2023 (8) TMI 1409 - HC - GST

Reimbursement of GST paid by the petitioners under the Central Goods and Services Tax Act, 2017 (CGST Tax) and Delhi Goods and Services Tax Act, 2017 (DGST Tax) - whether the petitioner ought to be reimbursed by the MCD the service tax which they have paid, at the rate prevalent during the relevant period? HELD THAT - It is noted that during the period commencing from 01.07.2017 and up until 20.09.2017, the petitioners appear to have paid CGST at the rate of 9% and likewise have paid DGST at the rate of 9%, pursuant to notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 and notification o. 11/2017-Central Tax (Rate) dated 30.07.2017 - Insofar as the period spanning between 21.09.2017 and 28.01.2018 is concerned, the petitioners appear to have paid the aforementioned taxes, i.e., CGST and DGST, at the rate of 6% in consonance with notification No. 24/2017-Central Tax (Rate) dated 21.09.2017 and the notification No. 24/2017-State Tax (Rate) dated 06.11.2017. It is also noted that the petitioners have relied upon the order of the Orrisa Appellate Authority for Advance Ruling for GST dated 05.03.2019, which takes the position that for maintenance of street lights, GST is payable. List the matter on 01.11.2023.

Summary

Issues involved:
The issue in consideration is whether the Municipal Corporation of Delhi (MCD) should reimburse the Goods and Services Tax (GST) paid by the petitioners under the Central Goods and Services Tax Act, 2017 and Delhi Goods and Services Tax Act, 2017. The petitioners argue that the services they render are composite in nature, involving both maintenance of street lights and provision of components like cables. They claim that the goods supplied for maintenance of street lights form more than 25% of the value of services rendered, making them eligible for GST reimbursement from the MCD.

Details of the Judgment:
The petitioners have been paying GST since July 1, 2017, and have sought reimbursement from MCD. The MCD's stance is that since the petitioners render purely services, they were not required to pay GST. The petitioners argue that the services they provide are composite in nature, involving both maintenance services and supply of goods. They rely on notifications issued by the Government of India to support their claim for GST reimbursement.

The petitioners have exchanged correspondence with the MCD since 2017 regarding the reimbursement of GST. The petitioners emphasize that their services are composite in nature, as per FAQ 25 released by the Central Board of Excise and Customs. They argue that the notification dated June 28, 2017, exempting purely services from GST does not apply to their case, as their services involve a combination of maintenance work and supply of goods.

The petitioners have paid CGST and DGST at various rates during different periods, as per the notifications issued. The prevailing rate at the time of the judgment is 6% for both CGST and DGST. The petitioners have consistently paid GST from April 1, 2017, onwards, but the tax authorities have not filed their counter-affidavits in the matter. The court directs the tax authorities to clarify whether GST was payable by the petitioners for maintenance of street lights and whether the MCD's stance on GST being payable at a nil rate is correct.

The petitioners have cited an order of the Orrisa Appellate Authority for Advance Ruling for GST, which supports the position that GST is payable for maintenance of street lights. The court instructs the tax authorities to consider this aspect and a previous judgment of a coordinate bench of the court while filing their affidavits. The matter is listed for further hearing on November 1, 2023, and the tax authorities are directed to provide a copy of their affidavit to the petitioners' counsel and the MCD's representative.