2023 (12) TMI 990 - HC - GST

Violation of principles of natural justice - manpower supplying service - whether proper tax along with applicable interest had been deposited by the petitioner on the Indian component for payment or not? - HELD THAT - Mr. Deepak Kakkar, Advocate accepts notice for Mr. Tejinder K. Joshi, Sr. Standing Cousnel, for respondents No. 1 to 3. To come up for service of respondent No. 4 on 13.02.2024.

Summary

Issues involved:
The issues involved in the judgment are related to Secondment & Cost Reimbursement Agreement, GST implications, tax liabilities, interest payments, show cause notices, and legal proceedings u/s Section 73 of the Central Goods Service Tax Act, 2017.

First Issue - Secondment & Cost Reimbursement Agreement:
The petitioner entered into a Secondment & Cost Reimbursement Agreement with a parent company, Mitsubishi Electric Corporation, Japan, for seconding employees to India. The agreement involved payment of certain amounts in Indian currency and Japanese Yen, leading to an investigation regarding GST implications and internal due diligence based on a judgment clarifying the taxable nature of manpower supplying services.

Second Issue - Tax Payments and Interest Element:
The petitioner paid a significant sum based on a decision by the Apex Court and an interest element, resulting in the authorities closing proceedings without a show cause notice under Section 73(6) of the Act. However, subsequent notices were issued regarding the proper tax deposition on the Indian component, leading to quantification of additional amounts and interest, with a deadline for payment to avoid penalties.

Third Issue - Legal Proceedings and Objections:
Despite objections raised by the petitioner regarding the coverage of the Indian currency component and the issuance of a closure letter, a notice was issued under Section 73(8) of the Act for payment within a specified timeframe. A similar issue was considered by the High Court of Karnataka in another case, emphasizing the need for interim protection to avoid rendering the writ petition infructuous.

Separate Judgement:
A notice of motion was accepted by Mr. Deepak Kakkar, Advocate for respondents, with further proceedings stayed in accordance with the show cause notice issued. The case is scheduled for service of respondent No. 4 on a specific date.

This summary highlights the key issues addressed in the judgment, including the contractual agreements, tax payments, interest elements, show cause notices, legal proceedings, and the relevance of a separate judgment by the High Court of Karnataka.