2024 (9) TMI 679 - HC - GST

GST demand partially quashed following Supreme Court precedent on composite supply violations under CGST Sections 2(30) and 8

The Madras HC partly allowed the writ petition challenging a GST demand confirmation. The court dropped demands in paragraphs 15(g) and 15(h) of the ... Confirmation of demand proposed in SCN - tax confirmation with interest - rest of the demand arising out the mis-match between the Input Tax Credit availed and the tax paid by the supplier and the demand of tax on the renewal charges paid for Factory License. Tax confirmation with interest - HELD THAT:- The issue is now covered in favour of the petitioner in terms of the decision of the Hon'ble Supreme Court in Union of India Vs. M/s.Mohit Minerals Pvt. Ltd. [2022 (5) TMI 968 - SUPREME COURT] where it was held that 'the impugned levy imposed on the ‘service’ aspect of the transaction is in violation of the principle of ‘composite supply’ enshrined under Section 2(30) read with Section 8 of the CGST Act. Since the Indian importer is liable to pay IGST on the ‘composite supply’, comprising of supply of goods and supply of services of transportation, insurance, etc. in a CIF contract, a separate levy on the Indian importer for the ‘supply of services’ by the shipping line would be in violation of Section 8 of the CGST Act.' - the demand confirmed in paragraph 15(g) and paragraph 15(h) of the impugned order is dropped. Rest of the demand arising out the mis-match between the Input Tax Credit availed and the tax paid by the supplier and the demand of tax on the renewal charges paid for Factory License - HELD THAT:- The same can be adjudicated by the petitioner before the Appellate Commissioner. Therefore, the petitioner can file an appeal on the rest of the issues. While dropping the demand in paragraph 15(g) and paragraph 15(h) of the impugned order, liberty is given to the petitioner to file a statutory appeal before the Commissioner of GST & Central Excise (Appeals), Coimbatore at Madurai, C.R. Building, Bibikulam, Madurai – 625 002, as far as other demands confirmed vide the impugned order are concerned. This Writ Petition stands partly allowed. Issues:Challenge to Order-in-Original dated 14.12.2022 confirming demand proposed in Show Cause Notice No.29/2022. Interpretation of demand, interest, and penalties imposed under various sections of CGST Act, Tamil Nadu GST Act, and IGST Act. Application of Supreme Court decision in Union of India Vs. M/s.Mohit Minerals Pvt. Ltd., 2022 regarding tax on composite supply. Disposal of demands in paragraphs 15(g) and 15(h) due to Supreme Court decision. Liberty to file appeal on remaining issues before Appellate Commissioner. Impleadment of Commissioner of GST & Central Excise (Appeals) as second respondent. Directions for filing appeal and depositing balance amount.Analysis:The High Court of Madras addressed a Writ Petition challenging Order-in-Original No.MAD-GST-DG2-ASC-06-2022 dated 14.12.2022, which confirmed demands from Show Cause Notice No.29/2022. The impugned order demanded various amounts for wrongly availed Input Tax credit, non-payment of IGST under RCM, and non-payment of GST under RCM, along with corresponding interest and penalties as per sections of CGST Act, Tamil Nadu GST Act, and IGST Act. The judgment cited the decision of the Hon'ble Supreme Court in Union of India Vs. M/s.Mohit Minerals Pvt. Ltd., 2022, regarding tax on composite supply, leading to the dropping of demands in paragraphs 15(g) and 15(h) of the impugned order.The Court allowed the petitioner to file an appeal before the Appellate Commissioner for the remaining issues arising from the mis-match between Input Tax Credit availed and tax paid by the supplier, and the demand of tax on renewal charges for Factory License. The judgment granted liberty to file a statutory appeal within 30 days and directed the Commissioner of GST & Central Excise (Appeals) to pass an appropriate order on merits. Additionally, the petitioner was instructed to deposit 10% of the balance amount on the duty confirmed in the impugned order while filing the appeal.In conclusion, the Writ Petition was partly allowed, with no costs imposed. The judgment provided detailed directions for addressing the remaining issues through the appeal process, ensuring compliance with statutory requirements and legal procedures.