It Is The Bonafide Mistake Of Taxpayer Paying To Railways Instead Of GST Department: Bombay High Court

The division bench of Justice K.R. Shriram and Justice A.S. Doctor has directed that the amounts which have been wrongly paid to railways should be paid to the CGST authorities and SGST authorities within two weeks.

The petitioner is in the business of advertising and providing advertising solutions to various parties. The petitioner submitted a bid in response to a tender floated by the respondent. The petitioner's bid was accepted and a Letter of Acceptance was issued to the petitioner by the respondent.

The General Conditions of Contract (GCC) provide for the payment of service tax. It says, "As & when it was notified for collection of service tax on commercial publicity contracts on railways, the contractor should pay the service tax at the applicable rates on the licence fee to the Railway Administration." The petitioner was paying the applicable service tax.

In July, 2017, the service tax regime was replaced by Goods and Services Tax (GST)—Central GST and State GST.

As was done in the past, the petitioner continued to pay the amount to the respondent together with a GST component of 18% per annum on the value of the services. The fact that the petitioner made the payments to railways, together with the GST of 18% per annum, has been admitted by the respondent. The last assignment that the petitioner had with the railways was for the Financial Year 2017-18.

On or about December 21, 2020, the petitioner received a notice from the Deputy Commissioner of State Tax for conducting an audit. The petitioner was directed to attend in person or through an authorised representative along with the books of accounts and records for the Financial Year 2017-18. The petitioner responded by submitting the requisite documents and by answering all the queries of the audit team to the best of its knowledge and ability.

During the course of the audit, the petitioner realised that the issue was related to the amount of GST that the petitioner had paid to the railways. Petitioner addressed communications dated February 3rd, 2022 and February 23rd, 2022 to the office of respondent seeking intervention on getting the issue of GST payment resolved for the last five years. The petitioner realised that though he was paying 18% GST to the railways, that amount was not being paid by the railways to the concerned authorities, i.e., 9% to the Central Government and 9% to the State Government.

The court held that the petitioner had not attempted to evade any tax.

"As and when the railway deposits the amount, and we have already observed that it will be done within two weeks from today, the CGST and SGST authorities will give an input tax credit to Petitioner," the court said.

Case Title: Arun Krishnachandra Goswami Vs. Union of India

Case No: Writ Petition No. 2963 Of 2022

Date: 05.09.2022

Counsel For Petitioner: Advocate Dharmendra J. Damani

Counsel For Respondent: Additional Solicitor General Anil C. Singh

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