M/S Ani Technologies Private Limited vs State Of Telangana And 4 Others on 16 June, 2022

Outcome
The Hyderabad High Court set aside the order dated 04.02.2022 and the consequential notice dated 08.06.2022. The matter was remanded back to the 3rd respondent (tax authority) for a fresh decision in accordance with the law, after giving due notice and opportunity of hearing to the petitioner.

Core Issue
The core issue was whether M/S Ani Technologies Private Limited (Ola) was correctly liable to pay Integrated Goods and Services Tax (IGST) or Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST) on passenger transportation services facilitated through its platform, specifically concerning the interpretation of "place of supply" for unregistered recipients under Section 12(9) of the IGST Act.

Key Facts

• Petitioner: M/S Ani Technologies Private Limited (operating as 'Ola'), a company providing an internet platform/mobile application for passenger transportation services, not directly providing the transportation service itself.
• It is registered under GST in Telangana and has business presence across various states.
• For the audit period July 2017 to March 2018, the petitioner paid IGST amounting to Rs. 20,88,20,582.00 for transportation services rendered by drivers where the embarkation or supply was outside the State of Telangana.
• The 3rd respondent issued a notice (02.03.2020) for short payment of tax, contending that since the supplier and place of supply were within Telangana, CGST and SGST (totaling Rs. 15,81,88,741.29) should have been paid instead of IGST.
• The petitioner submitted a detailed reply (19.03.2020) arguing that IGST was correctly paid.
• The 3rd respondent, through the impugned order (04.02.2022), rejected the petitioner's explanation, levied CGST and SGST, and initiated penalty proceedings, followed by a consequential demand notice (08.06.2022).

Arguments (Taxpayer vs. Revenue)

• Taxpayer (M/S Ani Technologies Private Limited):
  • Argued that it had rightly paid IGST for the audit period.
  • Relied on Section 7(3) of the IGST Act, which defines inter-state supply where the location of the supplier and place of supply are in different states/UTs.
  • Specifically invoked Section 12(9) of the IGST Act, asserting that for an unregistered person availing passenger transportation service, the place of supply is the place where the passenger embarks on the conveyance for a continuous journey. This implies that if the embarkation is outside Telangana, it would be an inter-state supply, warranting IGST.
• Revenue (State of Telangana):
  • Contended that the supplier of service and place of supply were located in the State of Telangana.
  • Therefore, CGST and SGST were payable by the petitioner, not IGST.
  • The 3rd respondent erroneously held in the impugned order that for an unregistered recipient, the place of supply is the location of such recipient, thus demanding CGST/SGST.
  • Suggested the petitioner should pay the demand and claim a refund of IGST, or alternatively, file an appeal.

Court’s Reasoning

• The Court found that the 3rd respondent had made a prima facie error in interpreting and applying Section 12(9) of the IGST Act.
• It highlighted that Section 12(9) clearly distinguishes between registered and unregistered recipients for determining the place of supply of passenger transportation service:
  • For a registered person, the place of supply is the location of such person.
  • For a person other than a registered person (i.e., an unregistered person), the place of supply is the place where the passenger embarks on the conveyance for a continuous journey.
• The Court observed that the 3rd respondent "erroneously recorded that in case of unregistered recipient, the place of supply shall be the location of such recipient," which directly contravened the explicit wording of Section 12(9) of the IGST Act.
• It concluded that the petitioner's contentions regarding IGST payment under Section 12(9) and non-liability for CGST/SGST were not considered in the right perspective, and the substantive portion of the impugned order lacked due application of mind to the legal provision.
• Given that the applicability of Section 12(9) goes to the root of the contention, the Court deemed it inappropriate to relegate the petitioner to an appellate remedy.

Statutory References

• Article 226 of the Constitution of India
• Companies Act, 1956
• Integrated Goods and Services Tax Act, 2017 (IGST Act):
  • Section 7 (Inter-State supply)
  • Section 7(3)
  • Section 8(2) (Intra-State supply)
  • Section 12 (Place of supply of services where location of supplier and recipient is in India)
  • Section 12(9)

Precedents Cited
None explicitly cited by name in the judgment.