A Johnson vs. The Deputy Commercial Tax Officer
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The petitioner, A. Johnson, filed a writ petition challenging an order dated November 16, 2023, passed by the Deputy Commercial Tax Officer for the tax period 2017-18. The petitioner had paid a total of Rs. 21,21,102/- pursuant to this order, comprising tax, interest, and penalty. The petitioner's contention was that a significant portion of the amounts paid pertained to work contracts completed prior to the Goods and Services Tax (GST) regime (before July 1, 2017), and therefore, tax under the GST Act, 2017 was not payable for those periods, as per transitional provisions. The respondent argued that the petitioner had discharged tax liability under the TNVAT Act, 2006 for work contracts and that the impugned order had been complied with.
Held
The Court held that if the petitioner claimed liability under the TNVAT Act, 2006, for work contracts prior to July 1, 2017, it was incumbent upon the petitioner to clearly explain this distinction to the respondent and demonstrate that the tax liability was indeed under VAT and had already been discharged. The Court noted that if there was any variance in tax rates between VAT and GST, the excess tax could be collected or refunded. Consequently, the impugned order was set aside. The case was remitted back to the respondent to pass fresh orders. The respondent was directed to allocate the amounts deposited by the petitioner between the VAT Act and the GST Act. The petitioner was directed to provide a reply, including a copy of the legal opinion obtained, and the respondent was granted liberty to issue suitable notice to recover any balance amount under the TNVAT Act, 2006.
Key Issues
1. Whether the tax liability for work contracts completed prior to July 1, 2017, is payable under the GST Act, 2017, even if payments were received subsequently? (Question of law, turning on Section 142(11)(a) of the GST Act, 2017). Petitioner's arguments: The petitioner argued that no GST was payable for work completed before June 30, 2017. Even if payments were made subsequently, transitional provisions under the GST Act, 2017, meant no tax was payable. The petitioner relied on a legal opinion obtained after the impugned order, which highlighted this aspect. Respondent's arguments: The respondent contended that the petitioner had discharged tax liability under the TNVAT Act, 2006, for work contracts. Therefore, the petitioner's submissions regarding the unsustainability of the impugned order were without merit, especially since the petitioner had complied with the order by paying tax, interest, and penalty.
Sections Cited
Section 142(11)(a), TNVAT Act, 2006
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Cause title — parties, addresses and appearances
ORDER Heard learned counsel for the petitioner and learned Additional Government Pleader for the respondent.
The petitioner is before this Court against the impugned order dated 16.11.2023 passed for the assessment year 2017-18 bearing reference in GSTIN: 33AGSPJ6505F1ZF/2017-18. 3. The case of the petitioner is that although the petitioner has discharged the tax liability pursuant to the impugned order, the impugned demand, that was confirmed, is unsustainable as the most of the amounts, from which, the tax has been paid pertains to the VAT period and therefore, the tax was not payable under Section 142(11)(a) of the GST Act, 2017. 4. The learned counsel for the petitioner submits that the petitioner has paid a sum of Rs.21,21,102/- pursuant to the impugned order as detailed below: 2/6 https://www.mhc.tn.gov.in/judis S.No DRC03 Reference No. dated Category CGST paid SGST paid Total amount paid (in Rs.)
D13310230139266/16.10.2023
D13311230017405/07.11.2023
DC3311230029035/07.11.2023 TAX PAID 180200 176235 146861 154791 180200 176235 1014522
DC3310230095246/16.10.2023 Interest paid 502564 502564 1005128
D1331123009/16.11.2023 Penalty paid 50726 50726 101452
It is submitted that later the petitioner obtained legal opinion based on the work completion certificate and the petitioner became aware of the fact that the tax was payable only for the work contracts service completed during the GST regime from 01.07.2017 to 31.03.2018. 6. It is the specific case of the petitioner that no GST has to be paid for the work completed prior to 30.06.2017 and that even if the payment was made, subsequently as per the transitional provisions, no tax was payable under GST Act, 2017. 7. The learned Additional Government Pleader for the respondent, however, stated that the petitioner has discharged the tax liability under the 3/6 https://www.mhc.tn.gov.in/judis provisions of the TNVAT Act, 2006 for the work contracts. Therefore, there is no merits in the submissions made by the learned counsel for the petitioner that the impugned order has to be interfered with, particularly, when the impugned order dated 16.11.2023, which has been also complied with by the petitioner on various dates by discharging the tax, interest and penalty.
I have considered the submissions made by the learned counsel for the petitioner and the learned Additional Government Pleader for the respondent.
If it is the case of the petitioner that the petitioner was liable to pay VAT for the works contract for the period prior to 01.07.2017, it was incumbant on the part of the petitioner to have explained that the tax liability was under VAT and not GST and that the petitioner has already discharged tax liability under VAT. If there was any variance in the rate of tax, the tax can be either collected or refunded from/to the petitioner.
Under these circumstances, the impugned order is set aside and the case is remitted back to the respondent to pass fresh orders by allocating the amounts 4/6 https://www.mhc.tn.gov.in/judis due payable by the petitioner from and out of the amounts deposited, under the VAT Act and under the GST Act. The petitioner is directed to give appropriate reply enclosing a copy of the legal opinion that was ostensibly obtained by the petitioner which impelled the petitioner to file the present Writ Petition. Liberty is given to the respondent to issue suitable notice to the petitioner to recover the balance amount, if any, under the TNVAT Act, 2006. This Writ Petition is disposed of, with above direction. No costs. Index : Yes / No 18.07.2024 Internet : Yes / No apd To The Deputy Commercial Tax Officer, Tirunelveli Town, Tirunelveli. 5/6 https://www.mhc.tn.gov.in/judis C.SARAVANAN, J.
apd
2024 6/6 https://www.mhc.tn.gov.in/judis
Reproduced from the public record of the Madras High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.