6 Recent Court Pronouncements On GST – Part I

Dr. Sanjiv Agarwal

Goods and Services Tax (GST) is now over 100 days old and has created ripples in various circles on operational and implementation front.

GST law, as drafted and legislated, does not come free from the interpretational hassles. Taxpayers have started challenging various provisions of GST laws and rules framed there under. High courts have taken a liberal stand so far in view of the fact that law is new and is yet evolving. However, CBEC has decided to move to supreme court where the verdict is against the Government.

Here are few judicial pronouncements for information and guidance of various stakeholders. It is expected that the litigation is bound to go up as time passes by.

1. In Samaj Parivartana Samudaya & Ors. v. State of Karnataka & Ors.(2017) 10 TMI 255 (Supreme Court),on question of whether lessee can claim input tax credit under CGST Act, 2017 in case of an e-auction transaction, it was held that the GST payable on the sale value of the mineral purchased in the e-auction shall be paid by the buyer directly to the lessee and the lessee would be responsible for all compliances as may be required under Act. The Monitoring Committee was directed to prepare appropriate proforma and also take steps for carrying proper Tax Identification Number of the respective lessees on the invoices as may be required. It was further directed that the GST payable on the sale value of the mineral purchased in the e-auction shall be paid by the buyer directly to the lessee and the lessee would be responsible for all compliances as may be required under Act.

2. In Mohit Minerals (P.) Ltd. v Union of India (2017) 63 GST 427/84 taxmann.com 268 (Delhi),where assessee was a trader in coal and has filed writ petition challenging constitutional validity of GST (Compensation to States) Act, it was held that where the assessee had already paid clean energy cess in terms of Finance Act, 2010 on stock of coal as on the appointed date, no further payment of tax under GST (Compensation) Act was required to be made.

3. In Commercial Tax Officer v. Madhu M.B. (2017) 85 taxmann.com 172 (Kerala),it was held that where as the statutory provisions in relation to search, seizure, detention and release thereof is provided under section 129 of CGST Act, 2017, the Department cannot deviate from the said provisions in order to pass an order which is against such provisions contained in the Act.

4. In Narendra Plastic (P.) Ltd. v Union of India (2017) 85 taxmann.com 153(Delhi),it was held that an interim relief can be granted to an exporter to continue to make imports under Advance Authorization licenses issued to it prior to 1-7-2017 without payment of IGST for export orders received by him before 1-7-2017, subject to verification by Customs Department in terms of such authorization.

5. In Chemico Synthetics Ltd. v. Union of India (2017) 86 taxmann.com 57 (Delhi),it was held that an interim relief can be granted to exporters to continue making duty free imports against Advance Authorization (AA) licenses issued to them prior to 1-7-2017 where period of validity of license remains unexpired, however the same shall be subject to certain conditions as prescribed.

6. In J K Mittal & Company v. Union of India & Ors (2017) 63 GST 138; 83 taxmann.com 281 (Delhi), it was held that as of date, there is no clarity on whether all legal services (not restricted to representational services) provided by legal practitioners and firms would be governed by the reverse charge mechanism. If in fact all legal services are to be governed by the reverse charge mechanism than there would be no purpose in requiring legal practitioners and law firms to compulsorily get registered under the CGST, IGST and/or DGST Acts. Those seeking voluntary registration would anyway avail of the facility under Section 25 (3) of the CGST Act (and the corresponding provision of the other two statutes). There is therefore prima facie merit in the contention of Mr Mittal that the legal practitioners are under a genuine doubt whether they require to get themselves registered under the three statutes. In the circumstances, the Court directed that no coercive action be taken against any lawyer or law firms for non-compliance with any legal requirement under the CGST Act, the IGST Act or the DGST Act (Delhi GST) till a clarification is issued by the Central Government and the GNCTD and till further orders in that regard by the Court. The court clarified that any lawyer or law firm that has been registered under the CGST Act, or the IGST Act or the DGST Act from 1st July, 2017 on wards will not be denied the benefit of such clarification as and when it is issued.

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