Aavanti Solar Energy Private Limited Vs Joint Commissioner of Central Tax (Karnataka High Court)
Karnataka High Court has set aside an order demanding Goods and Services Tax (GST) from Aavanti Solar Energy Private Limited on liquidated damages. The court, in its recent judgment, remitted the matter back to the Joint Commissioner of Central Tax for fresh reconsideration, citing the non-consideration of a crucial government circular.
Aavanti Solar Energy Private Limited challenged the Order-In-Original dated March 28, 2024, issued by the Joint Commissioner, specifically contesting demands related to liquidated damages. The petitioner’s counsel argued that the demand contradicted Circular No. 178/10/2022/GST, issued by the Government of India on August 3, 2022. This circular provides guidelines on the applicability of GST to liquidated damages. The petitioner contended that the impugned order’s failure to consider this circular rendered it vitiated.
The respondent, representing the tax department, defended the original order. However, the High Court observed that the impugned order indeed omitted any reference to or consideration of the Central Government’s circular dated August 3, 2022. The court emphasized that this oversight vitiated the order.
Without expressing an opinion on the merits of the underlying dispute, the High Court deemed it appropriate to set aside the impugned order. The case has been sent back to the Joint Commissioner of Central Tax with a clear directive to reconsider the matter in accordance with law, specifically bearing in mind the aforementioned circular. The court also granted liberty to Aavanti Solar Energy Private Limited to file additional pleadings and documents, ensuring all rival contentions remain open for fresh assessment.
