The division bench of the Rajasthan High Court led by Justice Pankaj Mittal and Justice Subha Mehta has held that the taxpayer cannot be compelled to pay tax on the services rendered twice. The division bench ruled that the petitioner's supply of manpower to a company in Rajasthan is either an inter-state transaction subject to CGST+RGST or an intra-state transaction subject to IGST. The petitioner has deposited 18% of the IGST, and the respondents or department has recovered 35% of the CGST and RGST by attaching the petitioner's accounts. The petitioner/assessee is in the business of supplying manpower to various entities. The petitioner deposited 18% IGST on the supply of the aforementioned manpower service, treating the supply of manpower as interstate services because it had its office in Delhi/Gurgaon and the manpower was supplied in Jaipur, Rajasthan.

The petitioner was served with a show cause notice to show cause why the demand for CGST and RGST under Section 74 of the GST Act, along with interest and penalty, may not be raised against it.

The petitioner has also challenged the validity of Section 19(1) of the IGST Act, Section 77(1) of the CGST Act/RGST Act, and Rule 89(1A) of the CGST Rules as unconstitutional.

The petitioner contended that the service of supplying manpower to an entity in Rajasthan is an inter-state transaction as the supply has been undertaken by the petitioner from a place of business outside Rajasthan to a place in the State of Rajasthan. On the interstate transaction, he duly deposited 18% of IGST, and as such, the demand of 18% CGST + RGST was unjustified and amounted to double taxation. The respondents are incorrectly treating the supply of services as intra-state so as to levy CGST plus RGST.

Case Title: M/s. Skylark Infra Engineering Pvt. Ltd. Versus UOI
Citation: D.B. Civil Writ Petition No. 60/2023
Link: https://hcraj.nic.in/cishcraj-jp/pdfjs-dist/web/viewer.php?file=https://hcraj.nic.in/cishcraj-jp/storefiles/createordjud/205200000602023_1.pdf

Appearance of the Advocates:-

For Petitioner(s) :

Mr. Hemant Kothari

For Respondent(s):

Mr. M.S. Singhvi, Advocate General assisted by

Mr. Sheetanshu Sharma

Mr. R.D. Rastogi, Additional Solicitor General assisted by

Mr. Vaibhav Jeswani,

Mr. Devesh Yadav

Mr. Hemant Sihag

Mr. Kinshuk Jain