2021 (2) TMI 694 - HC - GST

Levy of GST - Time of supply of services - submission of the learned senior counsel for the petitioner is that the charging section under the Central Goods and Services Taxes Act is Section 13 and that liability to pay taxes on the above work contract arises either at the time of supply of services or on the date of the receipt of the payment, whichever is earlier - HELD THAT - This is a disputed factual aspect which can only be resolved after a counter affidavit is filed on behalf of the respondents clearly stating the rate on which the tax was included while submitting the tender by the petitioner. The petitioner may also clarify its stand in this regard by filing an affidavit. List this petition for admission/final disposal on the exchange of affidavits on 9th March 2021.

Summary

Issues:
1. Discrepancy in GST rate charged on a work contract.
2. Interpretation of liability to pay taxes under the Central Goods and Services Taxes Act.
3. Disputed factual aspect regarding the inclusion of GST rate in the tender.

Analysis:
The judgment by the High Court of Jammu & Kashmir delves into the dispute arising from a discrepancy in the GST rate charged on a work contract awarded to the petitioner. The petitioner, a contractor, had paid GST at 12% as per a specific notification, while the respondents demanded GST at 18%, resulting in a substantial additional tax liability. The crux of the issue lies in the interpretation of the liability to pay taxes under the Central Goods and Services Taxes Act, particularly focusing on the timing of tax liability concerning the supply of services or receipt of payment. The petitioner contends that the liability arises at a date subsequent to a notification reducing GST from 18% to 12%, making them liable for payment at the reduced rate of 12%.

The legal arguments presented by both parties highlight the conflicting views on the inclusion of the GST rate in the tender submitted by the petitioner. While the petitioner asserts that they included GST at 12% in the tender, the respondents argue that the prevailing tax rate at the time was 18%, thus implying a potential discrepancy in the tender documents. This disputed factual aspect necessitates a resolution through the submission of counter affidavits by both parties to clarify the exact tax rate included in the tender. The court has directed the petitioner to file an affidavit clarifying their stance on the GST rate, and the respondents are required to file a reply within a specified timeline.

In light of the unresolved factual aspect and the legal complexities surrounding the interpretation of tax liability, the court has refrained from allowing any coercive measures to be taken against the petitioner for realizing the additional tax amount until further orders. The case is scheduled for admission or final disposal upon the exchange of affidavits, indicating a need for a comprehensive examination of the factual and legal arguments presented by both parties before reaching a conclusive decision on the disputed tax liability in connection with the work contract.