Bangalore Electrical Supply Company Limited Vs Assistant Commissioner of Central Tax (Karnataka High Court)
Karnataka High Court held that demand of Goods and Services Tax (GST) under reverse charge mechanism from service receiver will lead to double taxation since entire tax already paid by service provider. Accordingly, appeal allowed.
Facts- Pursuant to inspection being conducted on 09.03.2023 u/s. 67(1) of the Central Goods and Services Tax Act, 2017, the petitioner received communication dated 03.07.2023 from the Senior Intelligence Officer, DGGI, to which the petitioner submitted a reply, in pursuance of which, a communication u/s. 73(5)/74(5) was issued to the petitioner. Petitioner submitted a reply dated 11.12.2023, which was accepted by respondent No.2 and Show Cause Notice was issued to the petitioner calling upon them to pay a sum of Rs.1,86,94,168/- towards liability payable on the value of security services received by them. The petitioner submitted a reply dated 09.01.2024 and after taking necessary proceedings, respondent No.1 passed the impugned order-in-original dated 21.03.2024, which is assailed in the present petition.
Conclusion- Divisional bench had held that merely for the reason that there was no strict adherence to the ratio as envisaged during the relevant point of time for payment of tax insofar as the assessee and the service provider, the assessee cannot be made liable to pay the double tax. What is significant to note is that the discharge of entire tax amount is not disputed. Thus, the reverse charge mechanism would not lead to double taxation.
