2023 (11) TMI 1333 - HC - GST

Irregular levy of GST - violation of the Principles of Natural Justice - opportunity of hearing not provided to the Petitioner - HELD THAT - In view of the categorical statement made by the 4th Respondent in the counter affidavit the payment of the GST by the petitioner has to be termed as valid and legal. Therefore the contention of the respondents that the GST amount paid by the petitioner was not mandated under the law and it was wrongly paid is without any substance and the same has to be rejected consequently the impugned order passed by the Respondent no. 3 is quashed. The Respondent No. 2 is directed to process the pending bills if any of the petitioner and make the payments as expeditiously as possible preferable within a period of six weeks from the date of receipt of a copy of this order. Petition allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions addressed in this judgment are as follows:

Whether the order directing the petitioner to refund the GST amount of 18% paid to the GST authorities was valid under the law.
Whether the petitioner was liable to pay GST on the services rendered under the agreement with the Patna Medical College and Hospital (PMCH).
Whether the impugned orders were issued in violation of the principles of natural justice.
Whether the petitioner is entitled to the release of the withheld payments for services rendered to PMCH.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of the Order Directing Refund of GST

Relevant Legal Framework and Precedents: The case revolves around the interpretation of the GST Act and associated notifications, particularly Notification No. 11/2017-State Tax (Rate) and Notification No. 12/2017-State Tax (Rate).
Court's Interpretation and Reasoning: The court examined the notifications and the agreement between the petitioner and PMCH, concluding that the services provided by the petitioner were indeed subject to GST at the rate of 18%.
Key Evidence and Findings: The court relied on the affidavit filed by the Principal Secretary-cum-Commissioner, State Tax, which clarified the applicability of GST to the services rendered by the petitioner.
Application of Law to Facts: The court found that the petitioner had correctly paid GST as per the applicable legal provisions, and the order for refund was unjustified.
Treatment of Competing Arguments: The respondent's argument that the GST was paid without demand was rejected based on the legal clarification provided by the state tax authority.
Conclusions: The court quashed the impugned order, affirming the legality of the GST payment made by the petitioner.

Issue 2: Liability to Pay GST on Services Rendered

Relevant Legal Framework and Precedents: The court referred to the GST Act and relevant notifications to determine the taxability of the services.
Court's Interpretation and Reasoning: It was determined that the services fell under taxable categories as per the GST notifications cited.
Key Evidence and Findings: The affidavit from the state tax authority confirmed the taxability of the services provided by the petitioner.
Application of Law to Facts: The court applied the legal provisions to the facts and concluded that the services were indeed taxable.
Treatment of Competing Arguments: The court dismissed the respondent's claim of exemption based on the clarification from the tax authority.
Conclusions: The court held that the petitioner was liable to pay GST, and the payment was valid under the law.

Issue 3: Violation of Principles of Natural Justice

Relevant Legal Framework and Precedents: The principles of natural justice require that parties be given a fair hearing before any adverse orders are passed.
Court's Interpretation and Reasoning: The court noted that the impugned orders were passed without affording the petitioner an opportunity to be heard.
Key Evidence and Findings: The lack of a hearing was evident from the sequence of events leading to the issuance of the orders.
Application of Law to Facts: The court found that the orders were issued in violation of natural justice principles.
Treatment of Competing Arguments: The court did not find any justification for the lack of a hearing from the respondents.
Conclusions: The orders were quashed on the grounds of being issued in violation of natural justice.

Issue 4: Entitlement to Withheld Payments

Relevant Legal Framework and Precedents: The court considered the contractual obligations and the legality of the GST payments.
Court's Interpretation and Reasoning: Since the GST payment was found to be valid, the withholding of payments by PMCH was unjustified.
Key Evidence and Findings: The court relied on the contractual terms and the clarification from the tax authority.
Application of Law to Facts: The court applied the legal findings to direct the release of withheld payments.
Treatment of Competing Arguments: The respondent's reasons for withholding payments were rejected based on the legality of the GST payment.
Conclusions: The court directed the release of the withheld payments to the petitioner.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: The court stated, "In view of the categorical statement made by the 4th Respondent in the counter affidavit, the payment of the GST by the petitioner has to be termed as valid and legal."
Core Principles Established: The judgment reaffirms the importance of adhering to the principles of natural justice and the necessity of following the legal framework for GST applicability.
Final Determinations on Each Issue: The court quashed the impugned orders, affirmed the legality of the GST payment, and directed the release of withheld payments to the petitioner.

← Previous Next →