Classification Dispute of CCTV Installation as Works Contract u/s 2 GST Act: Delhi HC Directs to Avail Appellate Remedy [Read Order]

The Delhi High Court has refused to entertain a writ petition in a classification dispute pertaining to the classification of CCTV installation services, holding the assessee to avail the remedy under the Central Goods And Service Tax Act.

The Division Bench consisting of Justice Ajay Digpaul and Justice Nitin Wasudeo Sambre held that in the presence of an efficacious alternative remedy under the Act the writ petition is not maintainable and the petitioner is at liberty to avail the remedy under Section 107 of the CGST Act.

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The petitioner, being a supply and installation company of CCTV equipment, was selected for GST audit from FY 2017-18 to 2021-22. Though an amount of ₹49.52 lakh, which was initially due was paid during the audit a SCN was issued proposing a massive demand of over ₹19.97 crore alleging that the petitioner had wrongly classified its service as a works contract taxable at 12% instead of a higher rate applicable to the service.

The petitioner Technosys Integrated Solutions Pvt. Ltd. argued that the service of installing CCTV equipment qualifies to be a works contract service as per Section 2(119) of the CGST Act, which qualifies for a concessional rate of tax.

Further, the petitioner also argued against the inclusion of multiple financial years being decided in a single case as the issue was of an interpretational nature. However the Revenue department contended that the classification which has been followed is incorrect and the demand and penalties have been justified.

Therefore,the court held that the issue involves a detailed examination and such a classification and rate issue has to be decided by the appellate authority and the principles laid down in the Supreme Court in the case of Harbanslal Sahnia v. Indian Oil Corporation Ltd. regarding the interference in the jurisdiction of the Writ Court where alternative remedies exist.

As a result the court dismissed the Writ Petition and held that the classification issue including the issue regarding the classification of the works contract in the case of the CCTV installation has to be raised through the statutory appellate mechanism.

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