Classification of Services cannot be the subject matter of writ petition

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The Hon’ble Madras High Court in the case of KPR Concrete Readymix v. State Tax Officer [Writ Petition Nos. 35949, 35953 of 2023 January 08, 2024] held that the dispute which revolves around the classification of services, does not fall within the limited category of cases in which a Show Cause Notice may be assailed in proceeding under Article 226 of the Constitution of India. 


The issue involved in the dispute is that KPR Concrete Readymix (“the Petitioner”) is engaged in providing transportation services to their customers. The Petitioner classified its services under the Service Accounting Code (“SAC”) 996511 - Road transport services of Goods and paid a GST rate of 12% on such services. 

The State Tax Officer (“the Respondent”) issued a notice in FORM DRC-01A, alleging short payment of tax on the services provided by the Petitioner which should be classified under SAC 996601-Rental services of road vehicles including buses, coaches, cars, trucks and other motor vehicles, with or without operator, that attracts a GST rate of 18%.

The Petitioner contended that its services are classifiable under SAC 996511 only considering the nature of supply of services, and provided relevant documents and consignment notes in defense to their claim. 

The Respondent not satisfied with the reply of the Petitioner issued a notice in FORM DRC-01 (“the Impugned Notice”).

Hence, aggrieved by the Impugned Notice the present writ petition was filed by the Petitioner.

The question to be answered is 

Whether dispute revolving around the classification of services provided by the Assessee can be the subject matter of the writ petition?

The court ordered that this case does not fall within the limited category of cases 

The Impugned Notice was issued in respect of a dispute revolving around the classification of services provided by the Petitioner, which is not within the jurisdiction of the Court.

Therefore, the Court did not interfere with the writ petition.

It directed that, the Petitioner has liberty to reply and defend  to the Impugned Notices and raise all the objections in respect thereof. 

In turn, the Respondent was also instructed to consider all the objections before deciding the matter.

The Court finally decided not to interfere with the Impugned Notice.

Well......

Article 226 (1) clearly states that every High Court shall have the powers throughout the territories in relation to which it exercised jurisdiction to issue writ or orders to any person or authority.

Also, Article 226 is not a fundamental right. It is a constitutional right that empowers a high court to issue writs.

Hence, filing writ in this case involving Classification of Supply of Services, appears preature at Show Cause notice Stage and the petitioner could have waited for the Order from original adjudicating authority and then avail redressal mechanisms envisaged in law if agreived.


R.SRIVATSAN

NACIN CHENNAI

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