Big Relief to Paytm: Allahabad HC interim stay on GST Demand of Rs.1081 crore against Paytm

The Allahabad High Court has granted Paytm (One 97 Comunications Ltd) interim relief in a GST dispute involving the supply of mobile recharge coupons and Direct To Home (DTH) recharge vouchers. Meanwhile, the Central Board of Indirect Taxes and Customs (CBIC) has informed the court that directions will be issued within three months.

The crux of the dispute is whether the supply of mobile recharge coupons and Direct To Home (DTH) recharge vouchers to recipients in other states is inter-state supply or intra-state supply.

The company believes it is interstate, but the tax department believes otherwise, resulting in demand. As a result, it increased its GST demand to Rs.1,081 crore (approximately). This demand has now been halted.

During the hearing, the company’s lawyer argued that the tax was paid in Uttar Pradesh because the supply was considered inter-state. The State, on the other hand, seeks to raise demand by claiming it is intra-state supply. According to the provisions of the Integrated Goods and Services Tax Act of 2017, any amount of tax that is incorrectly paid can be adjusted. However, there is no interest payable on such a transaction.

In addition, the petitioner counsel claimed that the matter had already been referred to the Central Board of Indirect Taxes and Customs (CBIC) by a representation, the response to which is still pending.

The lawyer for the CBIC informed the court that the petitioner’s representation would be considered and appropriate directions would be issued by the board within three months.

“Because the amount of tax due on the transaction has already been paid and the only dispute is whether it is to be treated as an intra-state sale or an inter-state sale, recovery of the demand raised vide order dated December 3, 2022 shall remain stayed until the next date of hearing,” a division bench of the court recently said. The case has been rescheduled for April 27.