Sarkar Diesel And Anr vs. Deputy Commissioner Stete Tax Krishnanagar Charge And Ors
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The petitioners, Sarkar Diesel & Anr., filed three appeals (FMA 604, 616, and 617 of 2024) challenging orders from a learned Single Judge who declined to grant interim relief. These appeals stemmed from writ petitions where the petitioners were aggrieved by orders passed by the appellate authority and the original assessing officer. The core issue revolved around whether the appellate authority had considered all grounds raised by the petitioners. The appellate authority had only modified the penalty from Section 74 to Section 73 of the West Bengal Goods and Services Tax Act, 2017, citing a lack of fraud or willful misstatement. However, it failed to address other grounds. Crucially, the petitioners received a declaration from Indian Oil Corporation Limited on August 4, 2023, stating that GST liability under Reverse Charge Mechanism (RCM) for services availed from 2017-18 to 2019-20 had been discharged by Indian Oil Corporation Limited. This declaration could not have been produced before the original or appellate authorities.
Held
The Court held that the appellate authority had failed to consider all the grounds raised by the appellant in their appeal petition. The appellate authority's order dated 29.05.2023 was found to be deficient as it only addressed the penalty under Section 74 versus Section 73 of the West Bengal Goods and Services Tax Act, 2017, without delving into other crucial contentions. The Court also acknowledged the significance of the declaration from Indian Oil Corporation Limited, received post-appeal, which indicated that the GST liability under RCM had been discharged by the service recipient for the periods 2017-18, 2018-19, and 2019-20. The Court further ruled that an Advance Ruling rendered in Goa could not be automatically applied to a taxpayer in West Bengal and did not bind third parties. Consequently, the Court set aside the orders of both the appellate authority and the original assessing officer. The matter was remanded to the Assessing Officer for re-adjudication, with directions to consider the fresh documents submitted by the appellant, afford a personal hearing, and pass a reasoned order uninfluenced by previous findings or the Goa Advance Ruling. The Court reiterated that the Assessing Officer should exercise power under Section 73, not Section 74.
Key Issues
1. Whether the appellate authority, in its order dated 29.05.2023, considered all the issues raised by the appellant/registered tax payer in their appeal petition, as required under the relevant provisions of the West Bengal Goods and Services Tax Act, 2017? The petitioner argued that the appellate authority failed to address several grounds of appeal, limiting its interference solely to the penalty provision. They contended that a subsequent declaration from Indian Oil Corporation Limited, received on August 4, 2023, confirmed that the GST liability under RCM for services rendered between 2017-18 and 2019-20 had been discharged by the service recipient, a fact that could not have been presented earlier. Furthermore, the petitioner argued that the Assessing Officer's reliance on an Advance Ruling from Goa was misplaced, as an Advance Ruling is not automatically applicable to taxpayers in West Bengal and does not bind third parties. The State, represented by the Deputy Commissioner, State Tax, Krishnagar Charge & Ors., did not record any specific arguments in the judgment regarding the scope of the appellate authority's consideration or the validity of the Advance Ruling.
Sections Cited
Section 73, Section 74
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
and order.
Heard learned counsel for the respective parties elaborately.
The short issue which falls for consideration is whether the appellant authority namely Joint Commissioner of State Tax, Berhampore Circle had considered all the issues which have been raised by the appellant in their appeal petition. On a perusal of the order passed by the appellate authority dated 29.05.2023, we find that the only exercise done by the appellate authority is to interfere with the order passed by the Deputy Commissioner of State Tax, Krishnanagar on the ground that penalty could not have been imposed under Section 74 of the West Bengal Goods and Services Tax, 2017 (for short, the said Act) and the penalty should have been imposed under Section 73 of the Act. Since there was no allegation of any fraud, willful mis-statement or suppression. However, the Appellate Authority has not adverted to any of the other grounds which have been canvassed by the appellant/Registered Tax Payer. The appellant after disposal of the appeal, has been furnished with a declaration by the Indian Oil Corporation Limited that they have availed GTA services from the appellant for varying 2
periods i.e. from the year 2017-18, 2018-19 and 2019-20 and this declaration was furnished to the appellant/writ petitioner only on 4.8.2023. Therefore, the appellant could not have produced these documents before the authorities or even the appellate authority. Considering the fact that this declaration has been issued by the Indian Oil Corporation Ltd., the appellant would be entitled to take advantage of the same for as the declaration clearly mentions that the GST liability on Reverse Charge Mechanism (RCM) has been discharged by the Indian Oil Corporation Limited on the services availed from the appellant/writ petitioner. Therefore, we are of the view that the matter should go back to the original authority for re- adjudication of the matter considering the subsequent developments.
It is pointed out that by the learned Advocate for the appellant/writ petitioner that while issuing show- cause notice, the Assessing Officer had relied upon a decision of the Advance Ruling Authority, Goa wherein it appears that the Advance Ruling Authority at Goa held that the activity of issuance of pollution under the control certificate for the vehicle issued by the applicant therein is not covered under SAC 9991 and is covered under residue entry and hence should be taxed at 18%. Firstly, the Advance Ruling rendered in Goa cannot be made automatically applicable to the appellant/ Assessee who is registered tax payer in the State of West Bengal. Secondly, the Advance Ruling may bind the Department at Goa but 3
cannot bind a third party tax payer, and bind only the applicant who went before the Advance Ruling Authority for a decision. Therefore, the Original Authority while re- adjudicating the matter should not place any reliance on the Advance Ruling rendered by the Authority at Goa.
In the result, the appeal and the writ petition are allowed and the order passed by the Appellate Authority and the Original Authority/Assessing Officer are set aside and the matter stands remanded to the Assessing Officer.
The Appellant is directed to submit a fresh reply/representation enclosing all documents in support of their claims and submit the same to the Assessing Officer within a period of four weeks from the date of receipt of the server copy of this order. On receipt of the same the Assessing Officer shall afford an opportunity of personal hearing to the authorized appellant/Assesse and re- adjudicate the matter uninfluenced by any finding rendered by it in its earlier order nor by placing any reliance on the decision of the Advance Ruling Authority at Goa and pass a reasoned order on merits and in accordance with law.
Needless to say that the authority should exercise power under Section 73 of the Act and not under Section 74 of the Act as the Appellate Authority has already correct the same.
Consequently, connected application, if any, also stands allowed and disposed of. (T. S. Sivagnanam) 4
(Chief Justice)
(Hiranmay Bhattacharyya, J.) 5
Reproduced from the public record of the Calcutta High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.