Toyota Kirloskar Motor Pvt. Ltd. Vs Union of India (Karnataka High Court)
The Karnataka High Court recently delivered a split verdict in the case of Toyota Kirloskar Motor Pvt. Ltd. versus the Union of India, addressing the legality of Goods and Services Tax (GST) show cause notices issued by both Central and State GST authorities. The petitioner, Toyota Kirloskar Motor (TKM), had sought the quashing of multiple notices demanding input tax credit (ITC) along with interest and penalties.
Background of the Case
Toyota Kirloskar Motor, engaged in the assembly, manufacturing, and trading of vehicles, is registered under the Central Goods and Services Tax Act, 2017 (CGST Act), and the Karnataka Goods and Services Tax Act, 2017 (KGST Act). The dispute arose from show cause notices issued by both Central and State GST authorities concerning TKM’s availed input tax credit, particularly related to IGST paid on manpower supply services between 2017 and 2022.
TKM challenged several notices, specifically:
- Two notices dated August 5, 2023, and one dated October 6, 2023, issued by State GST authorities.
- One notice dated September 27, 2023, issued by Central GST authorities.
The core of TKM’s argument against the State GST notices was the principle of dual proceedings. TKM contended that once Central GST authorities had initiated proceedings on the same subject matter, the State GST authorities were barred from initiating parallel proceedings under Section 6(2)(b) of the KGST Act.
