The Orissa High Court in the case of Samarth Commodities Merchants (P.) Ltd. v. Commissioner, GST & Central Excise vide W.P.(C) NO.8586 OF 2024 dated 15.04.2024, has noted that if income from shares is indeed excluded by the Circular No. 196/08/2023-GST dated July 17, 2023, the authority's assessment based on the audit report is not legally sustainable. The judgment by the High Court of Karnataka in M/s. Yonex India Private Limited explicitly states that income from shares is not taxable. The Court quashed the impugned demand and order, directing the authority to reassess the matter considering the petitioner's submissions and providing an opportunity for a hearing. 

Facts of the case: The petitioner filed a writ petition to quash the demand arising out of GST DRC-07 and the Order-in-Original dated December 18, 2023, under Annexure-10. The petitioner contended that income from shares is not taxable under GST and is beyond its purview. Despite this, the authority issued a fresh demand, which is unsustainable in law. 

The petitioner relied on Circular No. 196/08/2023-GST dated July 17, 2023, issued by the Government of India, Ministry of Finance (Department of Revenue), Central Board of Indirect Taxes and Customs, GST Policy Wing, and the judgment by the High Court of Karnataka in M/s. Yonex India Private Limited v. Union of India & Ors.

The respondent department argued that the petitioner did not produce any evidence before the authority during the assessment to indicate that the income was from shares. The demand was determined based on an audit, and the proceeding was initiated accordingly. Further, the impugned order is appealable, and instead of approaching the appellate authority, the petitioner directly filed a writ petition in this Court.

Held:- The Court considered the arguments and reviewed the records. It noted that if income from shares is indeed excluded by the Circular No. 196/08/2023-GST dated July 17, 2023, the authority's assessment based on the audit report is not legally sustainable.  The judgment by the High Court of Karnataka in M/s. Yonex India Private Limited clearly states that income from shares is not taxable.

The demand arising out of GST DRC-07 and the Order-in-Original dated December 18, 2023, under Annexure-10, cannot be sustained in law and is therefore quashed. The matter is remitted to the same authority to hear it afresh and pass an appropriate order, giving the petitioner an opportunity for a personal hearing.

To read the complete judgment 2024 Taxo.online 954