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HIGH COURT OF MADRAS
Hon`ble Mr.Justice C.SARAVANAN
M/s. L.S.Mills – Appellant
Versus
The Assistant Commissioner o – Respondent
Taxation - Input Tax Credit - CGST Act 2017, IGST Act 2017 - Sections 73(1), 50(3), 122(2)(a) - The court ruled on the validity of demand relating to input tax credits under several provisions, highlighting the principle of composite supply and reinstating the non-binding nature of GST Council recommendations.
Fact of the Case:
The petitioner challenged an order demanding amounts for wrongly availed input tax credit as detailed in a Show Cause Notice, alongside interest and penalties according to various sections of GST legislation.
Issues: Whether the demands under the GST Act for input tax credits and other amounts were justified, particularly regarding IGST levied on CIF contracts already subjected to tax.
Ratio Decidendi: The court emphasized that an impugned levy on services, already taxed as part of composite supplies, was unlawful under the principle of composite supply in the GST framework.
Final Decision: The Writ Petition was partly allowed, with some demands dropped and others permitted for appellate review.
O R D E R
In this Writ Petition, the petitioner has challenged the impugned Order-in-Original No.MAD-GST-DG2-ASC-06-2022 dated 14.12.2022 passed by the respondent.
2. By the impugned order, the respondent has confirmed the demand proposed in Show Cause Notice No.29/2022 dated 25.08.2022.
The operative portion of the impugned order reads as under:-
15. In view of the above I pass the following order:
ORDER
a) I demand an amount of Rs.12,22,729/- (IGST:
4,18,975/- + CGST: Rs.4,01,877/- + SGST: Rs.
4,01,877/-). (Rupees Twelve lakhs twenty two thousand seven hundred and twenty nine only) towards wrongly availed Input Tax credit as detailed in Para 4.1 above and recover under Section 73(1) of CGST Act, 2017 /Tamil Nadu GST Act 2017 read with Section 20 of the IGST Act, 2017 ;
b) I appropriate the amount of Rs.3,20,510/- (CGST:
Rs.1,60,255 + SGST: Rs.1,60,255/-) reversed towards wrongly availed Input Tax credit vide DRC 03 (D13304220544247/ 3304220544279/ 330422054303) dated 28.04.2022 against the demand made in Sl. No. 15 (a) above;
c) I demand interest at the appropriate rate on the amount demanded [in para 15 (a)] and recover under section 73(1) of CGST Act, 2017 / Tamil Nadu GST Act 2017 read with section 50(3) of CGST Act, 2017 /Tamil Nadu GST Act 2017 and Section 20 of the IGST Act, 2017 ;
d) I demand an amount of Rs.37,00,693/-( IGST Rs.
1,98,307 + CGST Rs.17,51,193 + SGST Rs. 17,51,193) (Rupees Thirty seven lakhs six hundred and ninety three only) towards wrongly availed Input Tax credit [as detailed in Para 4.2 above] and recover under Section 73(1) of CGST Act, 2017 / Tamil Nadu GST Act, 2017 read with Section 20 of the IGST Act, 2017 ;
e) I appropriate an amount of Rs.4,05,445/- (IGST:
Rs.11319/- + CGST: Rs.1,97,063/-+ SGST: Rs. 1,97,063/-) reversed towards wrongly availed Input Tax Credit vide DRC 03 (D13304220544247/3304220544279) dated 28.04.2022 against the demand made in Sl.No.15 (d) above;
f) I demand an interest on the amount of Rs.
37,00,693/- [demanded in para 15 (d) above] and recover under section 73(1) of CGST Act, 2017 /Tamil Nadu GST Act 2017 read with section 50(3) of CGST Act, 2017 / Tamil Nadu GST Act 2017 and Section 20 of the IGST Act, 2017 ;
g) I demand an amount of Rs.98,97,188/- [Rupees Ninety Eight Lakhs ninety seven thousands one hundred and eighty eight only] towards non- payment of IGST under RCM on the Ocean freight charges [as detailed under para 4.3 and para 13.3 above] and recover under Section 73(1) of the CGST Act, 2017 read with Section 20 of the IGST Act, 2017 ;
h) I demand interest on the amount of Rs.
98,97,188/- [demanded vide 15 (g) above] and recover under Section 73(1) of the CGST Act, 2017 read with section 50 (1) of CGST Act, 2017 and Section 20 of the IGST Act, 2017 ;
i) I demand an amount of Rs.4,14,152/- (CGST Rs.
2,07,076/- and SGST Rs.2,07,076/-) (Rupees Four lakhs fourteen thousand one hundred and fifty two only) towards non-payment of GST under RCM on receipt of service from Government Department [as detailed in Para 4.4 above] and recover under Section 73(1) of the CGST Act, 2017 / Tamil Nadu GST Act 2017;
j) I demand an interest on the amount of Rs.
4,14,152/- [demanded in 15 (i) above] and recover under section 73(1) of the CGST Act, 2017 / Tamil Nadu GST Act 2017 read with section 50 (1) of CGST Act, 2017 / Tamil Nadu GST Act 2017; and k) I impose Penalty Rs.15,23,476/- @ 10% [detailed in below table] on the tax demanded / due; under Section 73(9) read with Section 122(2)(a) of the CGST Act, 2017 /Tamil Nadu GST Act, 2017 and read with Section 20 of the IGST Act, 2017 for non-payment of IGST/CGST/SGST/wrong availment and utilisation of ITC for each contraventions mentioned above in Sl No. (a), (d), (g) and (i).
| Total amount | % | Penalty imposed | |
| (a) | Rs. 12,22,729 | 10% | 1.22,273 |
| (d) | Rs. 37,00,693 | 10% | 3,70,069 |
| (g) | Rs. 98,97,188 | 10% | 9,89,719 |
| (i) | Rs. 4,14,152 | 10% | 41,415 |
| Total | 15,23,476 |
16. This order is issued without prejudice to any other action that may be initiated a
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