In a major case, the Andhra Pradesh  High Court (HC) directed contemporary adjudication after depositing 50% of Service Tax since non-participation in proceedings on account of unwell well being.

The petitioner challenged the proceedings underneath Section 74(5) of APGST Act, 2017 directing the petitioner to pay Rs.56,95,19,461/- in direction of differential tax, curiosity and penalty for evasion of the due tax as unlawful and arbitrary.

Petitioner is a proprietary concern engaged in outsourcing workers to A.P. State Beverages Corporation/4th respondent and A.P. Mineral Development Corporation/fifth respondent in varied classes. The petitioner obtained GST registration and has been submitting month-to-month returns as stipulated in GSTR 3B and paying the tax. Petitioner entered into agreements with respondents 4 and 5 to outsource the staff of varied classes.

In additionto the remuneration in direction of wages, the contractee has inter alia agreed to pay the required quantities as a contribution in direction of EPF, ESI when it comes to G.O.Ms.No.151 (Fin-HR-I) Planning & Policy, dated 08.08.2016. In addition to the above obligatory fee, the contractee has agreed to pay service expenses to the petitioner @ 2.17%.

As per Section 9 of the APGST Act, the petitioner is liable to pay GST on receipt of the service expenses alone. The petitioner collects EPF and ESI from the Government and pays to the respective authorities. Form GST DRC-01A which was issued underneath Section 74(5) of the APGST Act per which, the GST was calculated on the whole worth or fee obtained by the petitioner, although the legal responsibility of the petitioner underneath GST law is just on the service expenses being paid and obtained by the petitioner.

It was contended by the petitioner that the wages supplied to the staff and statutory funds of EPF and ESI, and so on., won’t fall inside the ambit of the GST shouldn’t be appropriate. It was argued that with out contemplating the objections dated 22.10.2022 and with out offering a possibility of listening to to the petitioner, the third respondent handed the impugned Assessment Order dated 10.11.2022 fixing the taxliability, thereby, the petitioner who’s an previous aged woman of 75 years misplaced her useful alternative to place forth her case.

A Coram comprising Justice U Durga Prasad Rao and Justice V Gopala Krishna Rao noticed that the petitioner couldn’t avail of the chance givenher previous age as she has aged 75 years and likewise on account of her unwell well being. The Court directed the third respondent to afford a private listening to to the petitioner and cross Assessment Order afresh by the regulation on appropriate phrases.

Further, the Court put aside the impugned Assessment Order dated  10.11.2022 handed by the third respondent on the  situation of the petitioner depositing 50% of the tax part of Rs.23,79,26,090/- as talked about within the impugned order dated 10.11.2022 inside six (6) weeks.

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REDDY ENTERPRISES vs THE STATE OF AP

CITATION:   2023 TAXSCAN (HC) 605