2024 (8) TMI 1309 - HC - GST

Tax liability of the petitioner for the period 01.04.2021 to 01.01.2022 - Whether M/s. APIIC is a government entity? - whether any of the three conditions set out in the N/N. 24/2017 Central Tax (rate), dated 21.09.2017 (which provided for concessional rate of tax) are applicable to the works executed by the petitioner? - HELD THAT - The works undertaken by the petitioner, as described above, are works taken up to create infrastructure in the Electronic Manufacturing Cluster and the Mega Industrial Hub at the locations mentioned above. The purpose of these constructions is to create infrastructure for assisting the entrepreneurs and others who would set up their manufacturing units or service units in these places which are created for such purposes. Whether the 4th respondent would be using these works for commerce industry or any other business or profession? - HELD THAT - Though the 4th respondent is an entity of the Government and is involved in promotion of industry in the state, the fact remains that the 4th respondent is conducting the business of developing industrial parks and industrial areas and recovering the cost of development from the entrepreneurs who set up units in these areas by including the same in the price charged for selling the said developed lands to these entrepreneurs - it must be held that none of the three conditions would be applicable and the 1st respondent has not committed any error in assessing the tax payable by the petitioner @ 18% for the period 01.04.2021 to 01.01.2022. Though the petitioner is primarily liable to pay the aforesaid tax, the arrangement between the petitioner and the 4th respondent is that the 4th respondent would pay the tax due to the petitioner who would then pass it on to the GST Department. The letter dated 22.05.2023 reflects this arrangement. Further, there is no contention in the counter affidavit of the 4th respondent that it is not liable to pay such tax. In any event, the fact that the 4th respondent had paid 12% tax for the period 01.04.2021 to 01.01.2022, on account of the understanding of both the petitioner and the 4th respondent that the rate of tax is 12%, would also show that the arrangement between the two is that the 4th respondent would bear the burden of the payment of the GST through the petitioner. This Writ Petition is disposed of, affirming the impugned order passed by the 1st respondent for the tax period 01.04.2021 to 30.11.2022.

Summary

Issues:
1. Whether M/s. APIIC is a government entity.
2. Whether any of the three conditions set out in the notification are applicable to the works executed by the petitioner.

Analysis:
1. The petitioner undertook works for M/s. APIIC, contested the assessment of works conducted from 01.04.2021 to 31.11.2022, and disputed the tax liability. The petitioner claimed liability for CGST and SGST at different rates for distinct periods. The 4th respondent remitted 12% tax instead of 18%, leading to a dispute. A letter from the Zonal Manager of the 4th respondent acknowledged the liability for 18% GST post-01.01.2022.

2. The petitioner argued for a concessional rate of 6% CGST and SGST based on notification No.24/2017 for works done between 01.04.2021 to 01.01.2022. However, the 1st respondent assessed tax at 18% for this period, citing non-fulfillment of conditions for the concessional rate. The petitioner contended that condition-a of the notification applied to their works, disputing the 18% tax imposition.

3. The key issues revolved around M/s. APIIC's status as a government entity and the applicability of the notification conditions. The 4th respondent claimed to be a State entity as most shares were held by the State Government. The works in question aimed at developing infrastructure in industrial clusters and hubs, facilitating entrepreneurs. The notification's conditions were analyzed, with condition-a being the focus, determining eligibility for concessional tax rates.

4. The judgment concluded that M/s. APIIC qualified as a government entity, and none of the notification conditions applied to the petitioner's works. The 1st respondent's assessment of 18% tax for the period 01.04.2021 to 01.01.2022 was upheld. The arrangement between the petitioner and the 4th respondent regarding tax payment was recognized, with the 4th respondent directed to pay the differential tax amount to the petitioner within two months.

5. The court disposed of the Writ Petition, affirming the 1st respondent's order for the tax period in question. The 4th respondent was instructed to clear the differential tax payment to the petitioner promptly. Any interest for late payment would be borne by the 4th respondent. No costs were awarded, and pending interlocutory applications were closed as a result of the judgment.