The Delhi High Court has held that the GST Assistant Commissioner (Refund) adopts dual standards, resulting in differential tax treatment to similarly placed assesses without any rational basis.
The bench of Justice Yashwant Varma and Justice Dharmesh Sharma has observed that the differential tax treatment to similarly placed assesses is a discriminatory treatment that violates the rights of the petitioner protected under Article 14 of the Constitution of India, 1950.
The Bharat Sanchar Nigam Limited (BSNL), a Public Sector Undertaking under the Department of Telecommunications (DoT), Ministry of Communication and Information Technology (MCIT), in the capacity of an “implementing agency”, floated a tender to roll out an exclusive and dedicated “Optical Fiber Cable Network” to be owned and operated by the Defence Services under the ‘NFS Project’ in different regions of the country.
The petitioner is a Government of India Enterprise under the administrative control of the DoT, MCIT, being one of the successful bidders, managed to secure the tender for a portion of the work for the Project for installation of the optical fibre cable, as well as other services incidental thereto.
Subsequently, the BSNL raised a Purchase Order (PO) upon the petitioner, towards Supply of Material, NLD services, Access Services and Training, under the said Project, for an aggregate value of Rs. 14,48,60,76,007. Admittedly, clause (36) of the PO specifically provided that “Service Tax” is not applicable on the PO.
Clouded with confusion regarding the issue of liability to pay service tax, the petitioner filed an application before the Customs Authority for Advance Rulings {Erstwhile Authority for Advance Rulings (Central Excise, Customs and Service Tax} constituted under Section 28E of the Customs Act, 1962, seeking an advance ruling.
In the proceedings, the Commissioner of Central Goods & Services Tax, Commissionerate Delhi South (Erstwhile Commissioner of Service Tax, Delhi-II) took a contradictory stand that the exemption provided under the Mega Exemption Notification shall not be applicable on the PO and accordingly, the Project work should be subject to service tax in terms of the relevant provisions of the Finance Act, 1994.
The advance ruling is being assailed by the petitioner contending that the BSNL had floated the tender only in the capacity of an “implementation agency” which was receiving 7.5% as “implementation charges” for the “NFS Project”, and the ultimate beneficiary of which is the armed forces i.e., Ministry of Defence, Government of India.
The petitioner contended that out of the 7 POs which were issued under the same tender floated by the BSNL, in respect of the PO dated 09 September 2014 which was issued to the petitioner, the ruling dated 23 March 2018 has been pronounced, contrary to their over ruling in respect of another PO dated 30 July 2014 which was issued to one M/s Vindhya Telelinks Limited (VTL), wherein quite the opposite approach has been taken by the respondents inasmuch as a Refund Order dated 12 October 2018 has been issued to VTL in terms of Section 102 of the Finance Act, 1994.
The court noted that both the POs were similar in nature and scope, the only difference being that the PO issued to the petitioner was for Rajasthan, Uttar Pradesh and Uttarakhand region, whereas the PO issued to VTL was for Punjab, Himachal Pradesh, Haryana and NCR region.
The court allowed the writ petition and held that the advance ruling dated 23 March 2018 passed under Section 28E of the Customs Act, 1962 to be not sustainable in law, and is therefore, quashed.
Case Details
Case Title: Telecommunications Consultants India Ltd. Versus Union Of India
Case No.: W.P.(C) 3016/2019
Date: 03 December 2024
Counsel For Petitioner: Tarun Gulati
Counsel For Respondent: Bhagvan Swarup Shukla
