Introduction: The landscape of Goods and Services Tax (GST) in India is continuously evolving, with various High Courts providing clarity on numerous contentious issues. These rulings address critical questions ranging from the electronic issuance of notices and refunds for payments made under coercion, to the eligibility for Input Tax Credit (ITC) and the constitutionality of specific GST provisions. This article delves into these pivotal judgments, offering insights and implications for taxpayers and GST practitioners.
Page Contents
- 1. Whether Summary of Demand and Notice issued u/s 74 of the CGST Act required to be issued electronically under Rule 142(1) of CGST Rules?
- 2. Whether the Taxpayer entitled to a refund of the amount deposited due to coercion during search proceedings?
- 3. Whether ITC can be availed by Registered Person when returns are filed beyond statutory period stipulated u/s 16(4) of CGST Act?
- 4. Whether the Penalty be imposed if the terms of the Show Cause Notice have been complied with?
- 5. Whether the GSTR-1 be rectified post- due date of furnishing details of outward supplies u/s 37(1) of the CGST Act?
- 6. Whether the SCN need to be set aside when issued without due application of mind?
- 7. Whether proceedings are to be re-adjudicated when no detailed order is uploaded by Revenue Department?
- 8. Whether Order liable to be set aside when no reasonable opportunity to submit a reply is provided to Assessee after issuance of SCN?
- 9. Whether Section 16(2)(c) of CGST Act and Rule 36(4)(c) of CGST Rules are constitutionally valid?
- 10. Can GST Assessment Notice/Order be passed against Deceased Person?
- 11. Whether Revenue Department is authorized to block ITC for more than one year?
- 12. Whether Revenue Department is required to de-freeze the bank account once required amount for filing has been deposited by Appellant?
- 13. Whether Revenue Department authorized to cancel GST registration based on Letter received from another authority?
- 14. Whether First Appellate Authority empowered to dismiss appeal for non-prosecution due to non-appearance of Assessee or authorized representative?
- 15. Whether amount paid for early termination of lease constitute consideration for supply?
- 16. Whether ITC can be claimed by submitting physical FORM GSTR-3B returns when FORM GSTR-2 was not notified?
- 17. It is mandatory to provide an opportunity for a personal hearing before issuance of an Order by Authority?
- 18. Whether refund Application is deficient when conditions stated under Rule 89(2) of CGST Rules are fulfilled?
- 19. Whether ITC for different financial years can be clubbed together for claiming a refund under Rule 89(4) of CGST Rules?
- 20. Whether GST Refund allowed for ITC accumulated on account of different tax rates on inward supplies?
- 21. Whether Writ Petition maintainable when proceedings are dependent upon adequacy of evidence?
- 22. Who has Jurisdiction to adjudicate all connected SCNs, if SCNs are issued by different commissioners?
- 23. Whether registration should be cancelled retrospectively for period when taxpayer has fulfilled compliance requirements?
- 24. Input Tax Credit (ITC) denial for belated return-filing challenged; Supreme Court issues notice
1. Whether Summary of Demand and Notice issued u/s 74 of the CGST Act required to be issued electronically under Rule 142(1) of CGST Rules?
Yes, The Honorable Delhi High Court in the case of Surinder Shah v. Additional Commissioner/Joint Commissioner CGST [W.P.(C) NO. 15766 OF 2023 dated December 7, 2023] directed the Revenue Department to issue the summary of Show Cause Notice and Demand electronically in Form GST DRC-01 & Form GST DRC-02, thereby holding that, a summary of Demand and Notice issued under Section 74 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) is required to be issued electronically under Rule 142(1) of the Central Goods and Services Tax Rules, 2017 (“the CGST Rules”).
The Honorable Delhi High Court relied upon the order passed by the Honorable Delhi High Court in the case of Shubham Gupta v. Additional Commissioner/Joint Commissioner CGST, and Anr. [W.P.(C) No. 12457/2023 dated September 21, 2023] wherein it was observed that as per Rule 142(1) of the CGST Rules, any notice issued under Section 74 of the CGST Act, is to be accompanied by the summary, generated electronically in Form GST DRC-01 and Form GST DRC-02. It was further observed that, though the summary in the electronic form is required to be furnished along with the Show Cause Notice, the furnishing of the summary at the present stage during the pendency of adjudication proceedings would be of sufficient compliance.
Author’s Comment:-
This is the common practice followed by many state authorities to issue DRC- 01 (summary of demand) notice manually. Rule 142(1)(a) clearly states that there are eleven provisions under the law and the twelfth provision is traceable to rule 100(2), where DRC- 01 has to be issued along with SCN electronically.
Another common issue surfacing is the issuance of DRC-01 (summary of demand) without issuing SCN. Most of the state authorities are following this practice. This practice is contrary to the law and the judicial pronouncements where justice is denied to the first step itself to demand and recover taxes along with interest and penalty without issuing a valid SCN.
Pertinent to mention here that this judgment will have a strong bearing on the fate of SCNs issued U/s 130 of the Actmanually. Many state authorities are still issuing SCN U/s130 (MOV-10) manually, post amendment in Section 130 by virtue of Finance Act, 2021 effective from 01 January 2022,this is contrary to rule 142(1)(a).
2. Whether the Taxpayer entitled to a refund of the amount deposited due to coercion during search proceedings?
Yes, The Honorable Delhi High Court in the case of Lovelesh Singhal Prop. Shivani Overseas v. Commissioner, Delhi Goods and Services Tax & Ors. [W.P. (C) 16353/2022 dated December 05, 2023] held that the taxpayer is entitled to a refund of the amount deposited due to coercion during the search proceedings.
The Honorable Delhi High Court noted that in cases where the tax is collected by the Respondent under coercion, the same is required to be returned. Also, the Petitioner is required to acknowledge the liability on account of which tax is paid, which is to be acknowledged by the Respondent as well.
The Honorable Court relied upon the judgment of the Gujarat High Court in the case of Vallabh Textile v. Senior Intelligence Officer [R/Special Civil Application No. 3196 of 2021 dated February 16, 2021], and concurring judgment of the Honorable Delhi High Court in the case of Vallabh Textiles v. Senior Intelligence Officer and Ors. [P.(C) 9834/2022 dated December 20, 2022] along with the Instructions dated May 25, 2022. It was further noted that it is impermissible for the Respondent officials to pay the tax without following the required procedure unless it is apparent that, such tax is due and payable. Also, as per the directions issued in the aforementioned judgments, the Respondent officials are required to advise the taxpayer who has come forward to deposit the tax during the search proceedings, should do so on the next day after the proceedings have been concluded. As per the aforementioned judgments, if the procedure stated is not complied with, it would be concluded that the deposit made by the taxpayer is not voluntary.
The Honorable Court opined that the Petitioner has disputed that he is liable to pay any tax. Also, neither the procedure laid out under Rule 142 of the Central Goods and Services Tax Rules, 2017 (“the CGST Rules”), is complied with nor the Respondent has issued any acknowledgment accepting the payment made by the Petitioner under Form GST DRC-04 as required under the CGST Rules. Therefore, the tax deposited by the Petitioner cannot be considered voluntary and within the purview of Section 73(5) of the CGST Act and allowed the writ petition.
Author’s Comment:-
Para 3 of instruction No. 01/2023-23 (GST- Investigation) dated 25th May 2022 clearly states that recovery of taxes not paid or short paid can be made under the provision of section 79 of CGST Act, 2017 only after following the due legal process of issuance of notice and subsequent confirmation of demand by the issuance of adjudication order.
Recovery of tax during inspection and/or search without following the due process laid down in the law is the outcome of over–passionate administration.
Moreover, as per Rule 142(2) Proper Officer is required to issue an acknowledgment, accepting the payment made by the taxpayer in Form GST DRC – 04.
3. Whether ITC can be availed by Registered Person when returns are filed beyond statutory period stipulated u/s 16(4) of CGST Act?
No, The Honorable Calcutta High Court in the case of BBA Infrastructure Ltd. v. Senior Joint Commissioner of State Tax [MAT No. 1099 of 2023 dated December 13, 2023] dismissed the writ petition and held that Section 16(1) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) is an enabling provision allowing Input Tax Credit and Section 16(4) of the CGST Act, imposing restriction on the filing belated returns for availing credit is valid in nature.
The Honorable Calcutta High Court relies upon the judgment of the Honorable Supreme Court in the case of ALD Automotive Private Limited v. Assistant Commissioner and Ors. [Civil Appeal No. 10412-10413 of 2018 dated October 12, 2018] observed that the conditions under which the concessions and benefit is given are always to be strictly construed and the time under which a return is to be filed for the purpose of assessment of tax cannot be dependent on the will of the dealer. Therefore, the time limit prescribed under Section 19(11) of the Tamil Nadu VAT Act is mandatory in nature.
The Honorable Court relies upon the judgment in the case of M/s. TVS Motor Company v. State of Tamil Nadu and Ors. [Civil Appeal No. 10560-10564 of 2018 dated October 12, 2018] Taking into consideration the aforementioned judgment, further observed that the ITC is a form of concession provided under the CGST Act which cannot be availed as a matter of right but only as per the terms of the statute, therefore the conditions mentioned has to be fulfilled by the dealer.
The Honorable Court further Observed that the eligibility criteria prescribed under Section 16(2) of the CGST Act, are mandatory in nature, and in the absence of fulfillment of the eligibility criteria the dealer will not be entitled to avail ITC.
The Honorable Court relying upon the judgement in the case of Tirumalakonda Plywoods v. Assistant Commissioner-State Tax [W.P. No. 24235 of 2022 dated July 18, 2023], further noted that the similar issues in relation to the present case were taken into consideration by the Honorable Andhra Pradesh High Court, where the pari-materia provisions under the Andhra Pradesh GST Act, namely Section 16(4) of the CGST Act was challenged on the ground that, the said provision is violative of Article 14, 19(1)(g) and 300A of the Constitution of India. The central issue in the aforementioned case was whether Section 16(2) of the CGST Act, being a non-obstante clause would prevail over Section 16(4) of the CGST Act.
The Honorable Court noted that Section 16(1) of the CGST Act is an enabling provision allowing Input Tax Credit and Section 16(2) of the CGST Act, imposes restrictions on the credit that is otherwise allowed to the dealers who have satisfied the conditions prescribed in the said provision and relying upon the judgment of Honorable Patna High Court in the case of Gobinda Construction v. Union of India and Others [CWJC No. 9108 of 2021 dated September 8, 2023] further noted that, there is no ambiguity in the language of Section 16 which clearly stipulates that the grant of ITC is subject to the condition stated in the CGST Act. Further, it is stated that the provision under Section 16(4) is one of the conditions making the registered person eligible to avail of ITC and is not violative of Article 300 A of the Constitution of India.
The Honorable Court opined that there is no ground to grant the relief sought by the Petitioner in the writ petition and dismissed the writ petition filed.
Author’s Comments:-
It is important to understand that Section 16(4) is violative of Article 14 and 19(1)(g) of the Constitution of India for the following reasons-:
The input tax credit is allowed in the following instances even though there is no saving clause for these instances in section 16(4) of CGST Act 2017, namely:
1. Clubs and Associations that have filed their first GSTR3B returns for the period from 1 Jul 2017 to 31 Jan 2022 on 20 Feb 2022 due to retrospective amendment to section 7(1)(aa) of CGST Act notified from 1 Jan 2022 and have been allowed an input tax credit for fifty-four (54) months since the retrospective amendment;
2. The input tax credit is allowed under section 18(1)(d) to eligible taxpayers even though they have not claimed credit within the time limit in section 16(4) of the CGST Act;
3. The input tax credit is allowed to IRPs in respect of Corporate Debtors who are undergoing the CIRP process under the Insolvency and Bankruptcy Code vide notification 11/2020-Central Tax dated 21 Mar 2020;
4. The input tax credit is allowed on the restoration of registration in appeal in cases where registration was canceled and login credentials blocked due to the action of Proper Officer which came to be overturned by Appellate Authority, and all outstanding returns were filed in one go.
Applying a different treatment to Section 16(4) cases compared to the above-listed instances is illegal and without the authority of law.
Further, the Honorable Madras High Court in the case of Tvl. Kavin HP Gas GraminVitrak v. The Commissioner of Commercial Taxes & Ors [W.P.(MD). Nos.7173 and 7174 of 2023 dated November 24, 2023] allowed the filing of belated returns for availing ITC in cases where the taxpayer was unable to file GSTR-3B when the registered person is not able to pay taxes on outward supply due to financial hardship.
4. Whether the Penalty be imposed if the terms of the Show Cause Notice have been complied with?
No, the Honorable Allahabad High Court in the case of M/s. Rathore Building Material v. Commissioner of State tax [Writ Tax No 1361 of 2023 dated December 1, 2023] held that Petitioner had complied with terms of Show Cause Notice by furnishing returns within 15 days and containing a recital that if returns were tendered in time, proceedings shall be withdrawn. However, the penalty was imposed on the Petitioner without lawful justification. Hence, Impugned orders were contrary to law and passed on non-application of mind and the same were liable to be set aside.
The Honorable Allahabad High Court observed that the Respondent issued the Impugned Order by imposing the Penalty by returning the findings that no reply to the SCN was tendered by the Petitioner. The finding is vitiated on account of non-application of mind to the facts in the record.
The Honorable Court noted that the petitioner had complied with the terms of the SCN by furnishing the returns within 15 days, there was no lawful justification to impose the penalty and held that the Impugned Order is contrary to law and passed on non-application of mind. Hence, the Impugned Order is liable to be set aside.
Author’s Comments
Infraction of the law triggers the imposition of a penalty. Law places a burden on Revenue to bring every infraction of law beyond mere ‘non-payment of tax or inadmissible claim of credit’. In other words, not every demand will automatically and irrefutably attract a penalty unless it can be shown that there was the necessary ingredient of animus or intent to commit such an infraction of the law.
When an infraction of law warranting imposition of penalty is dispensed with, if liability is discharged without contest and up to thirty (30) days after the issue of notice, it would be discriminatory to demand penalty in such a mechanical manner. For this reason, it is not a matter of routine and even when the imposition of penalty is merited, it is not a manner of routine and even when the imposition of penalty merited omission to bring allegations sufficient to support the ingredients needed to fit the facts within the operation of the provision, no demand will be sustainable, not in adjudication or in appeal as this will be an incurable deficiency in the notice.
Moreover, all returns filed which are valid as defined in section 2(117), subject to payment of late fee as applicable under section 47 have the curative effect by payment of late fee, which cannot be overlooked and this takes away the required mala fides to impose a penalty.
5. Whether the GSTR-1 be rectified post- due date of furnishing details of outward supplies u/s 37(1) of the CGST Act?
Yes, the Honorable Bombay high Court in the case of Star Engineers (1) Pvt. Ltd v. UOI & Ors [Welt Petition No. 15368 of 2023 dated December 14, 2023] allowed rectification of Form GSTR-1, post-date of furnishing details of outward supplies under Section 37(1) of Central Goods and Services Tax Act, 2017 (“the CGST Act”), thereby holding that Section 37(3) of the CGST Act, cannot be interpreted in a manner that would prevent The Assessee from placing the correct position and accurate details with respect to all the details in GST Returns being filed by the Assessee.
The Honorable Bombay High Court observed that the provisions of Sections 37,38, and 39 of the CGST Act, would be applicable with respect to the filing of GST Returns. Section 37 provides for furnishing details of outward supplies Section 38 provides for furnishing details of outward supplies and Section 39 provides for furnishing of returns
The Honorable court observed that, Section 37(3) of the CGST Act, provider that any registered person, who has furnishing returns under sub-section (1), shall upon discovery of any error or omission, rectify such error or omission and pay fax and interest, if any, in case, there is short payment of tax on account of such error or omission in return to be furnished for such tax period. The Provision to Section 37(3) CGST Act stipulates that no rectification of error or omission pertaining to details furnished under Section 37(1) of the CGST Act shall be allowed after furnishing of return under Section 39 for the month of September [as of now, 30th day of November] following the end of the finance year to which such details pertain or furnishing of the relevant annual return, whichever is earlier.
The Honorable Court noted that Section 37(3) of the CGST Act, cannot be interpreted in a manner that would prevent the Assessee from placing the correct position and accurate details with respect to all the details in GST Returns being filed by the Assessee and leaving no scope for any bonafide and inadvertent rectification/correction. any technicality preventing the rectification, could not defeat the provision of sub-section (3) of Section 37 of the CGST Act read with sub-section (9) of Section 39 of the CGST Act.
The Honorable Court opined that the Respondent Officer should have granted the Petitioner an opportunity to rectify/amend Form GSTR-1 for the Impugned Period, either through online or manual, means and allowed the writ petition and directed that the Petitioner be permitted to amend/rectify Form GSTR-3 for the impugned Period, either through online or manual means.
Author’s Comments
This judgment comes to the rescue of bonafide taxpayers to allow them to rectify their GSTR-1 and will allow recipients to settle the ongoing litigation. In this regard, recently, in a similar matter, The Hon’ble Orissa High Court has permitted the Assessed to rectify the error of mentioning B2C instead of B2B in Form GSTR-1 at the time of filing of returns in the case of M/s Y. B. Constructions Pvt. Ltd. v. Union of India and others (WP.(C) No.12232 of 2021 dated February 22, 2023, holding that the Assessee would be prejudiced if it is not allowed to avail the benefits of Input Tax Credit. Further, the Hon’ble Orissa High Court in M/s. Shiva jyoti Construction v. The Chairperson, Central Board of Excise & Customs and others [W.P. (C) No. 18216 of 2017 dated January 12, 2023] had permitted the Assessee to rectify its Form GSTR-1 file for the months of September 2017 and March 2018 in order to claim ITC benefit by the recipient, wherein B2C was erroneously mentioned, instead of B2B. It was held that the assessee will be unnecessarily prejudiced if it is not allowed to avail the benefits of ITC Further, the Hon’ble Karnataka High Court in M/s. Wipro Limited India v. the Assistant Commissioner of Central Taxes andOrs. [Writ Petition No. 16175 of 2022 (T-Res) dated January 6, 2023] had allowed the assessee to rectify the errors committed at the time of filing of Forms and submitting GST Returns for FY 2017-2020. A similar judgment was passed in Satyam Auto Components Ltd v. Union of India [CWP No. 8019 of2020 dated October 5, 2023]
6. Whether the SCN need to be set aside when issued without due application of mind?
Yes, the Honorable Calcutta High Court in the case of M/s. Diamond Beverages (P.) Ltd. v. Assistant Commissioner of CGST & CX [M.A.T. No. 1948 of 2023 and I.A. No. CAN of 2023 dated December 15, 2023] held that submissions made by appellants in their reply to pre-show cause notice appeared to have been considered. However, except extracting the reply given by the appellants, the authority has not dealt with the contentions, which were placed by the appellants in the reply to the pre-show cause notice. Thus, this would be sufficient to hold that the show cause notice has been issued without due application of mind. Hence, Show Cause Notice was set aside and subsequently, the matter was remanded back the matter to the Adjudicating Authority at the level of pre-show cause notice and the writ petition was allowed.
The Honorable Court noted that the Impugned SCN was issued without due application of mind, without considering the reply to the Impugned pre-SCN, and without conducting any inquiry or investigation at the supplier’s end, the Impugned SCN would call for interference.
The Honorable Court directed that the Respondent shall first inquire/investigate the matter from the supplier’s end, collect the necessary information, afford an opportunity to the Petitioner to put forth further submission on such and allow the personal hearing, and then proceed to decide as to whether the Impugned SCN under Section 73(1) of the CGST Act has to be issued or otherwise and held that both appeal and writ petition were allowed. The matter was remanded back the matter to the Respondent to the stage of the Impugned pre-SCN. Hence, the impugned SCN was set aside.
Author’s Comments
In view of the CBIC Press Note dated 4 May 2018 below:
Before issuing SCN alleging reversal of ITC in case the registration of the supplier is canceled retrospectively, the Notice ought to be put at notice about:
1. Nature of demand raised against said Suppliers;
2. The basis on which registration was granted originally by Revenue;
3. Disclosure of duration for which returns were filed and taxes discharged by said Suppliers from the date of such registration;
4. Reasons why Revenue elected to cancel registration along with copies of file noting to invoke authority in section 29(2) of Central GST Act that cancellation was the most expeditious alternative;
5. Details of action taken under section 79 of Central GST Act to the extent GSTR1 was filed but not GSTR3B;
6. Details of action taken under section 74 of the Central GST Act by issuing a notice of demand to the extent tax was left undercharged;
7. Details of adjudication and appeal filed in respect of notice of demand issued under section 74 of Central GST Act;
8. Details of recovery action under sections 83 and 93 of the Central GST Act against said Suppliers; and
9. Due to the demand in Impugned SCN bearing close proximity to these documents, copies of all relevant documents are requested.
Without answering all these questions, no demand for reversal of ITC can be made in a routine and summary manner which is akin to armchair inquiry to the extant legal position of the Government.
7. Whether proceedings are to be re-adjudicated when no detailed order is uploaded by Revenue Department?
Yes, the Honorable Madras High Court in the case of Ojus Power & Technologies (P.) Ltd vs Assistant Commissioner (ST) [W.P. Nos. 31986 of 2022 dated November 22, 2023] set aside the Impugned Summary Order as no detailed order was uploaded on the portal and remitted back the matter for re-adjudication.
The Honorable Madras High Court opined that the detailed order dated September 27, 2022, was signed by the Respondent Authorities only on April 27, 2023, and held that the Impugned Order is set aside and remitted the matter back to the Respondent authorities for re-adjudication.
The Honorable Court further held that the Petitioner is permitted to file a reply, if any, in addition to the reply filed earlier by the Petitioner in Form GST DRC-01A within a period of thirty (30) days from the date of receipt of a copy of this order and directed that the Respondent should grant the Petitioner an opportunity of personal hearing and pass orders on merit and in accordance with the law.
Author’s Comments
A lot of experts believe that the intimation under Rule 142(1A) i.e. in form DRC–01A is different from the pre-notice consultations referred to in sections 73(5) and 74(5) of the CGST Act, 2017. But in the author’s opinion, both are the same.
There is an urgent need to understand that the taxpayers need not expose themselves too much to pre-notice consultations issued in DRC-01A with long replies. Taxpayers just have to intimate in part –B of DRC-01A, whether or not they agree with the proposed demand.
It is important that all the relied upon documents are issued along with Form DRC-01A especially in the case of SCN U/s 74 of the act to make an informed decision because the penalty amount is considerable U/s 74.
8. Whether Order liable to be set aside when no reasonable opportunity to submit a reply is provided to Assessee after issuance of SCN?
Yes, the Honorable Madras High Court in Brakes India (P.) Ltd. v. Assistant Commissioner (ST) [W.P. No. 36438 of 2023 dated January 3, 2024] allowed the writ petition, thereby setting aside the Impugned Order in case where no reasonable opportunity is provided to the Assessee to submit a reply after issuance of Show Cause Notice (“SCN”) as the SCN is received via Email on the same day of the personal hearing.
The Honorable Madras High Court opined that as per the facts of the case, no reasonable opportunity was provided to the Petitioner to submit the necessary documents and provide the necessary explanation to the Respondent
The Honorable Court further opined that without expressing any opinion on the merits in the present matter, the Impugned Order requires interference and held that the Impugned Order is quashed and allowed the writ petition.
Author’s Comments
This is a welcome judgment and this highlights a major issue being faced by the taxpayer, where Principles of Natural Justice are grossly violated when the opportunity of being heard is not provided. This is expressly given in the statute [Section 75(4) and 126(3)] that the opportunity of being heard must be presented where it is specifically asked by the taxpayer or where the adverse order is contemplated. Providing the opportunity of a personal hearing along with SCN also raises a presumption that the proper officer is working with a preconceived notion to confirm the demand because the proper officer at the time of issuing SCN has neither gone through the reply of the taxpayer to contemplate an adverse order nor has the taxpayer requested a personal hearing in writing.
9. Whether Section 16(2)(c) of CGST Act and Rule 36(4)(c) of CGST Rules are constitutionally valid?
Yes, the Honorable Kerala High Court in the case of Nahasshukoor v. Assistant Commissioner [WA NO. 1853 OF 2023 dated November 3, 2023] dismissed the writ petition and upheld the constitutional validity of Section 16(2)(c) of Central Goods and Services Tax Act, 2017 (“the CGST Act”) and Rule 36(4) of the Central Goods and Service Tax Rules, 2017 (“the CGST Rules”) thereby holding that, the court must show judicial restraint to interfere with tax legislation unless it is shown and proved that such taxing statute is manifestly unconstitutional and arbitrary. The test to determine manifest arbitrariness is whether the enactment is drastically unreasonable, capricious, irrational, or without adequate determining principle.
The Honorable Court opined that the aforementioned provisions are not manifestly arbitrary and under the said circumstances the constitutional validity of the said provisions must fail.
Author’s Comments
This is always a presumption of the constitutional validity of the legislature with the burden of showing the contrary lying heavily upon someone challenging its validity. This is the wisdom of the parliament of the country to afford concession (ITC) based on vesting conditions laid down in section 16 that cannot be challenged routinely without persuasive arguments.
GST being a self-assessment-based tax regime, the taxpayer is entitled to examine inward supplies and claim an input tax credit based on satisfaction of vesting conditions and other restrictions. When the burden in section 155 of the CGST Act stands discharged, the Onus to disapprove the same shifts onto the department.
Prior to 01 January 2022 when Section 16(2) (aa) was introduced, the validity of Rule 36(4) was quite disputable because there was no parent legislation to govern Rule 36(4).
10. Can GST Assessment Notice/Order be passed against Deceased Person?
No, the Honorable Madras High Court in the case of Rekha S v. Assistant Commissioner (ST) [W.P.No.35411 of 2023 and W.M.P.No.35374 of 2023 dated December 19, 2023] granted relief to the legal heirs of the Deceased by setting aside the GST Assessment Order issued against the Deceased on the ground that the Order came to be passed against the dead person, which is non-est in law.
The Madras High Court held that the fact remains that the Impugned Order came to be passed against the dead person, which is non-est in law and hence, it is liable to be set aside. Therefore, this Court is of the considered view that, the Petitioners shall consider the Impugned Notices issued by the Respondent as it is issued to them as on date and directed the Petitioner to file a reply to the Impugned Notices within a period of 6 weeks from the date of receipt of the copy of this order. Thereafter, directed the Respondent to pass appropriate orders after providing opportunities of personal hearing to the Petitioner.
Author’s Comments
It is extremely important to highlight the Order XXII Rule 1 of the Code of Civil Procedure 1908, which is reproduced for reference as follows:
“(1) the death of a plaintiff or defendant shall not cause the suit to abate if the right to sue survives.”
Due to the death/demise of a natural person, all the proceedings against such person stand abated. Further as per section 169 of the CGST Act 2017, service of any notice, order, or communication against such person is neither validly served to said person nor it is accepted on account of such person.
Attention is invited to the judgment in the case of CIT v. Scindia Steam Navigation Co. Ltd. 1961 AIR SC 1633, where the Apex Court held that:
“…it is well settled that no mandamus will be issued unless the applicant had made a distinct demand on the appropriate authorities for the very reliefs which he seeks to enforce by mandamus and that had been refused.”
No, the Honorable Karnataka High Court in the case of S.P. Metals v. Assistant Commissioner of Central Tax [Writ Petition No. 21015 of 2023 dated January 3, 2024] allowed the writ petition and held that as per sub-rule (3) of Rule 86A of the Central Goods and Services Tax Rules, 2017 (“the CGST Rules”), the Respondent is not authorized to block the Input Tax Credit of the registered person under GST for a period of more than one year. Therefore, the continuation of blocking of ITC was illegal and arbitrary. Hence, directed to unblock the Input Tax Credit as per the Petitioner’s Electronic Credit Ledger.
The Honorable Karnataka High Court noted that the one-year-stipulated period as stated in sub-rule (3) of Rule 86A of the CGST Rules, comes to an end on May 11, 2023, therefore no question arises for the Respondent to continue to block ITC of the Petitioner as the same is illegal and arbitrary.
The Honorable Court held that the writ petition is allowed and directed the Respondent to unblock ITC as per the Petitioner’s Electronic Credit Ledger as expeditiously as possible.
Author’s Comments
Rule 86A(3) of the CGST Act, 2017 expressly provides that such restriction shall cease to have effect after the expiry of a period of one year from the date of imposing such restriction.
These are preemptive and emergency powers and must be exercised strictly in accordance with the law. Post expiry of one year period, this turns out to be institutionalized theft, and passion to protect the revenue is not authorized bypassing the law.
As and when such pre-emptive action is taken, taxpayers must prefer an application to the Proper officer authorizing such action to make a full and complete disclosure as to the ‘basis’ for invoking exceptional powers under rule 86A.
Important to mention here that the decision to block the electronic credit ledger under Rule 86A is a non-appealable order under section 107, although not specified in section 121 of the CGST Act, 2017.
12. Whether Revenue Department is required to de-freeze the bank account once required amount for filing has been deposited by Appellant?
Yes, the Honorable Madras High Court in the case of Jey Tech Moulds Dies vs. Deputy Commissioner (GST) [W.P. No. 33523 of 2023 dated November 30, 2023] directed the Revenue Department to de-freeze the bank account of the Appellant, thereby holding that the proceedings initiated by the Revenue Department would automatically be stayed, as and when, the amount has been deposited by the Appellant for filing the appeal under Section 107 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”).
The Honorable Madras High Court noted that as per Section 107 of the CGST Act if the Petitioner has paid ten percent of tax dues along with the penalty for filing an appeal, the Respondent proceedings would automatically stay.
The Honorable Court opined that as the petitioner had paid a sum of Rs.83,000/-, the Respondent is supposed to de-freeze the bank account of the Petitioner as per Section 107 of the CGST Act and directed that the Respondent is required to take into consideration the representation filed by the Petitioner and de-freeze the petitioner’s bank account, after submission of proof of deposit of Rs.83,000/- or ten percent of the total demand made by the Respondent.
Author’s Comments
This is a welcome decision by the Honorable High Court of Madras and it comes to the rescue of the taxpayer and once again the Rule of Land stands tall against the over-passionate administration. The Revenue Department has to understand that this kind of approach renders the “due process” laid down in the statute “Superfluous, unnecessary and nugatory”, which is impermissible in the law.
Section 107(7) of the CGST clearly states that where the appellant has paid the amount under sub-section (6) of Section 107, the recovery proceedings for the balance amount shall be deemed to stayed.”
Important to mention here that the order to provisionally attach property under section 83 of the CGST Act, 2017 is a non-appealable order under section 107, although not specified in section 121 of the CGST Act, 2017.
No, the Honorable Delhi High Court in the case of Sant Ram Vs Delhi State GST & Ors (Delhi High Court)[W.P No. 15846 of 2023 dated December 11, 2023] allowed the writ petition and set aside the order of GST Registration cancellation thereby holding that it is important for the Proper Officer to independently arrive at the satisfaction set out in subsection (1) or (2) of Section 29 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) for the purpose of GST Registration cancellation.
The Honorable Delhi High Court observed that Section 29 of the CGST Act enables the Proper Officer to cancel dealer GST registration in specific circumstances and Section 29(1) of the CGST Act states the circumstances under which taxpayer’s GST registration can be cancelled. Also, Section 29(2) of the CGST Act, states the circumstances under which registration can be canceled from such date, including with retrospective effect, as the proper officer deems fit.
The Honorable Court noted it is important for the Proper Officer to independently arrive at the satisfaction set out in subsection (1) or (2) of Section 29 of the CGST Act.
The Honorable Court relying upon the judgment of Union of India & Ors. v. Bharat Forge Ltd. &Anr. [(1970) 1 SCC 795] and Kritika Agarwal v. Union of India & Ors., [W.P. (C) 9424/2023 dated July 18, 2023] further noted that the Proper Officer has to act independently and cannot act mechanically on the instructions of another authority and opined that the Impugned SCN was issued solely based on letter received from another authority. The Letter neither was attached to the Impugned SCN nor does the Impugned SCN refer to the contents stated in the Letter. Further, opined that the Impugned Order does not state that the Proper Officer was satisfied with any of the conditions laid out under sub-section (1) or (2) of Section 29 of the CGST Act.
Author’s Comments
This is a welcome decision by the Honorable High Court of Delhi and it comes to the rescue of the taxpayer once again the Rule of Land stands tall against the over-passionate administration. The Revenue Department has to understand that this kind of approach renders the “due process” laid down in the statute “Superfluous, unnecessary and nugatory”, which is impermissible in the law. A similar judgment was passed in the case of Singla Exports v. Central Board of Indirect Taxes and Customs &Ors W.P.(C) 2732 of 2023 dated August 09, 2023 by the Honorable Delhi High Court and in the case of Rishiraj Aluminium Pvt. Ltd. v. Goods and Services Tax Officer [W.P.(C) No. 4125 of 2023 dated April 17, 2023 by the Honorable Delhi High Court.
No, The Honorable Patna High Court in the case of Nav Nirman Construction v. Union of India [CWJC No. 16940 of 2023 dated December 6, 2023] set aside the appellate order and directed that the Appeal be restored before the appellate authority, thereby holding that appellate authority is not empowered to dismiss the appeal for non-prosecution due to non-appearance of Assessee or authorized representative as the appellate authority has a duty and obligation to take into consideration the merits of the matter, examine the grounds raised by the appellant even if the appellant or authorized representative presence is not recorded; and decide the issue on merits.
The Honorable Patna High Court relied upon the judgment of the Honorable Patna High Court in the case of Purushottam Stores v. State of Bihar and Ors. [CWJC No. 4349 of 2023 dated April 25, 2023], and noted that the sub-sections (8), (9), (10), (11), and (12) of Section 107 of the Central Goods and Services Act, 2017 (“the CGST Act”) and corresponding provisions of the Bihar GST Act, the appellate authority has a duty and obligation to take into consideration the merits of the matter, examine the grounds raised by the Appellant even if the Appellant or authorized representative presence is not recorded; and decide the issue on merits. The Honorable Court further noted that the appellate authority has the power to conduct further inquiry to decide whether the appeal would be relinquished, as and when the appeal is dismissed for non-prosecution, and held that the Impugned Order is set aside.
Author’s Comment:-
This is a welcome judgment by the honorable Patna High Court. Section 107(12) requires the first appellate authority to dispose of the appeal in writing and shall state the points of determination, to decision thereon, and the reasons for such decision.
Non-appearance by the taxpayer or authorized representative cannot be a reason to dismiss the appeal and pass a speaking order without considering the grounds of the appeal raised.
15. Whether amount paid for early termination of lease constitute consideration for supply?
Yes, the AAR Karnataka, in the case of M/s. Enzyme Business Centre [Advance Ruling No. DGR 33 of 2023 dated November 16, 2023], held that the damages received by the Applicant from the tenant towards the termination of the sub-lease before the agreed upon lock-in period as per the sub-lease deed agreements tantamount to supply as per Section 7 of the Central Goods and Service Tax Act, 2017 (“the CGST Act”) and the amount received towards damages as per the settlement agreement is to be construed as Consideration for the supply. The services provided by the Applicant are classifiable under Chapter heading 9972 and are liable to GST at the rate of 18%.
The AAR, Karnataka observed that the payment of the amount is for an act of tolerance in the sense that, when there is a breach of the contract, the other party is put to certain hardships, which he tolerates in return for the payment received by his client. The same can be understood as consideration received by the Applicant for “agreeing to the obligation to refrain from an act or to tolerate an act or a situation” of their client of not completing the lock-in period, which he had agreed in terms of contractual obligations. As per the contract, the Applicant agrees to refrain or tolerate or to do an act. In case the obligation/condition of the contract is not fulfilled, then such an act is squarely covered under clause 5(e) of Schedule II of the CGST Act. Therefore, this activity constitutes supply in terms of Section 7(1) of the CGST Act.
The AAR relied on Circular No. 178/10/2022 dated August 3, 2022, where it is mentioned that amounts paid for early termination of the lease as contemplated by the contract as part of commercial terms agreed to by the parties constitute consideration for the supply of a facility, namely, early termination of a lease agreement. Therefore, such payments, even though they may be referred to as fines or penalties, are actually payments that amount to consideration for the supply, and are subject to GST, in cases where such supply is taxable. Since these supplies are ancillary to the principal supply for which the contract is signed, they shall be eligible to be assessed as the principal supply.
Author’s Comments
Important to mention here that advance ruling authority is not a quasi-judicial authority, and likewise except to applicant–taxpayer, AARs, and A-AARs, pronouncements of AAAs and A-AARs are not binding precedents.
This particular issue is covered under para 7 of Circular No. 178/10/2022 dated August 3, 2022, issued by the tax Research unit, wherein it has been specifically said that No GST is payable in case the compensation is received for the loss caused due to branch of contract, which is an event in course of performance of the contract and not an independent activity to constitute a supply under section 7 of the CGST Act, 2017 (Refer section 73 and 74 Indian contract act, 1972).
16. Whether ITC can be claimed by submitting physical FORM GSTR-3B returns when FORM GSTR-2 was not notified?
Yes, the Honorable Madras High Court in the case of Tvl. Kavin HP Gas Gramin Vitrak v. The Commissioner of Commercial Taxes &Ors. [W.M.P. (MD) Nos. 7173 and 7174 of 2023 dated November 24, 2023] held that the Respondents without giving any opportunity to file the returns by notifying the Form GSTR-2 cannot expect the taxable person to file returns. Hence, the Respondents ought to allow the dealers to file returns manually and the writ petitions were allowed without any cost.
The Honorable Madras High Court observed that if the GSTN provided an option for filing GSTN without payment of tax or incomplete FORM GSTR-3B, the dealer would be eligible for claiming ITC. The same was not provided in the GSTN network hence, the dealers are restricted from claiming ITC on the ground of non-filing of FORM GSTR-3B within the prescribed time If the option of filing incomplete filing of FORM GSTR-3B is provided in the GSTN network the dealers would avail the claim and determine self-assessed ITC online. The Petitioner had expressed real practical difficulty. The GST Council may be the appropriate authority, but the Respondents ought to take steps to rectify the same. Until then the Respondents ought to allow the dealers to file returns manually.
The Honorable Court relied on the judgment passed by the Punjab and Haryana High Court in the case of Hans Raj Sons v. Union of India and others [CWP No. 36393 of 2019 dated December 16, 2019], and Adfert Technologies Private Limited v. Union of India and others [CWP No. 30949 of 2018 dated November 04, 2019], wherein the Honorable Court held that the in absence of any enabling mechanism the assessee should not be denied from availing credit.
The Honorable Court held that the Respondents shall permit the petitioner to file manual returns whenever the petitioner is claiming ITC on the outward supply/sales without paying taxes and directed the respondents to accept the belated returns and if the returns are otherwise in order and accordance with the law, the claim of ITC may be allowed. Hence, the Impugned Orders is quashed and the writ petition is allowed.
Author’s Comments
This big relief to the taxpayer and will have far-reaching consequences favoring taxpayers, especially in case of ineligible ITC under Section 16(4).
After the divergent rulings from the Honorable Calcutta High Court in the case of BBA Infrastructure Ltd. v. Senior Joint Commissioner of State Tax [MAT No. 1099 of 2023 dated December 13, 2023] and Honorable Andhra Pradesh High Court in the case of Tirumalakonda Plywoods v. Assistant Commissioner-State Tax [W.P. No. 24235 of 2022 dated July 18, 2023], and Honorable Patna High Court in case of Gobinda Construction v. Union of India and Others [CWJC No. 9108 of 2021 dated September 8, 2023] this ruling comes in rescue of aggrieved taxpayers.
17. It is mandatory to provide an opportunity for a personal hearing before issuance of an Order by Authority?
Yes, the Honorable Madras High Court in the case of the A.H. Enterprises v. Deputy Commercial Tax Officer [Writ Petition No. 35894 of 2023 dated January 04, 2024] held that it is mandatory to provide the personal hearing under Section 75 of the Tamil Nadu Goods and Service Tax Act, 2017 (“the TNGST Act”) before passing an Order.
The Honorable Court directed the Respondents to provide a Personal Hearing to the Petitioner and thereafter issue a reasoned order within a maximum period of four weeks from the date of receipt of a copy of this order. Hence, the Impugned Order was quashed and remanded for reconsideration.
Author’s Comments
This is a welcome judgment and this highlights a major issue being faced by the taxpayer, where Principles of Natural Justice are grossly violated when the opportunity of being heard is not provided. This is expressly given in the statute [Section 75(4) and 126(3)] that the opportunity of being heard must be presented where it is specifically asked by the taxpayer or where the adverse order is contemplated. Similar judgment where delivered by the Honorable Madras High Court in the case of M/s. SHIDO Pharma v. Assistant Commissioner (ST) [W.P. Nos. 10371 to 10373 of 2023 and W.M.P Nos. 10334 to 10336 of 2023 dated April 03, 2023] and by the Honorable Bombay High Court in the case of M/s. Knowledge Capital Services V. Union of India (WRIT PETITION NO. 61 OF 2023) dated March 29, 2023.
18. Whether refund Application is deficient when conditions stated under Rule 89(2) of CGST Rules are fulfilled?
No, The Honorable Delhi High Court in the case of M/s. AB Enterprises v. Commissioner of Goods and Services Tax [WP (C) 7919 of 2023 dated November 21, 2023] allowed the writ petition and held that the Refund application cannot be termed as deficient if it complies with the conditions stated in Rule 89(2) of the Central Goods and Services Tax Rules, 2017 (“the CGST Rules”).
The Honorable Delhi High Court relied upon the judgment in the case of National Internet Exchange of India v. Union of India and Ors. [W.P. (C) 871 of 2022 dated August 9, 2023] wherein it was held that, if the application is complete with all the required documents, fulfilling the requirements stated in sub-rules (2), (3), and (4) of Rule 89 of the CGST Rules, the application for refund cannot be rejected. However, even if the documents are complete, the proper officer may withhold the processing of refund, on the ground that the amount of tax credited is not refundable to the taxpayer. In such cases, the proper officer is required to further verify the claim, by issuance of notice in Form GST RFD-08 under sub-rule (5) of Rule 90 of the CGST Rules.
The Honorable Court noted that the Impugned Communication implies that the Petitioner, as per Rule 90(3) of the CGST Rules, is required to file a fresh application for a refund. The Petitioner’s application for refund could not be termed as deficient if it complies with the conditions stated in Rule 89(2) of the CGST Rules. Though the concerned officer has the right to ask for further documents to process the claim, the refund application cannot be termed as deficient even if the documents asked for are not annexed with the application.
The Honorable Court opined that the impugned communication is devoid of any specific details. The Impugned Communication neither sets out specifically any relevant documents that have not been provided nor indicates the documents that are incomplete and held that the Impugned Communication is set aside.
Further, directed the Respondent shall issue the acknowledgment as per conditions laid out in Rule 90 of the CGST Rules, and process the Petitioner’s application for refund in accordance with the law.
19. Whether ITC for different financial years can be clubbed together for claiming a refund under Rule 89(4) of CGST Rules?
Yes, The Honorable Bombay High Court in the case of M/s. Sine Automation and Integration (P.) Ltd v. Union of India [Writ Petition No. 4655 of 2023 dated November 29, 2023] allowed the writ petition and held that as per the Circular 135/05/2020-GST, dated March 31, 2020, ITC for different financial years can be clubbed together for claiming refund under Rule 89(4) of the Central Goods and Services Tax Rules, 2017 (“the CGST Rules”).
The Honorable Bombay High Court opined that the Petitioner was permitted to club the ITC credit available for the period prior to April 1, 2018, as the ITC with respect to the FY 2017-2018 was available to the Petitioner in the Electronic Credit Ledger. The Respondent was also required to take into consideration the clarifications issued vide Circular 135/05/2020-GST, dated March 31, 2020 (“the Subsequent Circular”) which dilutes the content of the Circular and states that the restriction imposed by the Circular pertaining to the restriction on bunching of refund claims across financial years shall not apply.
The Honorable Court held that the Impugned Order is not sustainable and liable to be set aside and directed that the appeal filed by the Respondent be restored and decided afresh, taking into consideration the effect of the Subsequent Circular.
20. Whether GST Refund allowed for ITC accumulated on account of different tax rates on inward supplies?
Yes, The Honorable Delhi High Court in the case of Indian Oil Corporation Limited v. Commissioner of Central Goods and Services Tax &Ors. [W.P. (C) 10222/2023 & CM No. 39561/2023] held that the Petitioner is entitled to the refund of accumulated ITC on account of the different tax rates on inward supplies, the same cannot be denied by virtue of Circular No. 135/5/2020-GST dated March 31, 2020, issued under Section 168(1) of the Central Goods and Service Tax Act, 2017 (“the CGST Act”). Referring to paragraph 3.2 of the said Circular, a refund of accumulated ITC was not available, where the input and output supplies were the same, however, this ground stands virtually abandoned in the present case as the Petitioner seeks to be distinguished on the basis that though tax rates on the principle input supply and output supply is the same, the rate chargeable on other input supplies are different. Hence, the present petition is allowed.
The Honorable Delhi High Court observed that Section 54(3)(ii) of the CGST Act, is applicable only where ITC is accumulated on account of the “rate of tax of inputs being higher than the rate of tax on output supplies”. Here, plural inputs and outputs indicate that the refund claim of ITC is not confined to a single supply. In such cases, it is crucial to determine whether the accumulation of any ITC is in account of the rate of tax on inputs exceeding the rate of output for any reason. If the case is attributable solely to the rate of tax on inputs exceeding the rate of tax on output, the taxpayer’s claim would fall under Section 54(3)(ii) of the CGST Act.
The Honorable Court opined that Section 54(3)(ii) of the CGST Act, permits refund of unutilized ITC in cases where there is an accumulation of unutilized ITC on account of the rate of tax on input higher than the rate of tax on output supplies. However, the said section does not compare the rate of tax on the principal input with the rate of tax chargeable on the principal output supply.
Referring to paragraph 3.2 of the said Circular, a refund of accumulated ITC was not available, where the input and output supplies were the same, however, this ground stands virtually abandoned in the present case as the Petitioner seeks to be distinguished on the basis that though tax rates on the principle input supply and output supply is the same, the rate chargeable on other input supplies are different.
The Honorable Court directed that the Respondent process the application for refund along with applicable interest within a period of six weeks from the date the order is passed. Hence, the petition was allowed, and all the pending application was disposed of.
Author’s Comment:-
A similar judgment was passed in the case of M/s. Nahar Industrial Enterprises Limited v. Union of India [Civil Writ Petition No. 8476 of 20/21 dated October 31, 2023] by the Honorable Rajasthan High Court (Jaipur Bench) wherein it was held that that refund of Input Tax Credit can be claimed when there are multiple inputs having a higher rate of GST than the rate of GST on outward supplies. The Honorable Court relied upon the Circular No. 79/53/2018-GST dated December 31, 2018, and Circular No. 125/44/2019-GST dated November 18, 2019.
21. Whether Writ Petition maintainable when proceedings are dependent upon adequacy of evidence?
No, the Honorable Madras High Court in Malar International v. Deputy State Tax Officer-I [WP No. 198 of 2024 dated January 5, 2024] dismissed the writ petition as the disputes pertaining to the adequacy of evidence cannot be addressed in proceedings under Article 226 of the Constitution.
The Honorable Madras High Court noted that the ITC was denied after going through the documents on record provided by the Petitioner pertaining to the alleged purchase of goods from the Supplier.
The Honorable Court further noted that the crucial aspect of the adjudication in the present matter depends upon the adequacy of evidence pertaining to the actual purchase and delivery of goods to the Petitioner and opined that the aforementioned disputes cannot be addressed in proceedings under Article 226 of the Constitution.
22. Who has Jurisdiction to adjudicate all connected SCNs, if SCNs are issued by different commissioners?
The Honorable Delhi High Court in the case of Aasanvish Technology (P.) Ltd v. Director General of GST Intelligence [Writ Petition No. (C) 15221 of 2023 dated November 24, 2023] held that the matter for adjudication can be placed before an officer who exercises jurisdiction in respect of the notices, where multiple notices have been issued, in whose case the maximum demand has been raised.
The Honorable Delhi High Court held that as per Para 7.1 of Circular dated September 2, 2018, amended by Circular dated March 12, 2022, would be applicable where the matter for adjudication can be placed before an officer, who exercises jurisdiction where maximum demand has been raised. Therefore, the Additional/Joint Commissioner of Central Tax, Thane would have jurisdiction to adjudicate the said notice and the Petitioner’s contention that the Additional/Joint Commissioner of Central Tax, Thane would have no jurisdiction to adjudicate the impugned SCN is, thus, unmerited. The Commissionerate issuing the Impugned SCN to the Petitioner with the highest demand holds jurisdiction to adjudicate all connected SCN.
The Honorable Court directed that the concerned officer is required to consider all contentions and defenses raised by the Petitioner. And, if he does not accept any of them, he is required to pass a speaking order. Hence, the petition was disposed of.
23. Whether registration should be cancelled retrospectively for period when taxpayer has fulfilled compliance requirements?
No, the Honorable Delhi High Court in the case of Sharda Metal Works v. Commissioner of Central Goods and Services Tax [W.P.(C) NO. 16190 OF 2023 dated January 4, 2024] disposed of the writ petition, thereby setting aside the Show Cause Notice and Order of cancellation of GST Registration as the aforesaid Notice and Order is bereft of any proper reasoning. The Honorable Court further stated that the registration should not be cancelled retrospectively for the period when the returns have been filed and the taxpayer was compliant.
The Honorable Delhi High Court observed that Section 29(2) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) states that, the Proper Officer may cancel the GST registration of a person from such date which includes retrospective date, if the circumstances laid out in the said provision are satisfied.
The Honorable Court noted that no particulars or details have been mentioned in the Impugned SCN and there is no reference to any invoice or bill pertaining to which it has been alleged that no supply of goods or services has been made. Also, it is stated that, the Respondent is using the standard template for issuance of Notices as there is no clarity as to whether the Petitioner has issued invoices or bills without supply or action of the Petitioner which led to wrongful a ailment or utilization of ITC or refund of tax.
The Honorable Court noted that the Registration can be cancelled only if the Proper Officer deems fit to do so. The satisfaction should be based on objective criteria and the registration should not be cancelled retrospectively for the period when the returns have been filed and taxpayer was compliant.
The Honorable Court opined that the Impugned Order and Impugned SCN are bereft of any proper reasoning, thereby disposed the writ petition.
24. Input Tax Credit (ITC) denial for belated return-filing challenged; Supreme Court issues notice
The Honorable Supreme Court of India in the case of Mrityunjay Kumar v. Union of India [SLP (C) No. 28270 of 2023] vide order dated January 3, 2024, issued a notice in Special Leave Petition filed against the judgment of the Honorable Patna High Court in the case of Gobinda Construction v. Union of India and Others [CWJC No. 9108 of 2021 dated September 8, 2023], wherein the Honorable Patna High upheld the constitutional validity of Section 16(4) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) / the Bihar Goods and Services Tax Act, 2017 (“the BGST Act”). Section 16(4) of the CGST Act / the BGST Act states that Input Tax Credit would be denied in cases where any invoice or debit note is issued after the due date of furnishing returns. The matter has been listed for further hearing.
Conclusion: The recent spate of judgments from various High Courts on GST-related matters offers much-needed clarity on several contentious issues, reinforcing the principles of justice and fairness in the taxation realm. These rulings touch upon crucial aspects such as electronic issuance of notices, refunds for coerced payments, deadlines for ITC claims, and the validity of specific GST provisions. For taxpayers and professionals navigating the complexities of GST, these judgments serve as significant precedents, guiding compliance and litigation strategies. The evolving jurisprudence underlines the dynamic nature of GST law in India, emphasizing the judiciary’s role in shaping its application and interpretation.
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(The content and views stated in this article are solely for informational purposes. It does not constitute professional advice or recommendation in any manner whatsoever. For any feedback and queries write to me at caritesharora1628@gmail.com)
About the Author: CA Ritesh Arora, Partner at Ritesh Arora & Associates and an Author, is a seasoned Chartered Accountant with over a decade of expertise in indirect taxation. He offers comprehensive solutions in areas like GST compliance, tax consultancy, advisory, and litigation support, catering to his clients’ diverse business needs. Ritesh’s key strengths include in-depth knowledge of tax laws, helping clients optimize their tax positions, and delivering high-quality service that ensures compliance and minimizes risks. For inquiries, write to him at caritesharora1628@gmail.com.
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