2021 (2) TMI 1042 - HC - GST

Works Contract - Manner of payment of relevant tax for the period for which the work is continued - AVAT Act, 2005 or AGST Act, 2017? - HELD THAT - Instead of issuing notice, public interest would be better served, if a direction is issued to the Commissioner of Tax, Assam to take a decision on the aspect as to for the work period after the advent of the GST regime, which of the tax regimes would be applicable i.e. whether the AVAT Act, 2005 or the AGST Act, 2017. As the matter involves public interest, it is directed that the Commissioner of Tax to take a final decision on the aforesaid aspect within a period of one month from today.

Summary

Issues involved:
1. Interpretation of tax regime transition from Assam Value Added Tax Act, 2005 to Assam Goods and Services Tax Act, 2017 during the continuation of a work contract.
2. Uncertainty regarding the applicable tax regime for the period post the introduction of GST.
3. Public interest concern due to ambiguity in tax payment obligations under different tax laws.

Analysis:
1. The petitioner participated in a tender process for a work contract which was allowed to continue beyond the stipulated period. The transition from the Assam Value Added Tax Act, 2005 to the Assam Goods and Services Tax Act, 2017 raised a question regarding the tax payment obligations for the extended work period. The Taxation Department is yet to decide under which tax regime the petitioner would be covered post the introduction of GST. This uncertainty led to a situation where the petitioner was unsure about the applicable tax laws, affecting their ability to fulfill tax obligations (para 2).

2. The Court acknowledged the potential adverse impact on public interest due to the petitioner's inability to determine the appropriate tax regime for the continued work period. To address this issue, the Court directed the Commissioner of Tax, Assam, to make a decision on whether the Assam Value Added Tax Act, 2005 or the Assam Goods and Services Tax Act, 2017 would be applicable for the period post the implementation of GST (para 3).

3. Emphasizing the importance of resolving the tax regime ambiguity promptly, the Court instructed the Commissioner of Tax to reach a final decision within one month. The petitioner would be bound by the decision unless they choose to challenge it through the legal process. Until a decision is made, the Court ordered that no coercive action be taken against the petitioner for non-payment of tax, ensuring protection for the petitioner during the decision-making process (para 4).

This judgment highlights the significance of clarity in tax obligations under different tax laws and demonstrates the Court's commitment to upholding public interest and ensuring a fair resolution to the uncertainty faced by the petitioner in fulfilling their tax payment obligations.