Ola Fleet Technologies PVT. LTD vs. The Union Of INDIA
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Cause title — parties, addresses and appearances
The Court made the following ORDER
3 HON'BLE SRIJUSTICE UJJAL BHUYAN AND HON'BLE SRI JUSTICE A. VENKATESHWARA REDDY W.P.No.4210 of 2021 Ortle (l\t I lut'h/r' .\ n lunr t Ilpl Bhtaar) FIeard Mr. Narender Dave, leamed counsel for the petitioner; l,ft. B. Mukherjee, learned counsel representing learned fusistant Solicitor General of India for respondents No.l to 3; and Mr. K.Raji Reddy, leamed Special Standing C-ounsel for the Commercial Tax Depanment appeanng for respondents No.4 to 6. 2. By filing this petition under Article 226 of the Constitution of India, petitioner seels quashing of showcause notice dated 23.01..2021, issued by respondent No.5 and further seel$ a direction to the respondents for adjustment 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. ' Goods and Services Tax Acq 2017 ({or short'the TSGST Act). It is I
Petitioner is a registered penon under the Telangana State
of providing passenger transport motor engaged in the business vehicles on rental basis to vadous individuals for commercial usage. fu pan of its business, petitioner has been leasing vehicles to vadous drivers 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 supplyand would attract IGST.
It is stated that in the course of business, through inadvenence, petitioner mapped the State of Telangana as the State of Andhra Pradesh in its IT s).ctem. Since the location of the petitioner is in the State of Telang:rna and the location of the driver being in tl.re State of Andhra Pradesh, the IT s).stem of the petitioner determined the nature of supply to be that of inter-state 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, 2aU $or short 'the IGST Act) instead of paying CGST under the C-entral :"4::
5 ( Goods and Services Tax Act, 2017 (for shon '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 scrutiny of the returns filed by the petitioner for the year 2018-20t9, 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 forthe State of Telangana.
In this connection, a show cause notice was issued by respondent No.5 on 23.01'.2021 calling upon the petitioner to Pay an amount of Rs.5,98,65,274.0a on account of both CGST and SGST for the period Z0tS-2019 within fifteen dap. The breakup of the aforesaid amount is as under: CGST- Rs.2,99,)2,637 .00 SGST- Rs.2,99,3 2,$7 .AA
6 7 Against the said showcause notice, petitioner has preferred the present $,nt pet1t1on. 8 This C-ourt, by order dated 23.a2.2021, had issued notice and also granted interim stay. g. Thereafter, respondents No'1 to 3 have filed counter-affidavit followed byrespondents No.4 to 6, *ho have also filed an application for vacating stay along lvith counter-affidavit.
Stand taken by respondents No.l, 2 and 3 is that under Section 19(1) of the IGST Act, a registered person who has paid IGST on a supply considered 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 IGST so paid in such manner and subject to such conditions as may be prescribed. Therefore, it is stated that petitioner may file an application for refund of the IGST before respondents No.l, 2 and 3. 'There is no provision for adjustment oi IGST with CGST and SGST as contended by the petitioner. Elaborating on this aspect, it is stated that u4ren CGST and SGST are paid, CGST goes to the Consolidated Fund of India whereas SGST
7 ( goes to the exchequer of the respective State/Union territory' lWhen IGSTispaid,50%ofthelGsTgoestotheConsolidatedFundof India and the balance 50o/o $oes 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 Refund Rules).
In their detailed counter-affidavit, respondents No'4 to 6 have stated that adiustment sought for by the petitioner is beyond 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 transaction involved was an intra-state supply, serious revenue loss has been caused to the State of Telangana'
Reference has been made to a decision of the Jharkhand Flgh Court in Shree Nanak Ferro Alloys Pvt' Ltd' V' Union of Indial to contend that petitioner should first pay the outstanding CGST and SGST amount and may seek refund of the IGST amount paid erroneously. ) ) -! I v1.1,(T).Nr,.124(,,,f 2019drtcd 1r.t2.1019
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Learned counsel for the petitioner has referred to Section 77 of the CGST Act as well as Rule a(1) of the Refund Rules and submits that by intelpreting the aforesaid provisions in a pragmatic manner, a Single Bench of the Kerala Ftrgh C-oun in Saji S. Proprietor, Adithl'a and Ambadi Tradcrs v. Commissioner, Statc GST:, allowed the same contention of the petitioner for transfening the tax paid from the he rcl SGST to IGST. 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 duly considered.
At the outset, we may adven to Section 77 of the CGST Act, .r4rich reads as under, "
Tax wtongfully collected and paid to Central Govemrncnt or State Govemmcnt: (1) A registered penon who has paid the cenual tax and state tax or, as the cxe may be, the central ta-x and the union territory trul on a tmnsaction considered by him to be al intra-state supply, but which is subsequenrly held to be an inter-state supply, shall 2 2018 01) TNrr 951 r I 1,4, Flowever, this contention of leamed counsel for the petitioner
9 a be rel:unded the amount of taxes so paid in such manner and subject to such conditions as may be prescribed. (2) A registered penon who has paid integnted rax on a trarsaction considered by him to be an inter-state supply, but which is subsequently held to be an intra-srate supply, shali not be required to pay any interesr on the amount of central tax and State tax or, as the case may be, the central tax and the Union ter:ritory tax payable."
From the above, it is seen that if a registered person pays CGST and SGST on a transaction considered by him ro be an intra-state supply, but is subsequently held to be an inrer-state supply, such registered person shall be refunded the amount of taxes so paid in such manner and subject to such conditions as may be prescribed.
Likewise, if a registered person pa)6 IGST on a transaction considered byhim to be an inter-srate supply, but is subsequendyheld to be an intra-state supply, such registered person shall not be required to pay any interest on the amount of CGST and SGST.
At this stage, we rnay also refer ro Section 19 of the IGST Act, u.trich reads as follows:
"
Tax wrongfully collected and paid to Central Government or State Government:-
:: [0:: (1) A registered person, who has paid integrated tax on a supply considered 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 amoun! of integrated ta-x so paid in such tnurner and subject to such conditions as may be prescribed. (2) A registered penon, who hx paid central tax and state tax or Union territory tax, as the case may be, on a transaction considered by him to be an intra-state supply, but which is subsequently held to be an inter-state supply, shall not be required ro pay arry interest on the amount of integnted ta-x payable."
As in the case of Section 77 of the CGST Act, here also, provision for refund is made; and in case of payment of CGST and SGST on a transaction considered to be an intra-state supply, rn'&ich 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 Central Goods and Services Tax Rules, 2017 (for shon the CGST Rules'), lap down the procedure for sanctioning refund. Likewise, Rule a(1) of the Refund Ilules lap down the procedure for passing of order sanctioning refund.
After hearing leamed counsel for the panies and on due consideration, we are of the view that calling upon the responden$ to ( :: I l:: adjust IGST paid by the petitioner with CGST and SGST would amount to adopting a procedure, wfiich is not provided under the relevanr srarure. It would be going beyond the stature. To that extent, ue are unable to agree with the view expressed by the leamed Single Judge of Kerala F[gh Coun in Saii S. proprietor (2 supra).
On the other hand, we find that in Shree Nanak Fero Alloys Pvt. Ltd. (1 supra), a Division Bench of the Jharkjand Flgh Coun did not agree with similar conrention raised before that Court. In that case, Division Bench of the Jharkhand Ftrgh Court had directed the petitioner to deposit the IGST amounr within a period of ten dap without any interest; funher, holding that the said petitioner wouid be entitled to refund of the amount paid under the CGST head. )A .:'t. That was a case u,here peririoner had erroneously paid CGST instead of IGST.
Thus, upon thorough consideration of the matter, we are of the view that peritioner should comply with the showcause notice -dated 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. I )
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At the same time, petitioner would be at liberry to fiie appropriate appiication r-mder Section 19(i) of the IGST Act for refund of the IGST amount erroneouslypaid by it.
After compliance to the show cause notice dated 23.01.2021 and once such an appiication 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.
Writ Petition is, accordingly, disposed of. Related interlocutory applications, pending if an1,, stand disposed of.
No costs. K.SAILESHI ASSI STANT REGISTRAR //// SECTION OFFICER One fair copy to Hon'ble Sri Justice UJJAL BHUYAN vrrE rsrr -it[" i.llt l"taship's Kind Perusal) one rair copv to ?,".?'n|3 il',.i!i[9: ft,Y.=]5t]5,iHwARA REDDY To 1. 1,L5$ 33313Lry, N/inistry or Law' Justice and companv Arrairs' Union or " ifil);H,r',ilT"'rnn,nu Advocates Association Library' High court ror the " ;lt"-:*fi g1f .t!ilt"Jf,?'$ I n d ia, De pa rtme nt or Reve n u e, t\,4 i n i st ry or ' iiriunt",lz+A/North Block' New Delhi , ^ q rhe central Board ot '^ii;'JiiiX;'t "nd customs' Through its chairman' ^ +*[*".'l,Ht"T[:] l%9oJ"vr* qtl rl::: ^lo*u' 1 1' J eevan B ha rti Buildinq Janpath nouo "coin"i,r-gli piace ttlew D-elhi 110 001' 7 The Principal Secretary lo"Coi"i"t""t' State of Telangana Telangana ' Seiretariai.Hyderabad Telangana i co:#
B. The Assista nt Commissioner (State Tax), lvladhapur-l Circle' Hyderabad Rural
The Commission er of State Taxes, HYderabad trr'ladhaPur, HYderabad Divis ion, Telang a na. 10.One CC to SRI.NARENDER DAVE, Advocate [oPUC] 11 One CC tO SRI.B ,NNUKHERJI ,Ad vocate [OPUCI 12.One CC to SRI.K.RAJI REDDY,SPL. SC FORCT, DEPT (OPUC) '13.Two CD Copies
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) ) HIGH COURT ORDER WP.No.4210 of 2021 DISPOSING OF THE W.P WITHOUT COSTS. DATED:1610312022 i w -ur\u' I I 1 t{ AY 2[22 3 14 r€: 1 c q)a <) zo .:i) i\T * oFs '/ @ I ,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.