Judgment
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN MONDAY, THE 26TH DAY OF FEBRUARY 2024 / 7TH PHALGUNA, 1945 WP(C) NO. 20215 OF 2022 PETITIONER:
M/S. SASTHA CONTAINERS AND PACKAGING PVT. LTD.
AGED 60 YEARS, TC 25/2787(3), JAYA VIHAR, AMBUJAVILASOM ROAD, THIRUVANANTHAPURAM - 695 001, REPRESENTED BY ITS DIRECTOR - SRI. VENUGOPAL V.
BY ADVS.
K.I.MAYANKUTTY MATHER T.K.SREEKALA S.PARVATHI KALLIYANI KRISHNA B.
V.V.ASOKAN (SR.)
ANAND GEO RESPONDENTS:
1 KERALA STATE CIVIL SUPPLIES CORPORATION LTD.
MAVELI BHAVAN, GANDHI NAGAR, KADAVANTHRA P.O., KOCHI, PIN - 682020 REPRESENTED BY ITS CHAIRMAN AND MANAGING DIRECTOR 2 THE GENERAL MANAGER KERALA STATE CIVIL SUPPLIES CORPORATION LTD., MAVELI BHAVAN, GANDHI NAGAR, KADAVANTHRA P.O., KOCHI, PIN - 682020 3 THE MANAGER (GOVERNMENT SCHEME), KERALA STATE CIVIL SUPPLIES CORPORATION LTD., MAVELI BHAVAN, GANDHI NAGAR, KADAVANTHRA P.O., KOCHI, PIN - 682020 4 ADDL R4, SUPERINTENDENT, VELI RANGE, THIRUVANANTHAPURAM NORTH DIVISION, THIRUVANANTHAPURAM COMMISSIONERATE, CENTRAL GST AND CENTRAL EXCISE, P.B.NO.13, GST BHAWAN, PRESS CLUB ROAD, THIRUVANANTHAPURAM GPO. -695001.
ADDL R4 IS IMPLEADED AS PER ORDER DATED 11-07-2022 IN IA 1/2022 IN WP(C) 20215/2022.
BY ADVS.
SMT.MOLLY JACOB
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SMT.PREETHA S. NAIR, SC, CENTRAL BOARD OF EXCISE AND CUSTOMS SRI.R.LAKSHMI NARAYAN - SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 26.02.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
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JUDGMENT The petitioner – which is stated to be a company, has approached this Court seeking a direction to the Kerala State Civil Supplies Corporation Ltd. ('SUPPLYCO' for short), to reimburse to them the amount remitted by them towards GST in respect of processing charges and and finance recovery charges qua the supply of articles under various contracts, within a time frame to be fixed by this Court.
2. Sri.V.V.Asokan – learned Senior Counsel, instructed by Sri.Anand Geo – appearing for the petitioner, argued that, when the 'SUPPLYCO' had unequivocally admitted in Ext.P11 – being the 'minutes' of the meeting chaired by its CMD, on 22.09.2021 – that his client is eligible for GST as claimed; with a further recommendation that the file be forwarded to the Manager, Government Scheme, for processing their claim through Debit Notes, it is wholly improper on their part to have resiled from the same subsequently and to refuse payment, even though his client had, in the meanwhile, honoured the entire component of GST with the department. The learned Senior Counsel, therefore, prayed that the reliefs sought for in this writ petition be granted.
3. Pertinently, Sri.R.Lakshmi Narayan – learned Standing
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Counsel for the 'SUPPLYCO', argued that since the petitioner did not pay the GST component for the various invoices within the statutory time limit as is mandated under the GST Act, and since there is no material on record to establish that any payment is made by them – even assuming so – correlates to individual invoices raised qua the contracts which they had entered into, it would not be obligatory on his client's part to honour the same, even going by Clause 31 of Ext.P1 agreement between the parties.
He submitted that, therefore, the proper remedy for the petitioner is to seek for resolution of the disputes through Arbitration, in terms of Clause 52 of Ext.P1 agreement; and added that, if they are to do so, his client would not stand in the way of appropriate actions being initiated.
4. In reply, Sri.V.V.Asokan – learned Senior Counsel, submitted that, when the 'SUPPLYCO' does not even have a whispering imputation that Ext.P11 is in error and when they so expressly admit, even in their counter pleadings, their contentions as afore are not merely untenable, but rather unquestionable. He vehemently argued that there are no disputes between the parties to be referred to Arbitration; and, therefore, that Clause 52 of Ext.P1 agreement would not come into play in any manner,
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whatsoever. He thus reiteratingly prayed that the reliefs sought for by his client be granted.
5. I have examined the afore rival submissions of the learned Senior Counsel for the petitioner and the learned Standing Counsel for the 'SUPPLYCO', on the touchstone of the other materials and pleadings on record.
6. Dealing with the contentions of the petitioner based on Ext.P11, the 'SUPPLYCO' has, in paragraphs 9 to 11 of their counter affidavit, stated as under:
“9. In order to sort out the issue the Chairman and Managing Director of the first respondent Corporation vide D.O letter No.A 23-39304/19 dated 5/4/2021 addressed the State Tax Commissioner to get the opinion as to whether GST can be claimed based on a debit note on a transaction for which tax invoice was not issued under Section 31 of the CGST Act, 2017 and also on other related issues. While the question raised in the above letter was under consideration of the State Tax Commissioner a meeting with petitioner M/s. Sastha Containers and Packaging Pvt. Ltd chaired by Chairman and Managing Director of first respondent was convened on 22/9/2021 and in that meeting it was decided to forward the file to 3rd respondent Manager (Government Scheme) for processing the claim raised by petitioner through debit notes. The petitioner has produced the minutes of the said meeting as Exhibit P11. As directed in Exhibit P11 the file was forwarded to Manager (Government Scheme) who issued Exhibit P12 seeking clarification for the reason for preparation of debit notes before paying the full GST amount for the financial year 2017-2018. Petitioner was also requested to submit authentic documents, relating to invoices and the payment made along with the schedule specifying the details of each invoices and the GST amount paid against it. On receipt of Exhibit P12 petitioner submitted Exhibit P13. But the third respondent after going through Exhibit P13 sought clarification on certain points as per
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Exhibit P14 letter dated 29/10/2021. In Exhibit P14 the petitioner was directed to provide the details of GSTR 1 and GSTR 3B filed for the period from 7/2017 to 12/2018 and also to clarify why they have opted for DRC 03 instead of paying vide GSTR 3B. But the petitioner in any of the subsequent letters Exhibit P15 and P16 did not bother to furnish the reason for opting DRC 03 instead of paying vide GSTR 3B.
10. In the meanwhile the Commissioner of State Tax in response to the letter No. A 23-39304/19 dated 5/4/2021 of the Chairman and Managing Director of first respondent furnished the clarification sought for as per letter dated 25/10/2021. True copy of the said letter is produced herewith and marked as Exhibit R1 (e), In Exhibit R1(e) letter the Commissioner has stated that nothing in the amendment is implied to arrive at a conclusion that the debit note can be interchangeably be used instead of GST invoice. In the said letter the Commissioner alter extracting Section 34 (3) of the GST Act, 2017 has stated that the said provision does not intend to issue the debit note where the tax invoice was not at all issued under Section 31 of the GST Act, 2017.
The Chairman and Managing Director of the first respondent Corporation after examining Exhibit P16 letter of the petitioner, other related documents and relevant provisions of the GST Act was pleased to inform the petitioner as per Exhibit P17 that on verification of the GST portal, it is seen that M/s.Sastha Containers and Packaging Pvt. Ltd has not raised or filed any invoice in favour of Supplyco nor have they filed any returns during the period from July 2017 to December 2018 as stipulated under Act and as such Supplyco is unable to match the payments made by the firm pertains to trading with Supplyco. In the concluding portion of Exhibit P17 it is stated that subject to the provisions of the Act, Supplyco is unable to reimburse the amount paid by M/s.
Sastha Containers and Packaging Pvt. Ltd to the Government voluntarily through DRC-03. The Exhibit P17 letter of Chairman and Managing Director of first respondent Corporation is self-explanatory.
11. Petitioner has not cared to disclose the reason for paying the tax through DRC-03. As a matter of fact in the statement filed by the counsel for the fourth respondent it is stated that the reason for the payments are not mentioned in any of the DRC 03. Even according to the statement filed on behalf of the fourth respondent, being voluntary payments there is no other way to ascertain the reason of payment from the All-in-One system and on enquiring the same with the taxpayer it
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was explained that those payments are made against the debit notes mentioned above in the statement for processing fee. From the statement it can be seen that the fourth respondent is not in a position to state that the voluntary tax payments through the form DRC 03 made by the petitioner are related to the petitioner's business with Supplyco. In such a situation the petitioner is not justified in blaming the respondents for not reimbursing the amount paid by the petitioner to discharge the tax liability in terms of clause 31 of Ext.P1 agreement.
Petitioner has not produced any material to co-relate the payments made by the petitioner through DRC 03 with their business with the Supplyco. So the claim raised by petitioner for reimbursement of Rs (Rs.1,28,24,778 & Rs.85,15,261) is not sustainable.” 7. It is obvious from the afore extracted averments of the 'SUPPLYCO', that they appear to be saying, on one part, that the payments made by the petitioner are not established to have been qua the invoices raised; while, on the other, they contend that the voluntary tax payments, through “Form DRC 03”, cannot be seen to be in discharge of their obligations under the contract and that too, much less against the invoices raised by them. Crucially, it is also the case of Sri.R.Lakshmi Narayan – learned Standing Counsel for the 'SUPPLYCO', that some of the invoices never even had the component of GST mentioned therein.
8. Before I proceed, I must record that, in fact, adverting to the afore rival positions adopted by the parties, this Court had earlier thought it justified to allow the 'SUPPLYCO' to cause an enquiry, pending this lis, as to whether the payments made by the
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petitioner are against the invoices raised by them; and whether it can be correlated in such manner.
9. I notice that there are two reports filed on record thereafter, but the issue remains completely inconclusive; with Sri.R.Lakshmi Narayan – learned Standing Counsel for the 'SUPPLYCO', today taking the vehement stand that the disputes between the parties cannot be resolved by this Court in these proceedings, but only through Arbitration.
10. Obviously, therefore, this Court cannot even consider the question whether there are disputes between the parties, since, that itself would be an issue to be decided under Clause 52 of the agreement, if and when it is invoked by the petitioner.
11. As matters now stand, whether it be right or wrong, the 'SUPPLYCO' disputes every averment and claim of the petitioner and justifies it on various grounds, including that the GST was not paid within time, but only thereafter, as a voluntary payment under “Form DRC 03”. This Court, obviously, cannot enter into the merits of these contentions at this stage.
In the afore circumstances, I close this writ petition, leaving full liberty to the petitioner to act in terms of Ext.P1; however, recording the submissions of Sri.R.Lakshmi Narayan that, since
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the parties have subsisting disputes between them, it can only be adjudicated and resolved through the method of Arbitration mandated therein.
For the afore purpose, I clarify that, should an Arbitrator be appointed in terms of Clause 52 of Ext.P1 agreement, the said Authority will act de hors this proceeding, as also any of the interim orders issued earlier and the reports that have been generated through such process. To paraphrase, he will act in terms of law independently and de novo.
Sd/- DEVAN RAMACHANDRAN JUDGE anm
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APPENDIX OF WP(C) 20215/2022 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE AGREEMENT BETWEEN THE PETITIONER AND THE 1ST RESPONDENT DATED 18.06.2009 Exhibit P2 TRUE COPY OF THE ADDENDUM AGREEMENT BETWEEN THE PETITIONER AND THE 1ST RESPONDENT DATED 28.07.2018 Exhibit P3 TRUE COPY OF THE LETTER OF THE SUPPLY TO THE MILLERS INCLUDING THE PETITIONER DATED 22.8.2017 Exhibit P4 TRUE COPY OF THE COMMUNICATION ISSUED BY THE 3RD RESPONDENT TO THE MILLERS INCLUDING THE PETITIONER DATED 6.10.2018 Exhibit P5 TRUE COPY OF THE LETTER OF THE PETITIONER TO THE 2ND RESPONDENT DATED 25.7.2017 Exhibit P6 TRUE COPY OF THE LETTER OF THE PETITIONER TO THE 1ST RESPONDENT DATED 20.8.2020 Exhibit P7 TRUE COPY OF THE LETTER OF THE PETITIONER TO THE 1ST RESPONDENT DATED 24.11.2020 Exhibit P8 TRUE COPY OF THE LETTER OF THE PETITIONER TO THE 1ST RESPONDENT DATED 14.12.2020 Exhibit P9 TRUE COPY OF THE LETTER OF THE PETITIONER TO THE 1ST RESPONDENT SEEKING RE- IMBURSEMENT OF THE GST PAYABLE ON PROCESSING CHARGES DATED 06.03.2021.
Exhibit P10 TRUE COPY OF THE LETTER OF THE PETITIONER TO THE 1ST RESPONDENT DATED 7.4.2021 Exhibit P11 TRUE COPY OF THE MINUTES OF THE MEETING DATED 22.9.2021 Exhibit P12 TRUE COPY OF THE COMMUNICATION ISSUED BY THE 3RD RESPONDENT DATED 5.10.2021 Exhibit P13 TRUE COPY OF THE REPLY SUBMITTED BY THE PETITIONER TO THE 3RD RESPONDENT DATED 7.10.2021 Exhibit P14 TRUE COPY OF THE LETTER ISSUED BY THE 3RD RESPONDENT DATED 29.10.2021 Exhibit P15 TRUE COPY OF THE REPRESENTATION FILED BY THE PETITIONER TO THE 1ST RESPONDENT DATED 30.3.2022
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Exhibit P16 TRUE COPY OF THE REPRESENTATION FILED BY THE PETITIONER TO THE 3RD RESPONDENT DATED 30.3.2022 Exhibit P17 TRUE COPY OF THE COMMUNICATION OF THE 1ST RESPONDENT TO THE PETITIONER DATED 7.5.2022 Exhibit P18 TRUE COPY OF THE DEBIT NOTE UPLOADED BY THE PETITIONER IN THE GST PORTAL DATED 31.01.2021 Exhibit P19 TRUE COPY OF THE DEBIT NOTE UPLOADED BY THE PETITIONER IN THE GST PORTAL DATED 31.01.2021 Exhibit P20 TRUE COPY OF THE DEBIT NOTE UPLOADED BY THE PETITIONER IN THE GST PORTAL DATED 31.01.2021 Exhibit P21 TRUE COPY OF THE LETTER GIVEN BY PETITIONER TO THE CHAIRMAN AND MANAGING DIRECTOR OF THE 1ST RESPONDENT DATED 15.12.2018.
Exhibit P22 TRUE COPY OF THE RECONCILIATION STATEMENT FOR THE FINANCIAL YEAR 2017-18 SUBMITTED ALONG WITH EXT. P13- REPLY DATED NIL.
Exhibit P23 TRUE COPY OF THE RECONCILIATION STATEMENT FOR THE FINANCIAL YEAR 2018-19 SUBMITTED ALONG WITH EXT. P13- REPLY DATED NIL.
RESPONDENT EXHIBITS Exhibit R1(a) PHOTOCOPY OF THE LETTER NO. SFA-8925/17 DATED 16.6.2017 ISSUED BY THE 3RD RESPONDENT TO ALL MILLERS.
Exhibit R1(b) PHOTOCOPY OF THE LETTER NO. SC/2020/730 DT. 16.3.2020 OF THE PETITIONER TO 3RD RESPONDENT.
Exhibit R1(c) PHOTOCOPY OF THE FORM GST DRC-03 DATED 19.5.2020 REGARDING REMITTANCE OF RS 52,09,985/- BY THE PETITIONER.
Exhibit R1(d) PHOTOCOPY OF THE TAX INVOICE OF ONE OF THE MILLER BY NAME PREMIER AGRO PRODUCTS PVT. LTD.
Exhibit R1(e) PHOTOCOPY OF LETTER DATED 25.10.2021 OF COMMISSIONER OF STATE TAX TO CHAIRMAN & MANAGING DIRECTOR OF 1ST RESPONDENT.
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RESPONDENT ANNEXURES Annexure R-1 (a) THE TRUE COPY OF THE LETTER DATED 20.8.2020, ISSUED BY THE WRIT PETITIONER, TO THE 1ST RESPONDENT Annexure R-1 (b) THE TRUE COPY OF THE LETTER NO.A 23/39304/19 DATED 5.4.2021, ISSUED TO SGST COMMISSIONER BY THE 1ST RESPONDENT Annexure R-1 (c) THE TRUE COPY OF THE REPLY DATED 25.10.2021, ISSUED BY THE COMMISSIONER TO THE 1ST RESPONDENT Annexure R-1 (d) THE TRUE COPY OF THE LETTER DATED 16.3.2020, ISSUED TO THE MANAGER OF SUPPLYCO, BY THE PETITIONER Annexure R-1 (e) THE TRUE COPY OF THE LETTER DATED 16.1.2021, ISSUED TO THE CHAIRMAN AND MANAGING DIRECTOR OF SUPPLYCO, BY THE PETITIONER Annexure R-1 (f) THE TRUE COPY OF THE MINUTES OF MEETING DATED 26.10.2018, PRESIDED BY THE MANAGER OF SUPPLYCO Annexure R-1 (g) THE TRUE COPY OF THE LETTER DATED 20.8.2020, ISSUED TO THE CHAIRMAN AND MANAGING DIRECTOR OF SUPPLYCO Annexure R-1 (h) THE TRUE COPY OF THE LETTER DATED 16.6.2021, ISSUED BY ADV. C. SASIDHARAN PILLAI TO THE CHAIRMAN AND MANAGING DIRECTOR OF SUPPLYCO Annexure R-1 (i) THE TRUE COPY OF THE FORM GST DRC- 03 UNDER RULE 142(2) AND (3)