TaxTMI 
TaxTMI 
2020 (1) TMI 928
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.....P3 demanded towards IGST @ 18%, and to confirm the purchase and forthwith supply the sandalwood purchased by the petitioner; iii) to grant such other reliefs as this Hon'ble Court may deem fit in the circumstances of this case." 3. The petitioner is the proprietrix of an industrial unit in Madras Export Processing Zone. Madras Export Processing Zone is a notified Special Economic Zone earmarked for 100% export industrial units. The industrial unit of petitioner is manufacturing natural and essential oils, nutraceuticals, oleoresins, food supplements, aromatic chemicals etc. for supply to perfumeries, pharmaceuticals, cosmetics and detergent companies. On 22.5.2018 respondent Nos.1 and 2 issued e-auction notice for sale of sandal wood from Govt. Sandal Depot, Marayoor. Eauction is conducted subject to the sale conditions published in Kerala Gazette No.2, Volume IV dated 13.1.2015 vide notification No.Pro-(4) 54954/14 dated 23.12.2014 of the Additional Principal Chief Conservator of Forests (Protection) Thiruvananthapuram read with the general conditions set out in vide Kerala Gazette No.36, Volume III dated 16.09.2014 vide notification No.Pro-(4) 29243/2013 dated 21....
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.... 2. As per Section 10(a) of the IGST Act, 2017, if the supplier and recipient are situated in different States will be treated as interstate supply ie. IGST transaction. 3. As per Section 8(1)(i) supply to SEZ even within State is considered as IGST transaction. 4. Any supply of Goods or Services by a supplier located in India to a unit located within SEZ zone is exempt from IGST as such supplies of goods or services are treated as Exports. (emphasis added) 5. The supplier has an option of supplying goods without charging 18% IGST by submitting a letter of undertaking to their jurisdictional CGST/SGST authorities, or supplier can supply the goods on payment of IGST, and thereafter claim refund of IGST paid. 3.2 According to petitioner, de hors clarification in Ext.P6, the first and the second respondents insisted upon paying 18% IGST on the goods purchased by the petitioner in the e-auction held on 4.7.2018 as confirmed on 13.7.2018. The petitioner contends that the demand of IGST is illegal and unauthorised. Hence the writ petition. 3.3 The case of petitioner is that petitioner is located in a notified Special Economic Zone. Purchase of goods....
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....services or both supplied. 3.7 Therefore petitioner contends that the demand of 18% IGST for the subject sale by respondents 1 and 2 is illegal and hence prays that the demand of IGST at 18% from petitioner is liable to be set aside. 4. First respondent filed statement for himself and on behalf of second respondent. The first and the second respondents do not dispute dates and events referred to above. The case of respondents 1 and 2 is that firstly the e-auction notified vide Kerala Gazette dated 22.5.2018 refers to general and special conditions which are binding in the conduct and confirmation of sale. The special and general conditions of e-auction are appended as Annexures R1(a) to R1(c) to the statement. In fact the parties are not at issue on the conditions of e-auction notification dated 22.5.2018. This Court is of the view that for disposing of the writ petitions reference to all these conditions in the judgment is unnecessary except condition No.14, which reads as follows: "The successful bidder should remit the payments as per the following manner: (i) 35% of the bid value, after adjusting E.M.D. already remitted, shall be paid within 7 working da....
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.... by the petitioner towards any loss/cost incurred by the department; And iv) to grant such other reliefs as this Honourable Court may deem fit in the circumstances of this case." 5.1 The present writ petition is an offshoot of non-compliance with the condition stipulated by respondents while confirming the sale on 13.7.2018. The circumstances leading to the writ petition have been stated in sufficient detail in the preceding paragraphs. Therefore, for brevity, these circumstances are not stated once again. Ext.P16 dated 13.7.2018 confirms sale in favour of petitioner. The petitioner submits that first and foremost when the substantive issue is sub judice in Writ Petition No.24675 of 2018, the respondents ought not to have cancelled the sale already confirmed on 13.7.2018. The petitioner, to show her preparedness, deposited substantial amount, is always ready and willing to comply with the conditions of sale provided the subject supply is zero rated or not liable to 18% tax. It is stated that even as late as 19.11.2018 in Ext.P15 the petitioner agreed to pay the amount without GST and take delivery of the consignment. The first and second respondents have unnece....
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.... subject sale transaction. Ext.P6 in unequivocal terms states that for movement of inter state goods without paying tax. According to him, the subject transaction shall be treated as zero rated supply, and for the said purpose he refers to Section 2(23) and Section 16 of IGST Act. According to him, the petitioner/purchaser satisfies the applicable definitions of place of business, place of supply and is admittedly located in SEZ, outside the State of Kerala follows the procedure under Rule 87 read with Rule 96A(6). In other words, the sale of sandal wood by respondents 1 and 2 is treated as an export and not liable for tax. 7. The petitioner contends that the petitioner participated in eauction conducted on 4.7.2018 and 5.7.2018 and the sale was confirmed on 13.7.2018 for Rs. 31,59,450/-. The demand of IGST @18%, the petitioner approached the Joint Commissioner and subsequently this Court by WPC No.24675 of 2018 granted an interim order to make part payment excluding the IGST. The petitioner was asked to pay the balance amount by Ext.P14 which was received only on the last day the petitioner was directed to pay. This Court permitted the petitioner to remit the balance amount les....
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....ays tax and then lifts the goods for onward movement. The Government Pleader relies on Ext.R1(d) W.A. Judgment to contend that the delivery is at Marayoor Sandal Depot is held as intra state transfer. Respondents rely on Ext.P16 which according to them is self explanatory and they are justified in cancelling the sale in Ext.P3. Lastly it is argued that default of performance of argued conditions warranted cancellation of sale confirmation dt. 13.7.2018 in Ext.P3 and for valid and just reasons cancellation in Ext.P16 (WPC No.41418 of 2018) has been made and no exception within the scope of judicial review under Article 226 of Constitution of India has been made. She prays for dismissing the writ petitions. 9. In these circumstances, the following points are framed for consideration: (a) Whether the supply of goods pursuant to confirmation of sale on 13.07.2018 in favour of petitioner is an inter-State supply or intra-State supply (b) Whether respondents 1 and 2 are legally justified in levying and demanding 18% IGST on the sale price from the petitioner for completing the sale. 9.1 The petitioner firstly contends that the provisions of IGST are attracted to t....
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.... Special Economic Zone established under the Special Economic Zone Act, 2005 by any dealer in the domestic tariff area is an export sale and no Value Added Tax can be levied or collected by the respondents in respect of such sale. (ii) a writ of Certiorari or any other writ, order or direction, quashing Exhibits P9, P10, P14, P16 and P19 in so far as it demand sale tax on the sale of sandalwood to the petitioner treating the transaction between the petitioner and respondents 2 to 4 as a local sale taxable under Section 6 (1) of the Kerala Value Added Tax Act, as the demand and collection of sale tax being illegal, unjust and violative of Article 286 of the Constitution of India and provisions of the Special Economic Zone Act, 2005, Central Sales Tax Act, 1956 and Kerala Value Added Tax Act, 2003. (iii) a writ of Mandamus or any other writ, order or direction, directing the respondents to reimburse the amount paid by the petitioner to satisfy the illegal demand of the sale tax by the respondents and evidence by Exhibits P11 and P12 value added tax clearance certificate issued by the Forest Range Officer, Marayoor with interest at bank lending rate. (iv) A ....
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....icipated in the bid. The terms of the 'e-auction' notification and the special conditions by way of Exts. P5/P6 clearly indicated that it was nothing but a 'local sale'. Having purchased the goods by participating in such sale and having effected the entire payment in terms of the Tender notification/Special conditions and having taken delivery of the goods from the godown of the State/Department in Kerala, the subsequent conduct of the appellant/bidder, whether he wanted to sell it within the State of Kerala or intended to take it from this State to some other place or whether he wanted to effect some export of the product manufactured by making use of the timber/Sandalwood purchased from the Department, is of no consequence. The sale is complete in the State of Kerala and by virtue of the terms notified, agreed and accepted, it was exigible to tax under the KVAT Act, which is not a legally or factually forbidden fruit. In the said circumstances, this Court is of the firm view that the challenge raised by the appellant against the verdict passed by the learned single Judge is devoid of any merit. Interference is declined and the Writ Appeal is dismissed." (empha....
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.... b) a place where the books are maintained by the taxable person c) a place where the business is carried on through an agent. 16. The case attracts the first and foremost of the definition and then the place of business of petitioner is in Madras Special Economic Zone, Madras. 17. Section 2(86) deals with what constitutes place of supply of goods or services. According to Sec.2(86), place of supply means place of supply as referred to in Chapter V of the Integrated Goods and Services Tax Act, 2017. 18. Chapter IV deals with determination of nature of supply i.e. inter-state import/export including supplies to SEZ. According to Section 7(1)^2 the supply of goods where the section of the supplier and the place of supply are in two different states, such supply is treated as supply of goods in the course of inter state trade or commence attracting incidence of tax under Section 5(1) of IGST with change of permutation/combination in State/Union Territories and Union Territories/Union Territories the incidence of IGST is attracted. Section 7(5)^3 deals supply of goods/services or both to or by a Special Economic Zone developer or a Special Economic Zone Unit a....
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....ice are handed over to petitioner at Marayoor Depot, such delivery of good is for onward movement to Madras SEZ in State of Tamil Nadu. The definition and the substantive provisions in the applicable Statute that is binding between the parties but not the inference respondents 1 and 2 draw on the alleged completed transaction at Marayoor. The place of supply of goods shall be the location of the goods at the time at which the movement of goods terminates for delivery to the recipient. Therefore, as rightly contended by petitioner that the acceptance of delivery of sandal wood logs at Government Forest Department, Marayoor, is not the conclusive circumstance for deciding the place of supply of goods in the present regime of GST. Mr. Kumar does not dispute the circumstance that the petitioner upon completion of other sale conditions receives the sandal wood logs at Marayoor Forest Department depot, and the acknowledgment of goods at Marayoor Forest Department Depot does not result in termination of movement of goods but results in further movement of goods at the hands of recipient to SEZ. So the final destination i.e. SEZ in the case on hand is the supply point. The actual place of ....
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....dertaking etc., (b) a registered person may supply goods subject to such conditions, etc. on payment of interpreted tax and claim refund in accordance with section 54^8 of CGST Act or the Rules made thereunder. IGST defines what is 'zero-rated tax', and under what circumstances zero-rated tax is applicable and the manner of undertaking transactions with no incidence of tax liability on the recipient. From the above analysis, it is sufficiently clear that the argument of petitioner that it is zero rate tax transaction is completely supported by the combined reading of provisions considered above. Statute allows movement of goods without payment of tax which is again intended for the special treatment given to SEZ developer or SEZ unit, cannot be frustrated through the factual interpretation based on concluded transaction at Marayoor by the respondents. Hence it is for the parties to the transaction falling under Section 16 of IGST Act to follow one or the other options statutorily provided. It is contextual to observe that exports are priority of any country. The goods and services exported, burden of taxes are not exported with the goods and services exported. The reason is....
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....ted by the parties with reference to the legal obligations under GST/IGST. 25. Keeping in view the above discussion the writ petitions are ordered as follows: a) In the circumstances noted supra it is held that the subject transaction shall be treated as zero-rated tax supply. b) The petitioner is given four weeks from today to comply with the conditions which the petitioner is under obligation to comply with except deposit of 18% tax IGST and communicate to 1st and 2^nd respondents with a request to deliver the goods. c) The petitioner with a view to ensuring that the goods purchased are not diverted or movement of goods results in tax evasion to the State in any manner is directed to comply with all the statutory obligation in this behalf for movement of goods without IGST. d) Respondents 1 and 2 are directed to deliver subsequent sandal wood to the petitioner within one week from the date of communication received from petitioner. --------- ^1 2(85) "place of business" includes-- (a) a place from where the business is ordinarily carried on, and includes a warehouse, a godown or any other place where a taxable person stores his goods, ....
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....son has received the goods and the place of supply of such goods shall be the principal place of business of such person; (c) where the supply does not involve movement of goods, whether by the supplier or the recipient, the place of supply shall be the location of such goods at the time of the delivery to the recipient; (d) where the goods are assembled or installed at site, the place of supply shall be the place of such installation or assembly; (e) where the goods are supplied on board a conveyance, including a vessel, an aircraft, a train or a motor vehicle, the place of supply shall be the location at which such goods are taken on board. ^6 2.(23) "zero-rated supply" shall have the meaning assigned to it in section 16; ^7 16. (1) "zero rated supply" means any of the following supplies of goods or services or both, namely:-- (a) export of goods or services or both; or (b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit. (2) Subject to the provisions of sub-section (5) of section 17 of the Central Goods and Services Tax Act, credit of input tax may be availed for making zero-rated supplies, notwithstanding that su....
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....overnment on the recommendations of the Council: Provided further that no refund of unutilised input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty: Provided also that no refund of input tax credit shall be allowed, if the supplier of goods or services or both avails of drawback in respect of central tax or claims refund of the integrated tax paid on such supplies. (4) The application shall be accompanied by- (a) such documentary evidence as may be prescribed to establish that a refund is due to the applicant; and (b) such documentary or other evidence (including the documents referred to in section 33) as the applicant may furnish to establish that the amount of tax and interest, if any, paid on such tax or any other amount paid in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such tax and interest had not been passed on to any other person: Provided that where the amount claimed as refund is less than two lakh rupees, it shall not be necessary for the applicant to furnish any documentary and other evidences but he may file a declaration, based on the documentar....
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....s Act or the rules made thereunder or in any other law for the time being in force, no refund shall be made except in accordance with the provisions of sub-section (8). (10) Where any refund is due under sub-section (3) to a registered person who has defaulted in furnishing any return or who is required to pay any tax, interest or penalty, which has not been stayed by any court, Tribunal or Appellate Authority by the specified date, the proper officer may- (a) withhold payment of refund due until the said person has furnished the return or paid the tax, interest or penalty, as the case may be; (b) deduct from the refund due, any tax, interest, penalty, fee or any other amount which the taxable person is liable to pay but which remains unpaid under this Act or under the existing law. Explanation.--For the purposes of this sub-section, the expression "specified date" shall mean the last date for filing an appeal under this Act. (11) Where an order giving rise to a refund is the subject matter of an appeal or further proceedings or where any other proceedings under this Act is pending and the Commissioner is of the opinion that grant of such refund is likely to adversely affe....
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....able in respect of services themselves or, as the case may be, the inputs or input services used in such services, the date of-- (i) receipt of payment in convertible foreign exchange, where the supply of services had been completed prior to the receipt of such payment; or (ii) issue of invoice, where payment for the services had been received in advance prior to the date of issue of the invoice; (d) in case where the tax becomes refundable as a consequence of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court, the date of communication of such judgment, decree, order or direction; (e) in the case of refund of unutilised input tax credit under sub-section (3), the end of the financial year in which such claim for refund arises; (f) in the case where tax is paid provisionally under this Act or the rules made thereunder, the date of adjustment of tax after the final assessment thereof; (g) in the case of a person, other than the supplier, the date of receipt of goods or services or both by such person; and (h) in any other case, the date of payment of tax. ^9 87. Electronic Cash Ledger.- (1) The electronic cash ledger under sub-section....
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....ment of any amount indicated in the challan, the commission, if any, payable in respect of such payment shall be borne by the person making such payment. (4) Any payment required to be made by a person who is not registered under the Act, shall be made on the basis of a temporary identification number generated through the common portal. (5) Where the payment is made by way of National Electronic Fund Transfer or Real Time Gross Settlement mode from any bank, the mandate form shall be generated along with the challan on the common portal and the same shall be submitted to the bank from where the payment is to be made: Provided that the mandate form shall be valid for a period of fifteen days from the date of generation of challan. (6) On successful credit of the amount to the concerned government account maintained in the authorised bank, a Challan Identification Number shall be generated by the collecting bank and the same shall be indicated in the challan. (7) On receipt of the Challan Identification Number from the collecting bank, the said amount shall be credited to the electronic cash ledger of the person on whose behalf the deposit has been made and the common....
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....within a period of- (a) fifteen days after the expiry of three months, or such further period as may be allowed by the Commissioner, from the date of issue of the invoice for export, if the goods are not exported out of India; or (b) fifteen days after the expiry of one year, or such further period as may be allowed by the Commissioner, from the date of issue of the invoice for export, if the payment of such services is not received by the exporter in convertible foreign exchange or in Indian rupees, wherever permitted by the Reserve Bank of India. (2) The details of the export invoices contained in FORM GSTR-1 furnished on the common portal shall be electronically transmitted to the system designated by Customs and a confirmation that the goods covered by the said invoices have been exported out of India shall be electronically transmitted to the common portal from the said system. Provided that where the date for furnishing the details of outward supplies in FORM GSTR-1 for a tax period has been extended in exercise of the powers conferred under section 37 of the Act, the supplier shall furnish the information relating to exports as specified in Table 6A of FORM GSTR-....