GOODS AND SERVICEs TAX (GST)

I.    HIGH COURT

14.   2018 [17] G.S.T.L. 191 (All.) VSL Alloys (India) Pvt. Ltd. vs. State of U.P. and Ors. Date of Order 13^th April, 2018

Mere non-disclosure of vehicle No. in Part-B of E-way Bill cannot be a ground for seizure of the goods as well as vehicle.

FACTS

During the movement of the goods from petitioner’s factory upto the transporter’s premise for further transportation, the vehicle was intercepted. On perusing the documents produced, it was found that Part-B of the E-way bill was incomplete. On finding such irregularity, Order was passed u/s. 129 (1) detaining the vehicle as well as goods and levying tax liability and penalty. The Petitioner relying on third proviso of Rule 138(3) of CGST Rules, 2017 contested that the filing of Part B of E-way bill was optional where goods are transported from place of business of consignor to the place of business of the transporter for further transportation. The Respondent (Department) though admitted that all the requisite documents were accompanied the goods when the vehicle has been intercepted. Aggrieved Petitioner filed writ petition before the Hon’ble High Court.

HELD

Hon’ble High Court held that there was no ill intention of the petitioner nor the petitioner was supposed to fill up Part-B of E-way Bill in light of Rule 138 (3) of CGST Rules, 2017. The order was held illegal and once the Petitioner has placed the evidence with regard to its claim, it was obligatory on the part of the Department to consider and pass an appropriate reasoned order. The show cause notice and impugned seizure order were quashed directing to release goods as well as vehicle.

15.  2018 (99) Taxmann.Com 218 (Kerala) Saji S vs. Commissioner, State gst Department (Kerala High Court) Decided on 12^th November, 2018

GST paid under wrong head by mistake can be adjusted with another head

FACTS

The petitioner purchased goods from Chennai and transported to Kerala. During transit, for reasons not germane here, the goods were detained by the Assistant State Tax Officer (‘ASTO’) thereby demanding applicable tax and penalty by way of notice. The petitioner paid the same on the directions of ASTO.

The department then denied to release the goods because the payment so made was remitted under the head ‘SGST’ instead the head ‘IGST’. The petitioner contended that statue empowers the authorities to transfer the deposit from one head to another, i.e. from SGST to IGST. The Respondent submitted that the petitioner could as well pay the amount under ‘IGST’ and them claim a refund of ‘SGST’ because if authorities goes for an adjustment, it will take more than a couple of months. Hence, the writ.

HELD

The Hon’ble Kerala High Court while deciding the matter held that the facts are not in dispute. Further, section 77 of GST Act, 2017 provides for the refund of the tax paid mistakenly taken under one head instead of another. However, Rule 4 of GST Rules, 2017 provides for adjustments where the amount of refund is completely adjusted against outstanding demand under the Act and an order giving details of the adjustment to be issued in Part A of Form GST RFD – 07. Under these circumstances, there seemed no difficulty for the authorities to transfer the amount from head ‘SGST’ to ‘IGST’. It may, as the Respondent has submitted, take some time, but it was inequitable for the authorities to let the Petitioner suffer.  Hence, the Hon’ble Court directed Respondent to release the goods along with vehicle and, then ensure that the tax and penalty are accordingly transferred from the head ‘SGST’ to ‘IGST’. The writ petition was accordingly disposed.

16.  [2018-TIOL-176-HC-MUM-GST] A-1 Cuisines Pvt. Ltd vs. Union of India dated 28^th November, 2018

Shops located at a domestic Airport or Domestic Security hold area, which are beforeeven the immigration clearance where the transaction cannot be said to have taken place in any area beyond the customs frontiers of India or outside India cannot be considered as a non-taxable supply

FACTS

The Present petition seeks direction to the respondents to exempt the applicable taxes on sale of cosmetic products, perfumes etc. to the International passengers and claim refund of any input tax paid on input supplies and input services from the retail shop which the petitioner intends to set up at the Domestic Security in the International Airport. It was submitted that sale of similar products to international passengers are permitted without levy of Customs duty and applicable taxes under the CGST/IGST/SGST from the duty free shops located in the arrival and departure halls of International Airports in India.

HELD

The Court noted that exemption is applicable only in respect of supplies to or from the duty free shops situated after the passenger crosses the immigration counter beyond the Customs frontiers, at arrival or departure hall of International Airport terminals, where the transaction would be said to have taken place outside India as the same would be a “non-taxable” supply u/s. 2(78) of the Act and such duty free shops located at the International Airports would be in “non-taxable” territory as defined in section 2(79) of the Act. However, to shops located at a domestic Airport or Domestic Security hold area, which are before even the immigration clearance by a passenger, where the transaction cannot be said to have taken place in any area beyond the customs frontiers of India or outside India, no exemption can apply. It was also noted that a passenger travelling on a domestic flight from Nagpur may or may not travel abroad and the Customs Authorities would not be able to have effective check and control to verify whether the goods purchased from Domestic Airport at Nagpur are actually taken abroad by the passenger. Accordingly, the petition is dismissed.

II.      AUTHORITY OF ADVANCE RULING (AAR)

17.  [2018-TIOL-290-AAR-GST] NForce Infrastructure India Pvt. Ltd dated 28^th November, 2018

Construction service of building/civil structure to supplier of development rights (the land owner) against consideration in the form of transfer of development rights is liable for GST.

FACTS

Applicant entered into an agreement for construction and to hand over residential apartment area, and 8 car parkings on the land belonging to the six persons. Project was completed post 01.07.2017. Advance ruling was sought on the question as to whether they were liable to pay GST on the value of building constructed and handed over to the land owner in terms of the Joint Development Agreement since there is no monetary consideration involved. Further, whether the applicant is liable to pay service tax up to 30.06.2017 and GST thereafter.

HELD

The authority noted that the Applicant supplied construction service of building/civil structure to supplier of development rights (the land owner) against consideration in the form of transfer of development rights. Supplier of construction service to the supplier of development rights is liable to pay GST for the service provided in terms of notification 4/2018-Central Tax (Rate). Further, value is to be determined in terms of para 2 of notification 11/2017-Central Tax (Rate). Insofar as liability to pay service tax up to 30.06.2017 is concerned, it is clearly evident from section 142(11)(b) that the service tax is liable to be paid, which is liable under the Finance Act, 1994, on the services provided up to 30.06.2017 and on the services provided after 01.07.2017, GST is liable to be paid.

18.  [2018-TIOL-286-AAR-GST] Ina Bearing India Pvt. Ltd dated 9^th July, 2018

Sale of goods which are located outside India is not liable to tax in India u/s. 7(5)(a) of the IGST Act, 2017

FACTS

Sale of goods which are located outside India to a place outside India i.e. out and out sale, is a transaction not liable for GST.

HELD

The Authority held that in case of goods supplied on out and out basis, there is no levy till the time of their customs clearance in compliance with section 12 of the Customs       Act and section 3 of the Customs Tariff Act. Imported goods sold from and to a non-taxable territory, though they are clearly in the nature of inter-state supply would             come in the category of ‘exempt supply’ as no duty is leviable on them except in accordance with proviso to section 5(1) of the IGST Act. It was further noted that the legal position is reiterated and confirmed by CBIC Circular 3/1/2018-IGST dated 25.05.2018. Thus Sale of goods which are located outside India is not liable to tax in India u/s. 7(5)(a) of the IGST Act, 2017.