Tax dispute over flour mill's rate: court directs cooperation amid pandemic

The court addressed a writ petition challenging actions by the Central Goods and Services Tax Authorities under section 70 of the CGST Act. The dispute centered on the tax rate applicable to a flour mill engaged in PDS supply in West Bengal, with the petitioners claiming 5% liability and authorities asserting 18%. Allegations of harassment during inquiry were raised, emphasizing the need for cooperation. The court directed the respondents' advocate to specify essential documents required for the inquiry, aiming to minimize personal appearances due to the pandemic. Further proceedings were scheduled for clarification on document submission.

---

---

Issues:
Challenge of action under section 70 of CGST Act by petitioners, dispute over tax rate (5% vs. 18%), allegations of harassment during inquiry, cooperation of petitioners, issuance of summonses, production of documents, need to minimize personal appearance during pandemic.

Analysis:
The judgment concerns a writ petition where the petitioners contested the actions taken by the Central Goods and Services Tax Authorities (CGST Authorities) under section 70 of the Central Goods and Services Tax Act, 2017. The petitioners, a flour mill engaged in composite supply for the Public Distribution System (PDS) in West Bengal, claimed a tax liability of 5%, while the CGST Authorities asserted it to be 18%. The CGST Authorities initiated an inquiry under section 70, alleging non-cooperation by the petitioners, who refuted the claim, stating they were being harassed during the process, especially in light of the ongoing pandemic.

The State argued that regardless of the perspective adopted for scrutinizing the transaction, the maximum tax rate applicable should be 5% as per the State GST levied. They emphasized the necessity for the petitioners to cooperate in the inquiry process. The court noted the issuance of summonses on two occasions, with different sets of documents to be produced by the petitioners. However, it observed that the documents requested were not entirely overlapping, indicating that the petitioners had complied with the first set of requirements and were now directed to produce additional documents.

Given the current circumstances of the pandemic, the court deliberated on the possibility of minimizing the personal appearance of one of the petitioners by initially focusing on document production. It directed the advocate for the respondents to ascertain the essential documents required by the inquiry officer under section 70 of the CGST Act, apart from those already submitted or requested, to facilitate a well-informed decision by the court. The matter was scheduled for further consideration on 18th January, 2021, for the respondents' advocate to provide the necessary information regarding the required documents for the ongoing inquiry.

---