HC: Assessee Can’t be Forced to Pay Double GST on the Interstate Supplies

On the services that have been provided twice, the assessee does not compel to file the taxes, Rajasthan High Court ruled.

The division bench of Justice Pankaj Mittal and Justice Subha Mehta stated that the applicant’s supply of manpower to the company in the state of Rajasthan is either an inter-state transaction as per CGST+RGST or an intra-state transaction as per IGST.

The applicant would deposit 18% of the IGST and the respondents or the department would have recovered 35% of CGST and RGST via attaching the applicant’s account.

The business of the applicant is to provide various entities supplying manpower. The applicant has furnished an 18% IGST on the supply of the above-mentioned manpower service, considering the supply of manpower as interstate services as the same would have the office located in Delhi/Gurgaon and the manpower was supplied in Jaipur, Rajasthan.

The petitioner was served with a show cause notice to show cause why the demand for CGST and RGST under Section 74 of the GST Act, along with interest.

The show cause notice is been furnished to the applicant to provide the reason for the CGST and RGST under Section 74 of the GST Act, and the interest and penalty that does not raise against it.

Acknowledging the reply of the applicant, the assessing authority confirms the CGST and RGST, interest, and penalty demand as raised against the same via considering the applicant’s service of supply of the manpower as intra-state.

Joint Commissioner (Appellate Authority), confirmed the order.

The applicant contested the validity of Section 19(1) of the IGST Act, Section 77(1) of the CGST Act/RGST Act, and Rule 89(1A) of the CGST rules as unconstitutional.

The applicant has argued that the services of supplying manpower to the entity in Rajasthan would be an inter-state transaction as the supply would be implemented via the applicant from the business place outside Rajasthan to the place in Rajasthan.

Read Also: Easy to Understand Mixed and Composite Supply Under GST

18% IGST has been deposited on the interstate transaction and the 18% CGST + RGST demand was not been answered and rendered to the double taxation. The respondent would be wrongly considering the supply of services as inter-state so as to impose the CGST and RGST.