Orissa High Court rejects JSW plea on quashing GST demand

As per the provisions of GST law, JSW Steel Limited was eligible to avail ITC of Rs 1,510 crore towards payment of output tax liability.

Published: 23rd May 2022 08:37 AM  |   Last Updated: 23rd May 2022 08:37 AM   |  A+A-

Orissa High Court

Orissa High Court (File Photo | EPS)

By Express News Service

BHUBANESWAR: The Orissa High Court has rejected the plea of JSW Steel Limited, Barbil seeking quashing of the demand order passed by State CT and GST Enforcement Authority and interim stay. 

The steel company had moved the HC challenging the GST Enforcement Authority’s demand of Rs 2,678 crore towards tax, penalty and interest for a period of 14 months.

On March 28, the GST wing had raised the demand after thorough investigation and directed JSW Steel Limited, Barbil to pay the same within one month of issue of the order.

The bench comprising of Justice Jaswindar Singh and Justice MS Raman declined interim stay with the observation that the transactions in question prima facie amount to siphoning of tax amounts, therefore, apparently warrant invocation of proceeding under Section 74 of the GST Act.

Sources said, the company had started mining operation at Nuagoan, Jajang, Koira and Ganua mines, for which lease was granted by the State government, by paying applicable bid premium, royalty and other statutory fees in addition to Rs 1,510 crore towards GST on Reverse Charge Mechanism (RCM) basis. 

As per the provisions of GST law, JSW Steel Limited was eligible to avail ITC of Rs 1,510 crore towards payment of output tax liability. The company utilised Rs 271 crore for discharging output tax liability on actual supply of iron ore.

But contrary to the provision of law it had transferred the unutilised ITC of Rs 1239 crore to Input Service Distributor, Mumbai in the name of fictitious supply of support service for distri+bution to other units of JSW Steel Limited located in different states for their utilisation. 

As the State lost huge revenue due to such illegal transfer of ITC, the CT and GST Enforcement Authority after detail investigation passed an order raising demand of Rs 2678 crore towards tax, penalty and interest for the period from June 2020 to August 2021.

Challenging it, the company had prayed for quashing of the order and grant of interim stay which was opposed by Advocate General Ashok Parija who appeared for the State.

The HC besides declining to grant interim stay has directed the State government to file counter affidavit within six weeks and posted the matter to August 12 for further hearing.


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