M/S.Spk And Co vs. The Additional Commissioner

Held

The Court held that Section 14(a)(i) of the CGST Act, 2017, clearly states that the date of supply for GST determination is the earlier of the invoice issuance date or the payment receipt date. In this case, the work completion certificate was issued on 08.06.2022, but the GST rate revision occurred on 18.07.2022. The Court noted that no invoice was raised for over 40 days after the work completion, and the invoice was raised only after the GST rate revision. Based on the submissions of the Additional Government Pleader, the Court prima facie found that the delay in raising the invoice before 18.07.2022 and in making subsequent payments was attributable to the petitioner, not the third respondent. While acknowledging the principle laid down in the Circular dated 10.02.2023, which suggests the principal should bear differential tax in certain scenarios, the Court found the facts of the present case to be entirely different due to the petitioner's delay. Furthermore, the Court considered these to be disputed questions of fact that could not be adjudicated under Article 226 of the Constitution. Therefore, the Court was not inclined to entertain the writ petition.

Facts

M/s. SPK and Co. (petitioner) filed a writ petition challenging an order dated 26.04.2024 passed by the Divisional Engineer, National Highways (third respondent). The petitioner sought to quash this order and direct the third respondent to reimburse the differential Goods and Services Tax (GST) amount, considering the petitioner's representation dated 22.03.2024. The petitioner contended that initially, GST was levied at 12% on invoices raised by the third respondent for projects executed by the petitioner. Subsequently, the GST rate increased from 12% to 18% effective 18.07.2022. Although the work was completed on 08.06.2022, the third respondent raised the invoice and made payments after the GST rate revision. The petitioner argued that the applicable GST rate should be determined based on the earlier of the invoice date or payment date, as per Section 14(a)(i) of the CGST Act, 2017.

Key Issues

1. Whether the applicable GST rate on the supply of services by the third respondent to the petitioner is the rate prevailing on the date of invoice issuance or payment receipt, whichever is earlier, as per Section 14(a)(i) of the CGST Act, 2017, considering the increase in GST from 12% to 18% effective 18.07.2022? 2. Whether the delay in raising the invoice and making payment after the work completion certificate dated 08.06.2022, and after the GST rate revision on 18.07.2022, is attributable to the petitioner or the third respondent, and consequently, who should bear the differential GST amount? Petitioner's Arguments: The petitioner argued that as per Section 14(a)(i) of the CGST Act, 2017, the date of supply for determining GST is the earlier of the invoice date or payment date. They relied on a Circular dated 10.02.2023 from the Ministry of Road Transport and Highways, which states that in cases of subsequent payments and invoice raising with an increased tax rate, the principal (National Highways Authority) should bear the differential tax. The rejection of their claim by the third respondent was without considering this circular and statutory provisions. Revenue/State's Arguments: The respondents argued that the delay in raising the invoice prior to 18.07.2022 and in effecting payment subsequently was attributable to the petitioner's failure to complete the work within the stipulated period, leading to extensions. They contended that the default was on the part of the petitioner, and therefore, the higher GST rate could not be fastened upon the third respondent.