Excelsior Correspondent
Srinagar, Sept 4: The High Court has directed the Central Tax Authorities not to take any coercive steps against the business firms under Demand of GST and show cause notice issued with regard to cross Line of Control (LoC) trade for supply of goods.
The Division Bench of Justice Atul Sreedharan and Justice Mohammad Yousuf Wani has sought objections from the department to the pleas of business firms and till then directed that no coercive actions in terms of the show cause notices be initiated against them.
The demand of GST and show cause notices revealed that the traders operating at Trade Facilitation Centres at Salamabad, Uri and Chakan-Da-Bagh, Poonch about cross LoC trade taking place at LoC on Srinagar-Muzafarabad and Poonch-Rawalakote routes.
The trade was administered by SOP issued by the Ministry of Home Affairs Government of India enlist therein 21 items to be traded from Salamabad (Uri) to Chakoti (PoJK) and from Chakkan-Da-Bagh (Poonch) to Rawalkote (PoJK).
“Honouring the present status of territory at both sides of LoC, the cross LoC trade is being considered to be a trade within UT as both the countries mutually agreed for the same as India claim the territory across the LoC as its part of State and therefore provisions of Customs Act are not applicable there”, read the notice issued from the office of the Commissioner Central Goods & Services Tax Jammu.
It is said that on inward supply from PoJK up to October 2017 GST has not been paid on RCM by the notice (firms) in terms of notification dated 28.6.2017 which stand suspended from October 13, 2017 as such after taking investigation and supply of documents regard outward supplies to PoJK and inward supplies from PoJK was issued to the firms but there was no response from the firm.
The Senior Counsel Syed Faisal Qadri submitted the impugned Notice of Demand is completely illegal, arbitrary and unconstitutional as the applicability of CGST Act of 2017 completely excludes the exports of goods and there is no provision under the Act that would empower an authority to include the exports within the purview of the Act of 2017.
The positive case of the petitioner-firms is that the entire trade was in the form of an export to Pakistan, using a route of the territory of the UT of Jammu & Kashmir including the territory which falls across the Line of Control.
The firms upon issuance of the notification/order relating to suspension of trade activities across the border, also stopped the same forthwith. It appears that with effect from the date of the applicability of the CGST Act of 2017 in the State of J&K i.e., from 08.07.2017 till 19.04.2019 (when the order of suspension of trade) was ordered, the Respondent authorities have taken into consideration the supply/receipt of goods permitted by virtue of the notification issued in the year 2008 and consequently have assessed the same by bringing the said transactions within the purview of the CGST Act of 2017.
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