GST
TRT-2025-
Bombay High Court
Date:-18-04-23
In:-
Issue Favourable to Tax Payer ?:-
Order Date – 18 April 2023
Parties: Dharmendra M. Jani and A.T.E. Enterprises Private Limited (Formerly known as A.T.E. Marketing Pvt. Ltd.) Vs The Union of India, Central Board of Indirect Taxes and Customs, Goods and Services Tax Council, Principal Commissioner of Goods and Service Tax, Mumbai, and State of Maharashtra
Facts –
- The Petitioner, Dharmendra M. Jani, is engaged in providing marketing and promotion services to its customers located outside India. The petitioner provides services to enable his foreign principal to get purchasers for its goods in India or elsewhere. The petitioner thus undertakes activities of marketing and promotion of goods sold by its overseas customers in India in return he will get a commission in convertible foreign exchange.
- The petitioner has contended that the nature of the transaction(s) entered by the petitioner with its overseas customers are transactions of "Export of services", hence, such transactions were outside the purview of the CGST and the MGST Acts.
- It was contended that Section 13(8) and Section 8(2) of the Integrated Goods and Services Tax Act, 2017 are ultra vires the Article and the provisions of CGST Act, 2017
Issue –
- Whether Section 13(8)(b) and Section 8(2) of the Integrated Goods and Services Tax Act, 2017 are ultra vires Article and provisions of CGST Act, 2017?
Order –
- The Single Bench of Hon’ble High observed that it is well-settled that every provision in an enactment is required to be understood and interpreted within the framework of the object and intention the legislation intends to achieve. The provisions are required to be interpreted so as to forward the intent of the legislation and the purpose sought to be achieved.
- Section 2(6), Section 2(13), Section 8, Section 12, Section 13, and Section 16 under the IGST Act, need to be applied and understood in their applicability only under the IGST Act, even applying the principles of strict construction of the taxing statutes. Under such principles, it is not permissible to recognize any vague and/or non-specific incorporation of the provisions of the IGST Act and/or any incorporation by mere implication, unless such incorporation is explicit and as permissible under the Constitution
- It clearly appears that the entire concept of “export of services” which has been specifically stipulated and provided only under the provisions of the IGST Act, to be read into the provisions of the CGST and MGST Acts, would not be a correct reading of the provisions of Section 2(86) read with 2(65) of the said Acts, for the respondents to consider that Section 13(8)(b) stands firmly incorporated in the provisions of the CGST Act or the MGST Act.
- It may thus be observed that the fiction which is created by Section 13(8)(b) would be required to be confined only to the provisions of IGST Act, as there is no scope for the fiction travelling beyond the provisions of IGST Act to the CGST and the MGST Acts, as neither the Constitution would permit taxing of an export of service under the said enactments, nor these legislations would accept taxing such transaction.
- The provisions of Section 13(8)(b) and the provisions of Section 8(2) of IGST Act cannot be struck down as unconstitutional being violative of the provisions of Articles 14, 19(1)(g), 245, 246, 246A, 265, 269A and 286 of the Constitution. This more particularly considering the fact that the impugned provisions insofar as they stand and are applicable only under IGST Act.
- Hence the provisions of Section 13(8)(b) and Section 8(2) are confined in their operation to the provisions of IGST Act only and the same cannot be made applicable for levy of tax on services under the CGST Act and MGST Act, on such interpretation, the provisions are intra vires the Constitution, the IGST, the CGST and the MGST Acts. In the light of the above discussion and the conclusion as reached, it is not necessary to consider the validity of the impugned provisions on the touchstone of Articles 14 and 19(1)(g) of the Constitution as canvassed by the petitioners.
- The petitions are disposed of.
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