2024 (2) TMI 180 - HC - GST

Exemption from payment of GST - centage charges towards the expenditure borne by the petitioner for project implementation - whether the supply of goods and services received by the petitioner or supply made by them are exempted from payment of GST? - HELD THAT - It is not in doubt that the petitioner is a Government Company registered under Section 8 of the Companies Act, 2013. Almost all the shares of the petitioner are held by the State Government. The question whether the supply of goods and services received by the petitioner or supply made by them are exempted from payment of GST is the question which needs to be decided by the assessing authority itself. The petitioner has been issued with show cause notice to which they have filed their reply and the petitioner had also availed one opportunity of hearing before the assessing authority. It is not deemed proper to interrupt the ongoing proceedings before the assessing authority. However, it is made clear that the assessing authority will examine each and every argument of the petitioner against the show cause notice and also examine the evidences/documents submitted by them, including the notifications, to come to a conclusion whether the petitioner is entitled for exemption from payment of GST or not. Once the assessing authority comes to its conclusion that the petitioner is exempted from payment of GST, the show cause notice should be dropped. The present writ petition stands finally disposed of.

Summary

Issues involved:
The judgment deals with the issue of exemption from payment of Goods and Services Tax (GST) for a State Government entity registered under Section 8 of the Companies Act, 2013. The key question is whether the supply of goods and services received by the petitioner or supply made by them are exempted from payment of GST.

Details of the judgment:

Issue 1: Exemption from GST
The petitioner, a State Government entity, is exempted from payment of GST as per notification No.12/2017 - Central Tax (Rates) dated 28.6.2017. The petitioner received funds from Kerala Infrastructure Investment Fund Board (KIIFB) for purchasing goods to upgrade infrastructure in Government schools. The petitioner contends that the supplies made are exempted from GST under relevant notifications. However, a show cause notice was issued by the Anti-Evasion Wing of the Central Goods and Services Department alleging non-payment of applicable GST on supplies. The petitioner challenged the show cause notice on the grounds of exemption under GST notifications.

Issue 2: Proceedings before the assessing authority
The assessing authority issued a show cause notice to the petitioner based on investigations conducted by the Anti-Evasion Wing. The petitioner submitted a detailed reply to the notice and appeared for a personal hearing. The assessing authority was to consider the reply and evidence submitted by the petitioner to determine if the supplies were exempted from GST. The petitioner, however, approached the High Court seeking intervention, claiming that the authority had a pre-determined stance and adjudication would be futile.

Judgment
The High Court held that the ongoing proceedings before the assessing authority should not be interrupted at that stage. The assessing authority was directed to consider all arguments and evidence presented by the petitioner to decide on the exemption from GST. Once the authority concludes that the petitioner is exempted from GST, the show cause notice should be dropped. The petitioner was directed to appear before the assessing authority with all relevant documents to support their claim of exemption from GST. The writ petition was disposed of with these directions.

Significant Phrases:
- State Government entity registered under Section 8 of the Companies Act, 2013
- Exemption from payment of Goods and Services Tax (GST)
- Show cause notice issued by the Anti-Evasion Wing
- Challenge based on exemption under GST notifications
- Detailed reply submitted by the petitioner
- Assessing authority to consider all arguments and evidence
- Direction to appear before the assessing authority with relevant documents
- Disposal of the writ petition with specific directions