Zirconium Complex Rep By Its General Manager M Periasamy vs. The Assistant Commissioner (St)

Held

The Court held that there is merit in the petitioner's submission that Notification No. 9 of 2017, dated 28.06.2017, would be attracted if the petitioner is a unit of NFC, which in turn is part of the Department of Atomic Energy, a Central Government entity. The Court found that the material placed before it was relevant to determine if the petitioner is a unit of NFC and thus a part of the Central Government, which would impact the applicability of the exemption notification. The Court observed that the Assessing Authority ought to have examined the applicability of Notification No. 9 of 2017 before making the assessments, which it failed to do. Consequently, the Court set aside the impugned orders and directed the Assessing Authority to re-do the assessments, treating the impugned orders as show cause notices. The petitioner was given two weeks to file replies, after which the authority was to afford a reasonable opportunity of hearing.

Facts

The petitioner, Zirconium Complex, a processing plant for Nuclear Fuel Complex (NFC), Hyderabad, filed writ petitions challenging orders issued by the Assistant Commissioner (ST) for the tax periods 2017-18 to 2022-23. The impugned orders levied tax on alleged services rendered by the petitioner to NFC. The petitioner contended that its activities fall under Entry 3 of Schedule-II of the CGST Act or are covered by Serial No. 8 of Notification No. 9 of 2017, thus exempt from tax. The petitioner argued it is a unit of the Department of Atomic Energy, not an independent entity. The respondent argued that the petitioner's initial objections relied on a different notification (Notification No. 26 of 2017) and that the petitioner and NFC are distinct persons under Section 25(5) of the CGST Act.

Key Issues

1. Whether the services provided by the petitioner to Nuclear Fuel Complex (NFC), Hyderabad, are taxable under the Goods and Services Tax (GST) regime, considering the petitioner's contention that it is a unit of the Department of Atomic Energy and its activities might be covered by Entry 3 of Schedule-II of the CGST Act or Notification No. 9 of 2017. The petitioner argued that the levy of tax would be without jurisdiction and in violation of Article 265 of the Constitution. The respondent argued that the petitioner and NFC are distinct persons and the activity constitutes a supply, and that the petitioner failed to bring Notification No. 9 of 2017 to the notice of the adjudicating authority during assessment. 2. Whether the Assessing Authority failed to examine the applicability of Notification No. 9 of 2017, dated 28.06.2017, which provides for exemption on services provided by the Central Government to another Central Government, State Government, Union Territory, or Local Authority, before making the assessment.