Malaysia Airlines Berhad vs. Commissioner Of Delhi Goods And Services Tax Department Of Trade And Taxes & Anr.

W.P.(C) 9741/2024 Page 1 of 5 $~72 * IN THE HIGH COURT OF DELHI AT NEW DELHI % Date of Decision: 18.07.2024 + W.P.(C) 9741/2024, CM APPL. 39956-57/2024 MALAYSIA AIRLINES BERHAD .....Petitioner Through: Mr. Tarun Jain and Mr. Divyansh Singh, Advocates. versus COMMISSIONER OF DELHI GOODS AND SERVICES TAX DEPARTMENT OF TRADE AND TAXES & ANR. ....Respondents Through: Mr. Udit Malik, Additional Standing Counsel (Civil) for GNCTD along with Mr. Vishal Chanda, Advocates for R-1 and R-2. CORAM: HON'BLE MR. JUSTICE VIBHU BAKHRU HON'BLE MR. JUSTICE SACHIN DATTA VIBHU BAKHRU, J. (Oral) 1. Issue notice. Learned counsel for the respondents accept notice. 2. The petitioner has filed the present petition, inter alia, impugning the order dated 27.04.2024 (hereafter the impugned order) and the consequent demand notices issued by respondent no.2. 3. The impugned order was passed under Section 73 of the Central Goods and Services Tax Act, 2017 (hereafter the CGST Act) in respect of the tax period from April, 2018 to March, 2019. 4. The impugned order was passed pursuant to the Show Cause Notice dated 30.01.2024 (hereafter the SCN) based on a Special Audit Report. The SCN is founded on the reasoning that that the petitioner’s response to the Special Audit Report has been found to be incomplete/ inconclusive. Digitally Signed By:KAMLA RAWAT Signing Date:26.07.2024 14:08:25 Signature Not Verified W.P.(C) 9741/2024 Page 2 of 5 Accordingly, respondent no.2 proposed to raise a demand of ₹163,91,65,902/- on account of Integrated Tax, Central Tax and State Tax. In addition, respondent no.2 also proposed to recover interest and penalty. It is apparent from the SCN that it did not specifically deal with the replies sent by the petitioner to the Special Audit Report. It merely stated that the same had been found to be incomplete or inconclusive. 5. In the given circumstances, the petitioner furnished a detailed reply to the SCN, seeking to counter the allegations made in the Special Audit Report. 6. It is material to note that the petitioner has also contested the allegation that it had incorrectly disclosed lower revenue in the Goods and Services Tax (GST) returns in comparison to its receipts as reflected in its bank statements. It is the petitioner’s case that it held separate registrations in respect of its offices and had filed separate returns in respect of each registration. However, the bank account was common. 7. Paragraph 7 of the reply to the SCN reads as under:- “7. Less revenue disclosed in GST return in comparison to bank statements: It has been further observed by the special auditor and alleged by your good self that there is difference of INR 815,19,62,101/- between total receipts as credited in bank account of the Company and outward supplied reported in GST returns for the State of Delhi. Based on the said difference, your good self has raised a tax demand amounting to INR 146,73,53,178/- along with applicable interest and penalty. At the outset, the Company would wish to submit that the demand raised in this observation is based upon multiple assumptions and presumptions. The auditor has recorded its finds without any application of mind to the extent that a Company having multiple GST registrations can operate W.P.(C) 9741/2024 Page 3 of 5 a single bank account for its PAN India operations. It has been submitted by the Company that the Company maintains a single bank account for its PAN India operations. Further, there is no requirement under GST laws to maintain separate bank accounts for separate GST registrations. Since the Company has GST registrations in multiple states, all receipts from sale of tickets in different states are received in the same bank account. The special auditor has, without any application of mind and based on irrelevant assumptions has compared the revenue for the State of Delhi with receipts for PAN India operations which is totally absurd. As submitted above, SCN which is based on assumptions and presumptions is not tenable in eyes of law and consequential demand raised in SCN needs to be dropped. Reference can also be placed in a similar matter in the case of TVL. FUTURE GENERAL INDIA INSURANCE COMPANY LIMITED Vs 1. THE ASSISTANT COMMISSIONER (ST) (FAC), CHENNAI 2. THE ASSISTANT COMMISSIONER (ST), AMAINDAKARAI ASSESSMENT CIRCLE, CHENNAI [2024-VIL-161-MAD], wherein the tax authorities had compared the turnover of single GST registration with the turnover as per financials and had raised tax demand on differential amount. The matter was heard by Hon'ble High Court of Madras, wherein the Court had quashed the demand order and observed that: "5. On examining the impugned order, I find that the assessing officer has accepted the explanation of the petitioner with regard to certain defects. As regards defect No. 10, as contended by learned counsel for the petitioner, the assessing officer has recorded findings W.P.(C) 9741/2024 Page 4 of 5 without applying his mind to the fact that the turnover for an entity operating in multiple States in India, as reflected in the financial statements, and the turnover attributable to its operations in Tamil Nadu would vary. From the findings, it also appears that tax liability was imposed merely because the Chartered Accountant's certificate did not provide State- wise turnover. This finding does not stand to reason because only the bifurcation of total and Tamil Nadu turnover is germane. … The total tax imposed under this head is about Rs.14.56 crores and the patent errors justify interference with the assessment order even without examining the order in respect of other defects for which liability was imposed.