M/s ANI Technologies Private Limited vs State of Telangana

HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) THURSDAY, THE SIXTEENTH DAY OF JUNE TWO THOUSAND AND TWENTY TWO PRESENT THE HONOURABLE THE CHIEF JUSTICE UJJAL BHUYAN AND THE HONOURABLE MRS JUSTICE SUREPALLI NANDA WRIT PETITION NO: 25630 OF 2022 Between: M/s ANI Technologies Private Limited, 3rd Floor, S 1, NSL Centrum, Survey No 1043 1048, Kukatpally Balanagar Mandal, Ranga Reddy, Telengana, 50OO72 Represented by it's authorized representative, Saumya.

M, D/o lvladhava Murthy M, aged about 28 years., Occ.

Senior Manager of Petitioner Company R:/o.

Bengaluru, Karnataka.

Address for Communication.

140, Wing C, Prestige RMZ Startech, lndustrial Layout, Koramangala, Hosur Road, Bangalore, Bengaluru (Bangalore) Urban, Karnataka, 560095.

AND 1.

State of Telangana, Through its Secretary Finance Department 5th Floor, Burgula Rama Krishna Rao Bhavan, NH 44, Hill Fort, Adarsh Nagar, Hyderabad, Telangana 500063.

2.

Special Commissioner (ST), Enforcement Wing, Commercial Tax Department, C.T.

Complex, Nampally, Hyderabad - 500 001.

3.

Assistant Commissioner (ST)-1, Enforcement Wing, Commercial Tax Department, C.T.

4.

Assistant Commissioner, Hyderabad Rural, STU-2 Hyderabad.

5.

Joint Commissioner, Appeals - I Commissionerate, Hyderabad. ...RESPONDENTS Petition Under Article 226 of lhe Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue an appropriate Writ, Direction or Order, particularly one in the nature of Mandamus under Article 226 of the Constitution of lndia. (a) Calling for all papers and proceedings of the Petitioner's case pertaining to the lmpugned Order No.

AD3601210026202-1 dated 04.02.2022 passed by the Assistant Commissioner (ST)-l Enforcement Wing i.e Respondent No.

3 for Financial Year ... l Year ...PETITIONER 2O1B-19 under Section 73 of the Telangana Goods and Services Tax Act, 2017 read with Section 73 of the Central Goods and Services Tax Act, 2017 and afler examining the validity, legality and propriety thereof, quash and set aside the lmpugned Order raising a demand of Rs.

2,38,72,1'12.681-. (b) Calling for all papers and proceedings of the Petitioner's case pertaining to the Recovery Notice dated 08.06.2022 bearing Reference No.

36AAJCA13B9G7ZE issued by the Re spondent No.

3 and after examining the validity, legality and propriety thereol, quash and set aside the Recovery Notice for recovery of the amount of Rs.

2,38,72,112.681 - issued pursuant to the lmpugned Order No.

AD3601210026202-1 daled 04.O2.2022. (c) ln the alternative, direct Respondent No.

5 to accept and unconditionally hear the appeal to be filed by the Petitioner againsl lmpugned Order No.

AD3601210026202-1 daled 04.02.2022 passed by the Asr;istant Commissioner (ST)-l Enforcement Wing without insistence of any deposit( including 1 0 percentage) of the disputed tax liability under Section 107 of the --elangana Goods and Services Tax Act, 2017 rcad with Section 73 of the Central Goods and Services fax Acl,2017. |.A.NO:'t OF 2022 F)etition Under Section 151 CPC praying that in the circumstances stated in the zrffidavit filed in support of the petition, the High Court may be pleased to grant stay of operation of the lmpugned Order No.

AD3601210026202-1 daled 04.O2.2022 passed by the Assistant Commissioner (ST)-l Enforcemenl Wing i.e Respordent No.

3 for Financial Year 2018-19 and restrain the Respondents and/or its su bord inates/agents from taking any coercive action pursuant to the lmpugned Order till the final disposal of the instant writ petition.

Fetition Under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to grant stay of operation of the Recovery Notice dated 08.06. ted 08.06.2022 bearing Reference No.

36AAJCA'I 389G7ZE issued by the Respondent No.

3 and restrain the Respondents and/or its su bord inates/agents from taking any coercive action pursuart to the lmpugned Order till the final disposal of the instant writ petition.

Counsel for the Petitioner : SRI.MAMILLA ASHWIN REDDY Counsel for the Respondent No.1 : GP FOR FINANCE AND PLANNING Counsel lor the Respondent Nos.2 to 5 : SRI.K.RAJI REDDY SENCOR SC FOR COMMERCIAL TAX The Cor"rrt made the following ORDER l.A.NO:.2 OF 2022 THE HONOURABLE SRI JUSTICE UJJAL BHUYAN AND THE HONOURABLE MRS JUSTICE SUREPALLI NANDA WRIT PETITION No.2563o of 2022 ORDER: (Per Hon'ble Sri Justice Ujjal Bhugan) Heard Mr.

Tushar Jarwal, learned counsel appearing on behalf of Mr.

Mamilla Ashwin Reddy, learned counsel for the petitioner and Mr.

K.Raji Reddy, learned Senior Standing Counsel, Commercial Tax for the respondents 2 .

By filing this petition under Articl e 226 of the Constitution of India, petitioner has challenged legality and validity of the order dated O4.O2.2O22 issued bv the 3.d respondent le',ry"ing total tax (CGST SGST) of + Rs.2,38,72,112.68 for the audit period April, 2Ol8 to March, 2019 as well as the consequential notice dated 08.06.2O22.

Petitioner before us is a private limited company registered under the provisions of the Companies Act, 1956, having its registered office at Bengaluru in the State of l(arnataka though it has its business presencc in various -----7 I 1 I I UB,J&SN,J W.P.No.2563O of 2022 States including the State of Telangana. petitioner under the 'fade name 'Ola' is engaged in the business of providing internet platform/mobile application services where the rlriver partners provide passenger transportation services to the customers.

It is clarified that petition er per se is not engaged in providing passenger transportation senrice.

It is only providing an electronic platform to the driver partners and to the customers.

4 . omers.

4 .

Petitioner is registered with the Goods and Sr-'rvices Ta-r (GST) authorities in the State of Telangana.

It is the case of the petitioner that for transportation services rendered by the drivers outside the State of Telangana, it has been charged Integrated Goods and Services Tax (IGST) which it has paid.

Insofar this case is concerned, petitioner has paid IGST amounting to Rs.2,38,72,1 12.0O lor the period under consideration.

6 .

A notice for short payment of tax dated 2 I 02.03.2020 tvas issued to the petitioner by the 3.a UB,J&SN,J W.P.No.25630 of 2022 respondent.

As per the said notice, the supplier of service and place of supply were found to be located in the State ol Telangana.

Therefore, a view was taken by the 3.d respondent that State Goods and Services Tax (SGST) and Central Goods and Services Tax (CGST) had to be paid by the petitioner and not IGST.

Pointing out that a total amount of Rs.325,29,49,802.00 was to be paid by the petitioner, a notice lor short payment of tax was issued.

7. [n response thereto, petitioner submitted a detailed reply on 19.O3.2O2O pointing out that petitioner had rightly paid IGST lor the audit period arrd was not required to pay CGST and SGST.

B.

By the impugned order dated 04.O2.2022, explanation furnished by the petitioner was not accepted whereafter 3.t respondent took the view that CGST and SGST were required to be paid by the petitioner on its turnover and for the period from April, 2O 18 to March, 2O 19, a total amount of Rs.2,38,72,112.68 covering both CGST and SCST were required to be paid.

Since the dealer (petitioner) b_v not 3 I I UB,J&SN,J W.P.No.2563O of 2022 paying CGST and SGST has committed an offence .ihereunder, penalty proceedings have been initiated.

This is lbllowed by notice dated 08.O6.2022 issued by the 3'a respondent to the petitioner for payment of the above tax.

9. ve tax.

9.

Learned counsel for the petitioner has referred to liection 7 of the Integrated Goods and Services Tax Act, 2Ol7 (rriefly referred to hereinafter as the 1GST Act') and submits t.:at as per Sub-Section (3) thereof, supply of services where the location of the supplier arrd the place of supply are in two different States; or in two different Union Territories; or in o:re State and one Unior-r Territory, it shall be treated as a supply of services in the course of inter state trade or commerce though the same is subject to the provisions of Sr-.ction 12 of the IGST Act.

As per Section B(2) of the IGST At:t, subject to the provisions of Section 12 of the IGST Act, stLpply of services where the location ol the supplier and the place of supply of services are in the same State or sarne Utrion Territory, it shall be treated as inter-state supply.

4 pection 12 of the IGST Act deals r.vith place of supply of 1 -7 UB,J&SN,J W.P.No.25630 of 2O22 services where location of supplier and recipient is in India.

Sub-Section (9) is relevant.

It says that the place of supply of passenger transportation service to a registered person shall be the location of such person and if it is to a person other than a registered person, it shall be the place where the passenger embarks on the conveyance for a continuous journey.

Thus, what Sub-Section (9) of Section 12 of the IGST Act provides is that the place of supply of passenger transportation service to a registered person would be the location of such person, but if the person is other than a registered person, it shall be the place where the passenger embarks on the conveyance for a continuous journey.

10.

Learned counsel for the respondents submits that petitioner should pay the demand and claim refund of IGST.

Alternativelv he can file appeal.

1 1.

Submissions made have been considered.

12. lt is prirna facie evi.dent that if the passenger is 5 not registered under CST and avails transportation service, I UB,J&SN,J W.P.No. ,J W.P.No.2563O of 2O22 by way of legal fiction the place of supply would be the place where the passenger embarks or starts his journey.

13.

Keeping the above legal provision in mind, we may irdvert to the impugned order dated 04.02.2022.

Though the i}.d respondent has referred to provisions of Section l2(9) ot the IGST Act, he has however erroneously recorded that in c:ase of unregistered recipient, the place of supply shall be the lrcation of such recipient, which pima facie appeats to be in contravention of Section 12(91 of the IGST Act.

Thereafter, 3.a r,espondent levied the tax as noted above and issued notice for payment.

14.

We are afraid the contentions raised by the p,3titioner, more particularly the requirement to pay IGST under Section 12(91 of IGST Act and correspondingly the non- li:rbility to pay CGST and SGST insofar the transportation se'rvices rendered by the drivers were not considered in the right perspective.

That apart though the impugned order is a lengthy one, the substantive portion appears to be without dtre application of mind to the legal provision.

6 UB,J&SN,J W.P.No.2563O of 2022 15.

That being the position, we would not like to relegate the petitioner to the forum of appellate remedy since the question as to applicability of Section 12(91 of the IGST Act would go to the root of the contention raised by the petitioner.

16.

Accordingly, we set aside the order dated 04.O2.2O22 and remand the matter back to the 3.d respondent lor a fresh decision in accordance with law after giving notice of hearing as well as opportunity of hearing to the petitioner.

Since the petitioner is before the Court, let him appear belore the 3.,1 respondent within a period of three (03) weeks from today and file additional submissions, if considered necessary.

Third respondent to consider the submissions of the petitioner and thereafter pass fresh orders in accordance with law rvithin a period of four (04) weeks from the date of filing of additional submissions b missions by the petitioner.

Needless to say since we have set aside the impugned order dated 04.O2.2O22, the consequential notice daJed 08.06.2022 v,o:uld also stand quashed.

7 t B UB,J&SN,J W.P.No.2563O of 2O22 17.

This disposes of the Writ petition.

However, there l;hall be no order as to costs.

18.

As a sequel, miscellaneous applications pending, il-any, in this Writ petition, shall stand closed.

SD/-I.NAGALAKSHMI DEPUTY ISTRAR //TRUE COPY' SEC FFICER \ To 1.

10 S.A PS 4 5 6 7 8 The Secretary, Finance Department Sth Floor, Burgula Rama Krishna Rao Bhavan, NH 44, Hill Fort, Adarsh Nagar, Hyderabad, State of Tetangana at Telangana 500063.

The Special Commissioner (ST), Enforcement Wing, Commercial Tax Department, C.T.

Complex, Nampally, Hyderabad --500 00 j.

The Assistant Commissioner (ST)-1, Enforcement Wing, Commercial Tax Department, C.T.

Complex, Nampally, Hyderabad - 50b 001.

Tl",e Assistant Commissioner, Hyderabad Rural, STU-2 Hyderabad.

The J^oint Commissioner, Appeals - I Commissionerate, Hyderabad_ Trrro CCs to GP FOR FINANCE AND PLANN|NG, High Court for the State of Telangana at Hyderabad. [OUT] Orre CC to SRI.MAMILLA ASHWIN REDDY, Advocate IOPUC] OTIe CC to SRI.K.RAJI REDDY SENCoR SC FoR CoMMERCIAL TAX IoPUCI Two CD Copies One spare copy I I HIGI{ COURT DATED:1610612022 ORDER WP.1,1o.25630 of 2022 DISPOSING OF THE W.P WITHOUT COSTS.

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