2022 (11) TMI 1216 - HC - GST

Seeking reimbursement of GST from the service recipient - GTA service or Support Services relating to mining - taxable @12% or 18% - BPCL have been made for reimbursement of amount of GST in the said work order only to the extent of 12% - to be classified under Chapter Heading No. 9965 of Tariff Rules or under Chapter Heading No. 9986 of Tariff Rules? - HELD THAT - After going through the documents annexed with the respective affidavits and the averments made therein and also the alternative argument of learned counsel for the respective petitioners, at this stage any determination on the issue of leviablity of tax; whether @ of 12% or whether @ 18 % will certainly hamper the entire investigation as well as the same is not warranted also, inasmuch as, one service which is leviable to 12% comes under Chapter Heading No. 9965 of the Tariff Rules and one service which is leviable @ 18% comes under Chapter Heading No. 9986 of the Tariff Rules. Thus, we are not inclined to interfere in declaring the services of the petitioners in either of the heading at this stage. However from record, it appears that as per the work orders issued to the respective petitioners the tax which are given by the petitioners are to be reimbursed by the Coal-Company; as such, if in future the revenue holds that the tax for the work done by the respective petitioners comes under Chapter Heading No. 9986 of Tariff Rule being Support Services to Mining which is leviable to tax @ 18%, then the petitioners would be entitled to raise their claim for the differential tax from the Respondent-Coal Companies. Application disposed off.

Issues involved:
1. Classification of services under GST regime
2. Refund of involuntarily deposited amount
3. Reimbursement of tax differential
4. Validity of search and coercion during deposit
5. Cooperation in investigation and liability determination

Classification of services under GST regime:
The petitioners sought a direction for the refund of involuntarily deposited amounts without any demand or adjudication proceeding. They also requested the classification of works executed under specific work orders as 'Goods Transport Agency Services' leviable at 12%, instead of 'Support Services to Mining' at 18%. The court noted the commonality in issues and decided to hear and dispose of both cases together. The petitioners argued that the services provided should be classified as per Chapter Heading No. 9965 for GST purposes, while the revenue authorities opposed premature intervention, stating that investigations were ongoing without any show cause notices issued.

Refund of involuntarily deposited amount:
The petitioners, engaged in transport and material management businesses, were allegedly coerced to deposit significant amounts under protest during search operations at their premises. They contended that the coal companies had classified the works as 'GTA Services' with a 12% tax rate, leading to the involuntary deposits. The court acknowledged the grievances regarding the search, coercion, and lack of adjudicating orders, emphasizing the need for proper investigation before determining tax liabilities.

Reimbursement of tax differential:
In addition to seeking refunds, the petitioners requested reimbursement of any tax differentials if their services were reclassified under 'Support Services to Mining' at 18%. They argued that any additional tax liabilities arising from future adjudication orders should be borne by the coal companies based on their agreements. The court recognized the potential for differential tax claims in the future, allowing the petitioners to seek redress from the coal companies if subjected to higher tax rates post-adjudication.

Validity of search and coercion during deposit:
The petitioners raised concerns about the validity of the search operations that led to the involuntary deposits, alleging coercion by the tax authorities. They highlighted the lack of formal adjudication procedures and the imposition of taxes based on agreements with the coal companies rather than legal orders. The court considered these issues but refrained from making determinations on tax classifications, emphasizing the importance of completing investigations before addressing liability concerns.

Cooperation in investigation and liability determination:
The revenue authorities contended that premature intervention could hinder ongoing investigations and liability assessments. They assured that show cause notices would be issued once investigations were complete, allowing for a proper determination of tax liabilities. The court acknowledged the cooperation of the petitioners in the investigations and advised against premature declarations on tax classifications, emphasizing the need for a thorough assessment before making any decisions.

In conclusion, the court declined to interfere with the current tax classifications of the petitioners' services but acknowledged the potential for future tax liabilities based on investigation outcomes. The judgment allowed the petitioners to seek reimbursement from the coal companies for any tax differentials arising from future adjudication orders, ensuring a fair resolution of tax disputes in accordance with the law and contractual agreements.

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