Karnataka Vikas Grameena Bank Vs Deputy Commissioner of Commercial Taxes (Karnataka High Court)
Karnataka High Court held that pigmy agents employed by the Bank can never be treated as business facilitators and qualifies as employees of the Bank and hence commission paid to pigmy agents is clearly exempt from levy of GST in terms of Sl.No.1 of Schedule III. Accordingly, writ petition is allowed.
Facts- The petitioner is a Regional Rural Bank established under the provisions of the Regional Rural Banks Act, 1976. On 09-08-2023, Form DRC-01A is issued by the 1st respondent for the financial year 2018-19 alleging that the petitioner Bank has failed to deposit tax amount under reverse charge mechanism, which would be on the commission paid to the pigmy agents in the urban branches. Similarly, Form DRC-01A is issued by the 2nd respondent for the financial year 2019-20 and 2021-22.
Finding the reply to be unsatisfactory, the 1st and 2nd respondents issued show cause notices to the Bank between 27-12-2023 and 28-12-2023. The petitioner now challenges these notices issued to the Bank, on the score that it is not liable to pay any CGST for any regime or the KGST. The petitioner, apart from challenging the show cause notices so issued, also challenges the notification which extended the time limit for issuing show cause notices u/s. 73 of the KGST or CGST Acts as ultra vires of Section 168A of the CGST Act.
