The Hon'ble High Court of Madras, in the case of Tvl. Future General India Insurance Co. Ltd. v. Assistant Commissioner (State Tax) [WP No. 3534 OF 2024 dated February 16, 2024] held that where an assessee, filed a writ petition challenging an assessment order passed by the Competent Authority, since the said authority had accepted the explanation of the assessee with regard to certain defects but had imposed GST at 36 % instead of 18 % on the ground that the financial statements submitted by the assessee did not reflect state-wise turnover, the impugned assessment order was to be set aside, and the matter was to be remanded to the Competent Authority for reconsideration.
Facts:
M/s Tvl. Future General India Insurance Co. Ltd. (“the Petitioner”), was a private general insurance company engaged in the business of providing insurance products. On August 16, 2021, the Petitioner received an audit notice from the, Assistant Commissioner (State Tax) (FAC) (“the Respondent”). The Petitioner submitted documents in response to the said notice and replied to the defects raised in the audit slips. After issuing an intimation and a show cause notice (“SCN”), the impugned assessment order dated December 30, 2023 (“the Impugned Order”), was passed by the Competent Authority. In the impugned order, regarding defect No. 10, the Competent Authority accepted the Petitioner's explanation that the difference in turnover between the Profit & Loss account, balance sheet, and GSTR-9 arose due to the financial statements pertaining to Pan-India operations, whereas GSTR-9 was limited to turnover in Tamil Nadu. The Petitioner had submitted a Chartered Accountant's certificate specifying the turnover specific to Tamil Nadu, amounting to Rs. 80,89,05,068/-. However, the Competent Authority imposed State Goods and Services Tax (SGST) and Central Goods and Services Tax (CGST) at 18% each (36% in total) on the said turnover of Rs. 80,89,05,068/-, despite the Petitioner having already paid tax on the same.
Aggrieved by the impugned assessment order, the Petitioner filed a writ petition before the Hon'ble High Court of Madras.
Issue:
Whether the impugned assessment order, imposing GST at 36% instead of 18% on the turnover, despite accepting the Petitioner's explanation regarding the difference in turnover figures, was valid.
Held:
The Hon'ble High Court of Madras, in Writ Petition No. 3534 OF 2024
· Observed that the turnover for an entity operating in multiple states in India, as reflected in the financial statements, and the turnover attributable to its operations in a particular state (in this case, Tamil Nadu) would vary.
· Opined that the bifurcation of total and state-wise turnover is the only relevant factor, and the Competent Authority erred in imposing GST at 36% instead of the applicable rate of 18%, despite the Petitioner having already paid tax on the turnover of Rs. 80,89,05,068/-.
· Held that the impugned assessment order was to be quashed concerning defect Nos. 1, 4, 5, 7, 10, and 11, and the matter was to be remanded to the Competent Authority for reconsideration.
· Directed the Competent Authority to provide a reasonable opportunity to the Petitioner, including a personal hearing, and thereafter issue a fresh assessment order in accordance with law within a maximum period of two months.
Relevant Sections:
Section 2(112) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) talks about
“turnover in State” or “turnover in Union territory” means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis) and exempt supplies made within a State or Union territory by a taxable person, exports of goods or services or both and inter-State supplies of goods or services or both made from the State or Union territory by the said taxable person but excludes central tax, State tax, Union territory tax, integrated tax and cess;"
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