The Jharkhand High Court while imposing the cost of Rs. 1 Lakh on the transporter held that the state GST department can act against CGST-registered entity for non-deposit of GST.
The bench of Chief Justice M.S. Ramachandra Rao and Justice Rajesh Shankar has observed that action can be taken under subsection (2) of section 76 against ‘every person’ including a person not registered under the JGST Act, 2017, if he does not, having received JGST from the petitioner, file any return under GSTR-01 and does not remit the same to the state GST department. Therefore, it is not permissible for the state GST department to contend that they need not do anything since the transporter is registered with the CGST authorities. It is their bounden duty to take action against the transporter under sub-section (2) of Section 76 forthwith and there is no valid excuse for its inaction.
The petitioner/assessee is engaged in the business of loading, unloading and transportation of coal and is registered under the Goods and Services Tax. The Petitioner availed service of rental/hiring of commercial motor vehicle from the respondent (transporter) during the period October 2020 to March 2021 and the transporter is also registered under the GST Act.
The transporter for the period 2020-21 had raised six different Invoices/Vehicle External Charges Bills for Rs.73,34,569/- which included SGST and CGST amount of Rs.11,18,832.58. These bills are filed by petitioners.
The Petitioner contended that it cleared all the invoices as can be seen from the Bank’ statement of account along with the applicable taxes. The GST paid by it to the transporter against the supply of rental/hiring service of commercial motor vehicle was not being shown in the GSTR-2A and on enquiry, the petitioner came to know that the transporter had not filed GSTR-01 and, therefore, the tax paid by the petitioner to transporter was not reflected in the GSTR-2A, due to which the petitioner was unable to avail and utilize Input Tax Credit of Rs.11,17,703/- while discharging its Output Tax Liability and, thus, a huge financial burden was cast on it.
The state department stated that the transporter falls within the jurisdiction of the Central GST authorities and no action can be initiated as against the transporter by the state department.
Section 76 (1) of the Jharkhand GST Act, 2017 mandates that ‘every person who has collected from any other person any amount as representing GST, and had not paid the said amount to the Government, shall forthwith pay it to the Government’ and if he does not do so, under subsection (2) thereof, ‘the proper officer may direct him through a notice to show cause as to why the said amount as specified in the notice should not be paid by him to the Government, and why a penalty equivalent to the amount specified to the notice should not be imposed on him under the Act’.
The court allowed the writ petition with costs of Rs.1,00,000 to be paid by the transporter to the petitioner within eight weeks; and the state GST are directed to initiate proceedings under Section 76 the Jharkhand GST Act, 2017 against transporter for collection of the tax from the petitioner and not crediting it to the Jharkhand State Government during the financial year 2020- 2021 and withholding the tax amount which is due to the Government, by preventing petitioner from claiming input tax credit of the amount so paid.
Case Details
Case Title: M/s R.K. Transport & Constructions Limited Versus The State of Jharkhand
Case No.: W.P. (T) No. 1624 of 2024
Date: 13/06/2025
Counsel For Petitioner: Amrita Sinha, Advocate
Counsel For Respondent: Ashok Kumar Yadav
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