2022 (11) TMI 1067 - HC - GST

Seeking grant of GST components along with interest to be paid to the 5th Respondent - execution of works as main contractor and also executes work as sub-contractor to other main contractors - migration to GST regime - variation in the rate with the introduction of GST for the contractors - HELD THAT - The Petitioner has been issued with the Show Cause Notice No.60 of 2022 - GST dated 29.06.2022 by the Additional Director, Director General of GST Intelligence, Coimbatore, which has been adjudicated by the 5th Respondent and proposal was made demanding GST of Rs.5,11,38,438/- in terms of Section 74(1) of The Central Goods and Services Tax Act, 2017. As a matter of fact, the show cause notice also makes a reference to G.O(Ms)No.296, Finance (Salaries) Department, dated 09.10.2017, which has been issued by the Government of Tamil Nadu in support of the fact that GST ought to be paid by procuring entities while calling upon the Petitioner to discharge the applicable GST. In the meanwhile, the Petitioner was served with the notice by the 5th Respondent fixing dates for personal hearing, pursuant to the show cause notice. Two personal hearings have already been granted and the final hearing is fixed on 17.11.2022 by the 5th Respondent. This Court is of the view that the Respondents 1 to 4 shall consider the representation of the Petitioner dated 12.08.2022, on its own merits and pass appropriate orders in accordance with law, within a period of four weeks from today. It is also open to the Petitioner to submit before the GST authorities seeking further time in view of the pendency of the representation. Writ petition disposed off.

Summary

Issues:
1. Representation seeking grant of GST components and interest
2. VAT and Service Tax registration transition to GST
3. Change in tax rates under GST regime
4. Show Cause Notice for GST demand
5. Pending representation before State Government

Analysis:
1. The petitioner, a Partnership Firm involved in land development and road works, filed a Writ Petition to direct the Respondents to consider their representation dated 12.08.2022 for the grant of GST components and interest to be paid to the 5th Respondent. The petitioner had ongoing contracts pre and post-GST implementation, facing challenges due to tax rate variations.

2. The petitioner highlighted their VAT payment at 2% under the Tamil Nadu Value Added Tax Act, 2006, and exemption from service tax under specific notifications. With the transition to GST, the tax rate fluctuated from 18% to 12% and back to 18%, causing difficulties for contractors. The Government of Tamil Nadu issued notifications shifting the liability of GST under works contracts to procuring entities.

3. The petitioner received a Show Cause Notice demanding GST payment of Rs. 5,11,38,438 under Section 74(1) of The Central Goods and Services Tax Act, 2017. The notice referenced the Government notifications emphasizing the obligation of procuring entities to bear the GST liability. The petitioner sought time to calculate and release the applicable GST, pending the representation before the State Government.

4. The Court directed Respondents 1 to 4 to consider the petitioner's representation within four weeks and allowed the petitioner to request additional time due to the pending representation. The Court clarified that it had not expressed any view on the representation's merits, leaving it to the Respondents to evaluate independently. The Writ Petition was disposed of without costs, and the connected Miscellaneous Petition was closed.