Panacea Biotec Limited vs. Union Of INDIA And Ors

Facts

M/s Panacea Biotec Limited (Petitioner) filed a Writ Petition challenging a show cause notice dated July 16, 2024, and an impugned order dated August 19, 2024, both issued by Respondent No. 3 (Assistant Commissioner of State Tax). The core dispute concerns whether GST is leviable on a Deed of Assignment where land and a building were transferred by a Lessee to a third party. The Petitioner contended this transaction falls under Schedule III, Item 5 of the CGST Act, 2017, not Schedule II, Item 2. This contention was raised in the Petitioner's reply to the show cause notice but was not addressed in the impugned order. The impugned order also incorrectly stated that no submissions were made by the Petitioner in response to the show cause notice, despite a reply being filed on July 22, 2024.

Held

The Court held that the impugned order dated August 19, 2024, passed by Respondent No. 3, should be quashed and set aside. The primary reason for this decision was that the Petitioner's contention regarding the classification of the transaction under Item 5 of Schedule III of the CGST Act, 2017, was not dealt with in the impugned order. Furthermore, the order incorrectly stated that no submissions were made by the Petitioner in response to the show cause notice, despite a reply having been filed. The Court found it to be in the fitness of things to remand the matter back to Respondent No. 3 for fresh adjudication without going into the merits of the GST levy. The Petitioner was granted liberty to file a detailed reply within two weeks, after which Respondent No. 3 was directed to provide a personal hearing before passing any order. The Court also noted that a Gujarat High Court decision had taken a view that similar transactions are not amenable to GST, and directed Respondent No. 3 to consider and deal with this decision during the fresh adjudication.

Key Issues

1. Whether the GST Authorities can levy GST on a Deed of Assignment under which land and a building are transferred by a Lessee to a third party, specifically whether such a transaction falls under Item 5 of Schedule III or Item 2 of Schedule II of the Central Goods and Services Tax Act, 2017? 2. Whether the impugned order dated August 19, 2024, passed by Respondent No. 3, is vitiated by a failure to consider the Petitioner's reply to the show cause notice and by incorrectly stating that no submissions were made? Petitioner's Arguments: The Petitioner argued that the transaction in question falls within Item 5 of Schedule III of the CGST Act, 2017, and is therefore not subject to GST. They further contended that their reply to the show cause notice, which raised this specific point, was not dealt with in the impugned order, and the order erroneously recorded that no submissions were made. Revenue's Arguments: The judgment does not record any specific arguments made by the Revenue or State respondents regarding the merits of the GST levy on the Deed of Assignment. However, they were represented and participated in the proceedings.