Delhi High Court - Orders
M/S Kei Industries Limited vs Union Of India & Ors on 22 May, 2025
Author: Prathiba M. Singh
Bench: Prathiba M. Singh
$~52
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 6919/2025 & CM APPL. 31310/2025
M/S KEI INDUSTRIES LIMITED .....Petitioner
Through: Mr. V. Lakshmikumaran, Mr.
Yogendra A., Mr. Kund Kapoor & Ms.
Purvi Sinha, Advocates.
versus
UNION OF INDIA & ORS. .....Respondents
Through: Mr. Kshitij Chhabra, Senior Panel
Counsel.
Mr. Shlok Chandra, SSC with Mr.
Ujjwal Jain, Advocates, (M-
9999670588)
CORAM:
JUSTICE PRATHIBA M. SINGH
JUSTICE RAJNEESH KUMAR GUPTA
ORDER
% 22.05.2025
1. This hearing has been done through hybrid mode. CM APPL. 31311/2025 (for exemption)
2. Allowed, subject to all just exceptions. Application is disposed of. W.P.(C) 6919/2025 & CM APPL. 31310/2025
3. The present petition has been filed by the Petitioner - M/s Kei Industries Limited under Article 226 of the Constitution of India, inter alia, assailing the Order-in-Original bearing No. DE/GST/ADC(JR)/219/2024-25 dated 31st January, 2025 passed by the Adjudicating Authority i.e. Additional Commissioner, Central GST, Delhi East.
4. The short question that arises in the present petition is whether any payment of Integrated Goods and Services Tax (hereinafter, 'IGST') was W.P.(C) 6919/2025 Page 1 of 4 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 30/06/2025 at 17:18:15 required in respect of those expenses which were incurred by the Petitioner but were not cross-charged with the other entities.
5. Mr. V. Lakshmikumaran, ld. Counsel for the Petitioner relies upon the Circular No. 199/11/2023-GST dated 17th July, 2023 issued by the Central Board of Indirect Taxes and Customs (hereinafter, 'CBIC') by which the Board has clarified as under:
2 In respect of internally generated The value of supply of services made by a . services, there may be cases where HO is registered person to a distinct person providing certain services to the BOs for needs to be determined as per rule 28 of which full input tax credit is available to CGST Rules, read with sub-section (4) of the concerned BOs. However, HO may section 15 of CGST Act. As per clause (a) not be issuing tax invoice to the of rule 28, the value of supply of goods or concerned BOs with respect to such services or both between distinct persons services, or the HO may not be including shall be the open market value of such the cost of a particular component such as supply. The second proviso to rule 28 of salary cost of employees involved in CGST Rules provides that where the providing said services while issuing tax recipient is eligible for full input tax invoice to BOs for the services provided credit, the value declared in the invoice by HO to BOs. Whether the HO is shall be deemed to be the open market mandatorily required to issue invoice to value of the goods or services.
BOs under section 31 of CGST Act for Accordingly, in respect of supply of such internally generated services, and/ services by HO to BOs, the value of the or whether the cost of all components said supply of services declared in the including salary cost of HO employees invoice by HO shall be deemed to be open involved in providing the said services market value of such services, if the has to be included in the computation of recipient BO is eligible for all inputs tax value of services provided by HO to BOs credit.
when full input tax credit is available to Accordingly, in cases where full the concerned BOs. input tax credit is available to a BO, the value declared on the invoice by HO to the said BO in respect of a supply of services shall be deemed to be the open market value of such services, irrespective of the fact whether cost of any particular component of such services, like employee cost etc., has been included or not in the value of the services in the invoice.
Further, in such cases where full input tax credit is available to the recipient, if HO has not issued a tax invoice to the BO in respect of any particular services being rendered by HO to the said BO, the value of such services may be deemed to be declared as Nil by HO to BO, and may be deemed as open market value in terms of second proviso to rule 28 of CGST Rules.
W.P.(C) 6919/2025 Page 2 of 4This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 30/06/2025 at 17:18:15
6. Ld. Counsel also relies upon the decision of the Co-ordinate Bench of this Court in Metal One Corporation India Pvt. Ltd. & Ors. v. Union of India & Ors., 2024: DHC: 8298-DB. The Co-ordinate Bench of this Court in the said judgment held that if the charge is NIL, in that case demand would not be payable. In the said case, the Show Cause Notice as also consequent Order- in-Original have been quashed.
7. Ld. Counsel Mr. Chandra, appearing for the Respondent, relies upon a similar case in W.P. (C) 3602/2025 titled 'Filatex India Ltd. v. Additional Commissioner Central Goods and Service Tax Central Delhi East' wherein the Court while adjudicating a case in respect of Circular No. 199/11/2023- GST dated 17th July, 2023 had relegated the party to the appellate remedy.
8. The Court has considered the matter. A perusal of the Order-in-Original clearly shows that there were no cross-charges of expenses with the other entities. Moreover, the second proviso to Rule 28 of the Central Goods and Services Tax Rules, 2017 has been applied without giving benefit of the Circular No. 199/11/2023-GST and consideration to the said circular.
9. Under such circumstances this Court of the view that the Adjudicating Authority needs to reconsider the matter in the light Circular No. 199/11/2023-GST dated 17th July, 2023 and the judgment in Metal One Corporation India Pvt. Ltd. & Ors. (Supra) where the Court observed as under:
"14. In the facts of the present writ petitions, it is conceded that no invoices were generated. In view of the above and in light of the explicit terms of the Circular, the value of the service rendered would have to be treated as „Nil'. This would lead one to the inescapable conclusion of no perceivable or plausible tax W.P.(C) 6919/2025 Page 3 of 4 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 30/06/2025 at 17:18:15 liability possibly being created. Consequently, we are of the considered opinion that the proceedings initiated in terms of the impugned SCNs' and their continuance would be futile and impractical. The impugned SCNs are essentially rendered impotent and would serve no practical purpose."
10. Accordingly, the Adjudicating Authority shall afford a hearing once again to the Petitioner and pass a fresh order in the light of the Circular No. 199/11/2023-GST dated 17th July, 2023 and the judgement passed in Metal One Corporation India Pvt. Ltd. & Ors. (Supra).
11. The present petition is disposed of in these terms. Pending applications, if any, are also disposed of.
12. All rights and remedies of the Petitioners are left open.
PRATHIBA M. SINGH, J.
RAJNEESH KUMAR GUPTA, J.
MAY 22, 2025/da/ck W.P.(C) 6919/2025 Page 4 of 4 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 30/06/2025 at 17:18:15