Taxpayers cannot be compelled to pay tax on the services rendered by it twice: Rajasthan High Court.

Taxpayers cannot be compelled to pay tax on the services rendered by it twice: Rajasthan High Court.

The Rajasthan High Court passed a judgement on 05-01-2023 in the case of Skylark Infra Engineering Pvt. Ltd. Versus Union of India D.B. Civil Writ Petition No. 60/2023. The division bench of Justice Pankaj Mittal and Justice Subha Mehta ruled that the petitioner’s supply of manpower to a company in Rajasthan is either an interstate transaction subject to CGST+RGST or an intra-state transaction subject to IGST. The petitioner has deposited 18% of the IGST, and the respondents or department has recovered 35% of the CGST and RGST by attaching the petitioner’s accounts.


The petitioner is in the business of supplying manpower to various entities. The petitioner deposited 18% IGST on the supply of the aforementioned manpower service, treating the supply of manpower as interstate services because it had its office in Delhi/Gurgaon and the manpower was supplied in Jaipur, Rajasthan.

The petitioner was served with a show cause notice to show cause why the demand for CGST and RGST under Section 74 of the GST Act, along with interest and penalty, may not be raised against it.

After considering the petitioner’s response, the Assessing Authority assessed and confirmed the demand for CGST and RGST, interest, and penalty as raised against it by treating the petitioner’s service of supply of manpower as intra-state. The order was affirmed by the Joint Commissioner (Appellate Authority). Since the GST tribunal has not yet been constituted, the petitioner, instead of resorting to the remedy of further appeal, has preferred this writ petition challenging the assessment order.

The petitioner had also challenged the validity of Section 19(1) of the IGST Act, Section 77(1) of the CGST Act/RGST Act, and Rule 89(1A) of the CGST Rules as unconstitutional.


The Court held that the petitioner contended that the service of supplying manpower to an entity in Rajasthan is an inter-state transaction as the supply has been undertaken by the petitioner from a place of business outside Rajasthan to a place in the State of Rajasthan. On the interstate transaction, he duly deposited 18% of IGST, and as such, the demand of 18% CGST+RGST was unjustified and amounted to double taxation. The respondents are incorrectly treating the supply of services as intra-state so as to levy CGST plus RGST.

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