In a recent ruling, the Madras High Court set aside the GST demand order issued on rent-free canteen facilities. The court remanded the matter for reconsideration as the submissions made by the assessee were not considered by the GST department.
The assessee, M/s.Erode Medical Centre filed a writ petition challenging the GST demand order on the ground of non application of mind. The petitioner’s counsel, Mr. G. Natarajan, pointed out two main defects in the impugned GST demand order.
Firstly, he addressed the imposition of GST on premises used by a third party for running a canteen. The assessee had clarified in their reply that no rent was collected for the canteen space, as it was provided as an additional facility for hospital visitors. However, this explanation was disregarded, and the GST proposal was confirmed.
Secondly, with regards to the alleged non-payment of GST on the sale of medicines, it was clarified that the petitioner did not sell any medicines during the assessment period. Instead, EMC Pharmacy (HUF) or EMC Pharmacy, a partnership firm, conducted these sales and remitted the corresponding taxes. Despite the petitioner’s reply dated 08.01.2024 pointing out this fact, the order failed to consider it, necessitating judicial interference, submitted the Counsel.
The respondents’ counsel submitted that the factual aspects as to the identity of the supplier of medicines may be required to be reconsidered.
The bench of Justice Senthilkumar Ramamoorthy observed the assessee’s assertion that no rent was collected as the space was provided as an additional facility for hospital visitors. These points were not considered in the challenged GST order, necessitating reconsideration.
It was further observed by the Madras High Court that the assessee provided prima facie evidence showing that supplies during the relevant period were made by either EMC Pharmacy (HUF) or EMC Pharmacy, a partnership firm, and that these entities collected and remitted taxes. The assessee’s affidavit and reply affirmed this.
Thus, the order was set aside, and the matter was remanded for reconsideration.
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