I. HIGH COURT
27 Saiher Supply Chain Consulting (P.) Ltd vs. UOI [2022 134 taxmann.com 154 (Bombay)] Date of order: 10th January, 2022
The Order of Hon’ble Supreme Court issued under Misc. Application No. 665 of 2021 in Suo Motu Writ Petition (Civil) No. 3 of 2020 extending the period of limitation is also applicable to refund applications filed under section 54(1) of the CGST Act
FACTS
The Petitioner filed two refund applications which were rejected by the officer by issuing deficiency memos. When the third application was filed, the same was rejected as time-barred. Petitioner filed a writ petition praying for the restoration of the third refund application and a declaration that Rule 90(3) of the Central Goods and Services Tax Rules, 2017 is ultra vires the Constitution of India.
HELD
Relying upon the Extension of Limitation (Order dated 23rd September 2021), reported in 2021 SCC Online SC 947, passed by the Hon’ble Supreme Court in Misc. Application No. 665 of 2021 in Suo Motu Writ Petition (Civil) No. 3 of 2020 and considering that the third refund application is filed between the period 15th March, 2020 and 2nd October, 2021, the Hon’ble High Court held that the exclusion of the period of limitation falling between 15th March, 2020 and 2nd October, 2021 would also apply to the refund applications filed under section 54(1) of the CGST Act and consequently, the said refund application is within time. The Court however did not go into the question of the validity of the Circular dated 18th November, 2019 and the Rule 90(3) of the Central Goods and Services Tax Rules, 2017.
Note: The above period of 15th March, 2020 to 2nd October, 2021 has been further modified to 15th March, 2020 till 28th February, 2022 by the Order of Hon’ble Supreme Court dated 10th January, 2022.
28 Meritas Hotels (P.) Ltd. vs. State of Maharashtra [2021 133 taxmann.com 222 (Bombay)] Date of order: 3rd December 2021
The time limit for filing of the appeal under section 107 of the Act would commence from the receipt of a scanned copy of the impugned order by the Petitioner and not from the date of uploading of the appeal on the GST portal
FACTS
In this case, the petitioner did not file the GST return for February, 2019 on account of financial crunch. The petitioner was issued notice for non-filing of return followed by summary assessment order in Form GST ASMT-13 under section 62 of the MGST Act, 2017 fixing the liability of tax amount of Rs. 20,96,888 along with interest of Rs. 32,502 and penalty of Rs. 23,06,577 was made. The physical true copy of the assessment order was not served on the petitioner, nor was the same uploaded on the GSTN portal. However, the scanned copy of the impugned assessment order was sent by email to the General Manager of the petitioner company on the very same day. This email communication remained to be reported by the General Manager to the management of the petitioner company. The petitioner filed GSTR-3B for the said month on 14th June, 2019 based on the actual books of accounts. The petitioner came to know about the impugned assessment order only when their bank account came to be attached on 1st July, 2019. As the impugned assessment order was unavailable online, the petitioner had to file a physical appeal. The petitioner even tried to file the online appeal on the GSTN portal immediately after the order was uploaded on the GSTN portal. However, the status on the portal was showing that there is a delay in filing the appeal.
HELD
The High Court observed that the issue in the present case is whether, in the facts of the present case, the period of limitation to file an appeal under section 107(1) of the said Act would commence from the date when the impugned assessment order is uploaded on the GSTN portal or from the date of service upon the petitioner of the scanned copy of the impugned assessment order by email. The High Court further observed that it is not the case of the petitioner that the General Manager was not competent and/or not authorised to receive the communication of the impugned assessment order on behalf of the petitioner and accordingly held that failure on part of the General Manager to inform the petitioner regarding receipt of the impugned assessment order will not have the effect of extending the period of limitation prescribed under sub-section (1) of section 107 of the said Act. The Court did not accept the contention of the petitioner that the limitation prescribed by sub-section (1) of section 107 of the Act will commence from the date when the impugned assessment order is uploaded on the GSTN portal and that except for communication of the impugned assessment order on the GSTN portal, all other communications are to be disregarded for the purpose of sub-section (1) of section 107 of the said Act. Referring to Rule 108, the Court held that Rule 108 no doubt prescribes that the appeal has to be filed electronically, but it nowhere prescribes that the same is to be filed only after impugned assessment order is uploaded on GSTN portal online. Relying upon the decision of Hon’ble Supreme Court in the case of Assistant Commissioner (CT) LTU, Kakinada, and Ors. vs. Glaxo Smith Kline Consumer Health Care Limited, Hon’ble Court held that the policy behind the Act on the constitution of a special adjudicatory forum is meant to expeditiously decide the grievances of a person who may be aggrieved by the order of the adjudicatory authority. The Hon’ble High Court also did not apply the ratio of the decision of Hon’ble Gujarat High Court in the case of Gujarat Tate Petronet Limited vs. Union of India 2020-VIL-426-GUJ, wherein it was held that filing of the appeal and uploading of the order are intertwined activities. Hence though the physical copy of the adjudication order was handed over to the petitioner, the time period to file an appeal would start only when the order is uploaded on the GST portal as without the order being uploaded, the petitioner could not file the appeal and therefore, the contention raised on behalf of the respondents that the uploading of the order and filing of the appeal are two different processes is not tenable in law.
Note: With great respect, the author (MT) is of the view that the ratio of the Three Members’ decision of Hon’ble Gujarat High Court is more appropriate as the procedure for filing an appeal under Rule 108 electronically cannot be implemented unless the order is uploaded on the GST portal.
29 St. Joseph Tea Company Ltd. vs. State Tax Officer [2021 133 taxmann.com 3 (Kerala)] Date of order: 17th June, 2021
The recipients shall not be denied the claim of ITC on the ground of non-appearance of the credit in GSTR-2A, if the supplier is restrained from the filing of GST returns for circumstances beyond his control, provided the supplier has paid the tax to the Government
FACTS
The petitioner, a registered dealer under the Kerala Value Added Tax Act, had migrated to the Goods and Services Tax Act regime and applied for registration under the GST statutes. Having failed to obtain registration due to technical glitches in the GST portal, the petitioner filed a writ petition, and by an interim order, he was permitted to apply for registration afresh. Accordingly, he was granted registration afresh from 9th March, 2018. Even though the issue of registration was thus solved, the petitioner’s grievance about the inability to comply with the requirements in terms of the statutes for the period from 1st July, 2017 to 9th March, 2018 subsisted. As the petitioner was unable to upload the returns for the period from 1st July, 2017 to 9th March, 2018 and remit tax, the petitioner’s customers could not claim Input Tax Credit (ITC), and many of them stopped doing business with the petitioner. The department also started issuing notices in Form GST Asmt-10 to the petitioner’s customers, citing discrepancies in the return.
HELD
The Hon’ble Court observed that the department ought to provide the petitioner opportunity for statutory compliance for the period prior to 9th March, 2018. However, as stated by the respondent, it is technically impossible to make changes in the GST portal for providing an opportunity for an individual assessee to comply with the statutory requirements from a date prior to its registration. In such circumstances, the Hon’ble Court held that the only possible manner in which the issue can be resolved is for the petitioner to pay tax for the period covered by provisional registration from 1st July, 2017 to 9th March, 2018 along with applicable interest under Form GST DRC-03 against the show cause notice (SCN) or statement. If such payment is effected, the recipients of the petitioner under its provisional registration (ID) for the period from 1st July, 2017 to 9th July, 2018 shall not be denied ITC only on the ground that the transaction is not reflected in GSTR 2A.
30 Evertime Overseas Pvt Ltd. vs. Union of India [2021 (55) GSTL 257 (Bombay)] Date of order: 8th October, 2021
Refund of Goods and Service Tax paid cannot be withheld by the Revenue merely on the ground of pending Investigation
FACTS
Petitioner had filed a refund application under section 16 of the Integrated Goods and Service Tax Act, 2017 r. w. s. 54 of the Central Goods Service Tax Act, 2017, on account of making zero-rated supply. However, the application for refund was not processed on the ground that an investigation was pending and to secure the interest of revenue. Being aggrieved by such non-processing of the refund, the petitioner submitted an appeal before the Hon’ble Bombay High Court.
HELD
It was held that the petitioner’s application for refund shall be processed expeditiously as per law and directed the department to dispose of the refund application in an expeditious manner after passing a reasoned order based on the merits of the case.
31 Assistant State Tax Officer vs. VST and Sons (P) LTD. [2021 (55) GSTL 259 (Kerala)] Date of order: 22nd July, 2021
Transportation of used vehicles categorized as used personal effects are exempted from the requirement of E-Way Bill
FACTS
Respondent filed a writ petition challenging the detention of “Range Rover” motor vehicle while being transported as used personal vehicle from Coimbatore to Thiruvanthapuram. The motor vehicle was new and ran only for 43 kms. The department detained the vehicle on the ground that transportation was done without generation of e-way bill. Aggrieved by such detention the Respondent filed a writ petition before the Hon’ble High Court.
HELD
The High Court relied upon the judgement of Kun Motor Company Private Limited vs. Assistant Commissioner of State Tax 2019 (21) GSTL 3 (Kerala HC) and held that used vehicles are to be categorised as “used personal effects” irrespective of how negligible they have been used. Goods classifiable as “used personal and household effect” are exempt from the requirement of e-way bill in terms of Rule 138(14)(a) of CGST Rules. Thus, there was no requirement for the generation of e-way bill.
32 Daulat Samirlal Mehta vs. Union of India [2021 (55) GSTL 264 (Bombay)] Date of order: 15th February, 2021
An Arrest cannot be made merely because certain sections of the Central Goods and Service Tax provide for the same for specific violations or offences
FACTS
The petitioner, aged around 65 years, was a director of Twinstar Industries Limited and Originet Technologies Limited. During 2018 an investigation was initiated for the alleged fraudulent availment and utilization of Input Tax Credit (ITC) based on bogus invoices without actual receipt of goods or services. Summons were issued to the petitioner under section 70 of CGST Act on several occasions. In response to the summons, the petitioner appeared before the investigating officer and his statements were recorded on five occasions. After the fifth interrogation, the petitioner was arrested and sent to judicial custody. Petitioner was accused of committing an offence under section 132(1)(c) of CGST Act for availment of ITC around Rs.122.59 crores on strength of bogus invoices and offence under section 132(1)(b) and section 132(1)(c) of CGST Act for issuing bogus invoices and wrongfully passing ITC approximately Rs.191.66 crores without actual supply of goods or services. The petitioner, without admitting the allegations, filed three compounding applications under section 138 of CGST Act, one his personal account and the other two on behalf the two companies in which he is a director to avoid multiple proceedings as well as to avoid rigours of prosecution besides any further prejudice to his personal liberty. With the aforesaid grievance, the petitioner filed a writ petition before the Bombay High Court seeking bail.
HELD
It was held that the requirement under subsection (1) of section 69 of CGST Act is “reasons to believe” that not only a person has committed any offence as specified but also as to why such person needs to be arrested. The primary intention of the Central Goods Service Tax Act is to collect the revenue, and arrest is only incidental to achieve the main objective. An arrest cannot be made only because the offence is cognizable and non-bailable. The officers have to take into account whether arrest is necessary to prevent further commission of offences or tampering of evidences or influence of witness or producing before the courts. Further, once compounding under section 138 of the Central Goods Service tax Act is done, no further proceedings shall be initiated, and all the existing proceedings for the same offence shall stand abated. The Court concluded by granting bail to the petitioner subject to requisite bond, surety and conditions.
II. AUTHORITY FOR ADVANCE RULING
33 Suez India Pvt. Ltd. [2022-TIOL-15-AAR-GST] Date of order: 31st December, 2021
Even though there are two separate contracts, the contract for design and construction and operation and management for water loss management is a single indivisible contract
FACTS
Applicant entered into a performance-based contract for water loss management with Kolkata Municipal Corporation which includes construction of water distribution networks and operation and maintenance. The contract was awarded to him for a single lump sum amount, however, for the contract signing purposes, two separate contracts were prepared namely design and construction phase and operation and maintenance phase along with the Letter of Award. Applicant therefore, wished to know whether such an agreement be considered as divisible supplies or a single contract under the GST law and the taxability thereof.
HELD
Contract for water loss management made by the applicant with Kolkata Municipal Corporation which includes construction of water distribution networks and operation and maintenance shall be treated as an indivisible single contract and qualifies as works contract as defined under clause (119) of section 2 of the GST Act. Such composite supply of works contract gets covered under entry serial number 3(iii) of the Notification No. 20/2017-Central Tax (Rate) dated 22nd August, 2017 and therefore, would attract tax @ 12% with effect from 22nd August, 2017 – For the period from 1st July, 2017 to 21st August, 2017, however the supply would be taxable @ 18% vide entry serial number 3(ii) of the Notification No. 11/2017-Central Tax (Rate).
34 M/s Emcure Pharmaceuticals Ltd. [2022-TIOL-10-AAR-GST] Date of order: 4th January, 2022 [AAR-Maharashtra]
Recoveries made for providing canteen facility, bus facility and notice pay recovered from employees are not liable to GST
FACTS
The Applicant, a pharmaceutical company, makes recoveries at subsidized rates for providing canteen and bus transportation facilities to its employees and engages third- party service providers to provide the said facilities. These service providers raise invoices with applicable GST. The Applicant recovers a certain portion of the consideration paid to such third-party service providers from its employees. Also, there are instances where the employees leave without serving the mandated notice period. In such cases, the salary is deducted for the tenure not served as compensation for the breach of terms of Employment Agreement. The question before the Authority is whether such recoveries made are liable to GST.
HELD
The Authority noted that the canteen services are provided by the third-party service providers, and the company is not in the business of providing canteen facility, thus it is not their output service. Thus, the provision of a canteen facility is not a transaction made in the course or furtherance of business in terms of section 7 of the CGST Act, 2017 for a transaction to qualify as supply. Essentially it has to be made in the course or furtherance of business. Hence the canteen services cannot be considered as a ‘supply’ to attract GST payable on such recoveries. Also, recoveries made for the bus facility will not be liable for GST. With respect to the notice pay recovery, the Authority noted that the services by an employee to the employer in the course of or in relation to his employment are neither supply of goods nor supply of service. The employee opting to resign by paying an amount equivalent to month of salary in lieu of notice, has acted in accordance with the contract, and that being the case, no question of any forbearance or tolerance does arise. Thus notice pay recovered is also not liable to GST.
35 M/s. Chikkaveeranna Sweet Stall [2022-TIOL-08-AAR-GST] Date of order: 24th November, 2021 [AAR-Karnataka]
GST rate for composition tax payers engaged in the manufacture of sweet and namkeens and doing only the counter sales, is one percent
FACTS
Applicant is a composition taxpayer engaged in the manufacture of sweets and making counter sales without having any facility of restaurant or hotel. The question before the authority is the rate of GST applicable on the same.
HELD
The Authority held that since the applicant is into the manufacture of sweets, he can opt to pay GST at one per cent of the turnover subjected to the condition mentioned in the Notification No. 8/2017 (Central Tax) dated 27th June, 2017 and further amended notifications related to composition tax.
