M/S Ani Technologies Private Limited vs. State Of Telangana And 4 Others - Telangana High Court, 16 June 2022

Cause title — parties, addresses and appearances

HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (SPecial Original Jurisdiction) THURSDAY, THE SIXTEENTI'i DAY OF JUNE TWO THOUSAND AND TWENTY TWO PRESENT THE HONOURABLE THE SRI JUSTICE UJJAL BHUYAN AND THE HONOURABLE MRS JUSTICE SUREPALLI NANDA WRIT PETITIO NNO:2 s527 0F 2022 Between: M7s A-f.i'f ie.nnologies Private Limited, 3rd Floor, S 1, NSL Centrum, Survey -^^^- Nl ib?g io+a, -(rk"tprlly'E;i;;;s;iN'landal, Ransa Reddv, Telengana.' 500072 fiJprLr"-nt"O ny its'authori2e-Ol"pre"*ntiiire, Saumy"a. tvl, D/o N/adhaVa N/urthy It'4, ;'s",id;;;;i)B.,y;;;, o;. "S;iiii Nai"ag"iof Petitioner companv Rio Bengaluru' Karnataka Address for Communication: 140, Wing C' Prestige RMz Startech, lndustrial Layout, RXirrri']'g:;rr:"ii"ri:i i{,iio, aa;gjror;,-eengalriru (Bansalore) urban, Karnataka' s6oo95' "'PETlrloNER AND ^''i. St"t" of Telangana, Through its Secretary fil?.1"-" Department' 5th Floor' alitui" Rima"Krishna Ra6 Bhavan, NH 44, Hill Fort, Adarsh Nagar' Hyd!rabad, Telangana 500063. 2 Soecial commissronei(sr), Lntorcement wing, commercial Tax Department, C.T. Complex, Nampally, Hyderabad -500 001' :. Xrsi.ia ni'Co m m r s ji5 n ei i si )- l, E nfo rcement wi n g, -C^o^m me rcia I Tax " ij"pitir""t, c.T. Compttix, Nampally, Hyderabad -500 001 4 A;{i;i;;lC"mmissiondr, Hvderabad'Ruial' STU-2Hvderabad 5 Joint Commissioner, Appeals -l Commissionerate, Hyderaoao ESpONDENTS Petition under Article 226 of the constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High court may be pleasedtoissueanappropriateWrit,Directionororder,particularlyoneinthe nature of lr,4andamus under Article 226 of the Constitution of lndia: (a)CallingforallpapersandproceedingsofthePetitioner.scasepertaining to the lmpugned order No. AD360121 002620Z daled 0410212022 passed by the AssistantCommissioner(ST)-lEnforcementWingi.e.'RespondentNo.3for Financial Year 2017-18 (from July 2017 onwards) under Section 73 of the Telangana Goods and services Tax Act, 2017 read with Section 73 of the central Goods and services Tax Act, 2017 and after examining the validity, legality and propriety thereof, quash and set aside the lmpugned order raising a demand of Rs.1 5,81 ,88,741 .29l-. t- 2 (b) cailing for arr papers and proceedings of the petitioners case pertaining to the Re covery Notice dated ogto6r2o22 bearing Reference No. 36AAJCA1389G7ZE issued by the Respondent No.3 and after examining the validity, legal ty and propriety thereof, quash and set aside the Recovery Notice for recovery of tlte amount of Rs.1S,g1,BB ,741.291_ issued pursuant to the lmpugned Order No.AD 1601 21 0026202 dated O4lO2/2022. (c) ln the alternative, direct Respondent No. s to accept and unconditionaly hear the appear to be fired by the petitioner against rmpugned order No. AD3601210026202 daled o4lo2t2o22 passed by the Assistant commissioner (sr)-l Enforc:ment wing without insistence of any deposit (incruding lOpercent) of the disputed tax liability under section 107 of the Telangana Goods and Services Tax Act, 2017 read with section 73 of the centrar Goods and Services Tax Act, 2017. IA NO: 10F 2022 Petition under section i 51 cpc praying that in the circumstances stated in the affidavit Iiled in support of the petition, the High court may be pleased to grant stay of operation of the lmpugned order No. AD36oi 210026 2oz dated o4to2l2o22 passed by the Assistant commissioner (sr)-r Enforcement wing i.e Respondent No.3 for Firranciar yeat 2o1r-19 (from Jury 20.r7 onwards) and restrain the Respondent:, and/or its subord inates/agents from taking any coercive action pursuant to tle lmpugned order tiI the finar disposar of the instant writ petition. IA NO:2 OF 2022 Petition under section '1s1 cpc praying that in the circumstances stated in the affidavit'iled in support of the petition, the High court may be preased to grant stay of operation of the Recovery Notice dated o}to6r2o22 bearing Reference No. 36AAJCA13r]9G7ZE issued by the Respondent No. 3 and restrain the Respondentri and/or its subordinatesiagents from taking any coercive action pursuant to the lmpugned order till the final disposal of the instant writ petition. Couns6l for the Petitioner: SRI TUSHAR JARWAL FOR SRI. MAMILLA ASHWIN REDDY Counsel for the Respondent No.1: Gp FOR FINANCE AND PLANNtNG Counsel for the Respondent Nos.2 to 5: SRI K. RAJI REDDY SENIOR S.C. FOR COMMERCIAL TAX

The Court r ade the following: ORDER t

THE HONOURABLE SRI JUSTICE UJJAL BHT]"TAN AND THE HONOURABLE MRS JUSTICE SUREPALLI NANDA WRIT PETITION No.25527 of 202o ORDER: (Per Hon'ble Si Justice Ujjat Bhuyan) Heard Mr. Tushar Jarwal' learned counsei appearing on behalfofMr'MamillaAshwinReddy,learnedcounselforthe petitioner and Mr' K'Raji Reddy' learned Senior Standing Counsel, Commercial Tax for the respondents'

By filing this petition under Article 226 of the Constitution of India, petitioner has challenged legality and validity of the order dated resPondent levYing total 04.02.2022 issued bY the 3'd Rs. 15,81,88,747.2g for the audit period July' 2017 to March' 2018 as well as the consequential notice dated 08'06'2022' Petitioner before us is a private limited company registered under the provisions of the Companies Act' 1956' having its registered office at Bengaluru in the State of tax (CGST SGST) of + 3 Karnataka though it has its business presence in vanous l

UB, J & SN,.I States including the State of Telangana. Petitioner under the trade name 'Ola' is engaged in the business of providing internet platform/mobile application services where the drive r partners provide passenger transportation services to the r:ustomers. It is clarified that petitioner per se is not engaged in providing passenger transportation service. It is only providing an electronic platform to the driver partners and to the customers.

Petitioner is registered with the Goods and Sen ices Tax (GST) authorities in the State of Telangana.

It is the case of the petitioner that for trar sportation services rendered by the drivers outside the Stale of Telangana, it has been charged Integrated Goods and Serdces Tax (IGST) which it has paid. Insofar this case is con cerned, petitioner has paid IGST amounting to Rs.20,88,20,582.00 for the period under consideration.

A notice for short payment of tax dated 02.O3.2O2O was issued to the petitioner by the 3'd 2 I respondent. As per the said notice, the supplier of service and place of supply were found to be iocated in the State of Telangana. Therefore, a view was taken by the 3.d respondent that State Goods and Services Tax (SGST) and Central Goods and Services Tax (CGST) had to be paid by the petitioner and not IGST. Pointing out that a tota-1 amount of Rs.325,29,49,802.00 was to be paid by the petitioner, a notice for short payment of tax was issued. 7, In response thereto, petitioner submitted a detailed reply on 19.O3.2O2O pointing out that petitioner had rightly paid IGST for the audit period and was not required to pay CGST and SGST.

By the impugned order dated 04.02.2022, explanation furnished by the petitioner was not accepted whereafter 3.d respondent took the view that CGST and SGST were required to be paid by the petitioner on its turnover and for the period from Jwly,2Ol7 to March,2018, a total i .amount of Rs. 15,81,88,741.29 covering both CGST and SGST /, lr,ere required to be paid. Since the dealer (petitioner) by not 3 r (

Ir UB,J&SN,r paying CGST and SGST has committed an offence thereunder, penalty proceedings have been initiated' This is follov;ed by notice dated 08.06.2022 issued by the 3'a respondent to the petitioner for payment of the above tax.

Learned counsel for the petitioner has referred to Sect.on 7 of the Integrated Goods and Services Tax Act' 2017 (briefly referred to hereinafter as the 1GST Act') and submits that as per Sub-Section (3) thereof, supply of services where the location of the supplier and the place of supply are in two different States; or in two different Union Territories; or in one State and one Union Territory, it shall be treated as a supply of services in the course of inter-state trade or corrmerce though the same is subject to the provisions of Section 12 of the IGST Act. As per Section 8(2) of the IGST Act, subject to the provisions of Section 12 of the IGST Act, supply of services where the location of the supplier and the place of suppty of services are in the same State or sarne 7 Union Territory, it shall be treated as inter-state supply. Se,:tion 12 of the IGST Act deals with place of supply of 4 \ services where location of supplier and recipient is in India. Sub-Section (9) is relevant. It says that the place of supply of passenger transportation service to a registered person shall be the location of such person and if it is to a person other than a registered person, it shall be the place where the passenger embarks on the conveyance for a continuous journey. Thus, what Sub-Section (9) of Section 12 of the IGST Act provides is that the place of supply of passenger transportation service to a registered person would be the location of .such person, but if the person is other than a registered person, it shall be the place where the passenger embarks on the conveyance for a continuous journey.

10.

Learned counsel for the respondents submits that petitioner should pay the demand and claim refund of IGST. Alternatively he can file appeal. 1 1. Submissions made have been considered.

12.

It is pima facie evident that if the passenger is J ( I not registered under GST and avails transportation service, /

UB, J & SN, .I W-P.No-25527 of 2022 by lvay of legal friction the place of supply woulcl be the place wher-- the passenger embarks or starts his journey.

13.

Keeping the above legal provision in mind, \ /e may adver"t to the impugned order dated 04.02.2022. Thoug,r. the 3.d rt:spondent has referred to provisions of Section 12(91 of the IGST Act, he has however erroneously recorded that in case of unregistered recipient, the place of supply shall be the location of such recipient, which prima focie appears to be in contlavention of Section 12(9) of the IGST Act. Therea-fter, 3.a resprrndent. levied the tax as noted above and issued notice for payment.

14.

We are afraid the contentions raised by the petitioner, more particularly the requirement to pay IGST unde:r Section 12(91 of IGST Act and correspondingly the non_ liability to pay CGST and SGST insofar the transportation serv-ces rendered by the drivers were not considered in the righr- perspective. That apart though the impugned order is a lengthy one, the substantive portion appears to be without 1 \ due application of mind to the legal provision. 6 t ,|

15.

That being the position' we would not like to relegate the petitioner to the forum of appellate remedy since the question as to applicability of Section 12(9) of the IGST Act would go to the root of the contention raised by the petitioner.

16.

Accordingly, we set aside the order dated O4.O2.2O22 and remand the matter back to the 3'd respondent for a fresh decision in accordance with law after giving notice of hearing as well as opportunity of hearing to the petitioner. Since the petitioner is before the Court' let him appear before the 3'd respondent within a period of three (03) weeks from today and file additional submissions' if considered necessary. Third respondent to consider the submissions of the petitioner and thereafter pass fresh orders inaccordancewithlawwithinaperiodoffour(04)weeks from the date of filing of additional submissions by the petitioner. Needless to say since we have set aside the impugned order dated 04.O2'2O22, the consequential notice dated 08.06.2022 would also stand quashed' I

r UB, J & SN,,I

17.

This disposes of the Writ petition. However, there shall oe no order as to costs.

18.

As a sequel, miscellaneous applications pending, if any, in this Writ petition, shall stand closed. 8 ,// .T.SRINIVAS DEPUTY REGISTRAR SECTION OFFICER To,

The S ?gr.elary Finance Department, State of Telangana, Sth Floor, Bureula Rama Krishna Rao Bhavan, NH 44, Hiil Fort, Adarjh N;g;;, Hyd;iabad, * Telanryana 500063

The S tecial Commissioner (ST), Enforcement Wing, Commercial Tax , pepartment, C.T. Complex, Nampally, Hyderabad _5OO OOt

The Assistant Commisiioner (ST)-1, Enfcircement Wing, -Commercial Tax Department, C.T. Complex, Nambally, Hyderabad -506 001

The Assistant Commisiioner, Hyderat'aci Rural, STU-2 *yAerabaa

The Joint Commissioner, lppedts -l Commissionerate, HyAeriniO

One C;C to Sri Mamilla Ashwin Reddy, Advocate [OiUC]'

Two C:Cs to GP for Finance and plahning, Hiqh bourt ftr the State of - Telan.lana at Hyderabad. [OUT] P 9n: !:9 Ig Sti K. Raji Recidy, S-enior SC for Commerciat Tax [OpUC]

I wo (:u Copies

10.

One S pare Copy CHR PSh

1 HIGH COURT DATE D : 1 610612022 ORDER DISPOSING OF THE WRIT PETITION WITHOIJT COSTS 'l 1 o I .< co ( . T (: 1 2[?2 E U A a I a \1.