Allowed

M/s Ani Technologies Privat Limited v. State of Telangana and 4 Others

Telangana HC16 Jun 2022WP/25526/2022

Case brief

AI extract

What is this about?

The High Court set aside an impugned order levying CGST and SGST on M/s ANI Technologies. The court found the Assistant Commissioner erred in applying Section 12(9) of the IGST Act regarding the place of supply for passenger transportation services to an unregistered recipient. The matter was remanded for a fresh decision.

What did the court decide?

The impugned order dated 04.02.2022 and the consequential notice dated 08.06.2022 were set aside and quashed. The matter was remanded to the 3rd respondent for a fresh decision within four weeks.

M/s Ani Technologies Privat Limited Vs State of… — GST and Indirect Tax | Telangana HC (2022)

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HIGH COURT FOR^{THE STATEOF TELANGANA: AT HYDERABAD} (Special Original Jurisdiction)

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THURSDAY, THE SIXTEENTH DAY OF^JUNE TWO THOUSAND AND TWENTY^TWO

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PRESENT

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THE HON'BLE SRI JUSTICE^UJJALBHUYAN AND THE HON'BLE MRS JUSTICE^{SUREPALLI NANDA}

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WRIT PETITION NO:² 5526^{0F 2022}

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Between:

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M/s ANI Technologies^{Privat Limited, 3rd Floor, S} 1, rySL^{Centrum,Surye-V^!^o} iOaa ro+4, Kukatfially^{Balanagar Mandal, Ranga Reddy, Te.lenga.na,500072'} Rloresented bv its^{'authorizdd representative,Saumya,M, D/o Madhava} rvrriinv tt,1, aged about^{28 years,Oic.Senior Managerof Petitioner Company} Rl/o. Bengaluru, Karnataka

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Address for Communication:^{140, WingC, Prestige RMZStartech, lndustrial} Lavout. Koramanqala,^{Hosur Road, Bangalore, Bengaluru (Bangalore)Urban,} Kainataka, 560095 Contact^{No - 91 9008677299}

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.,.PETITIONER

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AND

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'1 . State of Telangana, Through its Secretary, Finance Department, sth^Floor, Buroula RamiKrishna Rao^{Bhavan'NH44, Hill Fort,AdarshNagar,} Hyd!rabad, Telangana^500063.

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Soecial commissioner^{(ST), Enforcement wing, commercialTax Department,} C.T. Complex, Nampally,^{Hyderabad - 500 001.}

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Assistant Commissioner^{(ST)-1,Enforcement Wing, Commercial Tax}

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Department, C.T. Compldx,^{Nampally, Hyderabad - 500001'}

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Assistant Commissioner,^{Hyderabad Rural, STU-2, Hyderabad'}

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Joint Commissioner,^{Appeals- I Commissionerate' Hyderabad'}

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...RESPONDENTS

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Petition under^{Article 226 of the constitutionof lndia prayingthat in the} circumstances stated in the^{affidavitfiled therewith,the High court may be} pleased to issue an appropriate writ,^{Directionor order,particularlyone in the} nature of [\4andamus under^{Article226of lhe Constitution of lndia'}

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(a) calling for all^{papersand proceedings of the Petitioners case pertaining to the} i*pugn"i Order'Nio^{AD36012100262O2-2 daled O4lO2l2O22passedby the} nssiiant Commissioner^{(ST)-l EnforcementWing i.e RespondentNo.3 for} Financial Year^{2019-20 under Section 73 of the Telangana Goodsand Services}

I I

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Tax Act, 2017^{read with Section 73 of the Central GoodsandServices Tax Act'} 2017 andafter^{examiningthe validity, legality and pro-priety theregf' quashand set} ,iiO" tn" lmpugned^{Order raising a demand of Rs' 2'21'38'236401-'}

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(b) Calling for all^{papers and proceedings of the Petitioners case pertaining to the} ii.l*r"iy flotice^{'dated Oa;toatzozZbelring Reference No36AAJCA'13B9GTZE} ir.r"A tiy^{the Responde"t No. e and aftJr examining the validity,legality-and} p-ropr;ty'tn"r"of .^{quashand set aside the RecoveryNotice for recovery. of the} Ir"r.i'"r Rs. 2,21 ,38,2c6.401^{- issued pursuant to the lmpugnedorder No.} AD36O'1 21^{002 620Z-2 daled 0410212022'}

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(c) ln the alternative,^{direct RespondentNo'5 to acceptand unconditionally hear} inl ,pp"rf to^{be filed by the Petitioner} .^{againstlmpugnedOrder . No'} nosool'zrooz620Z.2daledoqtoztzozzpassedbytheAssistant.Commissioner isr)-t-entor""ment^{wing without insistenceof any deposit(including_107o) of the} ;;.Jri; tax^{tiability under section107 of the Tetangana Goods and ServicesTax} n.i zoiz^{read with Section 73 of the centralGoodsand services Tax Act, 2017.}

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IA NO :1OF²⁰²²

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PetitionunderSectionl51CPCprayingthatinthecircumstancesstatedin the affidavit^{filedin support of the petition, the High.Court may be pleasedto grant} of the Recovery'Nlotice^{dated ogto6t2o22 bearing Reference No.} .irv 36AAJCA1389G7ZE "t "purution^{issuedUy tne RespondentNo 3and restrainthe} n"rponO"nt.^{and/orits subordinates/agenis from taking any coercive.action} ;;*:;"t^{i;ih"tmpugnedorder tiil the finat disposal of the instantwrit petition.}

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IAN O:2 OF 2022

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PetitionunderSectionl5lCPCprayingthatinthecircumstancesstatedin the affidavit^{filed in support of the petition,ine-Higncourt maybe pleasedto grant} .try "i operation oi tn" - t.pubned Order No. AD36O1 210026202-2 dated OitaOziZozi^{passed by the Assistint Commissioner(ST)-l EnforcementWingi.e} n"rp""a""t'r.ro.^{g for Financial year 2o1g-20 and restrainthe Resp'ondents} unJioi it. subord^{inates/agentsfrom takingany coercive action pursuan!to the} f rpugn"O Order^{till the final disposal of the instant writ petition'}

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Counsel for the^{Petitioner:SRI TUSHARJARWALfor} SRI MAMILLA^{ASHWIN REDDY}

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Counsel for the^{Respondent No.1: GP FORFINANCE& PLANNING}

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Counsel for^{the Respondent Nos.2to 5: SRI K'RAJI REDDY' Sr'SCfor CT}

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The Court made^{the following:ORDER}

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THE HONOURABLE^{SRI JUSTICE UJJAL BHUYAN}

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AND

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THE HONOURABLE^{MRS JUSTICE SUREPALLINANDA}

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UIRIT PETITIO^{N No.2552 6of2022}

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ORDER:^{(Per Hon'bte Sri Juslice Ujjal Bhugan)}

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Heard Mr.^{TusharJarwal, learned counsel appeadng on} behalf of Mr.^{Mamilla AshwinReddy, learned counsel for the} petitioner and^{Mr. K.RajiReddy, learned Senior Standing} Counsel,^{Commercial Tax for the respondents'}

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By filing this^{petition under Article 226 of tl:,e} Constitutionoflndia,petitionerhaschallengedlegalityand validity of the^{order dated O4'O2'2O22issued by the 3'd} respondent^{levying total tax(CGST +SGST)of} Rs.2,2l,38,236.4OfortheauditperiodApril'2O19toMarch' 2O2O aswell^{as the consequentialnotice dated 08'06'2022'}

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Petitioner^{before us is a private limitedcompany} registered under^{the provisionsof the CompaniesAct' 1956'} having its^{registeredoffice at Bengaluruin the Stateof} Karnataka though^{it has its businesspresence in various}

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2 UB,J&SN,J W.P.No.25526 of 2022

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States including the State of Telangana. petitioner under the trade name 'Ola, is engaged in the business of providing internet platform/mobile application services where the dliver partners provide passenger transportation services to t- the customers. It is clarified that petition er per se is not engaged in providing passenger transportation service. It is only providing an electronic platform to the driver partners and to the customers.

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Petitioner is registered with the Goods and Services Tax (GST) authorities in the State of Telalgana.

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It is the case of the petitioner that for transportation services rendered by the drivers outside the State of Telangana, it has been charged Integrated Goods and Services Tax (IGST) which it has paid. Insofar this case is concerned, petitioner has paid IGST amounting to Rs.2,21.,3a,236.00 for the period under consideration.

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A notice for short payment of tax dated \ O2.O3.2O2O was issued to the petitioner by the 3.d

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3 UB,J&SN,J W.P.No.25526 of 2022

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respondent. As per the said notice, the supplier of service and place of supply were found to be located in the State of Telangana. Therefore, a view was taken by the 3.d respondent that State Goods and Services Tax (SGST) and Centra-l Goods and Services Tax (CGST) had to be paid by the petitioner and not IGST. Pointing out that a total amount of Rs.325,29,49,802.00 was to be paid by the petitioner, a notice for short payment of tax was issued.

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In response thereto, petitioner submitted a detailed reply on 19.O3.2O2O pointing out that petitioner had rightly paid IGST for the audit period and was not required to pay CGST and SGST.

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By the impugned order dated O4.O2.2O22,. explanation furnished by the petitioner was not accepted whereafter 3.d respondent took the view that CGST and SGST were required to be paid by the petitioner on its turnover and for the period from April, 2019 to March, 2O2O, a total /amount of Rs.2,2 1,38 ,236.4O covering both CGST and SGST \ were required to be paid. Since the dealer (petitioner) by not

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4 UB,J&SN,J W.P.No.25526 of 2022

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paylng CGST and SGST has^{committedanoffence} thereunder,^{penaltyproceedings have been initiated.This is} followed by notice dated^{08.06.2022issued by the 3'a} respondent to the^{petitioner for payment of the above tax.}

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g. Learned counsel for the^{petitionerhas referredto} Section 7 of the Integrated^{Goods and ServicesTax Act, 2Ol7} (briefly referred to hereinafter^as the^{'IGST Act') and submits} that as per Sub-Section^{(3) thereof, supply of serviceswhere} the location of the supplier^{and the place of supplyare in two} different States; or in two^{different Union Territories;or in} one State and one Union Territory,^{it shall be treated as a} supply of services in the^{courseof inter-statetrade or} commerce though the^{same is subject to the provisionsof} Section 12 of the^IGST Act'^{As per Section 8(2) of the IGST} Act, subject to the^{provisionsof Section 12 of the IGST Act,} supply of services where the^{locationof the supplier and the} place of supply of services are in^{the same State or same} ,^{Union Territory, itshall be treatedas inter-statesupply'} Section 12 of ttre IGST Act deals^{with place of supplyof}

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5 UB,J&SN,J W.P.No.25526 of²⁰²²

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services^{where location of supplier and recipient is in India'} Sub-section^{(9) is relevant'It says that the place of supply of} passenger transportation^{service to a registered person shall} be the location^{of such personand if it is to a person other} than a^{registered person, it shall be the place where the} passenger embarks^{on the conveyancefor a continuous} journey. Thus, what^{Sub-Section (9) of Section12 of the} IGSTActprovidesisthattheplaceofsupplyofpassenger transportation^{serviceto a registeredperson wouldbe the} location of^{such person, but if the person is other than a} registered^{person, it shall be the place where the passenger} embarks on^{the conveyancefor a continuous journey'}

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'10. Learned counsel for the respondents submits that petitioner should^{pay the demand and claim refundof IGST'} AlternativelY^{he can file aPPeal'}

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Submtssions made^{have been considered'}

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)

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lt is^prima facie^{evident that if the passenger is} not registered^{underGST and avails transportation service'}

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6 UB, J & SN.,I W.P.No.2SS26 of 2O2i

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by way of legal fiction the place of supply would be the place where the passenger embarks or starts his journey.

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Keeping the above legal provision in mind, v7s maI advert to the impugned order dated.04.02.2022. Though the 3'd respondent has referred to provisions of Section l2(9) of the IGST Act, he has however erroneously recorded that in case of unregistered recipient, the place of supply shall be the location of such recipient, which prima facie appears to be in contravention of Section 12(9) of the IGST Act. Thereaffsl, Jra respondent levied the tax as noted above arrd issued notice for payment.

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We are afraid the corrtentions raised by the petitioner, more particularly the requirement to pay IGST under Section l2(9) of IGST Act and correspondingly the non_ liability to pay CGST and SGST insofar the trarsportation \ services rende \ :red by the drivers were not considered in the right perspective. That apart though the impugned order is a lengthy one, the substantive portion appears to be withou! _ due application of mind to the legal provision.

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UB,J&SN,J W.P.No.25526 of 2O22

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That being the position, we would not like^to relegate the petitioner to the forum^{of appellateremedy since} the question as to applicability of Section^{12(9) of the IGST} Act would go to the root of the contention^{raised by the} petitioner.

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Accordingly, we set aside the^{order dated} O4.O2.2O22 and remand the matter back^{to the3'd} respondent for a fresh decision in^{accordancewith law after} giving notice of hearing as well as opportunity of^{hearing to} the petitioner. Since the^{petitioner is before the Court,let} him appear before the 3'd respondent^{withina periodof three} (03) weeks from today and file additional submissions,^if considered necessary. Third^{respondentto consider the} submissions of the petitioner^{and thereafterpass fresh orders} in accordance with law within a^{period of four (04) weeks} from the date of liling of additional^{submissions by the} petitioner. Needless to say since we have^{set aside the} impugned order dated 04.O2.2022,^{the consequentialnotice} dated 08.06.2022 would^{also stand quashed.}