Kulithalai Municipality vs. The Assistant Commissioner Of GST And Central Excise

Facts

The petitioner, M/s. Kulithalai Municipality, a local authority, filed a writ petition challenging an order dated 15.09.2023 passed by the Assistant Commissioner of GST & Central Excise. The petitioner contended that it is exempted from paying Service Tax as a local body, citing notification No.14/2017-Central Tax (Rate) and Articles 243G and 243W of the Constitution. The petitioner also relied on a previous High Court decision in the context of the Finance Act, 1994. The impugned order pertains to the appropriation of Rs.5,80,518/- collected by the petitioner for renting of immovable property. The petitioner acknowledged that the time for filing a statutory appeal under Section 107 of the CGST Act, 2017, had expired.

Held

The Court did not decide on the merits of the petitioner's claim for exemption from GST on rental income. Instead, it acknowledged that the petitioner, being a local body, might have a valid case. However, the Court noted that the petitioner had failed to file a statutory appeal under Section 107 of the CGST Act, 2017, within the prescribed time limit. Despite the expiry of the appeal period, the Court, considering the petitioner's status as a local body, granted liberty to the petitioner to file an appeal within 15 days from the date of receiving the order. The Court directed that upon filing, the appeal shall be considered and disposed of on its merits and in accordance with law. The specific issue of the validity of the impugned order and the exemption claim was therefore left undecided on merits in this writ proceeding.

Key Issues

1. Whether the petitioner, as a local authority, is exempted from GST on the rental income derived from immovable property under notification No.14/2017-Central Tax (Rate) read with Articles 243G and 243W of the Constitution of India, and whether the impugned order appropriating the collected tax is valid? Petitioner's arguments: The petitioner argued that it is a local body and is exempted from Service Tax (and by extension, GST) on its activities as a local authority, relying on constitutional provisions and a specific notification. It also placed reliance on a prior High Court judgment concerning the Finance Act, 1994, in similar circumstances. Respondent's arguments: The respondent, represented by the Assistant Commissioner of GST & Central Excise, did not present any specific arguments on the merits of the exemption claim. However, the Court noted that the petitioner ought to have filed a statutory appeal under Section 107 of the CGST Act, 2017, and that the time for doing so had expired.