Erroneous Recording of Place Of Supply As The Location Of Unregistered Recipient: Telangana High Court Remands The Matter
The Telangana High Court ruled that, while the department referred to Section12(9) of the IGST Act, the department erroneously recorded that, in the instance of an unregistered receiver, the place of supply should be the recipient's location. It prima facie appears to be in contravention of Section 12(9) of the IGST Act. The division bench of Justice Ujjal Bhuyan and...
The Telangana High Court ruled that, while the department referred to Section12(9) of the IGST Act, the department erroneously recorded that, in the instance of an unregistered receiver, the place of supply should be the recipient's location. It prima facie appears to be in contravention of Section 12(9) of the IGST Act.
The division bench of Justice Ujjal Bhuyan and Justice Surepalli Nanda said, "it is prima facie evident that if the passenger is not registered under GST and avails transportation service, by way of legal fiction, the place of supply would be the place where the passenger embarks or starts his journey."
The petitioner/assessee under the trade name "Ola" is engaged in the business of providing internet platform/mobile application services where the driver partners provide passenger transportation services to the customers. It is clarified that the petitioner per se is not engaged in providing passenger transportation service. It is only providing an electronic platform to the driver partners and to the customers.
The petitioner contended that for transportation services rendered by the drivers outside the State of Telangana, it has been charged IGST, which it has paid. The petitioner has paid IGST amounting to Rs. 2,21,38,236 for the period under consideration.
A notice for short payment of tax dated 02.03.2020 was issued to the petitioner by the respondent. As per the notice, the supplier of service and place of supply were found to be located in the State of Telangana. Therefore, the respondent took the view that SGST and CGST had to be paid by the petitioner and not IGST. It was pointed out that a total amount of Rs. 325,29,49,802.00 was to be paid by the petitioner, and a notice for short payment of tax was issued.
The petitioner submitted a detailed reply, pointing out that the petitioner had rightly paid IGST for the audit period and was not required to pay CGST and SGST. The department did not accept the explanation furnished by the petitioner. The department opined that CGST and SGST were required to be paid by the petitioner on its turnover. Since the petitioner, by not paying CGST and SGST, has committed an offence, penalty proceedings were also initiated.
The petitioner submitted that, as per Section 7(3), the supply of services where the location of the supplier and the place of supply are in two different States; or in two different Union Territories; or in one State and one Union Territory, shall be treated as a supply of services in the course of inter-state trade or commerce and be subjected to the provisions of Section 12 of the IGST Act. As per Section 8(2) of the IGST Act, subject to the provisions of Section 12 of the IGST Act, supply of services where the location of the supplier and the place of supply of services are in the same state or same union territory shall be treated as an inter-state supply. Section 12 of the IGST Act deals with the place of supply of services where the location of the supplier and recipient is in India.
The petitioner submitted that, as per Section 12(9) of the IGST Act, the place of supply of passenger transportation service to a registered person would be the location of the person. But, if the person is other than a registered person, it shall be the place where the passenger embarks on the conveyance for a continuous journey.
The court remanded the matter back to the respondent for a fresh decision in accordance with the law after giving notice of hearing as well as an opportunity of hearing to the petitioner.
Case Title: M/s Ani Technologies Private Limited Versus State of Telangana
Case No: Writ Petition No.25526 of 2022
Citation: 2022 LiveLaw (Tel) 65
Dated: 16.06.2022
Counsel For Petitioner: Advocate Mamilla Ashwin Reddy
Counsel For Respondent: GP for Finance Planning TG