M/S. Ola Fleet Technologies PVT. LTD. vs. The Union Of INDIA And 5 Others
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Cause title — parties, addresses and appearances
The Court made the following ORDER Petition under section 151 cPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High court may be pleased to stay further proceedings in scN dated 2310112021 issued for the period April 2019 to March 2020 proposing demand of CGST of Rs. 1,82,23,949/- and SGST of Rs.'1 ,82,23,949/- issued by the Sth the Respondent, pending disposal of above writ petition and thus render justice. l.A.NO:1 OF 2021
,1\ HON'BLE SRIJUSTICE UJJAL BHUYAN AND HON'BLE SRIJUSTICE A. \'ENKATESHWARA REDDY w.P. 2 f202t Order: &r Itottbh Sn lustia Uxa/ Bksat) Fleard Ir&. Narender Dave, ieamed counsel for the petitioner; Mr. B. Mukherjee, leamed counsel representing leamed Assistant Solicitor General of India for respondents No.1 to 3; and Mr. K.Raji Reddy, leamed Special Standing C-ounsel for the C.ommercial Tax Department appqaring for respondents No.4 to 6. \ \
Leamed counsel for both the parties concede that subject mafter of this writ petfuion is covered byW.P.No.421'0 of 2021,\"hich t rl has bgen disposed of today by a separate order.
By filing this petition under Anicle 226 of the Constitution of India, petitioner seeks quashing .. of showcause notice dated 23.01.2021, issued by respondent No.5 and further seel$ a direction to the respondents for adustment of the Integrated Goods and Services Tax (IGST) paid by the petitioner towards Gntral Goods and Services Tax (CGST) and State Goods and Services Tax (SGST) in the State of Telangana.
2 4 Following the same, this Vrit Petition is disposed of with the direction that the reasons and directions contained in order dated 16.03.2A22 n \fl.P.No.4210 of 2021 shall fqrm part of this order as N.ell.
Registry to enclose a copy of order dated 16.03.2022 tn W.P.No.4210 of 2021to this order.
Related interlocutory applications, pending if any, stand disposed of.
No costs. To 1 1 S.A . B. SATYAVATHI //// ASSISTANT R'9]3IIti, SECTION OFFICER 1 . The Reven^u^e pg:rqlrry., Union of India, Department of Revenue, Ministry of Finance, '128-fuNorth Block, New Delhi.
The Central Board of lndirect Taxes and Customs, Through its Chairman, North Block, New Delhi - 1 10 001. 3. The Goods and Services Tax, Council Sth Floor, Tower ll, Jeevan Bharti Building Janpath Road, Connaught Place, New Delhi - 110 OO1. 4. Ing State of Telangana,.Through Prhcipal Secretary to Government, (S.T) _ Telangana Secretariat, Hyderabad, Teldngana. 5' The Assistant commissioner (State Tax), Madhapur-l circle, Hyderabad Rural Division, Telangana. . The Commissioner of State Taxes, Madhapur, Hyderabad. . one CC to SRI.LAKSHMt_[U_t-Vl4E4ry SRTDHARAN, Advocate tOpUC] . One CC to SRI.NAMAVARAPU RAJESHWAR RAO (ASSG|) IOpUCt' . One CC to SRI.B.NARAS|MHA SARMA, Advocate (OPUC) ' ' 0.Two CD Copies
One spare copy (Along with the Copy of Order dt:16/03t2022 in W.p.No. 4210 ot 2021) o 7 B o $\)< I
HIGH COURT DATED:1 610312022 ORDER WP.No.4217 ot 2021 DISPOSING OF THE W.P WITHOUT COSTS. ?. 1HE ST4 15 a) [ 2 FiJ,i ?t?2 a',\ft "4i'{x
., ,/ ,/ HON'BLE SRI JUSTICE UJJAL BHUYAN AND HON'BLE SRI JUSTICE A. VENKATESHWARA REDDY W.P.No.4210 of2021 Order: Pt I k't'h Jn JB//," ttjjrl Btrud4 Fleard Mr. Narender Dave, learned counsel for the petitioneq I\,&. B. Mukherjee, learned counsel representing leamed fusistant Solicitor General of India for respondents No.1 to 3; and lv{r. K.Raji Reddy, leamed Special Standing C-ounsel for the Commercial Tax Department appearing for respondents No.4 to 5. 2. By filing this petition under Article 226 of the C-onstitution of India, petitioner seels quashing of showcause notice dated 23.01.2021, issued by respondent No.5 and funher seels a diection to the respondents for adjustment of the Integrated Goods and Services Tax (IGST) paid by the petitioner towards Crntral Goo& and Services Tax (CGST) and State Goods and Services Tax (SGST) in rhe State of Telangana.
Petitioner is a registered person under the Telangana State Goods and Services Tax Act, 2aU (for short 'the TSGST Act). It is /
4:: engaged in the business of providing passenger transpon motor vehicles on rental bxis to various individuals for commercial usage. As pan of its business, petitioner has been leasing vehicles to various driven located in different states. If the driver is located in the State of Telangana, the transaction is qualified as intra-state supply to attract both CGST and SGST. On the other hand, if the driver is located in another State, the transaction would be deemed to be an inter-state supply and would attract IGST.
It is stated that in the course of business, through inadvertence, petitioner mapped the State of Telangana as the State of Andhra Pradesh in its IT sFtem. Since the location of the petitioner is in the State of Telangana and the location of the driver being in the State of Andhra Pradesh, the IT sFtem of the petitioner determined the nature of suppiy to be that of inter-smte supply, though the transaction was very much within the State of Telangana and would
therefore amount to intra-state supply. Consequently, petitioner paid IGST under the Integrated Goods and Services Tax Act, 2017 (for short 'the IGST Act) instead of paying CGST under the C-entral
/' a 5 Goods and Services Tax Act, 2Ol7 (for short 'the CGST Act) and SGST under the TGST Act.
An inspection was carried out bythe respondents/authorities in respect of the petitioner under Section 65 of the TGST Act. In the course of such inspection, it was noticed that both supply of service and place of supply were located in the State of Telangana' Therefore, petitioner was required to Pay CGST and SGST' On scrutinyof the remms filed bythe Petidoner for the T"car 2018-2019,it was noticed that petitioner had paid IGST of Rs.6,55,70,925.00 instead of CGST and SGST. In the process, there was substantial revenue loss for the State of Telangana.
In this connection, a show cause notice was issued by respondent No.5 on 23.01.2021 calling upon the petitioner rc pay an amount of Rs.5,98,65,274.00 on account of both CGST and SGST for the period 2018-2019 within fifteen days. The breakup of the aforesaid amount is as unden CGST- Rs.299,32'637 .00 SGST- Rs.2,99,32'637 .00
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Against the said showcause notice, petitioner has preferred the Present wnt Petltron.
This Court, by order dated 23.02.2021, had issued notice and also granted interim stay.
Thereafter, respondents No.1 to 3 have filed counter-affidavit followed by respondents No.4 to 6, who have also filed an application for vacating sta1, along with counter-affidavit.
Stand taken by respondents No.1, 2 and 3 is that under Section 19(1) of the IGST Act, a registered person u{ro has paid IGST on a supply considered by him to be an inter-state supply, but which t subsequently held to be an intra-sute supph shall be granted refund of the amount of IGST so paid in such rnanner and subject to such conditions as may be prescribed. Therefore, it is stated that petitioner may file an application for refund of the IGS'I' before respondents No.l, 2 and 3. There is no provision for adjustment of IGST with CGST and SGST as contended by the peririoner. Elaboratrng on this aspecr, it is stated that v{ren CGST and SGST are paid, CGST goes ro the Consolidated Fund of India whereas SGST
7 goes to the exchequer of the respective State,/Union territory. \,X.4ren IGST ; paid, 50o/o of the IGST goes to the C-onsolidated Fund of India and the balance 50% goes to the exchequer of the respective destination State/Union Territory. This procedure is prescribed under the Goods and Services Tax Refund Rules, 2017 (for short 'the fufund Rules).
In their detailed counter-affidavit, respondents No.4 to 6 have stated that adjustment sought for by the petitioner is beyrnd the provisions of the CGST Act, IGST Act and TGST Act. Because of the action of the petitioner in paying iGST, despite the fact that the tmnsaction involved was an intra-state supply, serious revenue loss has been caused to the State of Teiangana.
Reference has been made to a decision of the Jharkhand Ftrgh C-oun in Shree Nanak Ferro Alloys Pvt. Ltd. V. Union of Indial to contend that petitioner should fint paythe outstanding CGST and SGST amount and may seek refund of the IGST amount paid erroneousiy. I v.r11.No.z+c orzolg dated 18.12.2019
8 13' Irarned counsel for the peritioner has referred to Section zz of the CGST Act as well as Rule a(1) of rhe Refund Rules and submits that by inteqpreting the aforesaid provisions in a pragmatic manner, a Single Bench of the Kerala Flgh C-ourt in Saii S. proprietor, Adithya and Ambadi Traders v. Commissioner, State GST2, allowed the same conrenrion of the petitioner for transferring the tax paid from the head SGSTto IGST. 1,4. However, this contention of leamed counsel for the petitioner has been strongly opposed by both leamed counsel for respondents No.1 to 3 and leamed counsel for respondents No.4 to 6. 15. Submissions made have been dulyconsidered.
At the outset, we mayadven to Section 77 of the CGST Act, *{rich reads as under: *77 . Tax u rongfully collected and paid to Central Governrnent or State Govcrntnent: (1) A registercd person who has paid the central tax and state tax or, as the ca-se may be, the central mx and the union terrirory tax on a rransaction considered by him to be an intra-state supply, but which is subsequently held to be an inter_sure supply, shall 2 2018 (11) TMr 9s4 ti I
be refunded the amount of taxes so paid in such manner and subject to such conditions as may be prescribed. (2) A registered person who has paid integrated t2x on a transaction considered by him to be an inter-state supply, but which is subsequendy held to be an intra-state supply, shall not be required to pay any interest on the amount of central tax and State tax or, as the case rxry be, the central tax and the Union territory tax payable."
From the above, it t seen that if a registered person pap CGST and SGST on a transaction considered by him to be an intra-state supply, but is subsequently held to be an inter-state supply, such registered person shall be refunded the amount of taxes so paid in such manner and subject to such conditions as maybe prescribed.
Lilrewise, if a registered person pays IGST on a tclnsaction considered by him to be an inter-state supply, but is subsequendyheld to be an intra-state suppll such registered penon shall not be required to pay any interest on the amount of CGST and SGST.
At this stage, we may also refer to Section 19 of the IGST Act, which reads as follows: '
Tax wrongfully collected and paid to Centtal Governmcnt or State Govcrnment:- :: l0:: (1) A regi-srered person, s4ro hx paid integrated tax on a suppiy corsiderecl by him to be an inter-state supply, but which is subsequently held to be an intra-state supply, shall be granted refund of the amount of integrated tax so paid in such manner and sub.ject to such conditions as may be prescribed. (2) A registered person, r+'ho has paid central ax and state tax or Union territory tax, as the case may be, on a trarsaction considerecl by him to be an intra-state supply, but which is subsequently held to be an inter-state supply, shall not be required to pay any interest on the amount of integrated tax payable."
As in the case of Section 77 of the CGST Act, here also, provision for refund is made; and in case of pay,rnent of CGST and SGST on a transaction considered to be an intra-state supply v,hich was subsequently held to be inter-state supply, he is not required to pay any interest on the IGST so paid.
Rule 92(1) of the Gntral Goods and Services Tax Rules, 2017 (for shon 'the CGST Rules), lays down the procedure for sanctioning refund. Likewise, Rule a(1) of the Refund Rules lap down the procedure for pxsing of order sanctioning refund.
Aftcr hearing learned counsel for the parties and on due consideration, \ /e are of the view that calling upon the respondenm to li adjust IGST paid by the petitioner with CGST and SGST would amount to adopting a procedure, which is not provided under the relevant statute. It would be going beyond the statute. To that extent, we are unable to agree with the view expressed by the leamed Single Judge of Kerala Ftrgh Court in Saii S. Proprietor (2 supra).
On the other hand, we find that in Shree Nanak Ferro Alloys Pvt. Ltd. (1 supra), a Division Bench of theJharkjand F[gh Court did not agree with similar contention raised before that C-ourt. In that case, Division Bench of the Jharkhand Hrgh Crurt had directed the petitioner to deposit the IGST amount within a period of ten dap without any interest; further, holding that the said petitioner would be entitled to refund of the amount paid under the CGST head.
That was a case q.,here petitioner had erroneously paid CGST instead of IGST.
Thus, upon thorough consideration of the marter, we are of the view that petitioner should comply with the showcause notice darcd 23.01.2021 and pay the CGST and SGST amount in terms of the said showcause notice within a period of two months from today.
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At the same time, petitioner would be at liberry to file appropriate application under Section 19(1) of the IGST Act for refund of the IGST amount erroneouslypaid by it.
After compliance ro the show cause notice dated 23.01.2021 and once such an application is filed for refund, respondents No.5 and 6 shall take up the said application for refund and complete the process within a period of two months from the date of receipt of the refund application. 28. .'Writ Petition is, accordingly, disposed of. Related interlocutory applications, pending if any, stand disposed of.
No costs. UJJAL BHUYAN,J A. VENKATESHWARA REDDY, J Date: 16-03-2022 LT'R
Reproduced from the public record of the Telangana High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.