Case Law Details
Gitwako Farms India Private Limited Vs Union of India & Ors (Delhi High Court)
The Delhi High Court heard a petition seeking reimbursement of GST paid on the supply of frozen chicken to the Indian Army for the financial year 2019-20. The petitioner challenged clarifications dated 25.04.2019 and 10.06.2019, as well as subsequent letters issued by the authorities, through which reimbursement of GST was denied on the ground that no GST was payable on the supplied goods.
The petitioner had been awarded a contract to supply frozen meat to the Indian Army and had deposited a total GST amount of Rs. 18,21,339/- on the supplies made during the relevant period. However, the Army withheld reimbursement of the GST amount relying on clarifications issued by the Controller General of Defence Accounts and the Directorate General of Supplies and Transport.
The clarification dated 25.04.2019 stated that GST was not leviable on the petitioner’s products. Following this clarification, the Indian Army amended the contract on 20.05.2019 to provide that GST would not be reimbursed to the petitioner. Another clarification dated 10.06.2019 further stated that GST would not be reimbursed for products dispatched after the contract amendment. This position remained undisputed between the parties.
The Court observed that the central issue was whether Notification No. 2/2017-Central Tax (Rate) dated 29.06.2017 exempted the petitioner’s products from GST. The Court noted that if the exemption notification applied, the petitioner would not be entitled to reimbursement of GST already paid. However, if the exemption was not applicable, reimbursement would have to be made.
The petitioner relied on an advance ruling dated 18.04.2019 issued by the Rajasthan Authority for Advance Ruling (RAAR). The RAAR had held that the petitioner’s goods were branded, supplied on an actual rate basis, and supplied in unit containers, thereby attracting GST at the rate of five per cent. The ruling also specifically held that the supplies were not exempt under Entry 9 of Notification No. 2/2017-Central Tax (Rate).
The ruling was challenged before the Rajasthan Appellate Authority for Advance Ruling (RAAAR). The appellate authority framed the issue regarding classification of the supplies as unit containers and the applicability of exemption under the 2017 notification. The appeal was rejected by order dated 02.08.2019, and it was again held that the petitioner’s goods were supplied in unit containers and were not exempt from GST.
The Court further observed that under Section 103 of the Central Goods and Services Tax Act, 2017, the advance rulings passed by the RAAR and RAAAR were binding on the petitioner. Consequently, the petitioner was required to comply with those rulings and deposit GST on the supplies made.
Since the petitioner had paid GST in accordance with the advance rulings, the Court held that there was no justification for denying reimbursement solely on the basis of the exemption notification. The Court concluded that the exemption notification was not applicable to the petitioner’s supplies and that the petitioner was liable to pay GST on the products supplied to the Indian Army. Therefore, the petitioner was entitled to reimbursement of the balance GST amount from the respondents.
Accordingly, the Delhi High Court allowed the petition and directed the respondents to reimburse the balance GST amount paid by the petitioner on the frozen meat supplied to the Indian Army within three months from receipt of the order. The Court further directed that if payment was not made within the stipulated period, the petitioner would be entitled to interest at the rate of six per cent per annum thereafter.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
The petition is for directions to the respondents to reimburse the GST amount paid by the petitioner on supply of frozen meat to the Indian Army. For the sake of clarity, relief prayed for by the petitioner is extracted as under:
“a. Issue an appropriate writ, order(s) or direction quashing/setting aside/declaring non est the Impugned Clarification dated 25.04.2019 issued by Respondent No. 2, annexed as Annexure A , whereby Respondent No. 2 has held that no GST is payable on the Frozen Chicken supplied by the Petitioner to the Respondent No. 3 at its supply depots forming part of the Gwalior Cluster, i.e. Jhansi, Gwalior-Maharajpur and Babina-Talbehat; and b. Issue an appropriate writ, order(s) or direction quashing/setting aside/declaring non est Impugned Clarification dated 10.06.2019 issued by Respondent No. 1, annexed as Annexure B, whereby Respondent No. 1 has stated that no GST will be permitted to be charged on Chilled/Frozen Meat Products insofar as it prevents payment of GST to the Petitioner for supply of Frozen Chicken to the Respondent No. 3 at its supply depots forming part of the Gwalior Cluster, i.e. Jhansi, Gwalior-Maharajpur and Babina- Talbehat; and
c. Issue an appropriate writ, order(s) or direction quashing/setting aside/declaring non est Impugned Letters dated 27.12.2019, 24.02.2020, 09.07.2021 and 16.04.2022 issued by Respondent No. 3, whereby Respondent No. 3 has failed to make payments towards GST to the Petitioner for supply of Frozen Chicken to the Respondent No. 3 at its supply depots forming part of the Gwalior Cluster, i.e. Jhansi, Gwalior-Maharajpur and Babina-Talbehat, as a result of the Impugned Letter dated 25.04.2019 issued by Respondent No. 2 and the Impugned Clarification dated 10.06.2019 issued by Respondent No. 1; and
d. Issue an appropriate writ, order(s) or direction to the Respondent No. 3 to make payment of Rs. 16,79,814/- (Rupees sixteen lacs seventy nine thousand eight hundred and fourteen only) to the Petitioner herein on account of unpaid amounts towards GST @ 5% that have been deposited by the Petitioner on the Frozen Chicken goods that were supplied by the Petitioner to Respondent No. 3 at its various supply depots, for the supply year 01.04.2019 through 31.03.2020; and
e. Issue an appropriate writ or direction directing the Respondent to release interest @ 2% per month to the Petitioner pendente lite and future interest;
f. That in view of the facts and circumstances stated in the above paragraphs, it is prayed that this hon’ble Court may be pleased to allow the prayers as sought for in the present Petition.”
2. The facts would indicate that the petitioner was awarded a contract for the supply of frozen meat to the Indian Army for the fiscal year 2019-20. The said product was duly supplied and a total of Rs.18,21,339/- was deposited by the petitioner towards GST.
3. The Army department has withheld reimbursement of the said GST amount, relying on clarification dated 25.04.2019 issued by the Controller General of Defence Accounts, and clarification dated 10.06.2019 issued by the Directorate General of Supplies and Transport.
4. Vide clarification dated 25.04.2019, a query raised by the Indian Army has been answered to the effect that GST is not leviable on the petitioner’s products. Pursuant to the aforesaid clarification, on 20.05.2019, the contract was amended by the Indian Army and as per the amended terms, the GST amount need not be reimbursed to the petitioner.
5. Vide clarification dated 10.06.2019, it has been clarified that GST amount is not required to be reimbursed for the petitioner’s products dispatched after the amendment of the contract. That position remains undisputed.
6. A perusal of clarification dated 25.04.20219 indicates that the concerned authority has held that the supply of the product in question is exempt from payment of GST as per Notification No.2/2017-Central Tax (Rate) (notification of 2017) dated 29.06.2017 issued by the Ministry of Finance, Government of India.
7. Therefore, what emerges for consideration is only the aspect whether the exemption notification dated 28.06.2017 is applicable to the case of the petitioner. If the said notification is applicable to the petitioner and it is not liable for payment of the GST on the products it has supplied to the respondents, it shall not be entitled to the GST already paid. However, if the petitioner is not exempted under the said notification, the petitioner will have to be reimbursed the GST.
8. To deal with the aforesaid aspect, the attention of the Court has been drawn to the advance ruling dated 18.04.2019 rendered by the Rajasthan Authority for Advance Ruling, GST (RAAR). The RAAR has specifically ruled that the supply of the petitioner’s goods is branded and sold on actual rate basis and as a result, they are supplied in a unit container and hence, will attract five per cent GST. It is also held that the petitioner’s supply is not exempted under Entry 9 of the notification of 2017 on which reliance is placed by the respondent.
9. It be noted that the said ruling was challenged before the Rajasthan Appellate Authority of Advance Ruling (RAAAR), wherein, again, a specific issue was framed as to whether the petitioner’s supply is classifiable as a unit container and whether such a supply is exempted under the notification of 2017. The appeal was rejected and in the final order dated 02.08.2019, it was held that the petitioner’s goods are supplied in a unit container and are not exempted from payment of GST.
10. As per Section 103 of the Central Goods and Services Tax Act, 2017, the advance ruling passed by RAAR and the RAAAR are binding on the petitioner and, therefore, it was required to comply with the ruling and deposit the tax.
11. Pursuant to the aforesaid advance ruling, the petitioner has paid GST on the supply of the products in question, and therefore, claims reimbursement of the same.
12. The only reason for refusal of reimbursement as has been noted hereinabove was the exemption from GST liability allegedly enjoyed by the petitioner as per the terms of the notification of 2017. Since the petitioner’s liability has been conclusively determined by the RAAR and RAAAR, therefore, there is no reason to conclude otherwise.
13. What, thus, transpires is that the exemption notification was not applicable to the petitioner and it, therefore, was to make the payment of GST. It is, thus, entitled for the reimbursement of the balance amount from the respondent.
14. The petition is allowed.
15. Let the respondents to reimburse the balance amount of the GST paid by the petitioner on the frozen meat supplied to the Indian Army, within a period of three months from the date of receipt of a copy of the order passed today.
16. If the payment is not made within the aforesaid period, the petitioner shall be entitled to interest at the rate of six per cent per annum, thereafter.
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