Challenge to Inter-State Supply Determination: Assessee Relegated to Appeal Remedy

Summary in Key Points:

Issue: Was the respondent authority’s determination of the assessee’s supplies as intra-state, and the consequent levy of CGST and SGST, correct?
Facts: The assessee claimed their supplies were inter-state and subject to IGST, while the respondent authority treated them as intra-state, attracting CGST and SGST. The assessee challenged the order and also the vires of relevant sections of the IGST Act and the CGST/SGST Act.
Decision: The court held that the factual aspects of the case, particularly the nature of the supplies (inter-state or intra-state), needed to be determined before addressing the constitutional validity of the provisions. The assessee was directed to pursue the appeal remedy before the GST Tribunal. The court also ordered a stay on further recovery proceedings, subject to the assessee fulfilling the pre-deposit requirements for the appeal and depositing the previously refunded IGST amount.

Important Note: This decision underscores the importance of resolving factual disputes before delving into constitutional questions. The court recognized that the nature of the supplies was a crucial determinant in this case, and the factual aspects needed to be clarified before examining the validity of the relevant legal provisions. By directing the assessee to the appellate forum, the court ensured that the factual dispute is addressed through the established process. Additionally, the court’s order to stay further recovery proceedings, subject to certain conditions, protects the assessee’s interests while ensuring that the revenue’s interests are also safeguarded.

HIGH COURT OF RAJASTHAN

Skylark Infra Engineering (P.) Ltd.

Union of India

Avneesh Jhingan and UMA SHANKER VYAS, JJ.

D.B. Civil Writ Petition No. 60, 392 and 393 of 2023

NOVEMBER 5, 2024

Hemant Kothari for the Petitioner. Rajendra Prasad, Adv., General, Ms. Harshita Thakral, Ms. Dhriti Laddha, Tanay Goyal, Kinshuk Jain and Devesh Yadav for the Respondent.

ORDER

Avneesh Jhingan, J.- These petitions are being decided by this order as the issue and facts involved are similar. For convenience, the facts are being taken from DBCWP No.60/2023.

2. This petition is filed seeking quashing of order dated 23.09.2022 passed by the Appellate Authority, State Tax, Jaipur rejecting the appeal of the petitioner for assessment year 2017-18.

3. The relevant facts are that the petitioner claimed supplies made to be inter-state supplies and exigible to Integrated Goods and Services Tax (hereinafter referred to as ‘IGST’). The respondent No. 3 treated supplies to be intra-state and levied CGST and SGST.

4. The grievance raised in this petition is that the petitioner had already deposited tax under the IGST Act. The challenge in the present petition is also to the Vires of Section 19(1) of IGST Act and Section 77(1) of CGST and RGST Act of 2017.

5. On 17.04.2023, following order was passed:

“These matters come up for consideration insofar as compliance of interim order dated 05.01.2023 is concerned.

Learned counsel for the petitioner would submit that this Court had directed the petitioner to deposit balance 65% of CGST and RGST within a period of three months subject to the condition of refund of the IGST within a period of two months from the date of receipt of the application. He would submit that though application for refund has already been made, out of Rs.4.02 crores deposited towards IGST, only Rs.1,17,59,177/-have been refunded which includes both cash as well as credit component. Therefore, in these circumstances, the petitioner may not be required at this stage to deposit 65% of CGST and RGST within the time stipulated by the Court.

Learned counsel for Union of India submits that as far as Union of India is concerned, the amount deposited with it has been refunded and rest of the amount is required to be refunded by the GST Department at Delhi.

Taking into consideration the submission of learned counsel for the parties, we direct the petitioner to deposit refund amount of Rs. 1,17,59,177/- with the State under RGST within a period of one month.

Reply of the respondents may be filed within four weeks and the case be listed after four weeks.

Application No. 01/2023 is, accordingly, disposed off.”

6. Learned counsel for the petitioner on instructions submits that the refund received from Union of India with regard to IGST has been deposited with the Goods & Service Tax Authorities. The contention is that with the deposit of the amount, the prerequisite of pre-deposit for filing an appeal before Tribunal stands complied. Further that apart from this other amount has already been deposited.

7. Considering determination of the factual aspects is required to be done at first instance before the vires of the provisions can be gone into, the petition is disposed of relegating the petitioner to the remedy of appeal before the GST Tribunal.

8. It is clarified that the issue of challenge to the vires is kept open.

9. No further proceedings for recovery of the balance amount shall be taken against the petitioner in case of the authorities being satisfied that the condition of pre-deposit for filing the appeal has been complied with. The petitioner shall also deposit the refunded amount received on these transactions under IGST.

10. The GST Tribunal has not been constituted till date, the petitioner shall file an appeal within three months from the date of constitution of the Tribunal. The Tribunal shall consider the appeal on merits after being satisfied that the condition of pre-deposit has been complied with.