In a recent decision the Karnataka High Court observed that tax exemption cannot be denied to government’s helicopter pilots trainer on non-furnishing of GSTIN.
The petitioner was issued with notice in Form GST DRC-02 on 29.11.2022 for the period from 2018-19 to 2021-22 referring to the audit report and calling upon the petitioner to show cause against the additional tax liability in a sum of Rs.22,80,51,322/-.
The proceedings was initiated with the issuance of DRC -1A and DRC -01 alleging inter alia that the petitioner has discharged tax under wrong head i.e. IGST on the aforesaid supply instead of discharging SGST and CGST and causing loss to the State Exchequer.
These proceedings are initiated because the authorities have opined that in the absence of GSTIN and PAN, the place of supply will be in Karnataka [the place of petitioner’s registered address] according to Section 12(5) of the IGST Act, and the services extended by the petitioner to the defence establishments in Delhi, Jharkhand and other places will not be inter-state supplies.
The petitioner asserted that it has extended invoiced supplies to the recipient establishments which had PAN/TAN, while the supplies made to the recipient establishments with PAN are reduced, the proceedings relating to TAN are continued; and that even otherwise, the petitioner is bona fide in not mentioning the GSTIN obtained by the recipient organizations, as mentioned in paragraphs 74 and 75 of the memorandum of petition.
The Government Pleader, submitted that due registration of a receiving organization would be necessary as it would be a dispositive factor to decide the place of supply under Section 12(5) of the IGST Act. The petitioner has admittedly not furnished GSTIN, and therefore, the supply must be deemed to be an intra state service liable to KGST/CGST and this Court cannot take any exception either with the second respondent or the third respondent observing that the petitioner, who has not furnished the GSTIN, is liable to pay GST within the State because the place of supply will be in Karnataka.
A Single Judge Bench comprising Justice BM Shyam Prasad observed that “This Court is of the considered opinion that, especially in the peculiarities of this case, the third respondent, to sustain the proposed demand, had to examine whether failure to furnish the details of the GSTIN, notwithstanding the other circumstances, could justify denial of exemption.”
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