GST Liability on Construction of Mauritius Supreme Court: Madras HC Dismisses Writ as Premature, Directs to File Reply [Read Order]

Justice Krishnan Ramasamy, while rejecting the petition, directed the company to file a detailed reply with supporting documents before the authorities instead of approaching the Court at the stage of show cause notice.

Renaatus Projects, a Chennai-based construction company, had secured the contract from NBCC (India) Limited in 2017 to construct the Supreme Court building in Mauritius. To execute the project, the company established a Foreign Branch Office (FBO) in Mauritius, obtained corporate and business registration, and registered under the Mauritius VAT Act.

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The entire project was executed abroad, with invoices raised in USD and payments handled exclusively through Mauritius accounts. The company contended that since both the service provider (its FBO) and recipient (NBCC’s Mauritius branch) were registered in Mauritius, the supply was rendered outside India and not taxable under Indian GST law.

However, the Directorate General of GST Intelligence (DGGI), Chennai, issued a show cause notice in July 2024 demanding GST on the project.

The Department argued that both the supplier (Renaatus) and recipient (NBCC) were Indian entities and that under Section 12(3) of the IGST Act, 2017, the place of supply was the location of the recipient in India. Therefore, the transaction amounted to an inter-State supply taxable under the IGST Act.

The petitioner argued that the notice lacked territorial and legal jurisdiction since the project was wholly executed in Mauritius. It claimed that the issuance of the SCN was arbitrary and contrary to law, and urged the Court to quash it.

The High Court said that when an elaborate show cause notice is issued raising factual issues, the proper course for an assessee is to submit a reply with relevant documents and allow the Department to adjudicate.

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The bench noted that only after such an order is passed can the assessee approach appellate forums or the Court.

The court, referring to the Telangana High Court’s judgment in Sri Avantika Contractors (I) Ltd v. Appellate Authority for Advance Ruling (GST), where overseas work was held not chargeable to GST, observed that such findings were possible only after the assessee had filed replies and the authority had issued a decision.

The court said that ‘an elaborate show cause notice came to be issued on the factual aspect, which cannot be decided without any reply and supporting documents to be filed by the petitioner. When such being the case, this Court is of the view that it is obligatory on the part of the petitioner to file a detailed reply along with all the supporting documents to substantiate their case before the Assessing Officer. Therefore, it is clear that the present petition has been filed in a pre-mature manner and at this stage, the only right course available for the petitioner is to file a detailed reply along with all the supporting documents before the respondents.’

Therefore, the court dismissed the writ petition, holding it to be premature, while granting liberty to the petitioner to file a detailed reply to the SCN within 30 days. It further directed the Department to consider the reply on merits and decide in accordance with law.

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