Case Law Details
ESL Steel Limited Vs Bharat Heavy Electricals Limited (Jharkhand High Court)
The original dispute for which the petitioner came before us was the incidence of tax liability that had fallen upon the petitioner on account of delay in making export within the specified time in terms of the notification dated 23rd October, 2017. Petitioner had to deposit considerable amount of tax in absence of such extension of time as has been taken note of in the order dated 23rd February, 2022. Since such extension of time has been granted now by the competent authority under CGST in terms of Rule 96A(1) (a) of CGST Rule, 2017 in respect of LUTs made under seven export invoices, the instant grievances raised before this court do not survive. It is now upto the petitioner to approach its jurisdictional GST authority for refund of the tax deposited and / or its reversal, which he may do so. Writ petition is accordingly disposed of. Needless to say, this Court is not required to make any comment on claim of the petitioner for refund and / or its reversal, which is to be decided by the concerned jurisdictional GST Authority of the petitioner.
FULL TEXT OF THE JUDGMENT/ORDER OF JHARKHAND HIGH COURT
Heard learned counsel for the parties.
2. Writ petition was preferred with the following prayers:
(a) For issuance of an appropriate writ/order/direction or a declaration thereby declaring that the denial by the Respondent No. 1 vide its letter dated 2 November 2021 (Annexsure-22) to compensate the Petitioner company with the additional IGST liability demanded vide letters dated 28 July 2021 (Annexure-12), 17 September 2021 (Annexure-17) and 29 September 2021 (Annexure-18) by the Respondent No. 2, is arbitrary, unreasonable and violative of Article 14, Article 19(1)(g) and 300A of the Constitution of India and contrary to and beyond the terms of the Tender dated 3 January 2019 and Purchase Order dated 16 January 2019;
(b) For issuance of an appropriate writ/order/direction or a declaration thereby directing the Respondent No. 1 to pay the Petitioner the additional Integrated Goods and Services Tax amounting to Rs. 13,26,49,589/- and the applicable interest and penalty, which has been demanded by the Respondent No. 2 vide its letters dated 28 July 2021 (Annexure-12), 17 September 2021 (Annexure-17) and 29 September 2021 (Annexure-18).
3. The instant writ petition has been filed by the Petitioner seeking a declaration that denial by the Respondent No. 1 vide its letter dated 02.11.2021 to compensate the petitioner with additional IGST liability demanded by the Respondent No. 2 vide letters dated 28.07.2021, 17.09.2021 and 29.09.2021, is arbitrary, unreasonable and violative of Article 14, 19(1)(g) and 300A of the Constitution of India and contrary to the terms of the Tender dated 03.01.2019 and Purchase Order dated 16.01.2019. Petitioner also seeks a direction on the Respondent No. 1 to pay to the petitioner additional IGST amounting to Rs. 13,26,49,589.00 and the applicable interest and penalty which has been demanded by the Respondent No 2 vide its letters dated 28.07.2021, 17.09.2021 and 29.09.2021.
4. During the pendency of the instant writ petition, petitioner has also filed one interlocutory application being IA No. 2715/2022, seeking addition of the following two prayers:
(a) For quashing and setting aside the demand notices dated 21.07.2021, 17.09.2021, 29.09.2021 and 21.02.2022 issued by the Respondent No. 2 being arbitrary, unreasonable and violative of section 73 and 74 of the CGST Act and Article 14 and 19(1)(g) of the Constitution of India and violative of principles of natural justice.
(b) For directing the Respondent No. 2 to forthwith refund the amount of Rs. 11,27,29,864.00 paid as IGST by the petitioner through GSTR-3B return filed for the month of November 2021 and to recover the same from the Respondent No. 1 along with interest and penalty, if applicable.
5. Upon hearing learned counsel for the parties, the following order was passed on 23rd February, 2022.
“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 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 (Annexure-12). 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 Whatsup 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.”
6. Respondent no. 1 appeared only after the order was passed on 5th July, 2022. By order dated 10th August, 2022, this Court taking note of the delay caused in taking a decision on the application for extension of timeline of 90 days imposed under Notification dated 23rd October, 2017 of Ministry of Finance by Respondent-BHEL by the Commissioner, North CGST & Central Excise Commissionerate, Kolkata, directed the learned counsel representing the respondent no. 2 to take instruction on this issue. It was felt that if extension of timeline is not granted for making the export, tax has to be paid. If extension is granted, the supplier would get the benefit of exemption from tax in excess of the amount calculated at the rate of 0.1% in respect of the supplies made. Now such decision has been taken.
7. Respondent no. 1 has filed counter affidavit on 17th October, 2022 and brought on record the letter dated 6th October, 2022 issued by the office of the Principal Commissioner, CGST & Central Tax, Kolkata North Commissionerate, by which it has been communicated that the competent authority has been pleased to grant extension of time limit for export under LUT in terms of Rule 96A (1) (a) of CGST Rules, 2017 for the delay caused in export made under seven Export Invoices stated in the said letter. Learned counsel for the respondent no. 1 submits that now it is upto to the petitioner to approach its jurisdictional GST authorities to seek refund of the voluntary payment of tax made by it on account of differential amount of IGST.
8. Learned counsel for the respondent no. 5, Mr. P.A.S. Pati submits that statement of facts have been received. Based on that, learned counsel for the respondent no. 5 also submits that extension of time limit for export under LUT under 7 Export Invoices have been granted vide letter dated 6th October, 2022 by the competent authority. The decision has been taken strictly within the ambit of Rule 96A (1) (a) of CGST Rules, 2017 since if the request of exporter had not been accepted, the entire IGST foregone by the exporter on the exports made by them under these seven export invoices, would have become liable to be paid forthwith in terms of LUTs furnished by them. Learned counsel for the respondent no. 5, in particular, relies upon para-10 of the statement of facts, which reads as under:
“10. That it is stated that Respondent No. 5 is not the competent authority to take any decision on the applicability or otherwise of the concessional rate of GST availed by M/s ESL Steel Limited (the Supplier) under Notification No. 40/2017-CTR dated 23.10.2017 and Notification 41/2017-ITR dated 23.10.2017, since this decision has to be taken by the competent jurisdictional authorities of the Supplier, after taking into consideration, inter alia, whether there is any legal provision to extend the time periods specified in the said Notifications.”
9. Learned counsel for the petitioner, Mr. Bharat Rai Chandani fairly submits that no contentious issue remains to be decided by this Court. Petitioner shall approach the jurisdictional GST authorities for refund of the tax already paid and / or its reversal. He submits that the instant writ petition, therefore, may be disposed of in the light of the decision taken by the competent authority of CGST as contained in the letter dated 6th October, 2022.
10. We have considered the submission of learned counsel for the parties and taken note of the developments that have occurred during pendency of the writ petition. The original dispute for which the petitioner came before us was the incidence of tax liability that had fallen upon the petitioner on account of delay in making export within the specified time in terms of the notification dated 23rd October, 2017. Petitioner had to deposit considerable amount of tax in absence of such extension of time as has been taken note of in the order dated 23rd February, 2022. Since such extension of time has been granted now by the competent authority under CGST in terms of Rule 96A(1) (a) of CGST Rule, 2017 in respect of LUTs made under seven export invoices, the instant grievances raised before this court do not survive. It is now upto the petitioner to approach its jurisdictional GST authority for refund of the tax deposited and / or its reversal, which he may do so. Writ petition is accordingly disposed of. Needless to say, this Court is not required to make any comment on claim of the petitioner for refund and / or its reversal, which is to be decided by the concerned jurisdictional GST Authority of the petitioner. Pending I.As are closed.
