2024 (1) TMI 1342 - HC - GST

Non-payment of service tax - Challenge to assessment order - contract was awarded in Pre-GST regime but the work was executed in Post-GST regime which resulted in liability to Goods and Service Tax but the concerned Government department (Contractee) has not paid the GST - whether non-payment of tax by Government department (Contractee) absolve an assessee from his obligation and liability to pay tax? - HELD THAT - Event of taxation under the GST Act is the supply of goods or services. Undisputedly, the event of taxation has occurred resulting in liability to tax and accordingly assessing officer has assessed the liability to tax of the appellant. The appellant has stated that there is no illegality in the assessment order in so far as the determination of liability to the tax is concerned, but the grievance of the appellant is that since tax has not been paid by the contractee, therefore, the tax imposed to the extent of nonpayment by the contractee, be not recovered from the appellant - the submission of the appellant cannot be accepted in as much as the GST Act is a complete code in itself and payment of tax is not subject to realization of tax by an assessee. Under the circumstances, there are no manifest error of law in the impugned judgment and order passed by the learned Single Judge. There are no merit in this appeal - appeal dismissed.

Summary

Issues:
1. Appeal against assessment order under West Bengal Goods and Service Tax Act, 2017.
2. Dismissal of appeal by the first appellate authority.
3. Dismissal of writ petition by the learned Single Judge.
4. Appeal against the judgment of the learned Single Judge.
5. Liability of the appellant to pay tax due to non-payment by the contractee.
6. Interpretation of the GST Act regarding tax liability.

Analysis:
The appellant, a registered contractor under the CGST Act/WBGST Act, challenged the assessment order for the tax period 2018-2019, where tax was imposed. The first appellate authority dismissed the appellant's appeal, stating that non-payment of tax by the contractee does not absolve the appellant from tax liability. The appellant's writ petition against this decision was also dismissed by the learned Single Judge, leading to the current appeal.

The main argument raised by the appellant was that although the contract was awarded in the Pre-GST regime, the work was executed in the Post-GST regime, resulting in a GST liability. The appellant contended that since the contractee had not paid the GST, the appellant should not be liable to pay the assessed tax. The State advocate supported the lower court's decision.

The High Court analyzed the situation, emphasizing that under the GST Act, the event of taxation occurs upon the supply of goods or services, leading to a tax liability. The court noted that the appellant did not challenge the assessment of tax liability itself but rather the non-payment by the contractee. The court held that the GST Act is self-contained, and an assessee's tax payment is not contingent on the contractee's payment. Therefore, the court found no legal error in the Single Judge's decision.

Consequently, the High Court dismissed the appeal, stating that there was no merit in the appellant's arguments. However, the court allowed the appellant the liberty to pursue remedies against the contractee for the non-payment, leaving it open for the appellant to take appropriate legal action or submit a representation for redressal of the non-payment issue.

In conclusion, the High Court upheld the lower court's decision, emphasizing the self-contained nature of the GST Act and the independent tax liability of the appellant regardless of the contractee's payment status.