Travancore Mats and Mattings (P.) Ltd VS Assistant Commissioner

In these consolidated writ petitions, the issue at hand pertains to the taxation regime under the Goods and Services Tax (GST). The petitioner, a dealer under GST, initially paid a tax rate of 12% for the period from July 2017 to October 2017, following the implementation of the GST Act on July 1, 2017. However, upon receiving advice, the petitioner realized that the applicable tax rate for the goods they dealt with should have been 5%, rather than 12%. Consequently, from November 2017 to April 2019, the petitioner adjusted their tax payments to comply with the correct rate of 5%.

As a result, the petitioner filed returns for the relevant assessment years of 2017-18, 2018-19, and 2019-20, reflecting the revised tax payments at the 5% rate. The petitions were heard together due to the similarity of the issue involved, and with the agreement of legal counsel representing both sides, they are being addressed collectively in this common order.

The case revolves around a dealer under the Goods and Services Tax (GST) regime who initially paid a 12% tax rate for goods from July 2017 to October 2017. Subsequently, upon advice, they realized that the applicable tax rate for the goods in question was actually 5%, starting from November 2017 till April 2019. The petitioner filed returns for the relevant assessment years (2017-18, 2018-19, and 2019-20) accordingly. However, despite responding to a notice under Section 61 of the GST Act regarding scrutiny of the returns, the petitioner received another notice intimating discrepancies in the return on October 7, 2021.

Challenging this notice, the petitioner filed writ petitions. During the hearing, the petitioner’s counsel conveyed that although they contested the notice issued under Section 61 of the Act dated October 7, 2021, the petitioner agreed to the demand by the State Tax Authority to pay the remaining 7% of the tax for the period from November 2017 to April 2019, thus making the total tax payment 12% for that period. Consequently, with the consent of both parties’ counsel, all writ petitions addressing this common issue were heard together and are being disposed of by a common order.

The consolidated order addresses multiple writ petitions concerning a GST dealer. Initially, the dealer paid 12% tax from July 2017 to October 2017, assuming it was applicable to the goods they handled. However, upon advice, they realized that only 5% tax was required based on the goods category, so they paid 5% from November 2017 to April 2019. Despite filing returns for the relevant assessment years, the dealer received notices under Section 61 of the GST Act for scrutiny. After replying to these notices, another notice was issued on October 7, 2021, citing discrepancies in the returns. Consequently, the dealer filed writ petitions challenging this notice.

During the hearing, the dealer’s counsel stated that although they contested the notice issued on October 7, 2021, they had agreed to the State Tax Authority’s proposal to pay 12% tax for the period from November 2017 to April 2019, covering the remaining 7% of the initially paid 5%. Additionally, the dealer transitioned from a partnership firm to a Private Limited Company, resulting in changes to their identification numbers. They provided both old and new numbers for their branch office in Bhavani, Tamil Nadu, and head office in Cherthala, Kerala.

The counsel argued that by paying the entire tax proposal, the dealer would be eligible to claim Input Tax Credit (ITC), which they could assert from their head office to the jurisdictional GST authority. This change in identification numbers was cited as a reason for the adjustment in tax payments. Ultimately, the dealer sought relief through the writ petitions, aiming to resolve the issues regarding tax payments and discrepancies in the returns.

Several writ petitions were consolidated due to their shared concern. The petitioner, a GST dealer, initially paid a 12% tax rate from July 2017 to October 2017, believing it applied to their goods. Subsequently, they learned that a 5% tax rate was appropriate based on the goods’ classification and adjusted their payments from November 2017 to April 2019 accordingly. Despite filing returns for the relevant assessment years and responding to a notice for scrutiny under Section 61 of the GST Act, the petitioner received another notice highlighting discrepancies in their returns. In response, they filed the present writ petitions. During the hearing, the petitioner’s counsel stated that they accepted the State Tax Authority’s demand to pay the remaining 7% tax for the period from November 2017 to April 2019, bringing the total tax paid to 12%. Additionally, the petitioner, initially a partnership firm, converted into a Private Limited Company, resulting in changes to their identification numbers. The petitioner argued that paying the entire proposed tax would enable them to claim Input Tax Credit (ITC) from their Head Office in Kerala. However, the respondent, represented by the State GST, contended that the petitioner should have paid 12% tax throughout the specified period and noted discrepancies during scrutiny under Section 61. Despite the petitioner’s response to the initial notice, the Assessing Authority found discrepancies and maintained that the petitioner was liable for 12% tax for the period from November 2017 to April 2019.

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