The Delhi High Court, comprising Justice Vibhu Bhakhru and Justice Sachin Datta, has set aside the Integrated Goods and Service Tax ( IGST) demand of ₹163,91,65,902/- against Malaysia Airlines, ruling that the company, with GST registrations in multiple states, is allowed to receive all ticket sale receipts in a single account.
The petitioner has filed the present petition, inter alia, impugning the order dated 27.04.2024 and the consequent demand notices issued by respondent no.2. The impugned order was passed under Section 73 of the Central Goods and Services Tax Act, 2017 (CGST Act) in respect of the tax period from April, 2018 to March, 2019.
The impugned order was passed pursuant to the Show Cause Notice dated 30.01.2024 based on a Special Audit Report. The SCN is founded on the reasoning that the petitioner’s response to the Special Audit Report has been found to be incomplete/ inconclusive.
Accordingly, respondent no.2 proposed to raise a demand of ₹163, 91, 65,902/- on account of Integrated Tax, Central Tax and State Tax. In addition, respondent no.2 also proposed to recover interest and penalty. It is apparent from the SCN that it did not specifically deal with the replies sent by the petitioner to the Special Audit Report. It merely stated that the same had been found to be incomplete or inconclusive
In the given circumstances, the petitioner furnished a detailed reply to the SCN, seeking to counter the allegations made in the Special Audit Report.
It was material to note that the petitioner has also contested the allegation that it had incorrectly disclosed lower revenue in the Goods and Services Tax (GST) returns in comparison to its receipts as reflected in its bank statements. It is the petitioner’s case that it held separate registrations in respect of its offices and had filed separate returns in respect of each registration. However, the bank account was common.
The Company would wish to submit that the demand raised in this observation is based upon multiple assumptions and presumptions. The auditor has recorded its finds without any application of mind to the extent that a Company having multiple GST registrations can operate a single bank account for its PAN India operations.
It has been submitted by the Company that the Company maintains a single bank account for its PAN India operations. Further, there is no requirement under GST laws to maintain separate bank accounts for separate GST registrations. Since the Company has GST registrations in multiple states, all receipts from sale of tickets in different states are received in the same bank account. SCN which is based on assumptions and presumptions is not tenable in the eyes of law and consequential demand raised in SCN needs to be dropped.
The Company would wish to submit that all proceeds are received by the Company through banking channels and all GST liability is duly discharged on the sale of tickets made from Delhi location and other GST registrations. Accordingly, the demand raised in the captioned point does not hold good.
The court held that the impugned order was liable to be set aside. It was so directed.The matter was remanded to the Adjudicating Authority for considering afresh. The Adjudicating Authority shall consider the reply and the additional submissions filed by the petitioner and take an informed decision after affording the petitioner an opportunity of being heard. Accordingly, the present petition was allowed.
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