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The Court considered the genuine mistake of the petitioner, and noted that since the petitioner was not trying to evade tax, the GST authorities should deal with the petitioner’s case sympathetically. And petitioner not to be saddled with interest and penalty, unless other reasons found.
A Division Bench of Bombay High Court, comprising of Justice K.R. Shriram and Justice A.S. Doctor disposed of a petition wherein the petitioner was paying service tax to the Union of India even after the implementation of the Goods and Service Tax 2017.
The petitioner had approached the High Court stating that the petitioner was providing advertising solutions whose bid was accepted by the UOI in 2015. One of the clauses of the General Conditions of the Contract stated that “As & when it is notified for the collection of service tax on commercial publicity contracts on railways, the contractor should pay the service tax at the applicable rates on the license fee to the Railway Administration”.
The petitioner had continued paying the GST component at 18% per annum on the value of services which was acknowledged by the respondent. The last consignment on which the GST was paid pertained to the Financial Year (FY) 2017-2018.
In December 2020, the petitioner received a notice from the Deputy Commissioner of State Tax for conducting an audit with respect to FY 2017-2018. On audit being conducted the petitioner realised that the GST paid to the railway was not paid to the government i.e., 9% SGST and 9% CGST, and hence the petitioner approached the High Court.
The ASG submitted before the court that the tax was to be paid by the petitioner on a reverse charge basis to the central government and the state government. The ASG also produced before the court the invoices that were issued.
The court while disposing of the petition noted that the petitioner has not attempted to evade tax but has made the mistake of paying the CGST and SGST to UOI through Indian Railways instead of paying it to the Central Government and State Government respectively.
The court directed the Indian Railways to refund the amount back within one week and also directed the petitioner to pay the amount within one week of receiving it. The court also directed the GST authorities to open the portal for the petitioner for payment of the tax amount.
The court in its order further noted that:
“We also hope that in view of the unusual facts and circumstances of this case, the CGST authorities and SGST authorities would consider petitioner’s case sympathetically when it comes to interest and penalty. Unless they have some other reason, petitioner should not be saddled with interest and penalty”
Case Title: Arun Krishnachandra Goswami Vs Union of India
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