Zodiac Energy Ltd. Vs Assistant Commissioner of State Tax (Gujarat High Court)
The Hon’ble Gujarat High Court in the case of Zodiac Energy Ltd. v. Assistant Commissioner of State Tax [R/Special Civil Application No. 13397 of 2024, order dated July 17, 2025] held that the revenue authority cannot invoke Section 74 and the extended limitation period of five years without establishing fraud, wilful misstatement, or suppression of facts, and where the normal limitation period under Section 73 has expired, proceedings under Section 74 are impermissible in the absence of such mens rea.
Facts:
Zodiac Energy Ltd. (“the Petitioner”) is engaged in the business of supply and installation of Solar Power Generating Systems through composite contracts. For transactions executed in Financial Year 2017-18, the Petitioner charged GST at 5% treating the supply as composite supply under Section 8 of the GST Act.
On December 31, 2018, the Government issued Notification No. 24/2018 clarifying that such transactions would be treated as ‘works contract’ attracting GST at 18% on 30% of the value, as supply of service and 5% on 70% of the value as supply of goods. However, this notification was applicable prospectively from January 1, 2019.
The Revenue Authority (“the Respondent”) issued a communication dated October 19, 2020, under Section 73 proposing to levy GST at 18% on the Petitioner’s pre-2019 transactions. The Petitioner challenged this communication through Special Civil Application No. 6274 of 2021, which was withdrawn on February 1, 2024, as the three-year limitation period under Section 73 had expired.
