The High Court of Kerala in a case ruled that Goods and Service Tax ( GST ) is not demandable in lack of any supply of goods/services. The court validating the findings in the impugned orders has declared that the respondent corporation shall not be qualified to collect the tax under the provisions of the CGST Act 2017/SGST, Act 2017 from the petitioners.
Distributors of LPG have submitted these writ petitions appointed by the 1st respondent herein contesting the orders levying the penalty, appellate orders, and the Marketing Discipline Guidelines, 2018 ( MDG ) under which the penalty is levied.
Additionally, the applicants have contested the levying of the penalty in such matters as confirmed by the appellate authority. From the orders issued the penalties were levied by the 2nd respondent concerning a complaint raised via a consumer/customer alleging non-attendance of a leakage complaint.
A contention has been raised by the applicant to the effect that there was no intended non-attendance of the complaint as alleged that the complaint was received at the end merely on 21.8.2020 by 4.33 PM, that the complaint was attended via the mechanic via a telephone call by 5:30 pm/5:45 pm etc. Those contentions seem to have been adjudicated via the original authority and the appellate authority. In a writ jurisdiction, the gratitude of evidence in that concern cannot be performed.
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In W.P(C) No.11912 of 2021, from the order issued via the 2nd respondent the penalty is levied. The allegation is regarding the specific LPG connections given by the applicant. It seems that the reasons proposed have been analyzed in detail by the original authority while issuing an order.
In these writ petitions, the only other subsisting challenge that arises for acknowledgement is as regards the GST demand via the impugned order in these matters. An amount of Rs.28242.45 has been charged as GST at the time of issuing order Rs 28242.45 and it asked to be recovered from the applicant.
The counsel for the petitioners Sri. Surendran in these writ petitions shall argue that the GST demand as aforesaid was without any justification and arbitrary.
He said that no supply of service is there to demand GST from the applicants. Sri. Nandakumar, the senior counsel laid on the counter affidavit submitted, and the Notification No.11/2017- CT(R) dated 28.6.2017 issued by the Ministry of Finance, Government of India, to sustain the demand for GST as above.
Concerning the provisions of the CGST Act 2017/SGST Act, 2017 (the ‘Act’) the goods and services tax is charged. The preamble to the above-said act shall demonstrate that the act was made to create the provisions for the imposition and collection of tax on the “supply of goods or services or both”.
Hence it is to be established that there is either a supply of goods, a Supply of services, Supply of both to demand GST. There could not be any dispute that no supply of goods is engaged in the case.
Under Section 2(102) of the Act, the term services have been described where the services are directed that anything excluding goods, money, and securities, however, comprises of the activities pertinent to the use of the money or its conversion by cash or via any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is levied.
To demand the GST it is to be established that there is a “supply of goods/services” via the person collecting the tax to the person from whom the tax is asked to be recovered. For the case, it is the respondent corporation that is claiming that there is a supply of services to the applicants.
But a perusal of the documents shall specify that no supply of services is rendered via the respondent Corporation to the applicants herein while levying the penalty via the impugned orders. The question of demanding GST does not arise at all until and unless there is any such supply of goods/ services.
There is no dispute that it was discovered that no such agreement between the applicants and the respondent corporation is there. No case for the respondent corporation is there that the applicants and the respondent Corporation have entered into such an agreement/contract for a “consideration”. The same agreement couldn’t be assumed between parties. In this, the amounts asked to be collected from the applicants for the penalty are not for entertaining an act/situation.
The amounts asked to be recovered are for not complying with the terms of the agreement/MDG structured via the respondent corporation. The amounts are asked to be recovered as a deterrent against subsequent violation of the contract between the applicants and the respondent corporation. The amounts sought for recovery do not tolerate violations of the MDG terms.
A single bench led by Justice Harisankar V. Menon has ruled that the respondents are not allowed to collect GST from the petitioners. The bench confirmed the findings in the contested orders and declared that the respondent Corporation is not entitled to collect tax under the provisions of the CGST Act 2017 and the SGST Act 2017 from the petitioners.
| Case Title | M/s Aswathy Gas Agencies vs. Indian Oil Corporation Ltd |
| Citation | WP(C) NO.2552 OF 2021 |
| Date | 12.12.2024 |
| Kerala High Court | Read Order |
