Tax Exemption Can't Be Denied To Govt's Helicopter Pilots Trainer For Non-Furnishing GSTIN : Karnataka High Court

The Karnataka High Court has held that tax exemption cannot be denied to the government's helicopter pilot trainer merely for non-furnishing goods and service tax identification numbers (GSTIN) initially.

The bench of Justice B. M. Shyam Prasad has observed that the GSTIN of the recipient organization was not furnished initially, is able to be furnished later, and demonstrates that its services of imparting training to the helicopter pilots were totally sponsored and borne by the Central Government or the State Government.

The petitioner/assessee, during the period from 2018-19 to 2021-22, has offered “bulk simulator training services” to helicopter pilots from the Indian Air Force, Indian Army, Indian Navy, and other defence establishments, including some of the departments of the state government.

The services provided to the Central Government/State Government/Union Territory Administration for imparting training for which the total expenditure is borne by the Central Government/State Government/Indian Territory Administration are exempted vide Entry No.72 of the Notification No.12/2017 dated June 28, 2017.

The petitioner has raised invoices for the recipient organizations without mentioning GSTIN.

The proceedings are initiated with the issuance of DRC-1A and DRC-01, alleging that the petitioner has discharged tax under the wrong head, i.e., IGST, on the supply instead of discharging SGST and CGST and causing loss to the State Exchequer. The proceedings are initiated because the authorities have opined that in the absence of GSTIN and PAN, the place of supply will be in Karnataka according to Section 12(5) of the IGST Act, and the services extended by the petitioner to the defence establishments in Delhi, Jharkhand, and other places will not be inter-state supplies.

The petitioner asserted that the provisions of the Central Goods and Services Tax Act, 2017/Karnataka Goods and Services Tax Act, 2017 contemplate the recipient being a registered entity without making a distinction on whether such registration is PAN or TAN.

The petitioner asserted that it has extended invoiced supplies to the recipient establishments that had PAN or TAN. While the supplies made to the recipient establishments with PAN are reduced, the proceedings relating to TAN are continued. Even otherwise, the petitioner is bona fide in not mentioning the GSTIN obtained by the recipient organizations.

The petitioner contended that if the necessary details, such as TAN and the actual place of supply, could be discerned from the records, the department could not have denied the benefit of exemption.

The department contended that due registration of a receiving organization would be necessary as it would be a dispositive factor to decide the place of supply under Section 12(5) of the IGST Act. The petitioner has not furnished GSTIN, and therefore, the supply must be deemed to be an intrastate service liable to KGST/CGST. The Court cannot take any exception either, with the department observing that the petitioner, who has not furnished the GSTIN, is liable to pay GST within the state because the place of supply will be in Karnataka.

The court stated, “If the petitioner, notwithstanding the fact that the GSTIN of the recipient organization was not furnished initially, is able to furnish the same later and demonstrate that its services of imparting training to the helicopter pilots were totally sponsored and borne by the Central Government or the State Government, the third respondent will have to decide whether the exemption vide Notification No.12/2017 dated June 28, 2017 could be denied, these aspects will have to be considered for complete adjudication.”

Counsel For Petitioner: K.S. Naveen Kumar, Dakshina Murthy R.

Counsel For Respondent: Shamanth Naik

Case Title: M/S Hatsoff Helicopter Training P Limited Versus State Of Karnataka

Case No.: Writ Petition No. 24699 Of 2023

Citation No: 2024 LiveLaw (Kar) 20

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