COURT RULINGS
Rule 89(4)(c) of CGST Rules, held to be ultra-vires to the provisions of CGST Act and unconstitutional
Rule 89(4)(c) of CGST Rules, restricting the value of exports (when made without payment of taxes under LUT) to the extent of 1.5 times of the value of like goods when supplied domestically has been held to be ultra-vires to the provisions of CGST Act and unconstitutional. It was observed that on a combined reading of Section 54 of the CGST Act and Section 16 of the IGST Act, it can be said that intention of making exports zero-rated is to make the entire supply chain of exports tax-free. However, Rule 89(4) (c) restricts the refund in case of export made through the LUT model to 1.5 times the value of like goods domestically supplied, which is ultra vires in view of the well-settled principle of law that rules cannot override the parent legislation. Further noted that, Rule 89(4) (c) of the CGST Rules is violative of Articles 14 and 19(1) (g) of the Constitution being restricting the quantum of refund of unutilized Input Tax Credit (ITC) in case of export made under LUT model. In contrast, in the case of refund sought under payment of the IGST model, there is no such limit.
References
M/s Tonbo Imaging India Pvt Ltd v. Union of India (HC Karnataka)
Rejection of application for revocation of cancellation of registration basis vague SCN is not sustainable
The SCN issued was held to be reckless and as vague as it can be. Even the order passed by appellate authority is not only arbitrary but a reckless exercise of power which led to denial of the rights of freedom and business guaranteed under Article 19 of the Constitution of India. Such orders and SCN can never pass the test of Article 14 of the Constitution.
References
M/s Viraj Polymers Private Limited v. State of U.P. (HC Allahabad)
Rejection of refund claim without affording an opportunity of hearing is not valid
The provisions of Rule 92(3) of the CGST Rules are very clear that any application for refund shall not be rejected without giving applicant an opportunity of being heard. The rule is mandatory and the department is bound to give opportunity of hearing to the applicant before passing the rejection order. Accordingly, rejection order was set aside.
References
Fiscalnote India Private Limited v. Commissioner of Central Tax (HC P&H)
Mere allegation of fake credit being availed by supplier cannot be a ground for rejection of refund to exporter
The allegation of any fake credit availed by supplier cannot be a ground for rejecting the petitioner’s refund application unless it is established that the petitioner has not received the goods or has not paid for them. Further, observed that there has been no dispute that the goods have not been exported, the invoice in respect of which petitioner claims the ITC were raised by the registered dealer and there has been no allegation that the petitioner has not paid the invoice including taxes, then the application for refund cannot be denied as the petitioner-purchaser is not required to examine the affair of its supplying dealer.
References
M/s Balaji Exim v. Commissioner, CGST & Ors. (HC Delhi)
Rejection of appeal merely on account of non-submission of certified copy of the order appealed against, is not sustainable
It was observed that submission of certified copy of the order appealed against within 7 days of filing of the appeal is only a procedural requirement. The merits of the matters in the appeal filed by the petitioner should not have been sacrificed for non-compliance of a procedural requirement, which is only a technical defect.
References
M/s PKV Agencies v. The Appellate Deputy Commissioner (GST Appeals) (HC Madras)
Service provision on behalf of third parties is not an intermediary service
It was observed that a plain reading of the definition of the term ‘intermediary’ makes it clear that an intermediary merely “arranges or facilitates” the supply of goods or services or both between two or more persons. Even if it is accepted that the petitioner has rendered services on behalf of a third party, the same would not result in the petitioner falling within the definition of ‘intermediary’ under Section 2(13) of the IGST Act as it is the actual supplier of the professional services and has not arranged or facilitated the supply from any third party.
References
M/s Ernst & Young Limited Vs Additional Commissioner, CGST Appeals-II- (HC Delhi)
Attachment of Bank accounts of a person not taxable under GST is not valid
It was held that the petitioners are not taxable persons. The power of provisional attachment under Section 83 of the Act is limited to attaching the bank accounts and assets of taxable persons and persons specified under Section 122 (1A) of the CGST Act. It is not open for the revenue to attach the bank accounts of other persons on a mere assumption that the funds therein are owned by any taxable person. The draconian step of attachment of bank accounts can only be taken in case all specified conditions are fully satisfied.
References
Sakshi Bahl & ANR. Vs The Principal Additional Director General (HC Delhi)
Assessment Proceedings cannot be done without taking recourse under Sections 73 & 74
The court held that the entire exercise resorted to under Section 130 of the GST Act, without taking recourse to Section 74 for assessment/ determination of the tax and the penalty is not stipulated under the Act. Further, without the allegation of ‘intent to evade payment of tax’ in SCN the levy of a penalty cannot be made. The service of SCN to the accountant of the firm is also not tenable under the GST law. Further, the determination of the value of goods on eye estimation and without taking recourse to Section 15 was held to be non-sustainable and entire proceedings and orders were quashed by the court.
References
M/s Maa Mahamaya Alloys Private Limited v. State of U.P. (HC Allahabad)
ADVANCE AUTHORITY RULINGS
Taxability of transaction involving transfer of independent running business division as a whole
Transaction of transfer/sale of one of the independent running business division as a whole, along with all the assets and liabilities of the independent business division as going concern held to be a transaction of supply within the meaning of Section 7 of the CGST Act. However, exemption in terms of Entry 2 of Notification 2/2017-CT (Rate) dated June 28, 2017 shall be available subject to the conditions of going concern.
References
M/s Pico2femto Semiconductor Services Private Limited (AAR Karnataka)
NOTIFICATIONS
Reduction in late fee applicable for delayed filing of annual return in From GSTR-9
Late fee payable in respect of delayed filing of GSTR-9 from 2022-23 and onwards has been reduced as under;
- Where turnover is up to INR 5 crores – INR 25 per day subject to maximum of 0.02% of the turnover in the State
- Where turnover is more than INR 5 crores but is less than INR 20 crores- INR 50 per day subject to maximum of 0.2% of the turnover in the State
Late fee in respect of FY 2017-18 ~ FY 2021-22 has been capped at the maximum of INR 10,000, if filing is done on or before June 30, 2023.
References
Notification No. 07/2023 –CT dated March 31, 2023
Reduction in late fee for delayed filing of GSTR-10
Late fee has been capped, for all cases, at INR 500, if the said return are filed between April 01, 2023 to June 30, 2023
References
Notification No. 08/2023 –CT dated March 31, 2023
One-time relaxation in respect of filing the application for revocation of cancellation of registration
The government has relaxed the filing of the application for revocation of cancellation of registration till 30th June 2023 for all such cases where the registration was cancelled on or before 31st December 2022 and the assessee failed to apply for revocation in the given time limit. The said application will be filed after furnishing the returns up to the effective date of cancellation of registration and paying all the tax dues including interest, penalty and late fees.
References
Notification No. 03/2023 –CT dated March 31, 2023
Physical verification of the original copy of documents submitted along with the registration application
The government has amended Rule 8 (4A) to provide for the verification of the original copy of the documents uploaded with the application in FORM GST REG-01 at notified Facilitation Centres, based on data analysis and risk parameters.
References
Notification No. 04/2023 –CT dated March 31, 2023
Reduction and Waiver of the late fee applicable for GSTR-4
Government has waived the late fee for FY 2017-18 to 2021-22 where the CGST amount payable is NIL. Such late fee has been capped to a maximum of INR 250 for other cases, if the returns for such period are filed between April 01, 2023 to June 30, 2023.
References
Notification No. 02/2023 –CT dated March 31, 2023
Disclaimer
Information contained herein are only for reference and knowledge sharing purposes and are based on the information publicly available as on the date of this publication. The author takes no responsibility for its reliability and accuracy. It is advised to take appropriate legal/professional advice before undertaking any business activity or otherwise based on the above.
