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GST - Case Laws
Showing 101 to 120 of 2178 Records
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2023 (12) TMI 826
Detention of goods alongwith vehicle - petitioner is the owner of the goods - petitioner is willing and undertakes to pay the amount of security equivalent to the amount payable under Clause (a) of Section 129 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The goods have already been released. The enhanced security shall be deposited within a period of one month from today. Thereafter, the authority shall take out appropriate proceedings for assessment of the tax liability/penalty - The said security deposit shall remain subject to the result of the said adjudication. Needless to add that the impugned proceedings shall stand concluded in view of Section 129 (5) GST Act after deposit of the said security amount. Further, the findings in the impugned orders shall not influence the assessment proceedings under Section 73 and 74 of the GST Act or other appropriate provisions of the GST Act.
Petition disposed off.
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2023 (12) TMI 825
Mismatch in Input Tax Credit - Input Tax Credit availed by the petitioner company as per their returns, is not matching with the eligible Input Tax Credit as reflected in GSTR-2A statements and is in excess in respect of CGST, IGST as well as SGST Credits - HELD THAT:- There is merit in the submission of the learned counsel for the respondent that it is trite law that the jurisdiction under Article 226 of the Constitution of India ought not to be exercised in a routine fashion at the stage of show cause notice. Though it is submitted that the issues raised are governed by orders of this Court, however, it would require investigation of facts an exercise which is alien to the jurisdiction under Article 226 of the Constitution of India. Courts have frowned on Writ Petition filed against show cause notices. The liability to pay taxes requires determination of disputed questions of fact and should be agitated before Department authorities.
This Writ Petition against the show cause notice not entertained - petition disposed off.
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2023 (12) TMI 824
Seeking GST registration to be effective from retrospective effect i.e. 1.7.2017 - Migration from erstwhile tax laws to GST - Bonafide error in making application - refusal to grant benefit of Input Tax Credit (ITC) to petitioner and on supplies made to buyers - non-filing of the monthly return on the Form GSTR-3B - HELD THAT:- It is undoubtable, that in absence of any legal requirement on a ISD to file its monthly return on Form GSTR-3B, the ISD registration could never be cancelled for reason of not filing such returns.
As to the present facts, it is undisputed, petitioner no.1 was neither having more than one business vertical nor he was in need to distribute any amount of ITC that may have arisen to him. Yet, Tax Invoice were issued and the amounts of tax realized by him against the old/ISD registration, without delay - The registration as a ISD being a registration granted to a facilitation office of a recipient of taxable goods or service, it could not be utilized for any taxable business transaction with a third party, by a registered person/supplier.
The mistake with respect to grant of ISD registration, that forms the first error in the chain of errors noted above, may be described as mistake apparent on record. Under the erstwhile law where decisions to issue notice etc., were made only upon due application of mind, to the facts disclosed on paper upon due application of human intelligence, the procedure to offer correction was simple and direct. At present, under the Act, machine processes have been designed including auto-populated and auto-generated Forms, reports, etc., by the GSTN, ostensibly to eliminate avoidable human errors and to improve administrative efficiency. Under the present Act, by virtue of section 146, a digital common portal has been created by the GSTN to provide amongst others facilitation of registration; payment of tax; furnishing of returns; computation and settlement of integrated tax; issuance of electronic way bill etc.
The petitioner no.1 entitled to the relief such that the second registration granted to him be treated to be effective from the date 1.7.2017, on a deemed basis. In absence of lack of bonafides and in face of the established machine error that it is noted, grant of that relief has become imperative for non-negotiable justice considerations. Unless that equitable relief is granted, the demand of substantive justice would stand defeated primarily to unintended human errors reflected in imperfect machine processes employed to implement procedural laws.
The disclosure made in GSTR-1 of petitioner no.1 for the month of October 2017 would be modified by GSTN to reflect on the corresponding GSTR-2A, relevant to petitioner no.2 for the period July to September 2017 and all consequences to arise to the petitioners. To that extent, the order passed by the Authority for Advance Ruling may not stand in the way of the petitioners - Petition allowed.
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2023 (12) TMI 823
Cancellation of GST registration of petitioner - failure to file returns - fault committed by the petitioner's Consultant - no notice was served to the petitioner by way of physical mode and was served only through e-Portal - violation of principles of natural justice - HELD THAT:- This Court posed a question as to whether the petitioner has been served with show cause notice and the impugned orders directly through physical mode or through e-Portal, the learned Additional Government Pleader fairly admitted that all the communications, viz., the show cause notice/notice affording opportunity of personal hearing and the impugned order were not served directly through the petitioner but were only uploaded in the GST Portal.
Hence, the grievance of the petitioner that they have not been served with the show cause notice and only when they received property attachment notice, they came to know about the impugned orders appears to be genuine. Further, it is clear that the respondent knowing fully well that the petitioner's GST portal was closed owing to cancellation of GST registration on 08.02.2019, since, it the respondent, who made such cancellation, ought to have issued the show cause notice directly to the petitioner by physical mode of service and not through e-Portal, which was closed on 08.02.2019 itself - even assuming that the petitioner failed to respond to the show cause notice, it is the duty of the respondent to hear the petitioner before passing orders, which are prejudicial to the interests of the petitioner, instead, the respondent proceeded to pass the impugned orders by stating that the petitioner failed to file reply, nor appeared for hearing on 10.12.2021, and hence, the proposals contained in the show cause notice are confirmed, which is not fair on the part of the respondent.
This Court is of the view that the impugned orders are in violation of principles of natural justice and liable to be set aside and one more opportunity has to be granted to the petitioner to put forth their contention - matters are remanded to the respondent for re- consideration - Petition allowed by way of remand.
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2023 (12) TMI 822
Direction to pay a tax due along with penalty - petitioner did not file reply to the said show cause notice in time, and due to non-filing of reply, the respondent passed the impugned order - HELD THAT:- It is no doubt true that the petitioner is a taxypayer under section 10 of the Act and as per said section, the petitioner need not file GSTR 3B and filing of returns under GSTR 4 is suffice and accordingly, the petitioner filed GSTR 4, however, with a delay. Thus, considering the fact that the petitioner, being a Lady Proprietress and due to reverse of fortune, she was met with heavy loss, which resulted in closure of her business and due to wrong advice of the Auditor, she was not in a position to file returns in time and also not able to reply to the show cause notice owing to her ill-health, this Court in the interest of justice is of the view that one more opportunity can be granted to the petitioner for filing her reply and thereafter, the respondent shall pass fresh orders in accordance with law.
The matter is remanded back to the respondent for fresh assessment - petition allowed by way of remand.
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2023 (12) TMI 821
Governmental Authority or not - payments related to work order for Fire Fighting System installation at contracted area between the appellant and M/s JSCL - Item number (vi) in Column (3) of serial number 3 of Notification No. 11/2017 — Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 24/2017- Central Tax (Rate) dated 21.09.2017 - GST rate - rate of GST for service under RCM in respect of road cutting charges paid by them to JNN on behalf of M/s JSCL in relation to such contract - Recovery of such road cutting charges by the Appellant from M/S JSCL.
Whether M/s JSCL are set up by an Act of Parliament or a State Legislature? - HELD THAT:- M/s JSCL are not set up by an Act of Parliament or State Legislation.
Whether is it established by any Government? - HELD THAT:- M/s Jaipur Smart City Limited are a special purpose vehicle (SPV) formed on 12.03.2016 by the Rajasthan State Government (as approved by Order No. 64/2016 dated 01.04.2016 issued by the Cabinet of State of Rajasthan) to operate as a nodal agency to take up works proposed under the smart city proposal according to Smart City mission launched by the Government of India.
Whether Government possesses ninety per cent or more participation in M/s JSCL by way of equity or control? - HELD THAT:- M/s Jaipur Smart City Limited is a limited company incorporated under the Companies Act, 2013 in which the Rajasthan State Government and the Jaipur Nagar Nigam (local Authority/ULB) are the promoters having 50:50 equity shareholding. We note that Jaipur Nagar Nigam being a local authority is also an extension of the Government as it is a Municipal Corporation incorporated by Rajasthan State Government under “The Rajasthan Municipalities Act, 2009”. The officers of Jaipur Nagar Nigam also officiate as one of the Directors in M/s JSCL. This substantiates more than 90% control of the Government by way of participation; Therefore, it is held that M/s JSCL are covered under Governmental Authority as defined in the explanation to clause (16) of Section 2 of the IGST Act, 2017.
Whether or not Item number (vi) in Column (3) of serial number 3 of Notification No. 11/2017 — Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 24/2017- Central Tax (Rate) dated 21.09.2017 is applicable in respect of all payments related to work order for Fire Fighting System installation at contracted area between applicant (now appellant) and M/s Jaipur Smart City Limited? - HELD THAT:- When M/s JSCL qualify to be a Governmental Authority then the services provided to it by the appellant are considered as services provided to the Governmental Authority. Thus, Item number (vi) in Column (3) of serial number 3 of Notification No. 11/2017 — Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 24/2017- Central Tax (Rate) dated 21.09.2017 is clearly applicable on the appellant in this case.
GST rate for the work undertaken by applicant - HELD THAT:- The services provided by the appellant are covered under Item number (vi) in Column (3) of serial number 3 of Notification No. 11/2017 — Central Tax (Rate) dated 28.06.2017 as amended. The said services are then liable to attract GST @ 12% (i.e. 6% CGST & 6% SGST) during the contracted period only up to 31.12.2021, as after that, in column no. (3) of Serial No. 3 of Notification No. 11/2017 — Central Tax (Rate) dated 28.06.2017 the words “a Governmental Authority or a Government Entity” has been omitted vide Notification No. 22/2021- Central Tax (Rate) dated 31.12.2021 w.e.f. 01.01.2022.
Whether the applicant is liable to pay GST under RCM in respect of road cutting charges paid by them to Jaipur Nagar Nigam (JNN) on behalf of M/s Jaipur Smart City Limited in relation to such contract? - HELD THAT:- The services of granting permission/NOC for road cutting were provided by the Local Authority i.e. Jaipur Nagar Nigam (municipality) for a consideration to the business entity i.e. M/s Lakhlan & Qureshi Construction Company (appellant) and not to M/s JSCL. Hence, the appellant being a recipient of the services are liable to pay GST for the charges paid to Jaipur Nagar Nigam under reverse charge mechanism. The activity of giving permission for road cutting is not mentioned in the list of works as provided under Article 243W of the Constitution entrusted to a Municipality - clause (b) of sub-section (2) of Section 7 of CGST Act, 2017 read with Notification No. 14/2017-Central Tax ( Rate) dated 28.06.2017 as amended by Notification No. 16/2018 – Central Tax (Rate) dated 26.07.2018 is not applicable in this case. Therefore, the appellant are liable to pay GST @18%( i.e. 9% CGST + 9% SGST) as a recipient under RCM.
Whether Recovery of such road cutting charges by the Appellant from M/s. Jaipur Smart City Limited is liable to GST? If the answer is in affirmative, what will be the GST rate? - HELD THAT:- Three conditions are required to be satisfied for a service to be covered under Entry No. 3 of the Notification which are : (1) It must be pure service not involving any supply of goods. (2) It must be provided to the Central Government or State Government or Union territory or local Authority or a Governmental Authority or a Government Entity. (3) It must be an activity in relation to any function entrusted to a (i) Panchayat under Article 243 G of the Constitution; or (ii) Municipality under Article 243 W of the Constitution.
The appellant have fulfilled the condition No. 1 i.e reimbursement of road cutting charges by M/s JSCL to the appellant involves no supply of goods. Thus, the activity is purely in nature of service. Further, as it has already been decided that M/s Jaipur Smart City Limited are a ‘Governmental Authority’, therefore the second condition is also satisfied - the recovery of road cutting charges is not covered under an activity in relation to any function entrusted to a (i) Panchayat under Article 243 G of the Constitution; or (ii) Municipality under Article 243 W of the Constitution.
The exemption under Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017 is not available to the appellant. Thus, the appellant are liable to pay GST on recovery of such road cutting charges (from M/s JSCL) @18%.
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2023 (12) TMI 820
Levy of GST - incentives received under "Atma Nirbhar Gujarat Sahay Yojna" dated 16.05.2020 declared by the Gujarat Government could be considered as subsidy or not - incentive received under said scheme could be considered as supply of service under the provisions of section 7 under CGST Act - incentive received under said scheme if considered as supply then would it be covered under section 7(2) of CGST Act - incentive received under said scheme could be considered as excluded from the value of taxable supply under section 15(2)(e) of CGST Act, 2017.
HELD THAT:- It is found that the Banks were provided a base percentage of loan disbursement amount as an incentive. The incentive so granted varied, meaning thereby that the percentage of incentive increased on higher disbursement of loan. At best, the incentive can be termed as a consideration to the Cooperative Banks for providing the service to the beneficiaries/loanees by extending loans under the scheme promoted by the State Government of Gujarat. The argument of the appellant therefore that they had provided services only to the person who had availed loan and not to the State Government, fails - the reliance of the appellant on various dictionary meaning to argue that both the words subsidy and incentive, mean the same, is not a plausible contention.
Scope of supply u/s 7(2), ibid - Subsidy in the form of an incentive received - HELD THAT:- The appellant has not explained how incentive would fall within the ambit of section 7(2) or Schedule III.
The next argument of the appellant is that the scheme is for the benefit of the public and not beneficial to an individual or private commercial enterprise and therefore the amount being paid by the Government over and above reimbursement of 6% interest is nothing but 'subsidy' - HELD THAT:- To equate this subsidy of 6% granted to the loanee, as a part of relief measure announced by the State Government on account of the pandemic situation, with the incentive granted to the Cooperative Banks and Cooperative Credit Societies, which solely depended on the performance in disbursing loans, is not a prudent argument in the first place. This incentive granted based on the performance cannot be termed as a subsidy. Even otherwise, incentive granted to Cooperative that the GAAR has clearly held that this Banks/Cooperative Credit Societies granted no benefit to the loanees. This was one of the ground adopted by the GAAR to hold that the incentive was not a subsidy. We are in complete agreement with this finding of the GAAR.
Scope of Actionable claim - incentive is a subsidy or not - HELD THAT:- Actionable claim is an intangible movable property, and its transfer is dealt with in Chapter VIII of the Act, ibid. Accordingly, actionable claim means |a] claim to an unsecured debt and [b] beneficial interest in a movable property - one time incentive earned proportionate to the total disbursements of loans, would not fall within the ambit of actionable claims so as to fall within the exclusion as per Sr. No. 6 of Schedule-Ill, which deals with the activities of transactions which are neither supply of goods nor a supply of services.
Incentive paid by Government under the said scheme could also be considered as the compensation towards the interest or not - HELD THAT:- Since it is not substantiated with facts as to what exactly was the rate charged for other borrowings outside the scheme, what was the rate charged by other Banks during the period under dispute etc., it is difficult to come to a conclusion as far correctness of the submission is concerned. Had that been the case, the incentive given would have been constant/static and would not have varied with the increase in the level of disbursements of loans. Even otherwise, it is found that the loans were advanced during a period when the country was going through pandemic which could have also had its effect on the market borrowings & consequently on the rates charged by the Banks. The scheme provided for incentives, meaning rewards, which varied based on performance.
The last submission of the appellant is that they have not supplied any goods or services and the amount cannot be considered as consideration & hence is not covered u/s 7(1)(a) of CGST Act - HELD THAT:- Incentives were directly linked to the service provided by the appellant of granting loans to the beneficiary/loanee under the Scheme. Therefore, the above argument is not a legally tenable argument.
Reliance placed on O Rashmi Hospitality Services Pvt. Ltd. [2019 (10) TMI 755 - AUTHORITY FOR ADVANCE RULING, KARNATAKA] - HELD THAT:- The ruling was sought in respect of the said subsidy. However, it is found that the ruling is not applicable to the present dispute primarily since unlike in this case, there was no incentive paid over and above the amount fixed to M/s. Rashmi. Even otherwise, in terms of Section 103 of the CGST Act, 2017, the aforementioned ruling is applicable only to M/s. Rashmi [the applicant] and the jurisdictional officer.
Reliance placed on O Ponni Sugars and Chemicals Limited [2008 (9) TMI 14 - SUPREME COURT] - HELD THAT:- The appellant has erred in relying on the aforementioned judgement to substantiate his argument, more so since in the said judgement the two questions of law framed by the Hon'ble Apex Court were as follows - the questions on which the ruling was sought from GAAR at paragraph 7 are different. The reliance therefore, on the aforementioned judgement of the Hon'ble Supreme Court, is legally untenable.
The appeal filed by appellant M/s Rajkot Nagrik Sahakari Bank Limited against Advance Ruling Authority for Advance Ruling is rejected.
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2023 (12) TMI 819
Exemption from GST - hostel accommodation extended by the Applicant hostel - eligible for exemption under Entry 12 of Exemption Notification No. 12/2017-CT (Rate) dated 28.06.2017 and under the identical Notification under the TNGST Act, 2017, and also under Entry 13 of Exemption Notification No. 09/2017-IT (Rate) dated 28.06.2017, as amended or not - Requirement to take registration - Supply or not - Tariff heading - rate of taxability of the supply of service - composite exempt supply.
Whether the hostel accommodation being provided by the Applicant to students and working women qualify to be a residential dwelling for use as residence as described in the above entry and thus eligible for exemption or not? - HELD THAT:- Generally, renting of residential dwelling involves letting out any building or part of the building by a lessor to a person or family (related persons) against a rent for using rooms which form part of a house as kitchen, bedroom, and living room etc., on the whole as residence. Thus, a common understanding of the term “residential dwelling” is one where people reside treating it as a home. Moreover, renting of residential dwelling does not include amenities like food, housekeeping, or laundry etc., whereas, a hostel is that of an establishment which provides living accommodation to a specific categories of persons such as students & workers. The Applicant has rented out the premises with the intention of providing hotel accommodation which is more akin to sociable accommodation rather than what is typically considered as residential accommodation.
A house/ residential dwelling for occupation contain one or more rooms with one/part of the room being used as kitchen and the other/part as living room etc. But, in the instant case, a single house with two or more rooms where normally a single family resides, is subdivided, and let out to different persons and rent being collected on per bed basis with bundle of other services against a consideration clearly constitutes a business of supplying accommodation services along with ancillary services. Thus, on this count as well, the impugned accommodation thus provided does not qualify as a residential dwelling and thus the question of using the same as residence does not arise.
Regarding the second part of the description of service Tor use as residence’ it is observed that, though accommodation and residence seems to be synonymous, there is a subtle difference between the two. An accommodation is a location where someone is accommodated or provided with lodging. The term residence on other hand, in common usage, refers specifically to a place where someone resides permanently or for an extended period of time along with family/dependents - it is clear that hostels refer to a place where someone is accommodated or provided with lodging or boarding and lodging facilities against a charge or fees for the services rendered - the premises rented out by the Applicant cannot be construed as residential dwelling.
The purpose and objective of the notification is nothing but to avoid taxing residential properties taken on rent by family or individuals and the benefit of exemption is not extended to the premises which do not qualify as residential dwelling for use as residence. Further, unless the twin conditions of ‘renting of residential dwelling’ for ‘use as residence,’ being inter-twined and inseparable, are not met, the exemption is not available. As per settled position in taxation laws, especially when exemptions or concessions or benefits are to be availed, the interpretation is to be literally and strictly construed and not in liberal terms. In effect, the place rented out is neither a residential dwelling nor being rented out for use as residence - it is clear that hostel accommodation is not equivalent to residential accommodation and hence we hold that the services supplied by the Applicant would not be eligible for exemption under Entry 12 of Exemption Notification No. 12/2017-CT(Rate) dated 28.06.2017 and under the identical Notification under the TNGST Act, 2017, and also under Entry 13 of Exemption Notification No. 09/2017 IT(Rate) dated 28.06.2017, as amended.
Requirement to take registration - Supply or not - HELD THAT:- The Applicant’s service of providing hostel accommodation is not eligible for exemption under Entry 12 of Exemption Notification No. 12/2017-CT(Rate) dated 28.06.2017 as amended, the Applicant is very much be required to take registration under the GST Enactments, as the arrangement between the Applicant and the hostel occupants is liable to be classified as transaction in the course of furtherance of business and hence, as per Section 7(1)(a) of CGST Act, 2017 read with Entry No. 2 (b) of the Second Schedule to the CGST Act, the said transaction constitutes “supply” - the Applicant is required to get themselves registered in the state of Tamil Nadu, if their aggregate turnover in a financial year exceeds twenty lakh rupees.
Tariff heading - rate of taxability of the supply of service - HELD THAT:- It is observed that hotels are meant for a temporary stay (2-5 days) and have lot of facilities and staff, but hostels are used for a longer period and have basic facilities with minimal staff required by the inmates to stay at a reasonable rate. Therefore, hostel services cannot be equated to a hotel accommodation and hotel GST rates cannot be applied to a hostel. Therefore, we hold that supply of hostel accommodation services (Tariff heading 9963) is taxable @ 9% CGST + 9% SGST under SI.No. 7(vi) of the above Notification
In the event of the hostel accommodation being an exempt activity, whether the incidental activity of supply of in-house food to the inmates of the hostel would also be exempt being in the nature of a composite exempt supply? - HELD THAT:- Firstly, the service of providing hostel accommodation is not an exempt activity. It is seen from the submissions of the Applicant, that along with the provision of accommodation services, they are also providing food and certain other services to the inmates of the hostel for consolidated charges - The natural bundle has the characteristic of where one service is the main service and the other services are ancillary services which help in better enjoyment of the main service - As per Section 8 of the CGST Act, 2017, for a Composite supply, the tax rate on the principal supply will be treated as the tax rate on the given composite supply. It is held that since the Applicant provides a number of services in a composite manner, the hostel accommodation services provided by the Applicant, being the principal supply, which is taxable @18%, will be tax rate for the composite supply provided by them.
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2023 (12) TMI 739
Denial of Input Tax Credit (ITC) - requirements of Section 16(2) of GST / WBGST Act fulfilled or not - Failure of the supplier to pay GST to the government - High Court while allowing the petition of the assessee, directed the GST authorities to first proceed against the fourth respondent (supplier) and only under exceptional circumstance as clarified in the press release issued by the Central Board of Indirect Taxes and Customs (CBIC), then and then only proceedings can be initiated against the appellant. [2023 (8) TMI 174 - CALCUTTA HIGH COURT]
Held that:- Having regard to the facts and circumstances of this case(s) and the extent of demand being on the lower side, we are not inclined to interfere in these matters in exercise of our powers under Article 136 of the Constitution of India.
SLP of the revenue dismissed.
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2023 (12) TMI 738
Refund of the amount that was made through its cash ledger - amount was coercively recovered by from the Petitioner alongwith interest - conduct of search and seizure operation - HELD THAT:- It is an admitted case that while the payment was made by the petitioner, it had not admitted the liability to pay the amount. It is also not in dispute that there is no adjudication of the liability and the Show Cause Notice demanding the recovery of GST and the appropriation of the amount of ₹2,30,00,000/- deposited by the petitioner was issued on 23.06.2022, that is, much after the said deposit. The amount was deposited during the course of investigation. The learned counsel appearing for the respondents does not deny that an assessee cannot be forced to pay any amount during the course of investigation. If any amount is collected without any authority of law, the same amounts to depriving the person of its property and infringes its rights under Article 300A of the Constitution of India.
In the facts of the present case, it is accepted that the deposit was made by the petitioner under duress and compelling circumstances. The search operations started at around 3:45 p.m. on 20.10.2021 and went way beyond the normal business hours, that is, up to 00:30 a.m. on 21.10.2021. It is not in doubt that a tax payer can voluntarily pay tax prior to issuance of the Show Cause Notice in terms of Section 73(5) of the Act. In terms of Section 73(6) of the Act, in case a person chargeable with tax before service of notice under Section 73(1) or before giving any statement under Section 73(3) of the Act, makes a voluntary payment of tax with interest, the proper Officer is not to serve any notice in respect of tax so paid or any penalty payable under the provisions of the Act or the CGST Rules made thereunder. The provision is clearly for the benefit of the tax payer who voluntarily pays tax prior to issuance of any Show Cause Notice and, thus, absolves himself of any liability to pay the penalty. These provisions do not empower the Department to compel the tax payer to pay any tax.
It is also important to note that the requisite procedure under Rule 142 of the CGST Rules, has also been complied with in the present case. It is not disputed that any voluntary deposit in Form GST DRC-03 is to be followed by an acknowledgement accepting the payment as being voluntarily made by issuance in Form GST DRC- 04. The respondents, admittedly, have not issued Form GST DRC-04 as required under the CGST Rules.
This Court also relied upon the judgment passed by the Gujarat High Court in M/s Bhumi Associate v. Union of India [2021 (2) TMI 701 - GUJARAT HIGH COURT] and held that the directions issued by the Gujarat High Court had not been followed. The Central Board of Indirect Taxes and Customs (‘CBIC’), has also issued directions emphasizing that tax must be collected only after following the due process of law.
The petitioner’s claim for refund is allowed and the respondents are directed to forthwith process the same - petition allowed.
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2023 (12) TMI 737
Seeking grant of Regular Bail - tax evasion - supply of goods without issuing invoices - Power to arrest - HELD THAT:- The transaction by the petitioner was with an intention to suppress his actual outward taxable supplies and thus was involved in large-scale tax evasion. Permission for the search was sought under Section 67(2) of the Act at the principal place of business and the additional place granted by the Joint Commissioner on 20.10.2023. In the search that followed, business transaction books of 480 pages from the business places of Lakshmi Mobile Accessories at Kottayam were seized. On verification, it was found that the petitioner had suppressed a total turnover of Rs.34,15,42,040/- for the years 2021-2022, 2022-2023 and 2023-2024 and has evaded tax approximately to the tune of Rs.6,14,77,567/- being 18% of the taxable turnover. It was also found that the petitioner was doing business even from the VAT regime, and therefore, the suppression for the years 2017-2018, 2018-2019, 2019-2020 and 2020-2021 had to be verified. Based on the above accusations, the petitioner had committed cognizable and non-bailable offences under Section 132(5) of the GST Act, 2017.
Power to arrest - HELD THAT:- The power to arrest is one, and the exercise of the same is another. In the instant case, it has to be seen that for a proper investigation of the offence and to prevent the petitioner from causing the evidence of the offence to disappear or to tamper with the same, continued custody of the petitioner is warranted. The power to arrest under Section 69 can be invoked if the Commissioner has a reason to believe that the person has committed offences that are prescribed and which are punishable under Section 132 of the CGST Act, 2017. Thus, the reference to Section 132 in Section 69 is only to indicate the nature of the offences based on which reasonable belief is found and recorded by the Commissioner to pass an order for arrest - in cases of alleged violation of a technical nature, like where a demand of tax is based on a difference of opinion regarding the interpretation of law or such analogous grounds, the power to arrest must be very carefully exercised, having regard to the provisions of S.41 Cr.P.C. that stipulated the situations requiring an arrest. It is also relevant to note that the expression ‘any person’ in Section 69 includes any person suspected or believed to be concerned with tax evasion for availing legal input tax credit.
It has to be seen that there is an evasion of more than Rs.6.5 crores alleged against the petitioner. A serious allegation is made, which warrants a thorough investigation. Under such circumstances, when the investigation is going on, bail cannot be granted to the petitioner at this stage - bail application dismissed.
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2023 (12) TMI 736
Invocation of extended period of limitation - procedural irregularity inasmuch as the pre-show-cause notice was not issued as per the relevant circular issued by the Board - HELD THAT:- In the instant case, on going through the show-cause notice dated 11th November, 2019 as well as the order in original dated 31st March, 2023. Prima facie, while issuing the show-cause notice dated 11th November, 2019, the adjudicating authority in paragraph 9 has set out certain reasons as to why the extended period of limitation is invokable against the appellants. The appellants have contested the show-cause notice by submitting the reply and the adjudicating authority has sustained the allegations in the show-cause notice and justified invocation of the extended period of limitation. Thus, the case on hand appears to be not a simple case of going through the show-cause notice and examining as to whether there is any factual finding with regard to wilful misstatement or suppression or fraud but to consider the said aspect, facts have to be gone into, much of which has been seriously disputed by the appellants in their reply to the show-cause notice.
In the instant case, the issue as to whether extended period of limitation could be invoked is not purely a question of law but a mixed question of fact and law and necessarily, disputed questions of fact have to be gone, which cannot be adjudicated in a writ petition.
The appellants should not be permitted to bypass the appellate remedy available under the Act and for such reason, the appellants have to necessarily file an appeal before the learned Tribunal challenging the order in original dated 31st March, 2023 - Appeal dismissed.
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2023 (12) TMI 735
Search and seizure carried out on the premises of the assessee - mandatory provision with regard to Section 67 (1) of the Uttar Pradesh Goods and Services Tax Act, 2017 has not been complied with by the Joint Commissioner while granting the authorization for search and seizure - HELD THAT:- Upon a perusal of the documents, it is found that the authorization for search under the Form GST INS -01 was issued on 31.08.2022. However, the reasons for carrying out the search was provided to the Joint Commissioner subsequently which he has signed on September 1, 2022.
This is a clear case of putting the cart before the horse wherein the officer concerned has authorized the search and seizure without even looking into the reasons for the authorization of the same.
Upon a careful perusal of the Section 67, it is clear that it is only after reasons are provided to the Joint Commissioner that he can authorize in writing any search and seizure to be carried out - In the present case, the said procedure had not been followed, and accordingly, the entire authorization is vitiated and liable to be quashed.
Under such circumstances, the entire search and seizure that has been carried out is based on an illegal authorization and is accordingly quashed and set aside. The Authorities are directed to release all goods and documents that they may have detained or confiscated within a period of 15 days from date - petition allowed.
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2023 (12) TMI 734
Validity of notice initiated under Rule 129 of the Central Goods and Services Tax Rules, 2017 - seeking for stay of all the further proceedings pursuant to the summons issued on 22.11.2019 - HELD THAT:- What is apparent is that the notice and the summons were issued calling upon the petitioner to enter appearance and to produce cogent, relevant documents as has been sought by the authorities concerned.
Thus, no strong case has been made out by the petitioner calling for interdiction of the notice and summons under challenge. The petitioner is at liberty to enter appearance before the authorities concerned by submitting their detailed reply in addition to any reply if they have already made in the past. The authorities concerned thereafter in turn is expected to proceed further in accordance with law after due consideration of the contents of the reply and documents which the petitioner shall be furnishing by way of their response.
It is directed that considering the fact when the entire country is going into the digital world and the Competition Commission of India also having its sitting only at New Delhi, it cannot be expected that every person can afford attending the hearing at New Delhi on all the dates of hearing.
Petition disposed off.
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2023 (12) TMI 733
Cancellation of petitioner’s GST registration - impugned order does not record any reason for cancelling the petitioner’s GST registration but it refers to the Show Cause Notice dated 26.09.2019 - principles of natural justice - HELD THAT:- Section 29(2) of the Central Goods and Services Tax Act, 2017 empowers the proper officer to cancel the registration from any date including with retrospective effect if the authority deems it fit. However, the discretion to cancel the registration with retrospective effect cannot be exercised arbitrarily. In the present case, the only reason for proposing to cancel the petitioner’s GST registration was that the petitioner had not filed the returns for a continuous period of six months. However, the registration has also been cancelled for a period during which the petitioner had filed the GST returns. As noted above, the impugned order provides no reason whatsoever for cancelling the petitioner’s GST registration much less the reason for doing so with retrospective effect.
The petitioner’s GST registration are directed to be cancelled from September, 2018. However, it is clarified that this would not preclude the respondents from initiating any proceedings in case the petitioner has violated any statutory provisions - petition allowed.
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2023 (12) TMI 732
Maintainability of petition - non-constitution of Tribunal - availability of alternative remedy - HELD THAT:- Paragraph 4.3 of Circular dated 26th May 2020 records that when the assessee intends to take recourse to an alternate remedy of an appeal, after the Tribunal is constituted, the prescribed time limit to make an application to the Appellate Tribunal would be counted from the date on which President or the State President enters office - Further paragraph 5 of the said circular provides that a declaration is required to be made by such party and submitted to the jurisdictional Tax Officer, stating that an appeal is proposed to be filed under Section 112 of the CGST Act within a period of 15 days from the communication of the said order.
This petition is disposed off by permitting the petitioner to take recourse to an alternate remedy of an appeal as provided in the Circular dated 26th May 2020, and more particularly in terms of paragraph 4.3 read with paragraph 5, thereof, subject to the declaration to be made by the petitioner to the jurisdictional Tax Officer, in terms of Annexure-I to the said Circular, which be submitted within a period of 15 days from today.
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2023 (12) TMI 731
Cancellation of petitioner’s GST registration - impugned order does not indicate any reason for cancelling the petitioner’s GST registration except mentioning that no reply has been received to the SCN - principles of natural justice - HELD THAT:- In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. The registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. Merely, because a taxpayer has not filed the returns for some period does not mean that the taxpayer’s registration is required to be cancelled with retrospective date also covering the period when the returns were filed and the taxpayer was compliant.
In the present case, the petitioner had indicated that she closed her business in January, 2020. Thus, not filing returns, thereafter, cannot be a ground to cancel her registration in respect of the period while she was carrying on the business in compliance with the provisions of the law - the SCN proposing to cancel the petitioner’s GST registration is flawed. Although, it directed the petitioner to appear for a personal hearing on the appointed date and time but it failed to specify the said date, time, or venue. The impugned order cancelling the petitioner’s GST registration is also liable to be set aside as it is bereft of any reason. It neither specifies the reason for cancelling the GST registration nor gives any clue as to why it was cancelled with retrospective effect.
It is considered apposite to allow the present petition and direct that the cancellation of the petitioner’s GST registration shall take effect from 17.01.2020, being the date of the application filed by the petitioner seeking cancellation of her GST registration.
Petition allowed.
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2023 (12) TMI 730
Exemption under Notification No. 12 of 2017 dated 28 June, 2013 - Sr. No. 54(e) of N/N. 12 of 2017 dated 28 June, 2013 pertaining to loading, unloading, packing, storage or warehousing of “agricultural produce” namely “tea” - Whether the petitioner would be entitled to exemption in supply of warehouse services as let out to Unilever for packing and storage of tea under the Item Sr. No. 54(3) of the 2017 Notification’?
HELD THAT:- On a plain reading of the definition of the ‘agricultural produce’ and as applicable in the present context, it can be certainly inferred that the tea is produced from the cultivation of plants (tea gardens). It is an edible produce meant for human consumption. It can also be said that tea without processing, which can be done either by the cultivator / producer, or otherwise cannot be consumed. Further such processes do not alter its essential characteristic of tea ceasing to be an agricultural produce. Also such processing is necessary for making tea marketable for primary market. Merely by blending i.e. mixing or combining different teas and/or packing, such processes would not change the basic character of tea as an ‘agricultural produce’. Again by undertaking packing, it cannot be countenanced that the essential characteristic of tea to be an agricultural produce would undergo any change. It is ill-conceivable that the packs of tea cannot be sold in marketable lots, acceptable packages for its marketing.
The law laid down by the Supreme Court in COMMISSIONER OF SALES TAX, LUCKNOW VERSUS DS. BIST AND OTHERS [1979 (9) TMI 168 - SUPREME COURT] is clearly applicable in the facts of the present case, which ought to have persuaded the AAR to hold that the tea belonging to Unilever as stored in the petitioner’s godown, did not change its essential characteristics merely because certain processes were undertaken, so as to reach to a conclusion that tea was an agricultural produce. In reaching the above conclusion as to what was understood by the term ‘agricultural produce’ in some enactments and how they were considered by the Court can be discussed.
Now coming to the contention as urged on behalf of the respondents that in respect of the notification in question, a clarification has been issued by a CBIC Circular dated 15 November 2017 and therefore, the authorities below were correct in their approach in interpreting “Tea” as stored in the petitioner’s warehouse, is not an agricultural produce. This is not agreed - Such contention as urged on behalf of the respondent is in teeth of the settled principles of law that a circular cannot whittle down or nullified the Exemption Notification - the clarification as contained in the Circular cannot amend the statutory notification. Under the guise of clarification, the notification No. 12 of 2017 cannot be taken to be amended so as to delete ‘tea’ as an agricultural produce from the ambit of exemption.
On a perusal of the orders passed by the AAR the emphasis appears to be more on the issue that the process by which the tea leaves are dried which results in emergence of a manufactured product, and therefore, tea ceases to be an agricultural produce - The only question in the present proceedings was in regard to the levy of service tax and whether the petitioner would be entitled to exemption when the petitioner had provided services of warehousing of agricultural produce. It was only in such context both the authorities below were required to consider the legal position and apply the same and any other extraneous consideration could not have been relevant.
It is settled principle of law that a writ of certiorari can be issued only when there is a failure of justice and that it cannot be issued merely because it may be legally permissible to do so. There must be an error apparent on the face of the record as the High Court acts merely in a supervisory capacity. An error apparent on the face of the record means an error which strikes one on mere looking and does not mean long drawn out process of reasoning on points where there may conceivably be two opinions. Such error should not require any extraneous matter to show its incorrectness - While issuing a writ of certiorari, the order under challenge should not undergo scrutiny of an appellate court. It is obligatory on the part of the petitioner to show that a jurisdictional error has been committed by the statutory authorities.
This Hon’ble Court be pleased to issue a Writ of Certiorari or any other appropriate writ, order or directions under Article 226 of the Constitution of India calling for the records of the Petitioners’ case and after examining the legality and validity thereof quash and set aside the impugned order dated 10.12.2018 passed by Respondent No. 6 under Section 101 of the CGST Act and the MGST Act - Hon’ble Court be pleased to declare that the Petitioner is entitled to exemption from payment of GST in terms of SI. No. 54(e) of the Notification 12/2017-Central Tax (Rate) dated 28.06.2017 and the corresponding notification issued under the MGST Act - Petition allowed.
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2023 (12) TMI 729
Seeking approval to modify / amend FORM GSTR-1 for financial year 2021-2022 dated 11 September 2023 - Validity of communication dated 27 September 2023 issued by the respondent-Deputy Commissioner, State Tax.
Petitioner has been informed that such a request for amendment of Form GSTR-1 cannot be approved considering that the matter is time barred and accordingly, the petitioner’s application would stand rejected.
HELD THAT:- Having considered the statutory ambit of Section 37, 38 and 39, it is opined that the provisions of sub-section (3) of Section 37 read with Section 38 and sub-sections (9) and (10) of Section 39 need to be purposively interpreted - the sub-section (3) of Section 37 cannot be read to mean that the assessee would be prevented from placing the correct position and having accurate particulars in regard to all the details in the GST returns being filed by the assessee and that there would not be any scope for any bonafide, and inadvertent rectification / correction. This would presupposes that any inadvertent error which had occurred in filing of the returns, once is permitted to be rectified, any technicality not making a window for such rectification, ought not to defeat the provisions of sub-section (3) of Section 37 read with the provisions of sub-section (9) of Section 39 read de hors the provisos.
The proviso ought not to defeat the intention of the legislature as borne out on a bare reading of subsection (3) of Section 37 and sub-section (9) of Section 39 in the category of cases when there is a bonafide and inadvertent error in furnishing any particulars in filing of returns, accompanied with the fact that there is no loss of revenue whatsoever in permitting the correction of such mistake. Any contrary interpretation of sub- section (3) of Section 37 read with sub-sections (9) and (10) of Section 39 would lead to absurdity and / or bring a regime that GST returns being maintained by the department having incorrect particulars become sacrosanct, which is not what is acceptable to the GST regime, wherein every aspect of the returns has a cascading effect. This is necessarily required to be borne in mind when considering the cases of inadvertent human errors creeping into the filing of GST returns.
The State Tax officer ought to have granted the petitioner’s request to rectify / amend the Form GSTR–1 for the period July 2021, November 2021 and January 2022, either through Online or manual means.
The law would be required to be interpreted and applied by the Department. This necessarily would mean, that a bonafide, inadvertent error in furnishing details in a GST return needs to be recognized, and permitted to be corrected by the department, when in such cases the department is aware that there is no loss of revenue to the Government. Such freeplay in the joint requires an eminent recognition. The department needs to avoid unwarranted litigation on such issues, and make the system more assessee friendly. Such approach would also foster the interest of revenue in the collection of taxes.
The respondents are directed to permit the petitioner to amend / rectify the Form GSTR-1 for the period July 2021, November 2021 and January 2022, either through Online or manual means within a period of four weeks from today - Petition allowed.
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2023 (12) TMI 727
Levy and collection of cess by the respondent authorities under the provisions of the Assam Agricultural Produce Market Act, 1972 post the GST regime - refund of cess amount which have been wrongfully and illegally collected from the petitioners - whether post the 101st amendment of the Constitution and the enactment of the Central Goods and Service Tax Act, 2017, the Integrated Goods and Service Tax Act, 2017 and the Assam Goods and Service Tax, Act 2017 whether the respondent Board or the Market Committees established under Section 7 of the Act of 1972 would have the power to levy cess?
HELD THAT:- The law if applied to the facts of the present cases would make the exemption so granted by the notification No.12/2017-Central Government (Rate) dated 28.06.2017 issued by the Government of India, Ministry of Finance, Department of Revenue at Sl. No.54 and the notification No.FTX.56/2017/25 dated 29.06.2017 issued by the Finance (Taxation) Department of the Government of Assam at Sl. No.54 in respect to service by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale and purchase of agricultural produce pre-supposes that the cess which was collected by virtue of the Act of 1972 had been subsumed by the CGST Act,2017 as well as AGST Act, 2017. Under such circumstances, the levy of cess by the Respondent Board or the Market Committee after the said notifications had come into effect was unconstitutional as well as ultra vires to the provisions of CGST Act, 2017 and the AGST Act, 2017.
In the instant case, the Respondent Board and the Market Committee after having lost their powers to levy cess, the financial position of the Respondent Board is in a penurious state. It is surviving as could be seen from the additional affidavit filed on 28.09.2023 on the basis of grant-in-aid received from the State Government. Under such circumstances, it is the opinion of this Court that directing the State to recover the said amount from the Respondent Board would not be in the interest of justice, equity, good conscience as well as also it would seriously hamper the functioning of the Respondent Board in terms with the provisions of the Act of 1972.
This Court is not inclined to pass any direction(s) for restitution by the respondent Board of the cess so collected during the period from 01.07.2017 to 12.06.2020.
Petition disposed off.
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