In a recent case, the High Court of Madras has held that procurement of “Holographic Labels” from Govt. for affixing in Alcoholic liquor bottles is procurement of “goods”. The court further held that If the petitioner has paid tax on Reverse Charge Basis (RCB) by mistake, it is entitled to claim refund under Section 54 of the respective GST enactments.
M/s.United Breweries Limited,the petitioner challenged the Impugned Order-in-Appeal No.03/2021 dated 21.01.2020 passed by the 1st respondent Joint Commissioner of GST & CE (Appeals II). By the said Impugned Order-in-Appeal dated 21.01.2021, the 1st respondent has rejected the Appeal filed by the petitioner against Order-in-Original Notification No.13/2017 Central Tax (Rate) dated 20.08.2020.
The 2nd respondent as the Original Authority had earlier rejected the refund claims of the petitioner. It is the case of the petitioner that the “holographic stickers” purchased by the petitioner from the Prohibition and Excise Department was supply of goods and not service and therefore not liable to tax in terms of Notification No.13/2017 Central Tax (Rate) dated 28.06.2017.
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It is further submitted that service by way of grant of alcoholic liquor licence, against consideration in the form of license fee or application fee or by whatever name it is called by the State Government in which it is engaged as public authorities shall be treated neither as a supply of goods nor a supply of service in terms of Notification No.25/2019 – Central Tax (Rate) dated 30.09.2019. It is therefore submitted that the petitioner was entitled to refund of the amount paid on tax on Reverse Charge Basis under Notification No.13/2017 Central Tax (Rate) dated 28.06.2017.
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The case of the petitioner is that since the petitioner is purchasing “holographic stickers” from the Prohibition and Excise Department, it is not taxable in the hands of the petitioner as there is no Notification issued under the provisions of the respective GST Enactment of 2017, which mandates payment of tax on Reverse Charge Basis (RCB) for sale of holographic stickers.
On the other hand, if the supply of “holographic sticker” (excise label) is treated as a supply of “goods”, it would be outside the purview of tax payable by Reverse Charge Basis (RCB) at Sl.No.5 to Notification No.13/2017Central Tax (Rate) dated 28.06.2017.
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A single bench of Justice C.Saravanan observed that the activity of grant of excise license for consideration in the form of license fee / application fee is neither a supply of “goods” nor the supply of “services” within the meaning of Section 7(2) of the respective GST enactments in view of Notification No.25/2019-Central Tax (Rate) dated 30.09.2019, there is no merits in the Impugned Orders.
The supply of “holographic stickers” (excise labels) cannot be construed as supply of “service” under Section 2(52) of the respective GST enactments. The “holographic stickers” (excise labels) are not “services” within the meaning of Section 2(102) of the respective GST enactments.
The court further held that If the petitioner has paid tax on Reverse Charge Basis (RCB) by mistake, it is entitled to claim refund under Section 54 of the respective GST enactments. The Impugned Order dated 21.01.2021 passed by the 1st respondent upholding the Order dated 20.08.2020 of the 2nd respondent are quashed by the court.
The 2nd respondent is directed to process the refund claims of the petitioner and refund the amounts paid by the petitioner, strictly in accordance with Section 54 of the respective GST Acts read with Rule 89 of the respective GST rules in the light of the above observations, within a period of 3 months.
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