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2025 (2) TMI 889 - HC - GSTRefund of the GST paid on a Reverse Charge Mechanism (RCM) basis for the procurement of holographic stickers from the Prohibition and Excise Department of the Government of Tamil Nadu - case of the petitioner is that the petitioner was under a bona fide belief that the petitioner was liable to pay tax on the holographic stickers purchased from the Prohibition and Excise Department of the State on Reverse Charge Basis (RCB) in terms of Section 9 (3) of the respective GST enactments of 2017 read with Notification No. 13/2017-Central Tax (Rate) dated 28.06.2017. HELD THAT - As far as the sale and purchase of holographic stickers (excise labels) are concerned they are supplied by the Prohibition and Excise Department of the Government of Tamil Nadu. The holographic stickers are to be affixed on the manufactured and bottled alcoholic liquor - If the sale of holographic sticker is to be treated as a supply of service the petitioner would be liable to pay tax on Reverse Charge Basis (RCB) in terms of Sl.No.5 to Notification No. 13/2017-Central Tax (Rate) dated 28.06.2017. Holographic Sticker (Excise Label) is a label . Holographic Sticker (Excise Label) is therefore goods within the meaning of Section 2 (52) of the respective GST enactments. In paragraph 4.3 of Order in RFD-06 in C.No. IV/09/51/2020-GST (R) dated 20.08.2020 itself it has been clarified by the 2nd respondent that excise labels i.e. holographic stickers were supplied by the Prohibition and Excise Department - there is no dispute that label is thing viz. noun. It is a thing and therefore goods within the meaning of Section 2 (52) of the respective GST enactments as goods means every kind of movable property. The only contention of the respondents is that there was a composite supply as the label was supplied by the Prohibition and Excise Department is for affixing on the liquor bottles manufactured by the petitioner as per the relevant instructions / procedures together with grant of excise license - The question of treating the activity of the Prohibition and Excise Department of the Government of Tamil Nadu in granting excise license to manufacturers for manufacturing of alcoholic products and supply of holographic stickers (excise labels) is not a composite supply within the meaning of Section 2 (30) of CGST Act 2017. Supply of holographic sticker is not a taxable supply within the meaning of the definition in Section 2 (108) of the respective GST enactments as grant of excise license is exempted under Notification No. 25/2019-Central Tax (Rate) dated 30.09.2019. The activity of grant of excise license for consideration in the form of license fee / application fee is neither a supply of goods nor the supply of services within the meaning of Section 7 (2) of the respective GST enactments in view of Notification No. 25/2019-Central Tax (Rate) dated 30.09.2019 there is no merits in the Impugned Orders - The supply of holographic stickers (excise labels) cannot be construed as supply of service under Section 2 (52) of the respective GST enactments. The holographic stickers (excise labels) are not services within the meaning of Section 2(102) of the respective GST enactments. The principles of estoppel equity are alien to tax jurisprudence. Merely because the petitioner had unwittingly paid tax on Reverse Charge Basis (RCB) in terms of Notification No. 13/2017-Central Tax (Rate) dated 28.06.2017 in the past ipso facto would not mean that the petitioner was bound by its past practices. There is no contract with the respondents for invoking promissory estoppel against the petitioner - If the petitioner has paid tax on Reverse Charge Basis (RCB) by mistake it is entitled to claim refund under Section 54 of the respective GST enactments. The 2nd respondent is therefore directed to process the refund claims of the petitioner and refund the amounts paid by the petitioner strictly in accordance with Section 54 of the respective GST Acts read with Rule 89 of the respective GST rules in the light of the above observations within a period of 3 months from the date of receipt of a copy of this order. Conclusion - The petitioner is entitled to a refund of the GST paid on a reverse charge basis for the supply of holographic stickers as the supply is classified as goods and not services. Petition allowed.
ISSUES PRESENTED and CONSIDERED
The core legal question considered in this judgment is whether the petitioner is entitled to a refund of the GST paid on a Reverse Charge Mechanism (RCM) basis for the procurement of holographic stickers from the Prohibition and Excise Department of the Government of Tamil Nadu. The key issue revolves around the classification of the supply of these holographic stickers as either a supply of goods or a supply of services, and whether it constitutes a composite supply under the GST framework. ISSUE-WISE DETAILED ANALYSIS Relevant Legal Framework and Precedents The legal framework involves the interpretation of the Central Goods and Services Tax (CGST) Act, 2017, particularly the definitions of "goods," "services," and "composite supply" as per Sections 2(52), 2(102), and 2(30) respectively. The case also involves the application of Notification No. 13/2017-Central Tax (Rate) dated 28.06.2017, which specifies categories of services subject to tax on a reverse charge basis, and Notification No. 25/2019-Central Tax (Rate) dated 30.09.2019, which exempts the grant of alcoholic liquor licenses from being considered as supply of goods or services. Court's Interpretation and Reasoning The Court interpreted that the supply of holographic stickers is a supply of goods and not services. It was determined that these stickers, being tangible items, fall under the definition of "goods" as per Section 2(52) of the CGST Act. The Court also concluded that the supply of holographic stickers does not constitute a composite supply with the grant of an excise license, as the two activities are distinct and not naturally bundled. Key Evidence and Findings The Court relied on the definitions provided in the CGST Act and other legal texts to establish that holographic stickers are "goods." It was noted that the stickers are supplied by the Prohibition and Excise Department for affixing on liquor bottles, and their procurement is an independent activity from the grant of licenses. The Court found that the supply of stickers is not a service and does not fall under the reverse charge mechanism as outlined in Notification No. 13/2017. Application of Law to Facts The Court applied the definitions of "goods" and "services" to determine the nature of the supply of holographic stickers. It concluded that since the stickers are goods, the petitioner was not liable to pay GST on a reverse charge basis. The Court also examined the concept of composite supply and found that the supply of stickers and the grant of licenses are not naturally bundled activities. Treatment of Competing Arguments The petitioner argued that the supply of holographic stickers should be treated as a sale of goods and not services, thus not subject to GST on a reverse charge basis. The respondents contended that the supply was part of a composite service. The Court rejected the respondents' argument, emphasizing that the supply of stickers is an independent activity and not a composite supply. Conclusions The Court concluded that the supply of holographic stickers is a supply of goods, not services, and does not attract GST on a reverse charge basis. The petitioner is entitled to a refund of the GST paid under the mistaken belief that the supply was a service subject to RCM. SIGNIFICANT HOLDINGS The Court held that the supply of holographic stickers is a supply of goods and not services, thus exempting the petitioner from GST liability on a reverse charge basis. The Court emphasized that the principles of estoppel and equity do not apply in tax jurisprudence, allowing the petitioner to claim a refund for taxes paid by mistake. Core Principles Established The judgment establishes that the classification of supplies under GST must be based on the nature of the items supplied. It reinforces that goods and services are distinct categories under GST law, and the supply of tangible items like holographic stickers is classified as goods. Final Determinations on Each Issue The Court determined that the petitioner is entitled to a refund of the GST paid on a reverse charge basis for the supply of holographic stickers, as the supply is classified as goods and not services. The Court quashed the impugned orders and directed the refund to be processed within three months.
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