Provisions of Section 13(8)(b) and Section 8(2) of IGST Act are Legal, Valid & Constitutional: HC

Case Details: Dharmendra M. Jani v. Union of India - [2023] 151 taxmann.com 91 (Bombay)

Judiciary and Counsel Details

• • Sunil B. Shukre & Abhay Ahuja, JJ.
  • Bharat Raichandani, Rishabh Jain, Abhishek Rastogi, Pratyushprawa Saha, Mahir Chablani, Ms Kanika Sharma & Marmik Kamdar for the Petitioner.
  • Anil C. Singh, ASG Pradeep Jetly, Sr. Adv. J.B. Mishra, Aditya Thakkar, Dhananjay B. Deshmukh, Ms Jyoti Chavan & Dushyant Kumar, AGP’s for the Respondent.

Facts of the Case

The petitioner was engaged in providing marketing and promotion services to customers located outside India. It was providing services only to the principal located outside India and in lieu thereof receiving consideration in convertible foreign currency from the principal located outside India.

The petitioner contended that the transaction entered into by it with the foreign customers would be one of export of service from India earning valuable convertible foreign exchange for the country by an intermediary. However due to deeming fiction by Section 13(8)(b) of IGST Act, the place of supply shall be the location of the supplier of services which is in India and levy of CGST and SGST would arise. It filed writ petition assailing the constitutional validity of section 13(8)(b) of the IGST Act.

High Court Held

The coram of Division Bench Bombay High Court was of two judges. One Judge of Division Bench Bombay High Court observed that Section 13(8)(b) of IGST Act not only falls foul of overall scheme of CGST Act and IGST Act but also offends Articles 245, 246A, 269A and 286(1)(b) of Constitution.

Thus, as per one opinion, the provision is unconstitutional, other has expressed his disagreement and has rendered his separate opinion. Therefore, in view of such difference in opinion, the matter was placed before the Hon’ble Chief Justice for an administrative order and the Chief Justice referred these matters for the opinion of third Judge.

The third Judge held that that provisions of Section 13(8)(b) and Section 8(2) of IGST Act are legal, valid and constitutional and are confined in their operation to provisions of IGST Act only and same cannot be made applicable for levy of tax on services under CGST and State GST Acts. Therefore, the Hon’ble Chief Justice held that the provisions of Section 13(8)(b) and Section 8(2) of the IGST Act are legal, valid and constitutional.

List of Cases Reviewed

• • Dharmendra M. Jani v. Union of India [2023] 149 taxmann.com 317/97 GST 630/ 2023 (72) G.S.T.L 448 (Bombay) (para 9) followed.

List of Cases Referred to

• • Dharmendra M. Jani v. Union of India [2021] 127 taxmann.com 639/ 87 GST 117 (Bom.) (para 2)
  • Dharmendra M. Jani v. Union of India [2021] 127 taxmann.com 730/87 GST 522 (Bom.) (para 4)
  • Dharmendra M. Jani v. Union of India [2023] 149 taxmann.com 317/ 97 GST 630 / 2023 (72) G.S.T.L 448 (Bom.) (para 7).