GST taxable supply determination and differential demand under Section 73 following enquiry and summons; payment restrained pending adjudication

Determination of whether supplies are taxable and calculation of differential GST liability arising from turnkey contracts, and the validity of summons and inquiry proceedings, are contested with final adjudication to be under Section 73 of the CGST Act. The petitioning company has indicated an intention to contest legal interpretation; inquiry remains ongoing. The court disposed the writ petition directing that respondents shall not insist on payment of the notified differential amount of Rs.5,51,49,553 until final adjudication under Section 73 is completed, thereby staying recovery pending statutory adjudication.

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Issues:
The issues involved in the judgment are related to the demand for payment of GST by the petitioner-company, the legality of the notices issued by the respondents, and the requirement of adjudication under Section 73 of the CGST Act.

Details of Judgment:

Demand for GST Payment:
The petitioner-company, engaged in providing turnkey solutions, received notices from the respondents regarding short payment of GST on taxable supply to AVVNL. The petitioner contested the demand, claiming it was a matter of interpretation and objected to the computation of the amount. Despite the objections, the respondents forced the petitioner to deposit Rs.40,00,000 under Section 73(5) of the CGST Act. The petitioner argued that without proper adjudication, the respondents cannot compel payment of the demanded amount.

Legality of Notices:
The petitioner contended that the respondents were acting illegally by demanding payment without adjudication under Section 73 of the CGST Act. The petitioner maintained that it had paid GST at 12% and objected to the demand for over Rs.5 crore without proper adjudication. The respondents claimed that the notices were issued in accordance with the law and that the investigation was ongoing.

Adjudication Requirement:
The respondents admitted that the final adjudication under Section 73 of the CGST Act had not been completed. The court directed the respondents not to enforce payment of Rs.5,51,49,553 until the final adjudication takes place. The amount deposited by the petitioner through forms GST DRC-03 was to remain subject to the final adjudication under the CGST Act.

Conclusion:
The High Court disposed of the writ petition, instructing the respondents not to insist on payment until final adjudication under Section 73 of the CGST Act is completed. The stay petition was also disposed of, and no costs were awarded in the matter.

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