Facts of the Case

M/S. Hatsoff Helicopter Training P Limited provides Bulk Simulator Training Services to helicopter pilots of the Indian Air Force, Army, Navy and other defence establishments, including State Government departments, claiming exemption under Entry No.72 of Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 for services wholly funded by the Central/State Government. For the period 01.07.2017 to 31.03.2018, a show cause notice in Form DRC-01 was issued on 21.06.2022 alleging additional tax liability of Rs.4,48,19,934, on the ground that the petitioner had raised invoices without mentioning the recipients' GSTIN, and had discharged IGST instead of CGST/SGST. The second respondent passed an order-in-original dated 27.12.2022 in Form DRC-07 fixing total liability at Rs.4,93,01,928 (tax plus penalty). The petitioner's statutory appeal under Section 107(11), filed after a 10% pre-deposit, was disposed of on 30.09.2023. The petitioner then challenged both the order-in-appeal and a consequential recovery notice dated 17.10.2023, also seeking a refund of Rs.1,52,03,733.

Issues Involved

  1. Whether the absence of the recipient's GSTIN on invoices could, by itself, be treated as dispositive to deny the exemption under Notification No.12/2017 and to relocate the place of supply to Karnataka under Section 12(5) of the IGST Act.
  2. Whether the authorities were obliged to examine the exemption claim on its merits once the recipient establishments' identity and government funding were otherwise ascertainable.

Petitioner's Arguments

  • The GST law contemplates the recipient being a “registered entity” without distinguishing between PAN- and TAN-based registration; supplies to establishments with PAN/TAN were wrongly treated differently.
  • Non-mention of the recipients' GSTIN was a bona fide omission and did not alter the fact that the services were wholly funded by the Central/State Government, and hence exempt.
  • If necessary details such as TAN and actual place of supply are discernible from the records, exemption under Notification No.12/2017 could not have been denied merely for want of GSTIN.

Respondent's Arguments

  • Due registration of the recipient organisation is a dispositive factor for determining place of supply under Section 12(5) of the IGST Act.
  • Since the petitioner had not furnished GSTIN, the supply had to be deemed an intra-state supply liable to CGST/KGST at the petitioner's registered place of business in Karnataka.

Court Order / Findings

  • The impugned orders elaborately referred to the statutory provisions but concluded the proceedings solely on the premise that invoices lacked the recipients' GSTIN, without examining the undisputed fact that the recipient establishments were government/defence bodies located in Delhi, Jharkhand, and Uttar Pradesh.
  • Failure to furnish GSTIN, without more, could not be treated as sufficient to deny the Notification No.12/2017 exemption where the exempt character of the supply was otherwise ascertainable.
  • If the petitioner is able to furnish the GSTIN later and demonstrate that the training was wholly sponsored by the Central or State Government, the exemption question requires fresh, complete adjudication.
  • The petition was allowed in part: the order-in-appeal dated 30.09.2023 was quashed and the matter restored to the third respondent for reconsideration; the recovery notice dated 17.10.2023 was consequentially quashed.

Important Clarification

  • Denial of exemption under Notification No.12/2017 solely for want of GSTIN on invoices, without examining whether the recipient is genuinely a government body funding the service in full, does not amount to complete adjudication and is liable to be set aside.
  • Place-of-supply determinations under Section 12(5) of the IGST Act must be based on complete facts on record, not merely on the absence of a single data field.

Sections Involved

  • Section 12(5), IGST Act, 2017 — place of supply of services where the location of the recipient is not available.
  • Notification No.12/2017-Central Tax (Rate), Entry 72 — exemption for services wholly funded by Government for training.
  • Section 107(11), CGST/KGST Act, 2017 — powers of the Appellate Authority.

Decision – In Favour of

Allowed in part, in favour of the Assessee — the recovery notice and appellate order were quashed and the exemption claim remanded for fresh, complete adjudication; the Assessee's entitlement to exemption itself remains to be finally decided.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

Court: High Court of Karnataka at Bengaluru
Case No.: Writ Petition No.24736 of 2023 (T-RES)
Coram: B M Shyam Prasad, J.
Decision Date: 27.11.2023
Disposal Nature: Allowed in part; recovery notice quashed and remanded

Link to Download the Order

Click here to download the order

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.