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2022 Supreme(Telangana) 148
IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
UJJAL BHUYAN, A. VENKATESHWARA REDDY, JJ.
OLA Fleet Technologies Pvt Ltd - Petitioner
Versus
The Union of India, Through its Revenue Secretary, Department of Revenue, Ministry of Finance & others - Respondents
Writ Petition No. 4210 of 2021
Decided On : 16-03-2022
For the Petitioner: Mr. Narender Dave.
For the Respondents: Assistant Solicitor General rep. by Mr. B. Mukherji, Mr. K. Raji Reddy, Spl. Standing Counsel.
The adjustment of IGST with CGST and SGST was found to be beyond the provisions of the relevant tax acts and rules, and the petitioner was directed to comply with the show-cause notice to pay the outstanding CGST and SGST amount.
Headnote:
Adjustment of IGST with CGST and SGST - Tax Refund Rules - [TAX ADJUSTMENT] - [Goods and Services Tax] - [Section 77 of the CGST Act, Section 19 of the IGST Act, Rule 92(1) of the CGST Rules, Rule 4(1) of the Refund Rules] - The court discussed the provisions of Section 77 of the CGST Act and Section 19 of the IGST Act, along with Rule 92(1) of the CGST Rules and Rule 4(1) of the Refund Rules. It emphasized that the adjustment sought by the petitioner was beyond the provisions of the CGST Act, IGST Act, and TGST Act, and directed the petitioner to comply with the show-cause notice to pay the CGST and SGST amount, while also allowing the petitioner to file an application for refund of the IGST amount erroneously paid.
Fact of the Case:
The petitioner, a registered person under the Telangana State Goods and Services Tax Act, 2017, paid IGST instead of CGST and SGST due to an error in its IT system. The authorities required the petitioner to pay the outstanding CGST and SGST amount, leading to the present writ petition.
Finding of the Court:
The court directed the petitioner to comply with the show-cause notice and pay the CGST and SGST amount, while also allowing the petitioner to file an application for refund of the IGST amount erroneously paid.
Issues: The main issue was whether the petitioner could adjust the IGST paid with CGST and SGST, and whether the petitioner should comply with the show-cause notice to pay the outstanding CGST and SGST amount.
Ratio Decidendi: The court emphasized that the adjustment sought by the petitioner was beyond the provisions of the relevant tax acts and rules, and directed the petitioner to comply with the show-cause notice to pay the CGST and SGST amount, while also allowing the petitioner to file an application for refund of the IGST amount erroneously paid.
Final Decision: The writ petition was disposed of, directing the petitioner to comply with the show-cause notice and pay the CGST and SGST amount, while also allowing the petitioner to file an application for refund of the IGST amount erroneously paid.
ORDER :
Ujjal Bhuyan, J.
Heard Mr. Narender Dave, learned counsel for the petitioner; Mr. B. Mukherjee, learned counsel representing learned Assistant Solicitor General of India for respondents No.1 to 3; and Mr. K.Raji Reddy, learned Special Standing Counsel for the Commercial Tax Department appearing for respondents No.4 to 6.
2. By filing this petition under Article 226 of the Constitution of India, petitioner seeks quashing of show-cause notice dated 23.01.2021, issued by respondent No.5 and further seeks a direction to the respondents for adjustment of the Integrated Goods and Services Tax (IGST) paid by the petitioner towards Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST) in the State of Telangana.
3. Petitioner is a registered person under the Telangana State Goods and Services Tax Act, 2017 (for short ‘the TSGST Act’). It is engaged in the business of providing passenger transport motor vehicles on rental basis to various individuals for commercial usage. As part of its business, petitioner has been leasing vehicles to various drivers located in different states. If the driver is located in the State of Telangana, the transaction is qualified as intra-state supply to attract both CGST and SGST. On the other hand, if the driver is located in another State, the transaction would be deemed to be an inter-state supply and would attract IGST.
4. It is stated that in the course of business, through inadvertence, petitioner mapped the State of Telangana as the State of Andhra Pradesh in its IT system. Since the location of the petitioner is in the State of Telangana and the location of the driver being in the State of Andhra Pradesh, the IT system of the petitioner determined the nature of supply to be that of inter-state supply, though the transaction was very much within the State of Telangana and would therefore amount to intra-state supply. Consequently, petitioner paid IGST under the Integrated Goods and Services Tax Act, 2017 (for short ‘the IGST Act’) instead of paying CGST under the Central Goods and Services Tax Act, 2017 (for short ‘the CGST Act’) and SGST under the TGST Act.
5. An inspection was carried out by the respondents/authorities in respect of the petitioner under Section 65 of the TGST Act. In the course of such inspection, it was noticed that both supply of service and place of supply were located in the State of Telangana. Therefore, petitioner was required to pay CGST and SGST. On scrutiny of the returns filed by the petitioner for the year 2018-2019, it was noticed that petitioner had paid IGST of Rs.6,55,70,925.00 instead of CGST and SGST. In the process, there was substantial revenue loss for the State of Telangana.
6. In this connection, a show cause notice was issued by respondent No.5 on 23.01.2021 calling upon the petitioner to pay an amount of Rs.5,98,65,274.00 on account of both CGST and SGST for the period 2018-2019 within fifteen days. The break-up of the aforesaid amount is as under :
CGST - Rs.2,99,32,637.00
SGST - Rs.2,99,32,637.00
7. Against the said show-cause notice, petitioner has preferred the present writ petition.
8. This Court, by order dated 23.02.2021, had issued notice and also granted interim stay.
9. Thereafter, respondents No.1 to 3 have filed counter-affidavit followed by respondents No.4 to 6, who have also filed an application for vacating stay along with counter-affidavit.
10. Stand taken by respondents No.1, 2 and 3 is that under Section 19(1) of the IGST Act, a registered person who has paid IGST on a supply considered by him to be an inter-state supply, but which is subsequently held to be an intra-state supply, shall be granted refund of the amount of IGST so paid in such manner and subject to such conditions as may be prescribed. Therefore, it is stated that petitioner may file an application for refund of the IGST before respondents No.1, 2 and 3. There is no provision for adjustment of IGST with CGST and SGST as contended by the petitioner. Elabor
