A recent court case where a company successfully challenged a demand notice issued by the Central GST & Central Excise department.

Background:

The company (petitioner) received a demand notice (GST DRC-07) and order (dated December 18, 2023) for taxes allegedly due on income from shares. The company argued that such income is not subject to Goods and Services Tax (GST).

Company's Arguments:

• Income from shares is not taxable under GST.
• A government circular (No. 196/08/2023-GST dated July 17, 2023) clarifies this exclusion.
• A Karnataka High Court judgment (M/s. Yonex India Private Limited v. Union of India & Ors [2024 TAXONATION 153 (KARNATAKA)]) supports this position.

Department's Arguments:

• The company did not provide evidence during the initial assessment that the income came from shares.
• The demand arose after an audit revealed the income source.
• The company should have appealed the assessment order instead of directly filing a writ petition.

Court's Decision:

The court sided with the company, citing the following reasons:

• The government circular clearly excludes income from shares from GST.
• The Karnataka High Court judgment reinforces this exclusion.
• The assessment based on the audit report cannot stand if the income source is not taxable under GST.

Outcome:

• The court quashed the demand notice and order.
• The matter was sent back to the original authority for a fresh hearing, considering the company's arguments.

Topic-Samarth Commodities Merchants Pvt. Ltd., Sundargarh Versus Commissioner, GST & Central Excise, Rourkela & Ors

Citation-2024 TAXONATION 1077 (ODISHA)

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