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2022-TIOL-822-HC-DEL-GST
Indian Railway Catering And Tourism Corporation Ltd Vs Deepak And Company
GST - Arbitration - Sole arbitrator passed the impugned award dated 15 December 2020, allowing two claims of the respondent Deepak & Co. (DC), the claimant in the arbitration proceedings - viz. (i) payment with respect to welcome drink and (ii) reimbursement of GST on production charges w.e.f. 01st July 2017 - IRCTC had filed an objection against the impugned award before the District Judge at Patiala House Court Complex, Delhi, however, as the claim calculated by IRCTC exceeded its pecuniary jurisdiction as per provision of s.12(2) of the Commercial Courts Act, 2015, petition was filed u/s 34 of the Arbitration and Conciliation Act, 1996 before the Delhi High Court – High Court, Single Judge, in its order 5 th July 2021 [ 2021-TIOL-1463-HC-DEL-GST ], inter alia, held that the view taken by the Arbitral Tribunal would prevail so long as it is supported by reasoning; that the reasoning supporting the interpretation is rational, balanced and germane and there was no reason to disagree with the same; that upholding the claim for payment of GST is not stepping out of the confines of the terms agreed upon by the parties; that GST is a new tax and the contention of IRCTC that the production charges being ‘inclusive of taxes' would also encompass GST and/or restrict inclusion of any other tax is not in consonance with the terms of the contract - Appeal filed against this order.
Held:
+ Decision taken by IRCTC to have the service provider provide a welcome drink was taken only on 07.02.2017, by way of a policy framework.The argument, that because circular CC 32/2014 was an integral part of the tender, and therefore under clause 1.5 of the said circular, the respondent was obliged to serve a welcome drink to the passengers is not consistent with the contents of Annexure-E, which is also a part of the tender.[para 21, 22]
+ It is only on 06.04.2017, when IRCTC indicated to the respondent, that unless it gave its unconditional acceptance to the policy framework captured in its communication dated 07.02.2017, its temporary license, which was expiring on 18.06.2017, would not be extended, that the respondent agreed to provide a welcome drink and bear the financial burden qua the same. Therefore, the claim of the respondent qua welcome drink was restricted to the period spanning between 19.12.2016 and 18.06.2017. [para 25, 27]
+ Arbitrator correctly concluded that IRCTC could not have deducted the amounts expended by them towards serving welcome drink to the passengers from the bills of the respondent. [para 29]
+ Insofar as reimbursement of taxes deposited by the respondent is concerned, the same is governed by CC 32/2014 and CC 44/2017.Clause 5.1 of CC 32/2014 clearly provides, that service tax is to be paid separately (in this case, to the respondent) subject to proof of payment. Likewise, clause 5.2 of the very same circular i.e., CC 32/2014 provides that any applicable taxes which are notified by the Government of India (Ministry of Finance, Department of revenue notifications) or State Governments from time to time are to be collected by the Zonal Railways from the passengers of Rajdhani/Shatabdi/Duronto trains by embedding it in the ticket fare. As regards GST, when the parties had arrived at the subject contractual arrangement, since CC 32/2014 was in force, it would be applicable as regards taxes, which the respondent was required to bear, and seek its reimbursement upon proof of payment to the concerned statutory authorities.IRCTC also does not seem to have disputed the fact, that it has recovered GST from the passengers by factoring the same in the train fare. As correctly concluded by the arbitrator, GST from 01.07.2017 would have to be reimbursed to the respondent by IRCTC,upon the proof of deposit of the same.[para 34, 34.1, 35, 39, 40, 43]
+ Given the fact, that IRCTC has already factored GST in the train fare, lends heft to the stand taken by the respondent, that it should be reimbursed GST deposited by it with the concerned statutory authority. [para 44]
Conclusion:
++ No interference is called for with the impugned judgement dated 05.07.2021 [ 2021-TIOL-1463-HC-DEL-GST ].
++ Partial/interim award dated 15.12.2020, rendered by the arbitrator is neither patently illegal nor perverse.
++ Interpretation of the terms of contract, and appraisal of evidence is completely within the domain of the arbitrator. The Court cannot supplant its view with that of the arbitrator.
- Appeal dismissed: DELHI HIGH COURT
2022-TIOL-821-HC-ORISSA-GST
JSW Steel Ltd Vs UoI
GST - Petitioner [JSW Steel Ltd. (Odisha)] states that JSW Steel Ltd. (Mumbai) participated in the tender process invited by the Government of Odisha and was awarded the lease for undertaking of mining operations for iron ore blocks in the State of Odisha - JSW Steel Ltd. (Odisha) being the recipient of services in the State of Odisha is obligated to pay GST on reverse charge mechanism - It is claimed that iron ore extracted from the iron ore blocks is either supplied by JSW Steel Ltd. (Odisha) to JSW Plants by way of stock transfer; or to the extent permissible, supplied to third parties - Accordingly, it has raised tax invoices towards both the supplies and claims to have paid applicable GST - Scrutiny of returns filed by JSW Steel Ltd. (Orissa) revealed that they paid OGST and CGST under reverse charge mechanism (RCM) on bid premium, royalty, DMF, NMET, NPV etc. (towards availing of licensing services for right to use minerals including exploration and evaluation in respect of four mines located inside the State of Odisha (falling under Heading 9973)) - Having utilized a portion of the tax paid on RCM, the Petitioner-company in Odisha has passed on to JSW Steel Ltd. in Maharashtra (which is declared as ISD) tax in shape of IGST in the garb of outward supply of "facilitation services" to M/s. JSW Steel Ltd. (ISD) - Amount of input tax credit (ITC) that stood transferred by JSW Steel Ld. (Odisha) has been distributed by JSW Steel Ltd. (Maharashtra) to other units of JSW Steel Ltd. located in the States of Tamil Nadu, Maharashtra and Karnataka - Such a modality in claiming adjustment of unutilized input tax credit is objected to by the Revenue on the premise that such a device to facilitate other units of JSW Steel Ltd. located in other States to claim input tax credit arising in the State of Odisha is contrary to the statutory mandate - Proceedings were initiated and which culminated in demand/order dated 28.03.3022 of Rs.901,48,27,137/- [comprising tax to the tune of Rs.401,16,88,016/- and penalty of Rs.401,16,88,016/- and interest of Rs.99,14,51,105/- (up to 28th March 2022)] - It is against this order that the petitioner is before the High Court and seeks quashing of the same.
Held: No doubt JSW-Company from its Head Office at Bombay had applied and participated in the tender process, however, it cannot be lost sight of that it is JSW-Company, and not Head Office, Bombay, which has been granted the mining lease for the four Iron mines situated within the State of Odisha - The Company, to undertake the process of mining, had to get itself registered in State of Odisha as per the statutory provisions of CGST/OGST to undertake the execution of the mining lease - It is conceded that the execution of work and all transactions including payment of tax being "input recipient" have been conducted by the JSW-Company from its office Barbil (Odisha) - It cannot also be disputed that the outward supply of goods and services of the Company has been provided by the unit at Odisha to other units of the Company and other parties upon payment of tax for supply of such outward goods and services, thereby providing the JSW units in other States to avail the input tax credit on the tax paid to JSW Odisha for their outward supplies from such locations outside the State - It is conceded that the Input Tax Credit with JSW Steel Limited (in the State of Odisha) was found in excess, which remained unutilized - This excess input tax credit has been sought to be utilized by raising tax invoices in favour of JSW Steel Ltd. in the State of Maharashtra, declared ISD, in the garb of "support service" - That apart, it is not clear at all as to what is the support service which has been provided by JSW Steel Ltd.(Odisha) to JSW Steel Ltd.-ISD at Mumbai, much less any common services which could be utilized by other units located in other parts of the country - It also emerges that JSW Steel Ltd. in Odisha has utilized JSW Steel Ltd.-ISD Mumbai as wrongful conduit and facilitated the utilization of input tax credit by other units of JSW Steel Ltd., which, in this manner, have availed input tax credit twice, i.e. , once on the strength of the purchase invoices of supply of iron ore and the other on the strength of the tax invoices for alleged services issued by JSW Steel Ltd.-ISD at Mumbai - It is pertinent to notice that in view of definition of "Input Service Distributor" contained in Section 2(61), it is necessary that the ISD as an office is required to receive tax invoices towards inward supply - Since no such supply is being shown to have been made by JSW Steel Ltd. of Odisha to JSW Steel Ltd. of Maharashtra, no prima facie case is made out by the Petitioner - Thus transactions in question prima facie amount to siphoning of tax amounts, therefore, apparently warrant invocation of proceeding under Section 74 of the OGST/CGST Act - Bench declines to allow the prayer for restraining the opposite parties from effecting recoveries of the demand more so in equitable jurisdiction under Article 226 of the Constitution of India - Court issues notice in W.P.(C) No.10052 of 2022 along with I.A. No.5190 of 2022 - Matter listed on 12 th August 2022: High Court [para 7, 9, 10, 13]
- Matter listed: ORISSA HIGH COURT |
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