Allahabad High Court stays ₹1,081 crore GST demand raised against Paytm

The Allahabad High Court recently stayed a ₹1,081 crore Goods and Services Tax (GST) demand raised against payments and financial services company, Paytm [One 97 Communications Limited v UOI]..A bench of Chief Justice Rajesh Bindal and Justice JJ Munir passed the order earlier this month on a plea moved by One97 Communications Limited, the parent company of Paytm..The case raised questions on whether the supply of mobile recharge coupons and Direct To Home (DTH) recharge vouchers to recipients, who are located in other States would be an inter-state supply or intra-state supply. .An inter-state supply attracts Integrated Goods and Services Tax (IGST) which is collected and distributed by the Central government. On the other hand, an intra-state supply would attract Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST). .The Court was informed by Paytm that the amount of tax due with respect to the supply of these services has already been paid in the State of Uttar Pradesh by treating the same to be an inter-state supply. However, a demand was, thereafter, sought to be raised by the State claiming that the said transactions were intra-State supplies, the Court was told. .Given that Paytm had already paid an amount towards the discharge of GST liability, the Court granted the company interim relief. "In view of the fact that the amount of tax due on the transaction has already been paid and only dispute is whether it is to be treated as intra-state sale or inter-state sale, recovery of the demand raised vide order dated December 3, 2022 shall remain stayed till the next date of hearing," the Court ordered. .The Court noted the submission that under Section 19 of the Integrated Goods and Services Tax (IGST) Act, 2017, any amount of tax wrongly paid can be adjusted. Further, in terms of Section 77 of the Central Goods and Services Tax (CGST) Act, 2017, no interest is payable for such transactions, the petitioner's counsel added. .The Court was also informed that the petitioner had made a representation to the Central Board of Indirect Taxes (CBDT) on September 7, 2017, for a clarification of the issue. However, the representation is still pending, Paytm submitted. The government-counsel, in response, assured the Court that Paytm's representation shall be considered and appropriate directions shall be issued thereon by the CBDT within three months.The matter will be heard next on April 27.Paytm (One 97 Communications) was represented by Senior Advocate Tarun Gulati with advocate Nishant Mishra.The respondent authorities were represented by advocates Sudarshan Singh, Anant Kumar Tiwari, Ankur Agarwal, and Dhananjay Awasthi..[Read Order]