Kerala HC issued notice to Govt. in writ challenging GST on goods and services provided by Association to its members
Kerala High Court Advocates’ Association (Petitioner) filed a Writ Petition challenging GST on goods and services provided by the Petitioner to its own members.
The Members of the Petitioner Association are Advocates enrolled on the rolls maintained by the Bar Council of India ordinarily practicing in the Honorable High Court of Kerala. The Petitioner Association had been acting as an agent for its members in the matter of distribution of various essential items to its own members and for providing various essential facilities to its own members.
The Petitioner constructed a building for the chamber complex of lawyers’ and they have been occupied by members only, this venture was done long before the coming into force of the Central Goods and Services Tax Act, 2017 (“CGST Act”) as well as Kerala State Goods and Services Tax Act, 2017 (“KGST Act”).
The building was named as KHCAA Golden Jubilee Chamber Complex. A portion of the complex is used as a canteen for members, organic shop for members, given on a licensed basis. Banks run by outside agencies for the convenience and service of the Members of the Association also occupy a small portion of the Complex on a license basis. The income derived from the licensed premises is also used for the benefit of the members only. Hence the said income is not liable to be taxed under the CGST/KGST Acts as the proceeds therefrom are used for the benefits of the welfare of the members.
The primary contention of the Petitioner was that such a levy of GST would attract the ‘doctrine of mutuality’ as there could be no supply of goods from it to its members. Furthermore, the Petitioners argued that from the legal and factual perspective the Petitioner is a lawyers’ combination for assisting themselves in exclusively conducting cases before the Honorable High Court of Kerala. It cannot be termed as a taxable entity under the CGST/ KSGST Act.
After taking cognizance of all the facts and evidences, the Honorable Kerala High Court observed that Petitioners made out a prima facie case, which merits admission and on the basis of this observation the Court issued a Notice to the State Government on the plea of the Petitioner challenging the GST levied on the goods and services provided to its own members.
FULL TEXT OF THE HIGH COURT JUDGMENT
Writ petition (civil) praying inter alia that in the circumstances stated in the affidavit filed along with the WP(C) the High Court be pleased to
i)issue interim direction to the respondents to accept all pending and future returns of the first petitioner under the Central Goods and Services Tax Act, 2017 and Kerala State Goods and Services Tax Act, 2017 since March 2021 provisionally without insisting on conceding tax liability on distribution of various articles and goods to its own members or for providing facilities to its own members pending disposal of the Writ Petition.
ii)stay all further proceedings as per Exhibits P5, P5(a), P5(b),P5(c) and P5(d) Notices and all consequential proceedings under the Central Goods and Servies Tax Act, 2017 and Kerala State Goods and Services Tax Act, 2017 against the petitioners pending dispsoal of the Writ Petition.
This petition coming on for admission upon perusing the petition and the affidavit filed in support of WP(C) and upon hearing the arguments of M/s.K.M.FIROZ, M.SHAJNA, Advocates for the petitioners, GOVERNEMNT PLEADER for RI to R3, SRI.SREELAL WARRIER, STANDING COUNSEL for R4 to R7 and of ASG OF INDIA for R8, the court passed the following:
After hearing the exhaustive arguments of Adv.Firoz K.M., the learned counsel for the petitioner, I am satisfied that the petitioners have made out a prima facie case, which merits admission. Accordingly, the writ petition is admitted.
2. Learned Government Pleader takes notice on behalf of respondents 1 to 3, Adv.Sreelal Warrier, learned Standing Counsel takes notice on behalf of respondents 4 to 7 and learned ASGI takes notice on behalf of the 8th respondent.
3. The interim relief sought for by the petitioners is too wide and the same will have the tendency to interdict or control the procedure that the Assessing Officer must adopt. It is not for this Court to control the Assessing Officer that too at the present stage. However, since the petitioners have raised a prima facie case for consideration, the petitioners shall be free to file the returns contemplated under the Central Goods and Services Tax Act 2017 as well as the Kerala State Goods and Services Tax Act, 2017 in accordance with law. The filing of returns will be subject to the contentions raised in the present writ petition.
4. The learned counsel for the petitioners also points out that pursuant to Ext.P5, the respondents may proceed to assess the petitioners even without any consideration of the contentions raised in this writ petition and without hearing. It is clarified that the proceedings, if any, initiated pursuant to clause (3) in Ext.P5 series of notices will be subject to the result of the writ petition and the further orders from this Court.