Company drags taxman to court after similar tax demands raised by state and central GST authorities
The company, which filed a writ petition in the Bombay High Court, said that it had already paid significant GST to the state, but the central GST authorities issued summons to its managing director and duplicated the tax investigation and demand.
The Bombay High Court that was hearing the case said that there was no need for the managing director to honour the summons by the central GST authorities.
Because the petitioner’s managing director has been summoned to appear, the high court said that even though he has answered the summons, he is not required to do so because he is not a “competent person”.
Abhishek A Rastogi, partner at law firm Khaitan & Co, who represented the company, challenged the power of central GST authorities to issue summons. Rastogi challenged the power on the ground that the state GST authority had already blocked the utilised input tax credit to the tune of Rs 1.57 crore.
The company also challenged the summons issued to its managing director. The managing director of the petitioner may not be a competent witness. The group chief finance officer can be asked to appear before the authorities in response to the summons,” argued Rastogi in court.
Many industry trackers have in the past raised concerns over tax demands by different state GST departments as well. In many cases, state authorities have challenged the transactions of companies over where the GST should have been paid.
Under the GST framework, companies are required to register themselves with every state separately where they operate. Tax is only paid where consumption actually happens. The GST is also split in such a way that a part of the tax is collected by state authorities while another part is collected by central tax authorities.
Jitendra B Mishra, who was representing the tax authorities, sought time to file a reply to the writ petition. “We grant the respondents (government, tax department) four weeks’ time to file an affidavit in reply, which shall be served upon the petitioner’s advocate simultaneously,” the court said.
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