Facts of the Case

The petitioner, M/s JBT (Jai Bharath Travels), engaged in plying passenger buses across Andhra Pradesh, Telangana, Tamil Nadu and Puducherry, challenged an Assessment-cum-Penalty-cum-Interest order (DIN3715122281260) dated 15.12.2022 passed under the SGST/CGST Acts for tax periods 2017-18 to November 2019. This was the second round of assessment, an earlier order having been remanded by this Court in W.P.No.22198/2020 for want of personal hearing. The petitioner contended that the first respondent obtained turnover data from M/s Abhibus and wrongly assessed tax on the petitioner's total turnover across all four states, when under the GST law only the turnover attributable to Andhra Pradesh should have been assessed by the AP authorities, with the remaining turnover taxable under the respective statutes of the other states. A separate ground concerning lack of proper authorization for the officer who passed the order was also raised.

Issues Involved

  1. Whether an Andhra Pradesh GST authority can assess tax on an inter-state bus operator's entire turnover spanning four states, rather than confining the assessment to turnover attributable to Andhra Pradesh.
  2. Whether the assessment order was vitiated for want of proper authorization, given that the officer who conducted the inspection differed from the officer who passed the final assessment order.

Petitioner's Arguments

  • The petitioner argued that data obtained from third parties (M/s Abhibus and M/s Red Bus) reflected its total turnover across four states, but the first respondent wrongly assessed tax on the entire turnover as if it all related to Andhra Pradesh, when the statute requires state-wise apportionment.
  • It was further argued that the Joint Commissioner had authorised the second respondent only to conduct inspection/audit under Form GST INS-01, not to pass the assessment order, which was instead passed by the first respondent, allegedly not the jurisdictional Proper Officer, rendering the order void for want of authorization.

Respondent's Arguments

  • The Government Pleader explained that a restructuring of Divisions and Circles under A.P. Gazette Notification No.1071 dated 02.07.2022 had reduced the cadre strength of Deputy Commissioners to one per division, making the first respondent the proper officer for assessment despite the inspection authorization having been issued to the second respondent — an explanation the Court found plausible.
  • On merits, the Revenue defended the assessment, submitting that despite several opportunities and extensions, the petitioner failed to produce records demonstrating the state-wise bifurcation of AC and non-AC ticket revenue, and that tax and penalty were rightly imposed under Section 74 based on available third-party data.

Court Order / Findings

  • The Court accepted the Revenue's explanation regarding the restructuring of cadre strength as plausible, rejecting the petitioner's challenge based on lack of authorization.
  • On the central issue, the Court found that neither in the counter affidavit nor in oral submissions had the Revenue clarified whether the third-party turnover data was confined to Andhra Pradesh or included the remaining three states, and therefore granted the petitioner an opportunity to furnish state-wise turnover data for fresh assessment.
  • The writ petition was allowed, the impugned assessment order dated 15.12.2022 was set aside, and the petitioner was given liberty to submit turnover records separately for Andhra Pradesh, Telangana, Tamil Nadu and Puducherry, on condition of depositing the admitted tax (less amounts already paid) within three weeks.
  • On such deposit, the first respondent was directed to consider the fresh material, afford a hearing, and pass a fresh assessment order in accordance with law and expeditiously.

Important Clarification

Where an inter-state service provider's turnover spans multiple states, a State GST authority cannot assess tax on the entirety of the turnover obtained from third-party platform data as if the whole amount were taxable within its own state; it must confine the assessment to turnover genuinely attributable to that state, apportioning the remainder to the jurisdictions where it was actually earned.

Sections Involved

  • Section 74, SGST/CGST Act, 2017 — determination of tax involving fraud, wilful misstatement or suppression of facts, under which the impugned assessment was made.
  • Form GST INS-01 — the authorization form for conducting inspection, distinguished from authorization to pass an assessment order.
  • Form GST DRC-01/DRC-07 — the show cause notice and summary-of-order forms used in the Section 74 proceedings.

Decision – In Favour of

The decision is in favour of the Assessee in part — the assessment was set aside for fresh, state-wise reconciliation on a partial deposit condition, without a final finding on the ultimate tax liability.

Case Details

Court: High Court of Andhra Pradesh at Amaravati
Case No.: Writ Petition No.1588 of 2023
Coram: Justice U. Durga Prasad Rao and Justice T. Mallikarjuna Rao
Date of Order: 09.05.2023

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