NCS Pearson Inc. Minnesota Based Corporation Vs Union of India Through Its Secretary (Karnataka High Court)
Karnataka HC Quashes GST Show Cause Notice Because Department Already Knew All Facts; No Wilful Suppression Under GST When Classification Dispute Was Already Before Authorities; GST Extended Limitation Invalid Where Revenue Had Prior Knowledge of Transactions; Karnataka HC Quashes Section 74 Notice Because Intent to Evade Tax Was Not Established; Prior Disclosure Before AAR and AAAR Defeats GST Suppression Allegation; Karnataka HC Says Section 74 Requires Positive Evidence of Deliberate Suppression; Karnataka HC Rules Department Cannot Allege Suppression After Participating in Advance Ruling Proceedings; Extended GST Demand Set Aside Because Classification Issue Involved Bona Fide Interpretational Dispute.
The Karnataka High Court partly allowed the writ petition filed by a GST-registered assessee challenging a show cause notice issued under Section 74 of the CGST Act alleging wilful suppression in relation to GST liability on Type-III tests classified as OIDAR services.
The petitioner, engaged in providing computer-based test administration solutions including GMAT examinations, had earlier approached the Authority for Advance Ruling (AAR) in January 2020 seeking clarification on whether Type-II and Type-III tests qualified as OIDAR services under GST law. The AAR ruled in May 2020 that Type-II tests qualified as OIDAR services, while Type-III tests did not. Subsequently, the Revenue appealed before the Appellate Authority for Advance Ruling (AAAR), which reversed the finding relating to Type-III tests in November 2020 and held them taxable as OIDAR services. The petitioner challenged the AAAR ruling before the Karnataka High Court in a separate writ petition where interim protection against coercive recovery had been granted.
