2024 (4) TMI 853 - HC - GST

Violation of principles of natural justice - the issues in the impugned order not duly considered - Short payment of GST on import of services from a subsidiary company - second proviso to Rule 28 of the Central Goods and Services Tax Rules, 2017 - non payment of GST on turnover from export of services - export invoice of the petitioner was raised in US dollars - mismatch between the GSTR 1 and 3B - mismatch occurred on account of invoices which were cancelled because services were not provided. Short payment of GST on import of services from a subsidiary company - reliance placed on second proviso to Rule 28 of the Central Goods and Services Tax Rules, 2017 - HELD THAT - The respondents failed to record any reasons for rejecting the contention. Indeed, it appears that the order is incomplete on this issue. Non payment of GST on turnover from export of services - export invoice of the petitioner was raised in US dollars - HELD THAT - The documents placed on record by the petitioner, such as the export invoices and the credit advice appear to indicate prima facie that the invoice was raised in US dollars; payment was also remitted into India in foreign currency; and thereafter converted into INR. This observation is, however, tentative and not intended to be binding on the respondents. Mismatch between the GSTR 1 and 3B - mismatch occurred on account of invoices which were cancelled because services were not provided - HELD THAT - The petitioner has pointed out that no revenue loss was caused by adopting the procedure of cancelling the invoice instead of raising the credit note in respect of services not provided. Since all these issues have not been duly considered in the order impugned herein, it is just and necessary that the 1st respondent reconsiders the matter after providing a reasonable opportunity to the petitioner. At the same time, it should be recognised that the petitioner has approached this Court instead of approaching the appellate authority by remitting 10% of the disputed tax demand. In the over all facts and circumstances, it is also necessary to safeguard revenue interest to an extent - the petitioner agrees to remit a sum of Rs. 20,00,000/- as a condition for remand. The impugned order is set aside and the matter is remanded for reconsideration subject to the condition that the petitioner remits a sum of Rs. 20,00,000/- as agreed to within a maximum period of four weeks from the date of receipt of a copy of this order - petition disposed off by way of remand

Summary

Issues involved:
The judgment deals with challenges to an order dated 15.12.2023, which addressed three main issues: 1) short payment of GST on import of services from a subsidiary company, 2) non-payment of GST on turnover from export of services, and 3) an alleged mismatch between GSTR 1 and 3B.

Short payment of GST on import of services from a subsidiary company:
The petitioner contended that under Rule 28 of the CGST Rules, the recipient of service can issue an invoice for full Input Tax Credit (ITC), which should be deemed as the open market value. However, the impugned order did not provide reasons for rejecting this contention, rendering it incomplete.

Non-payment of GST on turnover from export of services:
The petitioner raised export invoices in US dollars, with evidence showing remittance in foreign currency into India. Despite this evidence, it was concluded that the amount was not remitted in foreign currency, leading to a dispute.

Alleged mismatch between GSTR 1 and 3B:
The mismatch between GSTR 1 and 3B was attributed to canceled invoices due to services not being provided. The petitioner argued that no revenue loss occurred due to this procedure.

Court's Decision:
The court observed that the issues were not adequately considered in the impugned order and directed the 1st respondent to reconsider the matter, providing a reasonable opportunity to the petitioner. The petitioner agreed to remit Rs. 20,00,000 as a condition for remand. The court set aside the impugned order and remanded the matter for reconsideration, with specific directives on the process and timeline for the fresh order.

Conclusion:
The writ petition was disposed of with no costs, emphasizing the need for a thorough review of the issues raised and the importance of safeguarding revenue interests.