Skylark Infra Engineering Pvt. Ltd. Vs Union of India

The court heard arguments from both sides, with Mr. Hemant Kothari representing the petitioner, a private limited company based in Delhi Cantt. The company’s primary business involves supplying manpower to various entities. Specifically, in the Assessment Years 2017-18, 2018-19, and 2019-20, it provided manpower services to M/s GVK Jaipur Expressway Pvt. Ltd.

Regarding tax matters, the petitioner deposited 18% Integrated Goods and Services Tax (IGST) upon supplying the mentioned manpower services, considering it taxable under IGST provisions.

Mr. Hemant Kothari, representing the petitioner, and Mr. M.S. Singhvi, the Advocate General, along with their respective legal teams, engaged in a legal battle concerning a private limited company based in Delhi Cantt. The company specializes in providing manpower services to various entities. Specifically, in the Assessment Years 2017-18, 2018-19, and 2019-20, it supplied manpower services to M/s GVK Jaipur Expressway Pvt. Ltd.

The crux of the matter lies in the taxation treatment of these services. The petitioner, believing the services to be inter-state, deposited 18% Integrated Goods and Services Tax (IGST) on the transactions. This was based on the rationale that the company had its office in Delhi/Gurgaon, from where the manpower was supplied to Jaipur in Rajasthan. However, the authorities issued a show cause notice on July 3, 2020, questioning this treatment and demanding Central Goods and Services Tax (CGST) and Rajasthan Goods and Services Tax (RGST) under Section 74 of the GST Act, along with interest and penalty.

Following the petitioner’s response, the Assessing Authority, through an order-in-original dated October 20, 2020, upheld the demand for CGST+RGST, interest, and penalty, considering the service of supplying manpower as intra-state. This decision was subsequently affirmed by the Joint Commissioner (Appellate Authority) in an order dated September 23, 2022.

Due to the absence of a GST Tribunal, the petitioner opted for a writ petition rather than pursuing further appeal. This petition challenges the assessment order dated October 20, 2020, and the appellate order dated September 23, 2022. Additionally, the petitioner contests the constitutionality of Section 19(1) of the IGST Act, Section 77(1) of the CGST Act/RGST Act, and Rule 89(1A) of the CGST Rules.

The crux of the petitioner’s argument lies in their assertion that the supply of manpower to an entity in Rajasthan constitutes an inter-state transaction, as it originates from a place of business outside Rajasthan and ends within the state. They maintain that their payment of 18% IGST adequately covers this, rendering the demand for 18% CGST+RGST unjustified and excessive.

This case involves a writ petition brought forth by a private limited company, the petitioner, challenging an assessment order passed by the Assessing Authority and an appellate order affirming the same. The petitioner, engaged in supplying manpower services, deposited Integrated Goods and Services Tax (IGST) considering its supply of manpower to M/s GVK Jaipur Expressway Pvt. Ltd. as inter-state services. However, the authorities treated the supply as intra-state, leading to a demand for Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST)/Regional Goods and Services Tax (RGST), along with interest and penalty.

The petitioner contests this classification, arguing that their supply of manpower from their office outside Rajasthan to a location within Rajasthan constitutes an inter-state transaction. They contend that the imposition of CGST and RGST amounts to double taxation since IGST was already deposited.

On the other hand, the Advocate General, representing the respondents, asserts that based on the facts and findings, the supply of manpower is an intra-state transaction, justifying the demand for CGST and RGST. They highlight the petitioner’s registration in Rajasthan and the disclosure of its place of business there, indicating that the services were rendered intra-state.

In response, the petitioner’s counsel argues that their registration in Rajasthan was compelled and only obtained in 2020, which should not affect transactions from previous years.

The Additional Solicitor General, representing the Union of India, supports the respondents’ stance.

The crux of the dispute lies in the classification of the petitioner’s services as either inter-state or intra-state, determining the applicable tax regime. The petitioner maintains that their supply of manpower constitutes an inter-state transaction, while the respondents argue for an intra-state classification. The outcome of this case will likely hinge on the interpretation of relevant tax laws and the factual circumstances surrounding the supply of manpower services.

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Skylark Infra Engineering Pvt. Ltd.

For Reference Visit:
Rajasthan High Court

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GST Case Law