Axis Bank Ltd VS Union Of India

The Writ Petition was filed in response to an Order dated 23rd November 2020 issued by the Additional Commissioner [GST-Appeals]. The petitioner, identified as the third largest private bank in India, offers a comprehensive range of financial services catering to both personal and corporate banking needs. Registered in both Andhra Pradesh [AP] and the State of Telangana [TL], the petitioner operates under two distinct GSTN Numbers. Upon the introduction of the Goods and Services Tax (GST) regime, the petitioner transitioned from a singular centralized registration under the Service Tax regime to obtaining state-specific GST registrations, each with its own unique GST for every state where it conducts business.

To facilitate the determination of the ‘Location of Supplier’ [LOS] and the ‘Place of Supply’ [POS], the petitioner systematically tagged all its branches to their respective states.

The present Writ Petition stems from an order dated 23rd November 2020, issued by the Additional Commissioner [GST-Appeals], prompting the petitioner—a major private bank in India—to file this petition. The petitioner, boasting the status of the third largest private bank in India and offering a wide array of financial services for both personal and corporate banking, is registered in both Andhra Pradesh [AP] and the State of Telangana [TL] under two distinct GSTN numbers. With the implementation of GST, the petitioner transitioned from a singular centralized registration under the Service Tax regime to having separate GST registrations tailored to each state where it operates, aiming for more precise determination of the ‘Location of Supplier’ [LOS] and the ‘Place of Supply’ [POS]. Each branch was aligned with the respective state for tax purposes.

(a) During the system configuration phase of GST implementation, certain business premises situated in Telangana State were erroneously linked to Andhra Pradesh. Consequently, services rendered from these Telangana premises were mistakenly attributed to Andhra Pradesh as the LOS, although the POS was correctly identified as Telangana. This led to IGST payments being made from the AP GST registration for services provided in Telangana, instead of the correct CGST + SGST payments from the Telangana registration.

(b) Additionally, services rendered from Telangana business premises were inaccurately recorded as being provided from premises located in Andhra Pradesh, resulting in a misalignment of the LOS and POS. This error caused confusion in the mapping of transactions and subsequent tax payments.

The petitioner contests that these errors were purely technical in nature and not indicative of any deliberate misconduct. They assert that efforts were made to rectify the misconfigurations promptly. However, despite these efforts, the Additional Commissioner’s order failed to acknowledge the technical nature of the discrepancies and instead upheld penalties and tax liabilities against the petitioner.

The crux of the petitioner’s argument lies in the contention that the order passed by the Additional Commissioner failed to consider the mitigating circumstances surrounding the misconfigurations and unjustly imposed penalties and liabilities. They seek relief from the court to quash the order and rectify the errors in the interest of fairness and justice.

The Writ Petition filed stems from dissatisfaction with the Order dated 23rd November 2020, issued by the Additional Commissioner [GST-Appeals]. The petitioner, a major private bank in India offering a wide range of financial services, operates with registrations in Andhra Pradesh (AP) and Telangana (TL), each with separate GSTN Numbers, following the transition from a single centralized registration under the Service Tax regime to state-specific GST registrations post the introduction of GST.

During the implementation of GST, a configuration error occurred where certain business premises in Telangana were erroneously tagged to Andhra Pradesh. Consequently, services provided from these Telangana branches were inaccurately recorded as being provided in Andhra Pradesh rather than in Telangana, leading to incorrect determination of the ‘Location of Supplier’ (LOS). Although the ‘Place of Supply’ (POS) was correctly identified as Telangana, IGST was paid from the AP GST registration instead of CGST + SGST from the TL registration for services rendered from these branches.

Additionally, services provided from Telangana premises were incorrectly mapped as services provided in Andhra Pradesh, resulting in faulty LOS determination in both states and erroneous categorization as Inter-State supply rather than Intra-State supply. Consequently, IGST was paid from the AP registration instead of CGST and SGST from the TL registration. The petitioner identified these mapping errors in 2019 and, to rectify the tax payment, voluntarily deposited appropriate CGST + SGST in Telangana for all relevant tax periods where IGST was incorrectly paid from the AP registration.

The petitioner duly paid CGST and SGST in Telangana and reported this through GST Form DRC 03, effectively resulting in double taxation: IGST in Andhra Pradesh and CGST + SGST in Telangana for the same services. The crux of the petition seems to revolve around rectifying these erroneous tax payments and seeking relief from the consequences thereof.

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