Karnataka High Court
M/S. Toyota Kirloskar Motor Pvt. Ltd vs Union Of India on 21 August, 2024
Author: S.R.Krishna Kumar
Bench: S.R.Krishna Kumar
-1-
NC: 2024:KHC:33601
WP No. 26129 of 2023
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 21ST DAY OF AUGUST, 2024
BEFORE
THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR
WRIT PETITION NO.26129 OF 2023 (T-RES)
BETWEEN:
M/S AUTOLIV INDIA PRIVATE LIMITED
PLOT NO.31, 32-P, 33-P
HITECH DEFENCE AND AEROSPACE
PARK IT SECTOR, JALA INDUSTRIAL AREA,
YELAHANKA, BENGALURU - 562 149
(REPRESENTED BY SHRI ASHOKA GOGATE)
DGM FINANCE AND COMPANY SECRETARY
INCORPORATED UNDER THE COMPANIES ACT, 1956
...PETITIONER
(BY SRI. RAVI RAGHAVAN AND SRI. TUSHAR SHARMA,
ADVOCATES)
AND:
Digitally signed
by
LEELAVATHI S 1. UNION OF INDIA,
R
Location: HIGH REPRESENTED BY ITS UNDER SECRETARY,
COURT OF MINISTRY OF REVENUE,
KARNATAKA
DEPARTMENT OF REVENUE,
NORTH BLOCK,
NEW DELHI - 110 001
2. STATE OF KARNATAKA
THROUGH ITS PRINCIPAL SECRETARY,
FINANCE DEPARTMENT,
VIDHANA SOUDHA,
BENGALURU - 560 001.
-2-
NC: 2024:KHC:33601
WP No. 26129 of 2023
3. ADDITIONAL DIRECTOR
OFFICE OF PRINCIPAL ADDITIONAL DIRECTOR
GENERAL DIRECTORATE GENERAL OF GST
INTELLIGENCE, BENGALURU ZONAL UNIT,
NO.112, S P ENCLAVE, ADJACENT TO
KARNATAKA BANK, K.H.ROAD,
BENGALURU - 560 027.
4. ADDITIONAL COMMISSIONER OF CENTRAL TAXES
BENGALURU NORTH COMMISSIONERATE
GROUND FLOOR,
HMT BHAVAN, GANGA NAGAR,
BENGALURU - 560 032.
5. DEPUTY COMMISSIONER OF COMMERCIAL TAXES
(VIGILANCE)-2, OFFICE OF JOINT COMMISSIONER OF
COMMERCIAL TAXES (VIGILANCE)
III FLOOR, A BLOCK,
VTK-2 BUILDING, KORAMANGALA
BENGALURU - 560 047.
6. ASSISTANT COMMISSIONER OF COMMERCIAL TAXES
(ENFORCEMENT)-17 SOUTH ZONE, 4TH FLOOR,
ROOM NO.406
'B' BLOCK VTK, BUILDING, KORAMANGALA
BENGALURU - 560 047.
...RESPONDENTS
(BY SRI. JEEVAN J. NEERALGI, ADVOCATE FOR R1, R3 AND R4;
SRI. HEMA KUMAR K., AGA FOR R2, R5 AND R6)
THIS WP IS FILED UNDER ARTICLE 226 OF THE
CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED
SCN BEARING NO.31/2023.24/DGGI/BZU DATED 29.09.2023 ISSUED
BY THE R3 ENCLOSED AT ANNX-A AND TO QUASH THE
IMPUGNED SHOW CAUSE NOTICES BEARING NO.DCCT
(VIGILANCE)-2/VIG/SCN-08/2023-24/1977 AND DCCT (VIGILANCE)-
2/VIG/SCN-09/2023.24 BOTH DATED 29.09.2023 BY R5 ENCLOSED
AT ANNX-B AND ANNX-C.
-3-
NC: 2024:KHC:33601
WP No. 26129 of 2023
THIS PETITION, COMING ON FOR ORDERS, THIS DAY,
ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR JUSTICE S.R.KRISHNA KUMAR
ORAL ORDER
In this petition, the petitioner seeks the following reliefs:
"a) Issue a writ of Certiorari or a Writ in the nature of Certiorari or any other appropriate Writ or order or direction under Article 226 of the Constitution of India quashing the impugned SCN bearing No.31/2023-24/DGGI/BZU dated 29.09.2023 issued by the Respondent No. 3 enclosed at Annexure-A;
b) Issue a writ of Certiorari or a Writ in the nature of Certiorari or any other appropriate Writ or order or direction under Article 226 of the Constitution of India quashing the impugned SCNs bearing No. DCCT(Vigilance)-2/VIG/SCN-
08/2023-24/1977 and DCCT(Vigilance)-2/VIG/SCN- 09/2023-24 both dated 29.09.2023 respondent No.5 enclosed at Annexure-B and Annexure-C;
c) Hold that the Petitioner has rightly availed input tax credit of Rs.2,70,88,685/- in respect of the IGST paid on manpower supply services received by the Petitioner during the period 2017-2020 as against alleged in Annexure-B and Annexure-C;
d) Hold that the interest under Section 50 of the CGST Act, 2017, for the period 2017-18 and 2018-19 respectively, on the alleged belated payment of IGST of -4- NC: 2024:KHC:33601 WP No. 26129 of 2023 Rs.2,70,88,685/- is not payable as demanded under Annexure-A, Annexure-B and Annexure-C;
e) Hold that the interest under Section 50 of the CGST Act, 2017 on the input tax credit availed and utilised is not payable as demanded under Annexure-A and Annexure-B;
f) Hold that the penalty in terms of Section 73 and Section 122(2)(a) of CGST Act and Section 20 of IGST Act is not imposable as demanded under Annexure-A;
g) Hold that the penalty in terms of Section 73(9) of KGST Act and Section 20 of IGST Act is not imposable as demanded under Annexure-B and Annexure-C.
h) Pass such further order(s) and other reliefs as the nature and circumstances of the case may require."
2. A perusal of the material on record will indicate that the petitioner is interalia engaged in manufacture of equipment for automotive safety and is into the business of designing, developing and manufacturing airbags, seat belts, steering wheels, airbag inflators, etc. The petitioner is registered under the Central Goods and Services Act, 2017, (CGST Act) and the respondent Nos.1, 3 and 4 are the CGST authorities in the present petition. So also, respondent Nos.2, 5 and 6 are the State GST authorities under the Karnataka Goods and Services Act, 2017 (KGST Act). The petitioner seeks quashing of the impugned Show Cause Notice at -5- NC: 2024:KHC:33601 WP No. 26129 of 2023 Annexure - A dated 29.09.2023 issued by Central GST Authorities as well as the impugned Show Cause Notices at Annexures - B and C issued by the State GST authorities and for other reliefs.
3. The respondents have filed their statement of objections and have contested the petition.
4. Heard learned counsels for the parties and perused the material on record.
5. In addition to reiterating the various contentions urged in this petition and referring to the material on record, learned counsel for the petitioner invited my attention to the impugned Show Cause Notices at Annexures - B and C, both dated 29.09.2023 issued by State GST Authorities in order to point out that prior to issuance of the said Show Cause Notices, the Central GST Authorities had already initiated proceedings in relation to the very same subject matter by issuing notices on 05.01.2023 onwards and consequently, in the light of the provisions contained in Section 6(2)(b) of the KGST Act, the impugned Show Cause Notices are contrary to the said provisions and illegal, arbitrary and without jurisdiction or authority of law since parallel / dual -6- NC: 2024:KHC:33601 WP No. 26129 of 2023 proceedings cannot be initiated by State GST Authorities after the Central GST Authorities had already initiated proceedings by issuance of summons, Show Cause Notices etc., prior to issuance of the impugned Show Cause Notices, which deserve to be quashed.
6. The learned counsel for the petitioner also invited my attention to the impugned Show Cause Notice at Annexure - A dated 29.09.2023 issued by the Central GST Authorities in order to point out that the demand made therein comprises of amounts paid by the petitioner to overseas entities as well as the employees directly in Indian rupees for the period July 2017 to October 2020. In this context, it is submitted that as can be seen from the proposed demand itself, the entire IGST has already been paid by the petitioner on 30.03.2023 and consequently, the petitioner would not be liable to pay interest on the said amount as illegally demanded by the Central GST Authorities.
7. It is submitted that insofar as the demand for payment of interest towards the amount paid to the overseas entities are concerned, the petitioner is exempted from payment of tax in view of the provisions contained in Section 128A of the CGST Act and -7- NC: 2024:KHC:33601 WP No. 26129 of 2023 consequently, the said demand deserves to be quashed. It is also submitted that insofar as the demand for interest of GST towards amount paid in favour of the employees' salary in Indian rupees is concerned, in view of Section 13(3)(c) of the CGST Act 2017, the petitioner would not be liable to pay interest as demanded in the Show Cause Notices on the said amount also and since the respondents have failed to consider both these contentions, it is necessary that the impugned notice at Annexure - A be quashed. In support of his submissions, learned counsel for the petitioner places reliance upon various provisions of the CGST Act, KGST Act and also the Circular bearing No.211/5/2024-GST dated 26.06.2024 issued by the Central Board of Indirect taxes and Customs, New Delhi.
8. Per contra, the learned AGA for respondent Nos.2, 5 and 6 would not dispute that the summons, Show Cause Notices and the proceedings have been initiated by the State GST Authorities subsequent to the Central GST Authorities already initiating proceedings as against the petitioner and Section 6(2)(b) of the KGST Act was applicable to the facts of the instant case and appropriate orders may be passed. He also submits that the -8- NC: 2024:KHC:33601 WP No. 26129 of 2023 respondent No.6 has already withdrawn the proceedings initiated by it vide letter dated 31.10.2023 and the respondent No.5 has also issued a letter on 07.12.2023 to the Central Authorities to continue the proceedings.
9. Learned counsel for respondent No.3 - Central GST Authorities submits that if petitioner submits reply along with necessary documents to the impugned Show Cause Notice at Annexure-A, the respondent No.3 would consider the same and proceed further in accordance with law.
10. A perusal of the material on record and the submissions made by both sides, including the Circulars dated 26.06.2024 and 17.07.2023 will clearly indicate that prior to issuance of the impugned Show Cause Notices at Annexures - B and C dated 29.09.2023, the Central GST Authorities had already initiated proceedings as against the petitioner and consequently, in the light of Section 6(2)(b) of the KGST Act, 2017, which contemplates a complete bar / embargo on the State GST Authorities to initiate proceedings in a situation where the Central GST Authorities had already initiated proceedings as against the petitioner coupled with the fact that the respondent No.6 had -9- NC: 2024:KHC:33601 WP No. 26129 of 2023 withdrawn its proceedings as against the petitioner in respect of the same subject matter and the same was confirmed and rectified by respondent No.5, I am of the considered view that the impugned Show Cause Notices at Annexures - B and C are clearly illegal, arbitrary and without jurisdiction or authority of law and the same deserve to be quashed.
11. Insofar as challenge to the impugned Show Cause Notice at Annexure-A dated 29.09.2023 issued by the respondent No.3 is concerned, the said challenge can be disposed of by directing the petitioner to submit a reply to the Show Cause Notice together with the relevant documents and by directing respondent No.3 to consider the same and proceed further in accordance with law bearing in mind the observations made in this order and the provisions referred to supra.
12. In the result, the following:
ORDER
(i) The petition is partly allowed.
(ii) The impugned Show Cause Notices at Annexures - B and C dated 29.09.2023 issued by the respondent No.5 are hereby quashed.
- 10 -
NC: 2024:KHC:33601 WP No. 26129 of 2023
(iii) Petitioner is reserved with liberty to submit a reply along with documents to the impugned Show Cause Notice at Annexure-A dated 29.09.2023.
(iv) The concerned respondent Nos.1, 3 and 4, Central GST Authorities shall consider the said reply and documents to be submitted by the petitioner and proceed further in accordance with law after providing sufficient and reasonable opportunity to the petitioner and hearing it, bearing in mind the observations made in this order as well as relevant statutory provisions, Circulars, judgments, contentions, etc., relied upon by the petitioner and pass appropriate orders within a period of four weeks from the date of receipt of a copy of this order.
Sd/-
(S.R.KRISHNA KUMAR) JUDGE RB / SV