M/S.Indus Motor Company Private LTD. vs. The Assistant Commissioner Of State GST

Facts

The petitioner, M/s. Indus Motor Company Private Ltd., filed a writ petition challenging the inclusion of Tax Collected at Source (TCS) amounts, collected under the Income Tax Act, 1961, in the taxable value for the purpose of GST on the sale of motor vehicles. The petitioner contended that TCS should not be part of the taxable value for GST. The respondent authorities are the Assistant Commissioner of State GST, Union of India, Central Board of Indirect Taxes and Customs, and Principal Commissioner of Income Tax. The tax period is not explicitly stated but pertains to the sale of motor vehicles.

Held

The Court held that the issue raised in the writ petition no longer requires adjudication. This is because the Central Board of Indirect Taxes and Customs (CBIC) issued Circular No. 76/50/2018-GST, clarified by a corrigendum dated 07.03.2019, which addresses the valuation methodology for GST on TCS. The circular clarifies that TCS collected under the Income Tax Act, 1961, will not be includible in the taxable value for GST determination on the sale of motor vehicles. The reasoning is that TCS is an interim levy and does not possess the character of a tax. Therefore, the writ petition is closed, with the understanding that the issue is governed by the aforementioned circular.

Key Issues

1. Whether amounts of TCS collected under the provisions of the Income Tax Act, 1961, can form part of the taxable value of supply under the GST regime during the sale of motor vehicles, as per Section 15(2) of the CGST Act? The petitioner argued that TCS collected under the Income Tax Act should not be included in the taxable value for GST purposes. The revenue or State's contention is not explicitly recorded in terms of argument, but the judgment notes that the issue has been clarified by a circular.