I. HIGH COURT
11 TVL Mehar Tex vs. Commissioner of CGST&E, Madurai [2021 (50) GSTL 357 (Mad)] Date of order: 18th March, 2021
Assessee cannot be denied refund on account of technical glitches and errors of the GSTN portal
FACTS
The petitioner made zero-rated supply in the months of October, 2017; November, 2017; and February, 2018. A refund application was then filed for unutilised input tax credit. When the application was uploaded, due to technical glitches and errors in the new system of the GSTN portal the entire claim got consolidated under the head SGST alone. While considering the refund applications, the Department restricted the refund claim to the extent of credit balance remaining under the head of SGST and rejected the refund claims made under the other heads. The writ petition was filed to question this.
HELD
It was held that the petitioner cannot be denied refund to which he is otherwise eligible merely on the grounds of technical glitches and an error of the GSTN portal. Hence, the petition was allowed and the refund rejection order set aside to the extent that it rejected the refund claimed under CGST and IGST.
12 Dharmesh Gandhi vs. Asstt. Commr. (Anti-Evasion), CGST&CE, Belapur [2021 (50) GSTL 350 (Bom)] Date of order: 10th March, 2021
Section 83 of CGST Act – There cannot be provisional attachment of bank accounts of the family members of a taxpayer
FACTS
The Assistant Commissioner (Anti-Evasion), CGST and Central Excise, Belapur Commissionerate, issued a communication dated 9th November, 2020 to provisionally attach the bank accounts u/s 83 of the CGST Act, 2017. Out of the nine accounts that were so attached, only three accounts belonged to the petitioner and the rest belonged to his family. Even after several prayers made by them, the bank accounts were not released. Thus, by filing the writ petition under Article 226 of the Constitution of India, the petitioner sought to quash the communication dated 9th November, 2020.
HELD
The Bombay High Court referred to the case of Siddhart Mandavia vs. Union of India 2021 (44) GSTL 347 dated 3rd November, 2020 wherein a similar issue was examined and it was held that the bank account of only a taxable person can be provisionally attached. Thus, the Court ordered the release of the bank accounts of the petitioner’s family. Further, in respect of the bank accounts of the petitioner, the court allowed him to file an objection against such provisional attachment within a period of seven days if such objections were not filed previously and simultaneously instructed the Commissioner to afford an opportunity of being heard to the petitioner and pass an appropriate order in accordance with the law within three weeks from the date of filing of the objection.
13 Union of India vs. Aditya Auto Engineering Pvt. Ltd. [2021 (51) GSTL 31 (Kar)] Date of order: 22nd April, 2021
No interim order should be granted for carrying out business operations as registered dealer to a person who has failed to file returns for a continuous period of more than two years and his GSTN had been deregistered
FACTS
The respondent, a company, admittedly failed to file returns prescribed under the CGST law in Form GSTR3B and discharge its liability for the period October, 2018 to October, 2020. Even though the respondent had failed to file GSTR3B, he was regularly filing GSTR1 and passing on the credit to the customers. The authorities issued various notices and orders on several occasions under sections 46 and 62 of the CGST Act and in response to these the respondent had filed two writ petitions. An interim order was passed by a single judge to stay the operation of cancellation of GST registration, to allow the respondent to carry out his business as a registered dealer and to file the returns manually.
HELD
The Court observed that the GST law does not permit for filing of manual returns and allowing such manual filing would certainly unsettle the entire scheme of the law. Further, the law states that in case of failure to file returns for a continuous period of six months, a person is liable to be deregistered. Hence, it was held that the interim order passed by the single judge was liable to be set aside; the single judge was requested to decide the matter on merit.
14 Ramakrishnan Mahalingam vs. State Tax Officer (Circle), Kotagiri [2021 (50) GSTL 369 (Mad)] Date of order: 30th April, 2021
At the time of processing the application for revocation of cancellation of GST registration, the authorities cannot embark upon the process of assessment of tax dues and eligibility of refund claim
FACTS
The GST registration of the petitioner was cancelled as it had failed to file the GST returns for a continuous period of six months. The petitioner had filed two applications for revocation of cancellation of GST registration. The first one was rejected by an order dated 24th July, 2020 citing non-compliance with a notice issued by the A.O. and the second one was rejected while referring to outstanding interest on belated payment of tax dues and for alleged wrongful claim of input tax credit. Hence, the writ petition was filed.
HELD
The High Court held that the petitioner had only sought for revival of registration and under the guise of considering the application for revocation, the authorities cannot embark upon the process of assessment. An authority can question the levying of tax and claim of input tax credit only when an assessment is made u/s 73 or other applicable provisions after following the procedures set out therein. Thus, to state that registration will not be revived since the petitioner had incorrectly availed input tax credit would be putting the cart before the horse. Hence, the respondent was directed to pass an order reviving the registration.
II. AUTHORITY FOR ADVANCE RULING
15 M/s B.G. Shirke Construction Technology Pvt. Ltd. [2021-TIOL-234-AAR-GST] Date of order: 9th September, 2021 [AAR-Maharashtra]
In terms of second proviso to Rule 28 of CGST Rules, 2017, as most of the recipients of such services are eligible for full credit, whatever is charged in the invoice is deemed to be the open market value
FACTS
The applicant has construction sites in different States and for which it holds separate GST registrations. The site offices are independent offices and are also separately registered. The Registered / Corporate Office supplies managerial and leadership services to the aforesaid distinct and related persons in the areas of finance, operations, etc., for which it levies fixed monthly charges on lump sum basis. The charges are at the discretion of the Registered / Corporate Office and not supported by any specific valuation method u/s 15 of the GST law. The question before the Authority is whether the service is to be considered as a supply u/s 7 of the GST law.
HELD
The Authority primarily holds that the supply of managerial and leadership service is a supply under the GST law. Since the supply of service is between distinct and related persons, ‘transaction value’ u/s 15(1) of the GST law is not available. Therefore, one has to resort to Valuation Rules in terms of section 15(4) of the CGST Act, 2017. There is no ‘open market value’ of such services and / or comparable services and also such services are not further supplied by the recipient; hence the instant case is not covered under the first proviso to Rule 28 and also Clauses (a) or (b) of Rule 28. Since full input tax credit is admissible to the recipient, the value declared in the invoice would be deemed to be the open market value of the services. Hence, the existing practice of debiting of value of services through invoices is covered by the second proviso to Rule 28 of the CGST Rules, 2017 and is the correct position in law.
16 M/s Adama India Pvt. Ltd. [2021-TIOL-228-AAR-GST] Date of order: 11th August, 2021 [AAR-Gujarat]
Inputs and input services used for provision of CSR activities are not allowable as input tax credit
FACTS
The applicant has sought to know whether the inputs and input services in order to undertake the mandatory CSR activities as required under the Companies Act, 2013 qualify as being in the course and furtherance of business and, therefore, will be counted as eligible input tax credit in terms of section 16 of the CGST Act, 2017.
HELD
The Authority noted that CSR activity does not include activities undertaken in pursuance of the normal course of business of the company. As per the Companies (CSR Policy) Rules, 2014 made by the Central Government in exercise of its powers u/s 469 of the Companies Act, the CSR activities undertaken by the company shall exclude activities undertaken in pursuance of its normal course of business. Section 16(1) of the CGST Act stipulates that a registered person is entitled to take credit of input tax charged on any supply of goods or services, or both, which are used or intended to be used in the course or furtherance of his business. CSR activity is not included within the ambit of the said eligibility. The decisions cited pertain to the pre-GST era and hence cannot apply to the present case. Therefore, the credit is not admissible.
17 M/s. Gensol Ventures Pvt. Ltd. [2021-TIOL-227-AAR-GST] Date of order: 27th August, 2021 [AAR-Gujarat]
Applicant intending to develop, own an electronic platform for booking of cabs is an E-Commerce Operator and is engaged in provision of passenger transportation service
FACTS
The applicant intends to develop, own an electronic / digital platform for booking of cabs. The drivers will list their electric motor vehicles on the proposed electronic platform / application for booking by the customers for the passenger transportation services. Further, as a business measure, it offers discounts to the customers for the passenger transportation service provided by the drivers, and the consideration charged and collected from the customer is after deducting such discount amount and this discount is recorded as a ‘marketing expenditure’ in the books of accounts. The question before the Authority is whether the applicant is an E-Commerce Operator and is liable for paying service tax u/s 9(5) of the CGST Act, 2017? If yes, what is the value of service and rate of tax?
HELD
The Authority noted that E-Commerce Operator means any person who owns, operates or manages a digital or electronic facility or platform for electronic commerce; considering this, the applicant can be termed as an E-Commerce Operator. The value of supply for passenger transportation service shall be the net amount arrived at after the deduction of discount (to be provided by the applicant to the customer) from the gross value. The SAC for subject supply is 996412, i.e., passenger transportation service, and GST shall be leviable @ 5% subject to the fulfilment of the condition at Entry No. 8 (ii) of Notification 11/2017-Central Tax (Rate) of restriction in availment of credit.
