2022 (3) TMI 90 - HC - GST

Supplier challenges GST liability when BHEL failed to export goods within mandatory 90-day period

M/s ESL Steel Limited (earlier known as M/s Electrosteel Steels Limited). Versus M/s. Bharat Heavy Electricals Limited, Superintendent (Preventive), Central Goods and Services Tax & Central Excise

The HC addressed a dispute where the petitioner supplied goods to BHEL under GST exemption for export supplies. When BHEL failed to export within the ... Exemption to inter-State supply of taxable goods - export as is in excess of the amount calculated at the rate of 0.1% subject to fulfilment of the laid down conditions - export to be made within the time limit of 90 days as required under sub clause (II) of the Exemption notification - HELD THAT:- Let notice be issued on respondent No.1 under registered cover with A/D and speed posts for which requisites etc. must be filed by Friday. Let notice be additionally effected by the petitioner upon the official email address of the respondent no.1 containing the attachment of the entire pleadings and its enclosures by Friday and a supplementary affidavit to that effect be filed in the next week. Let the matter appear on 31st March, 2022. Issues:1. Exemption under notification No. 41/2017-Integrated Tax (Rate) for export supplies.2. Extension of time limit for export by the recipient.3. Liability of differential tax on the supplier due to delay in export.4. Demand for payment of tax, interest, and penalty by the tax authorities.5. Dispute regarding payment responsibility between the supplier and the recipient.6. Request for interim protection from coercive actions during dispute resolution.Analysis:1. The petitioner supplied goods for export to respondent No.1-BHEL under an exemption notification. However, BHEL failed to export within the stipulated 90-day period as required by the exemption notification. The petitioner requested an extension of the export time limit citing delays caused by the implementation of the EDI system. The petitioner argued that the reduced rate of GST applicable for exporters should be considered. The petitioner corresponded with the tax authorities seeking an extension but received no response.2. The tax authorities issued notices demanding payment of differential tax amounts for the years 2018-19, 2019-20, and 2020-21. The petitioner was asked to pay substantial tax amounts and provide various documents. The petitioner made partial payments against the tax liability but was also asked to pay interest and penalty. The petitioner contended that the delays in exports by BHEL should not make them liable for the differential tax, as BHEL, being the recipient, was responsible for paying the GST leviable on the supplies.3. The petitioner sought interim protection from coercive actions by the tax authorities during the dispute resolution process. The petitioner argued that both respondent No.1 and respondent No.2 (tax authorities) are state entities, making the dispute within the ambit of writ jurisdiction. The petitioner emphasized that the demand for payment of differential tax was unjust as the responsibility for GST payment lay with the recipient, BHEL. The petitioner requested relief from further coercive measures until the dispute is resolved.4. The court allowed time for the tax authorities to file a counter-affidavit and granted the petitioner a week to respond. Notices were to be issued to respondent No.1, and the petitioner was directed to serve the pleadings to respondent No.1 via email. The matter was scheduled for further hearing on 31st March 2022, with a directive to refrain from taking any coercive actions against the petitioner in the interim.