The Jharkhand High Court quashed a GST notice, ruling that sales made at concessional prices are legitimate and cannot be treated as sham transactions.
Several mining lessees and dealers in Jharkhand challenged GST notices issued under Section 61 of the JGST Act, 2017. The notices alleged that the petitioners sold stone boulders and chips at prices lower than market rates and asked why proceedings under Sections 73/74 should not be initiated. Petitioners argued that Section 61 only allows for notices based on discrepancies in returns, not on price comparisons. Despite their replies, further notices were issued, leading to the filing of writ petitions.
The bench of Chief Justice M.S. Ramachandra Rao and Justice Deepak Roshan has observed, “We are of the firm opinion that notices issued comparing the particulars at which Petitioners have sold their goods with that of prevalent market price, is wholly without jurisdiction and beyond the scope of Section 61 of the Act. In fact, it is settled law that unless transactions of sale are shown to be sham transactions or the mere fact that the goods were sold at a concessional rate/rate less than market price would not entitle the Revenue to assess the difference between the market price and the price paid by the purchaser as transaction value.”
Further the Court added, “we have no hesitation in declaring that notices issued under Section 61 to the respective writ petitioners are wholly without jurisdiction and are, accordingly liable to be quashed/set aside by this Court.”
The High Court quashed all GST notices issued under Section 61 of the JGST Act against the mining lessees. It held that price differences between the petitioners’ sales and prevailing market rates cannot, by themselves, justify action. Tax officers may issue new notices only for genuine discrepancies in the petitioners’ returns. All related interlocutory applications were closed, with no costs awarded.
Read Here: