GST Authorities Cannot Assume Jurisdiction For Passing Adverse Orders For Work Concluded Under VAT Regime: Allahabad High Court

Notices were issued to the petitioner, a work contractor, for the Financial Year 2018-19 under the GST Act. The petitioner was unable to reply to the notices in time. Consequently, an ex-parte order was passed, levying tax, penalty and interest on him. Aggrieved, he sought relief before the High Court.

The petitioner contended that the transaction in dispute related to payment for work done for the Jal Nigam in the Years 2015-16 and 16-17, prior to the implementation of the GST regime. He submitted that in accordance with the regime then, the Jal Nigam had already deducted the VAT as required. Thus, the GST authorities lacked jurisdiction to pass adverse orders against him.

The Court held that merely because payment was made subsequent to the implementation of the GST regime, it would not be sufficient for the GST authorities to claim jurisdiction. Given that the transaction was completed prior to the GST regime, the Court held that they should have apprised the authorities under the VAT act, under whose ambit the matter fell.

“Once the original record itself shows that petitioner was engaged in work contract and work order was allotted to the petitioner by Jal Niam, merely on the basis of fact that payment has been made at a subsequent stage, after implementation of GST regime, the GST authorities cannot assume the jurisdiction to levy tax, interest or penalty on the ground of mismatch between GSTR 3B and Form 26 AS of the petitioner issued by the Income Tax Department,” held Justice Piyush Agarwal.

Accordingly, the writ petition was allowed.

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