The Petitioner made supplies for export to Bharat Heavy Electricals Ltd (BHEL). The goods were ultimately exported, albeit with delay. Petitioner and BHEl made representations to the Revenue for condonation of delay in exports. Reliance was placed on Para 5.1 of Circular No. 37/11/2018-GST dated 15.03.2018. However, to no avail. Revenue proceeded for recovery against the petitioner. BHEL refused to reimburse GST to the petitioner. Revenue claimed the prayers of the petitioner are against BHEL and not the department. However, the high court granted stay of recovery of the balance amounts. The High court noted as per terms and conditions of the tender and purchase order, GST is payable by BHEL. However, recovery has been made from the Petitioner and BHEL rejected to indemnify the Petitioner for the payments made.
FULL TEXT OF THE JUDGMENT/ORDER OF JHARKHAND HIGH COURT
Petitioner has made supplies for export to respondent No.1- BHEL. The notification No. 41/2017-Integrated Tax (Rate) dated 23rd October, 2017 issued by the Department of Revenue Ministry of Finance Government of India grants exemption to inter-State supply of taxable goods by a registered supplier to a registered recipient for export as is in excess of the amount calculated at the rate of 0.1% subject to fulfilment of the laid down conditions therein Annxure-4. Respondent No.1 couldn’t make the export within the time limit of 90 days as required under sub clause (II) of the Exemption notification. Under the terms of tender Annexure-1 Clause 14.1.2, GST along with Cess (as applicable) legally leviabale and payable by successful supplier as per GST law shall be paid by BHEL, extra. Hence, supplier shall not include GST along with Cess (as applicable) in their quoted rates/ price. Supplier, however was under an obligation to ensure that the reduced/ concessional rate of GST as applicable for penultimate exporter vide notification No. 41/2017-Integrated Tax (Rate) dated 23rd October, 2017 or similar Notification issued by the 2 State /Union Territory GST authority is levied along with all necessary compliances. As per one of the purchase order at page 144 all inclusive total F.O.B. Port Price included all taxes and duties excluding GST. GST along with CESS (as applicable) legally leviable & payable by successful bidder as per GST Law, shall be paid by BHEL. Petitioner supplier corresponded with the Commissioner North CGST & Central Excise Commissionerate, Kolkata (Annexure-11) with a request for extension of time limit for making exports by BHEL during the period February 2019 to April 2020 and specifically referred to para 5.1 of Circular No. 37/11/2018-GST dated 15.03.2018 as per which if in cases the export have been made but not within 3 months, from the date of issue of the invoice for export, payment of Integrated Tax first and claiming refund at a subsequent date should not be insisted upon.
2. Learned counsel for the petitioner in the aforesaid background facts pleaded from the records submitted that clause 5.1 of the circular indicates that in such cases, the Jurisdictional Commissioner may consider granting extension of time limit for export as provided in the said sub-rule on post facto basis keeping in view the facts and circumstances of each case. The same principle should be followed in cases of export of services. According to the petitioner his representation remain un-responded. Such a request was also made by the recipient BHEL vide Annexure-10 on 19th August, 2021 citing delay in exports due to implementation of EDI system for the first time in riverine route in the month of June, 2019. It caused consequential cascading delays which were lined up serially to the other barges. However, petitioner was asked to pay the tax amount amounting to Rs. 9,41,49,267.71 as differential tax liable to be paid for the supplies made in the respective years 2018-19, 2019-20, 2020-21 (Annexure12). Petitioner was also asked to produce certain documents by summons dated 12th August, 2014 (Annexures- 13, 14 and 16). Similar notice for non-payment of tax amounting to Rs. 3,85,00 322/- for the same periods with the details of invoices were issued on 17th September, 2021 followed by the letter dated 29th September, 2021 asking the petitioner to pay the differential 3 amount of tax Rs.13,26,49,589/- and submit copy of the DRC-03 for the same. Petitioner was also asked to submit copies of proof of exports/Shipping bills of remaining invoices as communicated vide letter No. 5717 dated 17th September 2021 urgently for calculation of tax liability, if any, along with reconciliation statement of ITC.
3. Learned counsel for the petitioner has also placed the copy of the letter bearing No. 1042 dated 21.02.2022 issued by the Deputy Commissioner (Prevention) CGST & Central Excise, Ranchi has been sent today through Whatsapp and is being taken on record.
4. Learned counsel for the petitioner has pointed out from the letter dated 21.02.2022 that the payment of Rs. 11.27 crores against the liability of Rs. 13.26. crores has been acknowledged by the department. However, respondent No.2 has also requested to pay Rs.5,12,71,194/- towards interest on differential tax amount of Rs.11.27 crores, which has been paid against supply to M/s BHEL, Kolkata at concessional rate of tax @ 0.1% for export along with penalty @ 15%, failing which recovery under Section 79 of CGST and Central Excise will be initiated against it as per Section 75 (12) of the CGST Act, 2017.
5. Learned counsel for the petitioner in these background facts has argued that because of delay in export by the respondent no.1 petitioner is being made liable to pay the differential tax though all the compliances were required to be made by respondent No.1-BHEL the recipient. Respondent No.1 being a State entity under the terms of the tender and also the purchase order is required to pay the GST leviable and payable by the supplier. Respondent No.1 has however surprisingly denied to compensate the petitioner with the additional IGST liability vide its letter dated 2nd November 2021 (Anneuxre-22). Respondent No.2 instead of making the respondent No.1 recipient liable for the payment of the additional IGST has instead raised the demand of Rs.13.26 crores against the petitioner and on threat of coercion petitioner has been made to pay an amount of Rs.11.27 crores with the balance tax amount of Rs. 1.99 crores to be paid.
6. In these background facts and based on the relevant materials on record learned counsel for the petitioner has prayed for an interim protection from any further coercive steps being taken against the petitioner pending adjudication of this dispute.
7. He contends that both respondent Nos. 1 and 2 are State authorities and the dispute is amenable to the writ jurisdiction.
8. Learned counsel for the respondent No.2 submits that the grievances of the petitioner are essentially directed against the respondent No.1.
9. Learned counsel for the respondent No.2 Mr. P.A.S.Pati prays for three weeks’ time to file counter-affidavit. One week time thereafter is allowed to the petitioner to file reply, if so advised.
10. Let notice be issued on respondent No.1 under registered cover with A/D and speed posts for which requisites etc. must be filed by Friday.
11. Let notice be additionally effected by the petitioner upon the official email address of the respondent no.1 containing the attachment of the entire pleadings and its enclosures by Friday and a supplementary affidavit to that effect be filed in the next week.
12. Let the matter appear on 31st March, 2022.
13. In the meantime no further coercive steps be taken against the petitioner.