9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (4) TMI 339 - HC - GSTDismissal of petition on the grounds of an available statutory appellate remedy under Section 85 of the Finance Act 1994 - Effect of the post-facto approval which was granted on 6th June 2017 - Challenge to adjudication order passed by the Service Tax Authority pertaining to certain transactions done during the period 2016-17 upto June 2017 - Penalty imposed on the appellant in the adjudication order dated 29.9.2022. HELD THAT - This court had an occasion to consider an identical issue in M/S. RAJLAXMI CONSTRUCTION M/S. BISWAS ENTERPRISE VERSUS EXECUTIVE ENGINEER HOOGHLY HIGHWAY DIVISION NO. 1 ORS. 2025 (4) TMI 233 - CALCUTTA HIGH COURT . In the said case also the argument was based upon the post-facto approval dated 6th June 2017. Apart from considering the said approval the other internal correspondence between the various authorities of the department were also taken note of by the court and it was held that it will be too late for the respondents to now contend that the sanction was a post-facto sanction for the project and the question of payment of any amount of the contractor would not arise. The only difference in the instant case is that since the consideration was received by the appellant during the GST regime the GST authorities have demanded GST on that and recovered Rs.65.28 lakhs. This amount has to be necessarily refunded to the appellant by re-credited to the cash/credit ledger of the appellant. After doing so the PWD Authorities have to pay the appellant a sum of Rs.84, 84.035/- which being the service tax demanded by the Service Tax Department and such payment should be made to the appellant within a stipulated time and on receiving the said payment the appellant should remit the said amount to the service tax authorities within three days from the date of the receipt of the money. Penalty imposed on the appellant in the adjudication order dated 29.9.2022 - HELD THAT - It is deemed appropriate to hold that this is not a fit case where penalty should be imposed on the assessee either under Section 78 of the Finance Act read with Section 174 of the CGST Act 2017 and Section 77(1)(a) of the Finance Act 1994 and Section 77(2) of the Finance Act 1994 - penalty set aside. Conclusion - i) The dismissal of the writ petition upheld due to the availability of a statutory appellate remedy reinforcing the principle of exhausting statutory remedies before seeking judicial intervention. ii) The post-facto approval is found to be binding requiring the State authorities to refund the GST amount and pay the service tax amount to the appellant. iii) The penalties and interest imposed on the appellant are set aside with the court recognizing the administrative confusion and delays as mitigating factors. The order passed by the State authorities are set aside - appeal allowed.
ISSUES PRESENTED and CONSIDERED
The primary issues considered in this case were:
ISSUE-WISE DETAILED ANALYSIS 1. Dismissal of the Writ Petition The writ petition was initially dismissed by the learned writ court on the grounds that there was an available statutory appellate remedy under Section 85 of the Finance Act, 1994. The court did not delve into the merits of the case, as the statutory framework provided an alternative route for the appellant to challenge the adjudication order. The court's interpretation was based on the principle that judicial intervention via writ petitions is generally discouraged when statutory remedies are available, unless exceptional circumstances justify such intervention. 2. Post-Facto Approval and Payment Obligations The post-facto approval dated June 6, 2017, was a central issue, as it granted administrative approval for certain projects, including service tax components. The appellant argued that this approval should influence the payment obligations under both the service tax and GST regimes. The court considered previous judgments, particularly those in FMA 340 of 2023 and FMA 342 of 2023, which addressed similar issues. It was noted that the post-facto approval included service tax considerations, and the court had previously determined that the respondents could not deny the payment obligations arising from such approvals. In this case, the appellant's name was included in the annexure to the post-facto approval, which supported their claim for reimbursement of service tax and GST payments. The court held that the State authorities were obligated to refund the GST amount already recovered and to pay the service tax amount to the appellant. 3. Penalty and Interest Imposed on the Appellant The adjudication order dated September 29, 2022, imposed penalties and interest on the appellant. The court found that due to the inter-departmental confusion and the prolonged nature of the case, imposing penalties was inappropriate. The court referenced the confusion arising from the transition between the service tax and GST regimes and the subsequent administrative challenges. It concluded that the penalties under Section 78 of the Finance Act, read with Section 174 of the CGST Act, 2017, and Section 77 of the Finance Act, 1994, were unjustified. Similarly, the interest imposed was also deemed inappropriate and was subsequently deleted. SIGNIFICANT HOLDINGS The court made several significant holdings:
In conclusion, the appeal was allowed, and the State authorities were directed to recredit the appellant's credit/cash ledger with Rs.65.28 lakhs and to pay the service tax demanded, amounting to Rs.84,84,035/-. Upon receipt, the appellant was instructed to remit the amount to the Service Tax Department under the CGST Head. This decision underscores the importance of administrative clarity and the necessity for authorities to adhere to approvals and legal obligations.
|
