TaxTMI 
TaxTMI 
2020 (1) TMI 928
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....rchase 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 21.8.2014, Kerala Gazette No.43, Volume III dated 4.11.2014 read ....
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....EZ 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 by a dealer located beyond the territorial limits of State of Kerala comes as interstate purchase of goods. The Integrated Goods and Services Act, 2017 (for short 'IGST') was introduced to make provision for levy and collection of tax by t....
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.... 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 days of issuance of acceptance letter. (ii) Balance value along with applicable VAT, FDT and other taxes if any is to be made within 40 days in case of hard woods and within 15 days in case of softwood from the date of issuance of acceptance letter." 4.2 The case of respondents therefore is ....
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....018. 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 unnecessarily raked up the controversy of payment of tax. 6. Mr.A.Kumar contends that e-auction notice dated 22.5.2018 refers to statutory obligations arising under Kerala Value Added Tax and Central Sales Tax regimes. With the implementation of GST & IGST, the levy and demand of tax under these two enactments had undergone dynamic changes. There....
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....able 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 less GST and kept in abeyance further proceedings. The order was later extended. The petitioner remitted the entire balance amount less GST. Hence the petitioner prays for setting aside Ext.P16 and permit the petitioner to take the goods. 8. Dr.Thushara James submits that the petitioner regularly participates in e-auction and purchases sandal woo....
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....d 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 the subject supply of goods. Secondly, the petitioner is an industrial unit established and being operated in a notified Special Economic Zone (SEZ). Therefore the petitioner cannot be called upon to pay tax under CGST/IGST. The petitioner contends that condition 14 in conditions appended to e-auction notification dated 22.05.2018 firstly does not take note of cha....
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.... 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 writ of prohibition or any other writ, direction or order restraining the respondents from demanding or collecting value added tax on any sale made by them to the petitioner, being a unit in Special Economic Zone. (v) to issue such other writ, order or direction which this Hon'ble Court may deem fit and proper in the facts and circumstances of the case." 12. The writ petition was dismis....
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....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." (emphasis applied) 13. Perusal of Writ Appeal judgment shows that the issues taken up for consideration in the said judgment are in the background of KVAT Act, vis-à-vis the conditions stipulated in the e-auction notice issued by the respondents and the incidence of tax on a completed transaction in the State of Kerala under KVAT. Had the very same tax regime i.e. KVAT been implemented as on date, the contentions n....
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....eferred 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 as inter-state supply of goods/services in the course of inter state trade or commerce. A reading of Section 7(5) of IGST Act shows thus: Supply of goods or services or both - When the supplier is located in India and the place of supply is outside India it is treated as inter-State trade or commerce. The supply of goods or services or both to or by a SEZ developer or the SEZ unit shall be treated to be a supply of goods in the course of inter- State tr....
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....or 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 supply by plain interpretation of Section 10(1) is within the SEZ in Madras, State of Tamilnadu, but not in State of Kerala. Therefore, the contention of respondents 1 and 2 that supply of goods is completed at Marayoor Forest Department and subject sets is an intra state transaction is unsustainable. The second objection canvassed by respondents 1 and 2 on place of supply is rejected for the above reasons. 20. The next argument between the parties is on ....
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.... 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 simple i.e., to make the exports internationally competitive and earn foreign exchange to the country. Export incentives are impermissible under WTO. However, goods and services can be relieved from the burden of domestic taxes. Under the scheme of IGST supplies to SEZ unit and SEZ developer are treated at par with physical exports. The exporting units to compete with world market need raw materials without payment of taxes and duties. Either the denial of zero....
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.... 2nd 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, supplies or receives goods or services or both; or (b) a place where a taxable person maintains his books of account; or (c) a place where a taxable person is engaged in business through an agent, by whatever name called; 2(86) "place of supply" means the place of supply as referred to in Chapter V of the Integrated Goods and Services Tax Act; 2 7. (1) Subject to the provisions of section 10, supply of goods, where the location of the supplier and the place of supply are in-- (a) two different States; (b....
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....l, 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 such supply may be an exempt supply. (3) A registered person making zero rated supply shall be eligible to claim refund under either of the following options, namely:-- (a) he may supply goods or services or both under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised input tax credit; or (b) he may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on ....
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....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 documentary or other evidences available with him, certifying that the incidence of such tax and interest had not been passed on to any other person. (5) If, on receipt of any such application, the proper officer is satisfied that the whole or part of the amount claimed as refund is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund referred to in section 57. (6) Notwithstanding anything contained in sub-section (5), the proper officer may, in the case of any claim for refund on account of zero-rated....
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.... 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 affect the revenue in the said appeal or other proceedings on account of malfeasance or fraud committed, he may, after giving the taxable person an opportunity of being heard, withhold the refund till such time as he may determine. (12) Where a refund is withheld under sub-section (11), the taxable person shall, notwithstanding anything contained in section 56, be entitled to interest at such rate not exceeding six per cent. as may be notified on the recommendations of the Council, if as a result of the appeal or further proceedings he becomes entitled to refund.....
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....ommunication 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 (1) of section 49 shall be maintained in FORM GST PMT-05 for each person, liable to pay tax, interest, penalty, late fee or any other amount, on the common portal for crediting the amount deposited and debiting the payment therefrom towards tax, interest, penalty, fee or any other amount. (2) Any person, or a person on his behalf, shall generate a challan in FORM GST PMT-06 on the common portal and enter the details of the amount to be deposited by him towards tax, interest, penalty, fees or any other amount: Provided that the challan in FORM GST PMT-06 generated at the....
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....at 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 portal shall make available a receipt to this effect. (8) Where the bank account of the person concerned, or the person making the deposit on his behalf, is debited but no Challan Identification Number is generated or generated but not communicated to the common portal, the said person may represent electronically in FORM GST PMT-07 through the common portal to the bank or electronic gateway through which the deposit was initiated. (9) Any amount deducted under section 51 or collected under section 52 and claimed by the registered taxable person from whom the said amount was deducted or, as the case may be, collected shall be credite....