2023 (6) TMI 1443 - HC - GST

Challenge to assessment order - respondent has passed the Assessment Orders by total non application of mind - violation of principles of natural justice - HELD THAT - The court extended the benefit of interim protection granted in a previous order to the present matters. The court listed the case for the next hearing and instructed the respondent to file counters by the specified date. List on 20.06.2023 as an item successive to W.P.No.5248 of 2023.

Summary

Issues:
Challenge to assessment order under Tamil Nadu Goods and Services Tax Act, 2017 for various financial years. Interpretation of Notification No. 11/2017 dated 28.06.2017 regarding GST rates for works contract services provided to railways. Non-application of mind by tax authorities in passing assessment orders.

Analysis:

The judgment involves a challenge to an assessment order dated 06.12.2022 under the Tamil Nadu Goods and Services Tax Act, 2017 for the periods spanning financial years 2018-19, 2019-20, 2020-21, and part of 2021-22. The petitioner, a Railway Contractor, contested the assessment on the grounds of incorrect application of GST rates. The petitioner argued that they fall under Sl. No.v of Notification No. 11/2017, which pertains to composite supply of works contract services exclusively to railways, and not under Sl.No.iii, which applies to supplies to Government entities. The petitioner claimed that they correctly reported and paid GST at 12% for their services. The court noted the petitioner's contention that the tax authorities did not consider their reply to the Show Cause Notice, which clearly stated their position as a Works Contractor for Railways. The court observed that the tax authorities summarily rejected the petitioner's reply without proper consideration.

The court analyzed the provisions of Notification No. 11/2017 dated 28.06.2017, highlighting the distinction between Sl.No.iii and Sl.No.v. Sl.No.iii applies to works contracts supplied to Government entities, while Sl.No.v pertains to works contracts exclusively for railways. The court agreed with the petitioner's interpretation that as a Works Contractor solely serving railways, Sl.No.v should apply to determine the GST rate applicable to their services. The court acknowledged the petitioner's argument that the tax authorities failed to apply their mind to the petitioner's reply, leading to an erroneous assessment order.

The respondent, represented by the Additional Advocate General, assured the court that no coercive steps would be taken for recovery until a final decision is reached. The court directed the respondent not to take any coercive measures against the petitioner pending final orders. Additionally, the court suo moto impleaded the Ministry of Finance, Union of India as the second respondent in the writ petition to ensure effective adjudication. The court scheduled the next hearing for further proceedings and directed the registry to make necessary amendments for the same.

In conclusion, the court extended the benefit of interim protection granted in a previous order to the present matters. The court listed the case for the next hearing and instructed the respondent to file counters by the specified date. The judgment focused on the correct interpretation of GST rates for works contract services provided to railways under Notification No. 11/2017 and highlighted the importance of tax authorities considering submissions made by taxpayers before passing assessment orders.