2023 (11) TMI 1372 - HC - GST

Demand of differential amount of tax arising from reduction in the rate of tax - recovery notices issued by the respondents complied with the principles of natural justice or not - HELD THAT - The issue decided in M/S PARDEEP ELECTRICALS AND BUILDERS PVT. LTD. VERSUS UOI TH. SECRETARY DEFENCE AND OTHERS. 2023 (11) TMI 1369 - JAMMU AND KASHMIR HIGH COURT where it was held that the petitioner is liable to refund the differential amount of service tax arising from the reduction of the rate from 18% to 12% effective after the last date for receipt of tenders. The recovery notices must comply with principles of natural justice. The cases of the petitioners in these petitions are squarely covered by the above judgment and therefore what is said in the said judgment shall apply on all fours to these cases as well. Petition dismissed.

Summary

The Jammu and Kashmir High Court, through Hon'ble Justices Sanjeev Kumar and Mohan Lal, dismissed the writ petitions, relying on their contemporaneous judgment in WP(C) No. 170/2021. The Court reaffirmed the settled legal principle under Article 265 of the Constitution of India that "no tax can be levied or collected except by the authority of law," meaning only statutory law or subordinate legislation can impose tax; executive or non-statutory authorities like the GST Council lack such authority.The Court emphasized that the parties' contractual obligations govern their conduct, specifically referencing the contract's special condition No. 49, which mandates adjustment of service tax rates based on the prevailing rate on the last date for receipt of tenders. The petitioner's claim that the service tax rate was 12% at bid submission was irrelevant, as the contract required rates to reflect the tax prevailing on the tender deadline, with corresponding obligations for refund or reimbursement upon rate changes.Finding no merit in the petitioner's arguments, the Court dismissed the petitions and vacated any interim directions, applying the reasoning of the earlier judgment "on all fours" to these cases.