2025 (2) TMI 889 - HC - GST

Petitioner entitled to GST refund on holographic stickers under reverse charge mechanism Section 54

M/s. United Breweries Limited Versus The Joint Commissioner of GST and Central Excise (Appeals II), Chennai, The Assistant Commissioner of GST and Central Excise, Chennai.

M/s. United Breweries Limited Versus The Joint Commissioner of GST and Central Excise (Appeals II), Chennai, The Assistant Commissioner of GST and Central ... ISSUES PRESENTED and CONSIDEREDThe core legal question considered in this judgment is whether the petitioner is entitled to a refund of the GST paid on a Reverse Charge Mechanism (RCM) basis for the procurement of holographic stickers from the Prohibition and Excise Department of the Government of Tamil Nadu. The key issue revolves around the classification of the supply of these holographic stickers as either a supply of goods or a supply of services, and whether it constitutes a composite supply under the GST framework.ISSUE-WISE DETAILED ANALYSISRelevant Legal Framework and PrecedentsThe legal framework involves the interpretation of the Central Goods and Services Tax (CGST) Act, 2017, particularly the definitions of 'goods,' 'services,' and 'composite supply' as per Sections 2(52), 2(102), and 2(30) respectively. The case also involves the application of Notification No. 13/2017-Central Tax (Rate) dated 28.06.2017, which specifies categories of services subject to tax on a reverse charge basis, and Notification No. 25/2019-Central Tax (Rate) dated 30.09.2019, which exempts the grant of alcoholic liquor licenses from being considered as supply of goods or services.Court's Interpretation and ReasoningThe Court interpreted that the supply of holographic stickers is a supply of goods and not services. It was determined that these stickers, being tangible items, fall under the definition of 'goods' as per Section 2(52) of the CGST Act. The Court also concluded that the supply of holographic stickers does not constitute a composite supply with the grant of an excise license, as the two activities are distinct and not naturally bundled.Key Evidence and FindingsThe Court relied on the definitions provided in the CGST Act and other legal texts to establish that holographic stickers are 'goods.' It was noted that the stickers are supplied by the Prohibition and Excise Department for affixing on liquor bottles, and their procurement is an independent activity from the grant of licenses. The Court found that the supply of stickers is not a service and does not fall under the reverse charge mechanism as outlined in Notification No. 13/2017.Application of Law to FactsThe Court applied the definitions of 'goods' and 'services' to determine the nature of the supply of holographic stickers. It concluded that since the stickers are goods, the petitioner was not liable to pay GST on a reverse charge basis. The Court also examined the concept of composite supply and found that the supply of stickers and the grant of licenses are not naturally bundled activities.Treatment of Competing ArgumentsThe petitioner argued that the supply of holographic stickers should be treated as a sale of goods and not services, thus not subject to GST on a reverse charge basis. The respondents contended that the supply was part of a composite service. The Court rejected the respondents' argument, emphasizing that the supply of stickers is an independent activity and not a composite supply.ConclusionsThe Court concluded that the supply of holographic stickers is a supply of goods, not services, and does not attract GST on a reverse charge basis. The petitioner is entitled to a refund of the GST paid under the mistaken belief that the supply was a service subject to RCM.SIGNIFICANT HOLDINGSThe Court held that the supply of holographic stickers is a supply of goods and not services, thus exempting the petitioner from GST liability on a reverse charge basis. The Court emphasized that the principles of estoppel and equity do not apply in tax jurisprudence, allowing the petitioner to claim a refund for taxes paid by mistake.Core Principles EstablishedThe judgment establishes that the classification of supplies under GST must be based on the nature of the items supplied. It reinforces that goods and services are distinct categories under GST law, and the supply of tangible items like holographic stickers is classified as goods.Final Determinations on Each IssueThe Court determined that the petitioner is entitled to a refund of the GST paid on a reverse charge basis for the supply of holographic stickers, as the supply is classified as goods and not services. The Court quashed the impugned orders and directed the refund to be processed within three months.