The October 2024 GST Case Law Compendium covers pivotal judicial decisions from the High Court, GSTAT, Supreme Court, and CESTAT on varied GST issues. One key judgment addressed the validity of issuing a single show cause notice for multiple tax periods. Courts reviewed whether GST authorities can invoke penal provisions under the Indian Penal Code (IPC) without applying GST Act penalties and whether uploading an SCN on the GST portal qualifies as valid notice communication. The legal validity of Notification No. 56/2023-CT, which extended timelines for order issuance for fiscal years 2018-19 and 2019-20, was also scrutinized. Further rulings explored whether penalties can be imposed solely for e-way bill expiration absent tax evasion intent, and if assessment orders are lawful when GSTR-9 data is ignored. Other judgments discussed penalties under Section 129 in search and seizure cases, and the validity of SCNs sent by email post-cancellation of GST registration. The courts examined whether the CGST department may conduct audits after similar state audits and ruled on cases where demand orders were issued without an SCN or due opportunity to respond. The compendium also includes rulings on reattaching bank accounts beyond one year, initiating confiscation for excess stock, and issuing orders against deceased taxpayers. Additional issues covered include penalties for lacking e-tax invoices, SCNs without hearing dates, unilateral registration cancellations, GST on voucher supply, discrepancies in e-way bill addresses, late appeal filings due to illness, and requirements for transporters to carry original tax invoices. This compendium serves as a detailed legal reference for navigating complex GST compliance and procedural issues.
1. Whether a Single Show Cause Notice can be issued for multiple tax periods?
No, the Honorable High Court of Karnataka in the case of M/s Veremax Technologies Services Limited v. The Assistant Commissioner of Central Tax [Writ Petition No. 15810 of 2024 dated September 04, 2024] held that single Show Cause Notice cannot be issued for multiple tax periods because particular action must be completed within a designated year, and that same is consolidated in section 73(10) of the Central Goods and Services Tax Act, 2017 that prescribes a specific time limit for furnishing annual return for the Financial Year to which the tax due relates and it stipulates that particular actions must be completed within a designated year, and such actions should be executed in accordance with the law’s provisions. The Honorable High Court of Karnataka relied on the case of M/s. Titan Company Ltd. vs. Joint Commissioner of GST [Writ Petition No. 33164 of 2023 dated December 18, 2023] the Honorable Madras High Court further relied on, the Honorable Apex Court in the case of State of Jammu and Kashmir and Others v. Caltex (India) Ltd. [AIR 1966 SC 1350] where an assessment encompasses different assessment years, each assessment order can be distinctly separated and must be treated independently. The Honorable Court noted that the Respondent erred in issuing a consolidated SCN for multiple assessment years, spanning from 2017-18 to 2020-21. The Honorable Court held that the Impugned Notices issued by the Respondent are fundamentally flawed. The practice of issuing a single consolidated SCN for multiple assessment years contravenes the provisions of the CGST Act and established legal precedents.
Author’s Comments
This decision is rendered sub silentio for not considering that GST involves matters that transcend financial year where one event, say ITC occurs in one year and it’s conditions subsequent (claimed as fulfilled and to be tested) fall in another year. In the considered opinion of the Author, these aspects were not considered and this judgment is distinguishable on so many levels to have any force in laying down good precedent in GST. Issuance of a single SCN for multiple years is not something that can be pleaded to highlight how exactly the taxpayer is aggrieved in such a scenario. And para (iii) of the operative decision itself gives liberty for the respondent to issue fresh notices, which is otiose. Further circular 185/17/2022-GST dated 27 December 2022 ensures that no prejudice is caused to the taxpayer and this was never discussed.
2. Whether GST Authorities can launch prosecution invoking penal provisions under IPC without invoking the penal provisions of the GST Act?
No, the Honorable Madhya Pradesh High Court in the case of Deepak Singhal v. Union of India and Others [Writ Petition No. 21641 of 2024 dated September 11, 2024] held that the GST Authorities are not permitted to bypass the procedure for launching prosecution under the GST Act, 2017 and invoke provisions of Indian Penal Code without pressing into service penal provisions from GST Act, 2017 and that too without obtaining sanction from commissioner under Section 132(6) of the Central Goods and Services Tax Act, 2017. The Honorable Madhya Pradesh High Court observed that the Petitioner had been summoned under Section 70 of the CGST Act and it had given its statement to GST Authorities and thereafter no action under the GST Act was taken against the Petitioner by the GST authorities. Further no sanction before launching prosecution i.e. registration of FIR, was taken from the Commissioner as required under Section 132(6) of the CGST Act and no justification exists on the part of GST authorities to invoke penal provisions of IPC without invoking penal provisions under GST bypassing the procedure as prescribed under the GST Act. The Honorable Court noted that justification is mandatory especially when uncontroverted allegations in the inspection report and FIR, constituted offense squarely covered under the provisions of the GST Act, specifically Section 132 of the CGST Act. The Honorable Court opined that the GST Act is special legislation that holistically deals with procedure, penalties and offences relating to GST and the GST Authorities cannot be permitted to bypass procedure for launching prosecution under GST Act and invoke provisions of IPC only without pressing into service penal provisions from GST Act. The Honorable Court relied on the decision in the case of Sharat Babu Digumarti v. Government (NCT of Delhi) 2017 (2) SCC 18, in which it has been held that it is a settled position in law that a special law shall prevail over the general and prior laws. Thus, allowed the writ and in consequence, quashed the FIR in Crime No.62/2022 u/s 420, 467, 468, and 471 of IPC.
Author’s Comments
There is no bar under the statute to preclude GST officers from filing complaint for an offence under the Indian Penal Code without concluding proceedings under GST law. Initiation of penal proceedings under GST law is not a pre-condition for filing a complaint under IPC for such an offense. However, it would be remarkable for external agencies like police, to frame and conclude charges under IPC without finalization of proceedings under GST Law. Further, Section 131 of the CGST Act, 2017 states that any penalty or confiscation made under the GST law will not prevent proceedings under any other law for the time being in force. Further, approval of the Commissioner under section 132(6) of the CGST Act, 2017 is required for launching prosecution under section 132 of the Act. It is certainly not a sine qua non for filing a complaint under IPC.
On the similar issue, the Honorable Tripura High Court in the case of Sentu Dey v. The State of Tripura., The Superintendent of Police, Shri Niranjan Ch. Das, Superintendent of State Tax, Bishalgarh [2021 (51) G. S. T. L. 255 (Tripura)] held that If ingredients of an offense under IPC get satisfied in an alleged GST offense, then provisions under IPC can also be invoked along with GST provisions when prosecution is launched in GST cases.
3. Whether uploading SCN on the “View additional Notices & Orders” tab is sufficient communication of the notice?
No, the Honorable Delhi High Court in the case of M/s Neeraj Kumar v. Proper Officer SGST [Civil Writ Petition No. 9425 of 2024 dated July 11, 2024] held that Show Cause Notice uploaded under the category of “View Additional Notices and Order” instead of “View Notices and Orders” before the GST portal was redesigned is not sufficient communication of SCN to the petitioner. The Honorable Delhi High Court relied on the case of ACE Cardiopathy Solutions (P.) Ltd. v. Union of Union of India [Neutral Citation No. 2024: DHC:4108-DB] where the court further relied on the case of M/s East Cost Constructions and Industries Ltd. v. Assistant Commissioner (ST) [Writ Petition No. 26457/2023 dated September 11, 2023] wherein the High Court of Madras noticed that communications are placed under the heading of “View Notices and Orders” and “View Additional Notices and Orders”. The Madras High Court had directed the respondents to address the issue arising out of the posting of information under two separate headings. As per the petitioner, the Menu “View Additional Notices and Orders” were under the heading of “User Services” and not under the heading “View Notices and Orders”. Further, the Honorable Court observed that the GST Authorities have addressed the issue and have redesigned the portal to ensure that the ‘View Notices’ tab and ‘View Additional Notices’ tab were placed under one heading but SCN was issued to the petitioner prior to this change. Hence, the Impugned Order was set aside, and the matter was remanded to the adjudicating authority for consideration afresh.
Author’s Comments
Although Section 169 of the CGST Act, 2017 specifies 14 different ways/modes of serving any decision, order, summons, notice, or other communication under the Act, care must be taken by the authorities not to simply pick and choose any option, rather the best possible option must be chosen by which it is mostly likely to reach the intended noticee. The notice or any other communication cannot be termed to be served until it has reached the intended noticee.
In the Author’s considered opinion, it is immaterial whether the notice was uploaded on the “View Notices and Orders” tab or the “View Additional Notices and Orders” tab. The only aspect to consider is whether or not the intended notice was served to the intended noticee. If not, then the service of SCN must have been disputed and must have allowed the revenue to discharge their burden regarding the service of SCN. Without discharging this elementary burden, ‘due process’ under the law is abused and SCN deserves quietus in judicial review.
4. Whether Notification No. 56/2023-CT dated December 28, 2023 extending the timeline for passing orders for FY 2018-19 and 2019-20 is ultra-vires the law?
Yes, the Honorable Gauhati High Court (High Court of Assam, Nagaland, Mizoram, and Arunachal Pradesh) in M/s Barkataki Print and Media Services v. Union Of India and Others [Case No.: WP(C)/3585/2024 dated September 19, 2024] held that the Notification No. 56/2023-Central Tax dated December 28, 2023 is ultra vires the provisions of Section 168A of the Central Goods and Services Act, 2017 as well as there is no notification issued by the State Government in conformity with Section 168A of the Assam Goods and Services Act, 2017 and is not legally sustainable in law. The Honorable Gauhati High Court noted that the Impugned Orders being challenged in these writ petitions pertaining to the FY 2018-19 and 2019-20. The Honorable Court noted that the Government to exercise the powers under Section 168A to extend the time limit specified or prescribed or notified, it can be made on the recommendation of the GST Council by way of a notification in respect to acts which could not be completed or complied with due to force majeure. The challenge to Notification No. 56/2023-CT is on account of the absence of a recommendation by the GST Council and the existence of force majeure as defined in the Explanation to Section 168A of the CGST Act. Further, noted that there is no denial to the fact that Notification No.56/2023-CT was issued without the recommendation of the GST Council. The use of the phrase “on the recommendation of the Council” in Section 168A prima facie suggests that the power to be exercised under Section 168A by the Government is when a recommendation is made by the GST Council. The challenge to Notification No. 56/2023-CT contended that, without force majeure, the power under Section 168A could not be exercised. The Court notes that force majeure, as defined in Section 168A, includes natural calamities, war, and epidemics. The GST Council’s recommendation must be based on such conditions. However, in its 49th meeting, the Council decided against any further extensions in time line for issuance of Notification No. 09/2023-CT. Since Notification No. 56/2023-CT was issued without considering force majeure or the Council’s recommendation, the notification was issued improperly. The Honorable Court held that Notification No. 56/2023-CT is ultra vires the CGST Act and legally unsustainable, and thus quashed it. The State of Assam did not issue any corresponding notification for the periods in question (after April 01, 2024, for FY 2018-19 and after July 01, 2024, for FY 2019-20). Consequently, the Impugned Orders under Section 73(9) of both the CGST and AGST Act were issued beyond the time limit set in Section 73(10), making them without jurisdiction. Therefore, these impugned orders were set aside.
Author’s Comments
This is one of the most celebrated case in the recent times, but in the considered opinion of the Author, Notices and demands confirmed based on extended period of limitation will not be reversed or refunded. Although, it would be interesting to see how Government overcomes this decision of the Honorable Court. Lack of prior recommendation by GSTC can be overcome by ratification and this will not be the first instance where CBIC has rolled out the notification and then recommendation will be ratified by the GST Council at a later stage. But who knows, the GSTC recommendation can also be a challenge because if it would have been possible, then Central Government would have already got it ratified in 50th, 51st, 52nd, 53rd, 54th council meetings. (Article 279(6)-Cooperative federalisms between Centre & States- Political angle cannot be ignored). Further, it is recorded in 49th GSTC meeting that no further extension will be given pursuant to recommendation for notification no.09/2023.
The Government may overcome issue of absence of force majeure based on new event (not covid but a new & different force majeure event like shortage of manpower to complete audit, etc which is approved by parliament). Similar decision has been rendered by the Honorable Kerala High Court in Faizal Traders Pvt. Ltd. v. Deputy Commissioner, Central Tax and Central Excise [WP(C) No. 24810 of 2023] wherein the Court upheld the notifications by holding that it’s executive power to extend the period of limitation to COVID-19 for issuance of show cause notice by invoking the powers under sec 168A of the CGST Act.
5. Whether penalty can be levied due to the expiry of an E-way bill when there is no intention to evade payment of tax?
No, the Honorable Allahabad High Court in Raghuveer Ispat Private Limited v. State of UP [Writ Tax No. 222 of 2021 dated May 29, 2024] allowed the writ petition and set aside the order imposing penalty under Section 129(3) of the Central Goods and Services Tax Act on the ground that expiry of e-way bill during the course of transportation of goods is a technical violation. The Honorable court noted that the authorities have not been able to indicate in any manner the repetitive use of the E-way bill or the intention to evade payment of taxes. Further, the Honorable Court observed that the goods were accompanied by relevant documents and were as per the invoice description. The E-way bill expired due to the delay caused during transportation by the vehicle’s engine failure. In light of this, the Court did not agree with the findings of the authorities and accordingly, the impugned orders dated December 9, 2017 and May 8, 2019 are quashed and set aside. The Honorable High Court also directed the Revenue Department to refund the amount of tax and penalty deposited by the Petitioner within four weeks from the date of the order.
Author’s Comments
As per Circular No.64/38/2018 dated 14.09.2018, a general penalty under section 125 of the GST Act must be imposed in case of minor breaches or discrepancies.
In the Author’s considered opinion, all the discrepancies in relation to the movement of goods except the fatal errors like not accounting for transaction of supply in the books of accounts, are to be treated as minor discrepancies and no penalty u/s 129 of the GST Act can be imposed.
As per Section 129 and Rule 138A of the GST Act, until and unless mensrea exists and is proved, all the errors and omissions have to be termed as non-fatal errors and no penalty under section 129 can be imposed.
A Similar judgment was delivered by the Honorable Allahabad High Court in the case of M/s. Varun Beverages Ltd. v. State of Uttar Pradesh [Writ Tax No. 129 of 2024 dated February 07, 2024], wherein the court set aside the orders imposing penalty under Section 129(3) of the UPGST Act on the reason that the defect was of a technical nature only and without any intention to evade tax.
6. Whether assessment order is valid if the data reported in GSTR-9 is not considered?
No, the Honorable Calcutta High Court in the case of Ankit Kumar Aggarwal v. Assistant Commissioner of State Tax [M.A.T. NO. 939 OF 2024 dated May 21, 2024] allowed the appeal filed against the impugned order and directed the Revenue Department to grant the opportunity of hearing to the petitioner when data related to Input and Output Cess could not be reported in Form GSTR-1 and Form GSTR-3B but was duly reported in Form GSTR-9. The Honorable High Court held that not taking into consideration the figures reported in Form GSTR-9 filed within the time period, during the adjudication proceedings is violative of principles of natural justice and petitioner’s rights are prejudiced. Therefore, the Honorable High Court directed the Respondent to grant the opportunity of a personal hearing taking into consideration GSTR-9 filed by the Appellant and proceed to take a fresh decision on merits and in accordance with the law.
Author’s Comments
Whether to celebrate such an order that remands back the case to the Proper officer for another round of adjudication (re-adjudication) is a matter of choice and strategy. In the Author’s considered opinion, such orders are unable to fetch the desired relief because SCN is not vacated; only a short-term relief (at a cost) is provided. The petitioner could have disputed the cause-of-action invoked (unclear whether ITC reversal demanded or output tax demanded), and the burden to proof would have been on the revenue to prove their case. Important to mention that the mismatch/ linear comparison of two data sets (GSTR-9 vs GSTR-3B) is meaningless in GST. Yes, it could raise suspicion, but without evidence, it is impossible to bring home the allegations leveled against the taxpayer.
Further, the petitioner pleaded the concept of “Revenue neutrality” which is an admission of wrongdoing and this concept of “Revenue neutrality” is no longer alive in GST.
7. Whether penalty under Section 129 can be imposed pursuant to Search and Seizure proceedings?
No, the Honorable Allahabad High Court in the case of Gupta Mentha Oil Commission Agent v. State of UP [Writ Tax No. 738 of 2024 dated May 08, 2024] allowed the writ petition and set aside the penalty imposed under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 subsequent to search conducted at the business premises of the petitioner. The Honorable High Court relying upon the judgment of the Honorable Allahabad High Court in the case of Mahavir Polyplast (P.) Ltd. v. State of UP [Writ Tax No. 56 and 57 of 2020 dated August 06, 2022], set aside the Impugned Order and directed to refund the amount of tax and penalty deposited by the Petitioner inter-alia holding that search and seizure at the godown cannot result in penalty proceedings under Section 129 of the UPGST Act.
Author’s Comments
There is a Proper officer for every section and every action under the law. The officer authorized under section 67 to conduct inspection, search and seizure proceedings is not the Proper officer authorized to impose penalty under section 129. Moreover, section 67 proceedings are to be limited only to the ‘contraventions’ listed in form INS-01, and after discovery is strictly not allowed in this intrusive action. Section 129 is limited to the Detention, seizure, and release of goods and conveyances in transit only.
The law of administration states that when power is given to do a particular thing, that thing must be done in that particular manner or not at all. Taxpayers before replying to any proceedings, ‘Validity of Jurisdiction’ must be tested and confirmed. And if there is any doubt, the Proper officer must explain the exercise of jurisdiction when validity is questioned in the view of the mandate in section 160(2) of the Act.
8. Whether SCN served by E-mail after GST Registration Cancellation is valid?
No, the Honorable Andhra Pradesh High Court in Somaprasanth Karampudi v. Union of India and Others [Writ Petition No. 14969/2024 dated July 29, 2024] remanded the case back to the adjudicating authority and held that physical notices sent to the Petitioner being returned with noting “Left”, should have been sufficient for the Respondent to take steps to ascertain whereabouts of the Petitioner and to serve notices at such address. The Honorable Andhra Pradesh High Court noted the main contention of the Petitioner that none of the notices, that are said to have been sent by the Respondent, had been received by the Petitioner and as such the Petitioner had no notice of any of the proceedings and the Impugned Order suffers from violation of principles of natural justice. The Honorable Court observed though it cannot be said that service of notice on the Petitioner by way of the E-Mail ID has not been done, the fact remains that the cancellation of the registration could have resulted in the petitioner not looking into the mails sent to the E-Mail ID which was registered with the department. The Honorable Court held that it would be appropriate to give an opportunity to the Petitioner to set out his case. Accordingly, the Writ Petition is allowed, setting aside the Impugned Order of the Respondent and remanding it back for adjudication.
Author’s Comments
Although Section 169 of the CGST Act, 2017 specifies 14 different ways/modes of serving any decision, order, summons, notice, or other communication under the Act, care must be taken by the authorities not to simply pick and choose any option, rather the best possible option must be chosen by which it is mostly likely to reach the intended noticee. The notice or any other communication cannot be termed to be served until it has reached the intended noticee.
Violation of principles of natural justice is a failure of due process. This violation renders the process arbitrary and when executive action is arbitrary it violates articles 14, 19, and 21 of the Constitution. Reference may be made to the jurisprudence in the case of Menaka Gandhi v. UOI AIR 1978 SC597, which illuminates understanding about the ‘role’ of a valid notice in any proceeding, however obvious the conclusion and consequent treatment might be.
In the Author’s considered opinion, the validity of the service of SCN must have been disputed and must have allowed the revenue to discharge the burden of proof to show service of notice was done as per the law. Any failure to discharge this burden could have been fatal to the demand confirmed.
9. Whether CGST department can conduct the audit after the State Authority has conducted proceedings for the same period?
Yes, the Honorable Madras High Court in the case of P S K Engineering Construction & Co. v. Assistant Commissioner of GST & Central Excise [Writ Petition No. 13418 of 2024 dated June 10, 2024] held that there is no restriction in statute for Central GST authorities to initiate proceedings on different subject matter that it is already adjudicated by State Authorities. The Honorable Madras High Court noted that on perusal of the Impugned Notice, it is clear that such notice was issued while being fully aware of Section 6(2)(b) of the CGST Act. However, there is no restriction to initiate any proceedings on any other subject matter by the Central Tax Authority. Accordingly, the officer intended to conduct an audit under the provisions of section 65 of the CGST Act. The Honorable Court held that the subject matter of the audit was not the same subject matter as proceedings initiated by the State GST authorities, there is no restriction in the statute. Therefore, the writ petition was disposed of by leaving it open to the petitioner to respond to the Impugned Notice.
Author’s Comments
As per Section 6(2)(b) of the CGST Act, if a proper officer under the SGST Act or the UTGST Act has initiated any proceedings on a subject matter, no proceedings shall be initiated by the proper officer under the CGST Act on the same subject matter. In the considered opinion of the Author, there is no bar under the law that once a proceeding is initiated for a particular period by the CGST department, no proceedings can be issued by the SGST or UTGST authorities or vice versa for the same period. The only bar that the statute places is regarding proceedings based on the same cause-of-action and the same subject matter (in a few circumstances, even for the same cause-of-action, parallel proceedings are permissible). Section 6(2)(b) of the Act comes into play only when overlapping SCN is issued for the same subject matter for the same period.
Important to highlight that the cross-empowerment is allowed for proceedings carried out under section 67 of the Act only.
10. Whether demand Order can be passed without the issuance of SCN?
No, the Honorable Himachal Pradesh High Court in the case of M/s. Microtek Himachal Power Products (P.) Ltd. v. State of Himachal Pradesh [CWP No. 5562 of 2023 dated June 26, 2024] disposed the writ petition and directed that the erroneous order passed with the wrong description be treated as Show Cause Notice and be further adjudicated upon after the filing of reply to the deemed SCN.
The Honorable court noted that the order dated June 20, 2023 is issued in Form GST DRC-01 passed under Section 74(9) of the Central Goods and Services Act and it is contented that no prior SCN has been issued before the passing of the Impugned order mandated under Section 74(1) of the CGST Act and thereby the Impugned Order passed is in violation of principles of natural justice. The Honorable Court noted that the Revenue Department contended that there has been an error on the part of the Respondent officer, as the portion of the SCN has been mentioned as if there is the determination of tax, interest, and penalty.
The Honorable High Court accepted the submissions made by the Respondent and directed that the Impugned Order shall be treated as SCN issued to the Petitioner. Further, the Honorable High Court directed petitioner to file the reply to the deemed SCN within the period of four weeks.
Author’s Comments
Approaching a writ court under Article 226 or Article 32 of the Constitution of India must be a strategic and well-thought decision. If the Honorable Court remands back the case for the second round of adjudication and the notice is not vacated, then it turns out to be a fruitless exercise unable to fetch the desired relief.
It is not always that suffering an ex-parte order will be disastrous. Most of the times, ex parte orders without a reply by taxpayers, are not sustainable on facts and law. Moreover, every mistake of the Revenue cannot become ground to vacate notice and achieve the desired outcome.
In the instant case, the petitioner could have disputed the adverse order because “Due Process” of law demands, (i) pre-notice consultations in DRC-01A conducted and concluded; (ii) notice served; (iii) reply received; (iv) personal hearing conducted and concluded; and (v) adjudication completed by passing speaking order. Any departure from ‘due process’ in law causes prejudice to the taxpayer’s rights, remedies and safeguards. And this itself can be a ground to fetch the desired relief in appeal or judicial review. Passion to protect the interest of revenue does not authorize the by-passing of the law.
11. Whether Order can be passed on the same day of issuance of SCN without giving a reasonable opportunity for filing a reply?
No, the Honorable Madras High Court in the case of M/s. Pithamber Distributors v. Assistant Commissioner (ST), Chennai [W.P. No. 11337 of 2024 dated April 30, 2024] allowed the writ petition, thereby setting aside the order passed citing lack of reasonable opportunity to file a reply to SCN. The Honorable Court noted that both the SCN and the Impugned Order were issued on the same date, which violated the principles of natural justice by not providing a reasonable opportunity to respond before the Impugned Order was passed. The Honorable observed it is also contended that the said act violated the provision of Section 73(2) of the CGST Act, which requires the Department to grant sufficient time for filing of reply to the SCN. The Honorable Court held that no reasonable opportunity was provided when SCN was issued and Impugned Order was passed on the same day. Hence, the Impugned Order passed is liable to be set aside.
Author’s Comments
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 an adverse order is contemplated against the taxpayer.
Further, prior to issuance of SCN under section 73 of the Act, proceedings under section 73(5) by way of pre-notice consultations in Form GST DRC1A Part A under rule 142(1A) should have been initiated and reasonable time of, say, thirty (30) days allowed to submit reply in Form GST DRC1A Part B under rule 142(2A). Therefore, if one were to trace the time required from the decision to issue notice until passing Orders, a minimum of four (4) months would be required. If not, the ‘due process’ in law will be carried out in haste, causing prejudice to taxpayer’s rights, remedies, and safeguards. And this itself can become a ground in appeal or in judicial review and it would be too difficult for the Revenue to get out of this situation to save the demand.
12. Whether Bank Accounts can be reattached after the expiry of the period of 1 year under section 83 of the Act?
No, the Honorable Supreme Court in the case of RHC Global Exports Pvt. Ltd. & Ors. v. Union of India [SLP(C) No. 015992 – 015994 / 2023 dated September 18, 2024] allowed the application and directed ‘lifting’ and ‘defreezing’ of bank account attachment. The Honorable SC noted that it is contended by the petitioner that once the attachment expires by virtue of the operation of law in terms of sub-section (2) of Section 83 of the Act, there is no provision or jurisdiction vested with the Department to once again attach an account. The Honorable Court noted that although the attachment had lapsed, there has been a renewal of the attachment. Hence, directed to unfreeze the bank account that was previously frozen (blocked from access) and had been re-attached or frozen again after the original freeze had expired.
Author’s Comments
Section 83(2) of the CGST Act states that every such provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the order made under section 83(1) of the CGST Act. For re-attachment of the property after the expiry of the period of one year, twin conditions are required to be satisfied (i) initiation of fresh proceedings under Chapter XII, Chapter XIV or Chapter XV, and (ii) fresh opinion based on new ‘reasons to believe’ is to be made by the Commissioner to protect the interest of the Revenue. Passion to protect the interest of revenue does not authorize the by-passing of the law.
Further, as soon as provisional attachment is ordered, the taxpayer must prefer an application to Commissioner in form DRC-22A under Rule 159(5) to present (i) undertaking to discharge liability when a lawful demand is made (ii) ability of taxpayer to meet future obligations (ii) liability is not free from doubt about the underlying interpretation of facts or of law (iv) all other returns and compliances up to date by taxpayer (v) no other delinquency detected and (vi) no risk of light and any perception to be redressed by offering surety or suitable security. When these factors are presented, it would be herculean task to reject application as the decision to reject is subject to ‘judicial review’ of the reasons for dissatisfaction with explanation offered by taxpayer.
13. Whether confiscation proceedings can be initiated under Section 130 for allegation regarding excess stock?
No, the Honorable Allahabad High Court in the case of Shree Om Steels v. Additional Commissioner and Ors. [Writ Tax No. 1007 of 2022 dated July 19, 2024], allowed the writ petition and held that confiscation proceedings under Section 130 of the Central Goods and Services Tax Act cannot be initiated for excess stock solely based on inspection under section 67 of the Act, as the tax demand must be quantified under Section 73 or 74 of the CGST Act. The Honorable High Court observed that the petitioner has contended that only eye measurement was done and based on this, allegation of excess stock is pressed by issuing notice under section 130 read with section 122 pursuant to proceedings carried out under section 67. Relying upon the judgment of the Maa Mahamaya Alloys (P.) Ltd. V. State of U.P. [Writ Tax No. 31/2021 dated March 23, 2023], the Honorable Court opined that even if excess stock is found, proceedings under Section 130 of the CGST Act cannot be initiated. The Honorable Court held that the writ petition is allowed and the Impugned Order is quashed as it is unsustainable in the eyes of the law.
Author’s Comments
“Due Process” of law demands, the exercise of specific powers conferred to the Proper officer within specific boundaries of the law. Passion to protect the interest of revenue does not authorize the bypassing of the law.
Section 35(6) of the CGST Act, 2017 covers the situation of shortage of stock. In the considered opinion of the Author, there is no provision under the law to cover the situation of excess stock found. In case of excess stock is found, Section 130 of the CGST Act cannot be invoked as decided in this case. Further, there is no cause-of-action to invoke section 74 of the CGST Act. In case of Excess stock, it can be alleged that goods are received without invoice, in such a situation; action can be taken against the supplier only for contravention of the provisions of this law and not against the recipient. Necessary ingredients to establish levy are not attracted in case of excess stock found, to demand tax under section 74 of the Act.
14. Whether an assessment order can be passed against a deceased person?
No, the Honorable Madras High Court in the case of Unnikrishnan R. v. Union of India [W.P No. 12464 of 2024 dated June 12, 2024], held that the order passed against the dead person is non-est in law when the business of the deceased person is not being operated by the legal heirs of the deceased person. The Honorable Madras High Court noted that the SCN was legally invalid since it was directed at a deceased person. Also, the Petitioner being a legal heir has not continued the business and therefore could not be liable for the tax demand. However, if the Petitioner continues the business, tax demand could be raised and recovered under Section 93 of the CGST Act. The Honorable Court held that the Impugned Order is set aside, and directed the Respondent to issue common notice to the Petitioner representing the interest of the other legal heirs/legal representatives of the deceased dealer.
Author’s Comments
All the proceedings against the dead person are non-est in the eyes of the law. 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 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 must be accepted on account of such person by any another person.
The Apex Court in the case of CIT v. Scindia Steam Navigation Co. Ltd.1961 AIR SC 1633, 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.”
Further, in the considered opinion of the Author, no proceedings can be initiated against the legal heirs of the deceased as there exists no provisions under the GST law that mandates the initiation of such proceedings against the legal heirs of the deceased person. Contrastingly, in the Income Tax Act, 1961 Section 159(2)(b) empowers Revenue to initiate proceedings against the legal heirs of the deceased person. Section 93 of the CGST Act, 2017 covers the situation where liability is determined against the person and such person dies thereafter. Where no liability is determined by following the ‘due process’ of law, there cannot be any proceedings against the legal heirs of the deceased person.
15. Whether Penalty can be imposed for not accompanying E-Tax Invoice?
No, the Honorable Allahabad High Court in the case of Nancy Trading Company v. State of UP [Writ Tax No. 892 of 2023 dated July 15, 2024], quashed the detention and penalty order under Section 129 of the Central Goods and Services Tax Act, 2017 on the ground that non-generation of the e-tax invoice was considered as bona fide human error and there was no intent to evade tax, and all other required documents were in order. The Honorable High Court observed that while transiting goods all documents as required under Rule 138A of the CGST Rules were accompanying goods. Only a technical error had been committed by the Petitioner for not generating E-tax invoice before the movement of goods. There was no discrepancy with regard to the quality and quantity of goods as mentioned in the tax invoice, the e-way bill as well as GRs accompanying goods. The error committed by not generating an e-tax invoice before the movement of goods was a human error.
The Honorable Court further noted that prior to August 1, 2022, dealers who had annual turnover of more than Rs. 20 crores was required to issue e-way bills and said limit had been reduced with effect from August 1, 2022, to Rs. 10 crores. The Honorable Court held there was a bona fide mistake on the part of the Petitioner for not generating an e-tax invoice. However, in the absence of any specific finding with regard to mensrea for evasion of tax, proceedings under section 129(3) of the CGST Act could not be initiated. Accordingly, the Impugned Orders imposing penalty were to be set aside.
Author’s Comments
As per Rule 48(5), every invoice issued by a person to whom sub-rule (4) of Rule 48 applies in any manner other than the manner specified in the said sub-rule is not treated as an “invoice”. In the instant case, Revenue ought to have proceeded under section 130 to confiscate the goods as without an E-tax invoice as required, there exists no invoice on record. Supplying goods without the cover of the invoice has all the ingredients to bring home allegations leveled for confiscation under section 130. When there is no discussion regarding mensrea for evasion of tax in the SCN, there arises no occasion to confirm the demand under section 129. Without evasion of tax allegation, proceedings under section 129 remains hollow and allegations self-defeating. In such a scenario, Circular No.64/38/2018 dated 14.09.2018 comes into play and a general penalty under section 125 of the GST Act can be imposed in case of minor breaches or discrepancies.
16. Whether omission to mention the Personal Hearing date in the SCN violates the principle of natural justice?
Yes, the Honorable Orissa High Court in the case of Alfa Cityinfra (P.) Ltd. v. Chief Commissioner of CT and GST, Odisha [Writ Petition (Civil) No. 16864 of 2024 dated July 23, 2024] held that any defect in the Show Cause Notice would cause a violation of principles of natural justice. The Honorable Orissa High Court opined that the Petitioner was relying on directions given in the Impugned Notice regarding the time to file a reply and the date and time of the personal hearing. However, only the date to reply to show cause notice was given. The date and place for the personal hearing were not mentioned. The Honorable Court deemed the Impugned SCN invalid and therefore, quashed it. Furthermore, the Court granted the Petitioner a two-week period to file a response and assured that a personal hearing would be provided. Consequently, the writ petition was allowed.
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.
In the Author’s opinion, there is no requirement under the law to provide details of personal hearing in SCN, although, an opportunity of being heard must be given before passing an adverse order.
17. Whether registration can be cancelled without affording an opportunity of being heard?
No, the Honorable Delhi High Court in the case of M/s Abhishek Appliance (P.) Ltd. v. Assistant Commissioner CGST [Writ Petition (Civil) No. 8920 of 2024 dated July 03, 2024] ruled that a Petitioner should be given an opportunity to respond to the allegations and submit the evidence regarding the place of business. The Honorable Delhi High Court observed that the Impugned Order indicates that the Petitioner’s GST Registration was canceled for the sole reason that the Petitioner was found non-existent at its principal place of business. It is also apparent that the Petitioner has sought to change its principal place of business more than once. The Honorable Court held that the Petitioner to be permitted to file a response to the allegation regarding the non-existence at its principal place of business as it will be open for the Petitioner to set out the complete details as to when it has ceased to carry on its business from its principal place of business and also to furnish sufficient evidence as to the place from where it continued to carry on its business, within a period of ten days from the date of order.
Author’s Comments
Cancellation of registration has far reaching consequences and given that legislature has specified five (5) explicit delinquencies under section 29(2), there should be no violation of principles of natural justice by canceling registration without affording an opportunity of being heard.
Section 155 of the CGST Act places the burden to prove “eligibility to credit” only on the taxpayer. For everything else, the burden rests on the Revenue making the allegation and not on the Registered Person-suffering the allegation. The Burden of proof is not discharged by making an allegation. The Burden of proof is discharged only when a mountain of evidence commensurate with the nature of the allegation made is produced and appended to the notice. Allegations of severe wrong-doing require proportionately substantial evidence. Evidence is not extracts of books of accounts or statements taken on-oath or letters received from another department. Evidence is that which proves something. Solely the fact that the taxpayer was not found at the principal place of business during the departmental visit, without any corroborating evidence or material on record, is the allegation deeply rooted in incomplete investigation based on only surmise, conjecture and assumptions that is unable to bring home the allegations leveled against the taxpayer.
18. Whether supply of Vouchers is subject to GST?
Yes, the Authority for Advance Ruling, Uttar Pradesh, in the case of M/s Payline Technology Private Limited, In Re [Ruling No. UP ADRG 43 of 2024 dated February 20, 2024] ruled that the Supply of Vouchers by the Applicant is taxable as a supply of goods and the time of supply shall be decided as per Section 12 (2) of the Central Goods and Services Tax Act, 2017 and the Uttar Pradesh Goods and Service Tax Act,2017and will be taxed at the rate of 9 % CGST and 9% UPGST as per residual entry no. 453 of Third Schedule of Notification No. 01/2017-Central Tax (Rate) dated June 28, 2017. Further, the value of supply shall be decided as per sub-sections (1), (2), and (3) of Section 15 of the CGST Act.
The AAR, Uttar Pradesh observed that the Applicant purchases three types of vouchers: (I) Gift vouchers, (II) Vouchers, and (III) Pre-paid vouchers. These vouchers are purchased by the Applicant from entities on payment of a consideration and the vouchers are sold to their clients for a consideration. The Applicant is neither the issuing person nor the actual user of these vouchers. Further noted that vouchers cannot be treated as money as defined under Section 2(75) of the CGST Act. Money has been excluded from the terms “goods” as well as “services”, which is primarily used to settle an obligation or exchange with Indian legal tender of another denomination. However, these vouchers are not used by the Applicant to settle an obligation and hence cannot be considered as “money”. The Applicant is merely a trader of these vouchers, which are not used to settle an obligation. These vouchers could be termed as money only when it is redeemed by the beneficiary at the time of purchase of goods and/or services. The settlement of the obligation occurs at the time when the ultimate beneficiary uses the voucher to purchase goods and/or services. The Honorable Court opined that the vouchers purchased by the Applicant are considered movable property and thus qualify as goods. The vouchers have both value and ownership, which is transferred from the issuer to the Applicant and then to the ultimate beneficiary who redeems them. There is no element of service between the issuer of the vouchers and the Applicant, nor between the Applicant and the purchaser. The transaction is purely for the transfer of goods (vouchers). Further as per Sl. No. 6 of Schedule III of the CGST Act, actionable claims (except lottery, betting, and gambling) are neither considered goods nor services. The trading of vouchers by the Applicant is considered the supply of goods, not services, even though actionable claims are generally excluded.
Author’s Comments
This is the classic example of taxpayer’s strategy gone wrong. The Advance Ruling authority is not a quasi-judicial authority and for this reason, pronouncements of Advance ruling authorities are not binding precedent. Except to Applicant-taxpayer, AAR & AAAR’s have no precedent value in ‘’law of precedents’.
When it is accepted by the AAR that “the Applicant is neither the issuing person nor the actual user of these vouchers” then entire transaction is only ‘transactions in money’ which is excluded from the definition of “goods” in section 2(52) and from the definition of “services” in section 2(102) and do not attract the incidence of tax either under section 5(1) of Integrated GST Act or 9(1) of Central GST Act.
If the agreement between parties is not claimed to be fictitious or bogus, then Revenue cannot rewrite the contract of transaction in ‘money’ to bring incidence of tax as supply of ‘goods’.
It has been decided in the decision of CIT v. Motor and General Stores (P) Ltd. AIR 1968 SC 200 where the Apex Court depreciated any tendency of rewrite the contract presented by the Parties and to limit treatment applicable to the terms agreed between them.
19. Whether penalty under Section 129 can be imposed for a discrepancy relating to the address mentioned in the E-way bill and tax invoice?
No, the Honorable Madras High Court in the case of M/s. Jindal Pipes Limited v. Deputy State Tax Officer [W.P. (MD) No. 17211 of 2024 dated July 25, 2024] held that the penalty under Section 129 of the Central Goods and Services Tax Act cannot be levied when a discrepancy relates to stating of different location address of same recipient. The Honorable Madras High Court noted that the discrepancy relating to the Pin code in the invoice and E-Way bill is a minor violation and thereby, a penalty should not be imposed, taking into consideration the contents of para no. 5(b) of Circular No. 64/38/2018-GST dated September 14, 2018 wherein it is stated that proceedings under Section 129 of the CGST Act, should not be initiated in the case where there is an error in pin code subject to the condition that the address is correct. The Honorable Court further noted that the discrepancy relating to the address in the invoice is on account of the difference in the Head Office and the actual place from which the delivery was made as the petitioner has a separate office from where the Tax Invoices are raised, whereas the dispatching is done from the godown where the pipes manufactured by the Petitioner. The Honorable Court opined that the philosophy under the respective GST enactments is not to levy unjust tax and burden on the petitioner, who is otherwise regular in paying tax and complies with the law, and held that the Impugned Order is liable to be set aside.
Author’s Comments
As per Circular No. 64/38/2018 dated 14.09.2018, a general penalty under section 125 of the GST Act must be imposed in case of minor breaches or discrepancies.
In the Author’s considered opinion, all the discrepancies in relation to the movement of goods except the fatal errors like not accounting for transaction of supply in the books of accounts are to be treated as minor discrepancies and no penalty u/s 129 of the GST Act can be imposed.
As per Section 129 and Rule 138A of the GST Act, until and unless mensrea exists and is proved, all the errors and omissions have to be termed as non-fatal errors and no penalty under section 129 can be imposed.
A Similar judgment was delivered by the Honorable Allahabad High Court in the case of M/s. Varun Beverages Ltd. v. State of Uttar Pradesh [Writ Tax No. 129 of 2024 dated February 07, 2024], wherein the court set aside the orders imposing penalty under Section 129(3) of the UPGST Act on the reason that the defect was of a technical nature only and without any intention to evade tax.
20. Whether delay in filing an appeal due to the accountant’s illness can be condoned?
Yes, the Honorable Madras High Court in the case of Chandhrasekaran Anand v. Deputy Commissioner (ST) [Writ Petition No. 13487 of 2024 dated June 11, 2024], allowed the writ petition filed against the order dismissing the appeal filed beyond the condonable period due to Accountant’s illness and thereby, directed the Appellant to consider the appeal filed on merits without going into the question of limitation. The Honorable Court noted that the petitioner has placed on the record evidence that an accountant engaged to handle GST matters was hospitalized during the relevant period evident from the discharge summary submitted. There is a delay of 25 days beyond the condonable period. In the facts and circumstances outlined above, the interest of justice warrants that the petitioner’s appeal be received and disposed of on merits.
Author’s Comments
If the appeal is filed after the period of condonation permitted in Section 107(4) (3+1 months), the Appellate authority does not have statutory authority to condone the delay, not even if the reasons are ample and deserve to be entertained. The appeal must be dismissed for being fatally belated because the Legislature has allowed Appellate authority this much authority and not more.
The Honorable Supreme Court has decided in Singh Enterprises v. CCE 2008 (221) ELT 163 that where the period of limitation is specifically provided in the statute, admitting appeals albeit for ‘sufficient cause’ would render statutory provisions impossible. And Appellate Authority thus being the denuded of authority to condone (due to lapse of maximum time permitted) is barred from examining the cause and condone the delays even for a “good and sufficient” reason.
The Honorable Allahabad High Court in the case of M/s. Yadav Steels v. Additional Commissioner and Anr. [Writ Tax No. 975 of 2023 dated February 15, 2024] and in the case of M/s. Abhishek Trading Corporation v. Commissioner (Appeals) and Anr. [Writ Tax No. 1394 of 2023 dated January 19, 2024] has decided that the Central Goods and Services Tax Act, 2017 is a special statute and a self-contained code in itself and Section 5 of the Limitation Act is not applicable to give power to First Appellate authority to condone the delay beyond statutory time limit allowed.
21. Whether an adverse order be passed without reasonable opportunity for hearing?
No, the Honorable Delhi High Court passed a common order in the case of Mohinder Kumar v. Pr. Commissioner of Delhi GST and connected matters [W.P. (C) 10869/2024 & Connected petitions dated August 30, 2024] and held that an Adjudicating Authority shall not pass any adverse order against any of the Petitioners without affording them a reasonable opportunity to be heard. The Honorable Delhi High Court noted that some of the officers had during the last three days of limitation passed a large number of such orders. Illustratively, one of the officers had passed 526 such orders (246 orders on 29.12.2023; 203 orders on 30.12.2023 and 77 orders on 31.12.2023). Further, one of the common features of the impugned orders is that they merely reproduce the tabular statement of the demand proposed in the respective SCN and affirm the same by rejecting the response of the taxpayer as unsatisfactory. The Honorable Court observed that the Counsel for Respondents obtained written instructions that (i) remanded matters shall be disposed of within six months by passing reasoned and speaking order and (ii) after remand back, show cause notices will be reviewed and if no infractions are found, the same shall be dropped and a communication in that behalf shall be sent to concerned dealer /assesse. The Honorable Court set aside the orders impugned in these petitions and remanded the matters for consideration afresh by the adjudicating authority. Further held that all rights and contentions of the Petitioners are reserved, and the disposal of the present petitions would not preclude them from raising such contentions as advised including those that may have been raised in the present petitions.
Author’s Comments
Whether to celebrate such an order that remands back the case to the Proper officer for another round of adjudication (re-adjudication) is a matter of choice and strategy. In the Author’s considered opinion, such orders are unable to fetch the desired relief because SCN is not vacated; only a short-term relief (at a cost) is provided.
In the Author’s considered opinion, the petitioners could have chosen a different line of defense to vacate the notices. Carrying such adverse orders to the First Appellate Authority could have been a strategic decision because non-speaking orders not only violate principles of fairness in adjudication but also impose an enormous burden on the Appellate Authority to enter into ‘fact finding’. The adverse order is at ‘large’ before the Appellate Authority and anything short of well-reasoned and speaking order; FAA is in no position to reject the pleadings by the appellants.
22. Whether the petitioner is required to be afforded another opportunity to explain the discrepancy post issuance of the demand order?
Yes, the Honorable Madras High Court in the case of Tvl. Tripathi Packaging v. Deputy State Tax Officer, Madurai [W.P. (MD) No. 11734 of 2024 dated June 06, 2024], granted the petitioner a fresh opportunity to file a reply to the Show Cause Notice in case where the petitioner could not provide a proper explanation to discrepancy raised as the petitioner was not aware of the proceedings initiated subject to the condition that the petitioner deposits 10% of the disputed tax amount confirmed in the adjudication order. The Honorable Madras High Court opined that the Petitioner should be given an adequate opportunity to reply to the SCN in DRC-01 and submit supporting documents regarding the erroneous claim of ITC. The Honorable Court held that the Impugned Order was quashed, and the Respondent was directed to issue a fresh order after the Petitioner deposited 10% of the disputed tax amount, thereby disposing of the writ petition.
Author’s Comments
The Writ Courts generally provide moulding relief to the petitioners and this case is one such example. Whether to celebrate such an order that remands back the case to the Proper officer for another round of adjudication (re-adjudication) is a matter of choice and strategy. In the Author’s considered opinion, such orders are unable to fetch the desired relief because SCN is not vacated; only a short-term relief and that too at a cost is provided.
Alternatively, the petitioner could have disputed the liability and could have allowed the revenue to prove their case. For claiming ITC in Table 4A(3) instead of Table 4A(5), there arises no cause-of-action to demand a reversal of credit. And if output tax is demanded based on RCM liability claimed as ITC in Table 4A(3), then ITC is accepted to be genuine and without the taxing ingredients and stating in the SCN (i) the nature of supply (ii) the taxability of the same (iii) the HSN code (iv) the time of supply, and (v) the place of supply, any demand for output tax is arbitrary and illegal.
There are many rights, remedies, and safeguards available within this law to defend any SCN.
23. Whether the petitioner can file an appeal after the expiry of the statutory time limit allowed?
Yes, the Honorable Calcutta High Court in the case of Acme Paints and Resin (P.) Ltd. v. Deputy Commissioner of Revenue, State Tax [WPA No. 12250 of 2024 date July 04, 2024] held that since the Petitioner had deposited a pre-deposit amount and there was no lack of bona fide on the part of the Petitioner. The Honorable Calcutta High Court noted that the Petitioner had filed an appeal against the order dated August 14, 2023, under Section 73(9) of the CGST Act. Simultaneously, with the filing of the appeal, the Petitioner had also made a pre-deposit of Rs.1,76,141/-. It cannot be said that there is any lack of bona fide on the part of the Petitioner. The Petitioner claims that by reasons of oversight on the part of its accountant, the appeal could not be filed on time. The aforesaid explanation though, does not appear to be adequate, however, for the end of justice and taking into consideration the fact that the Petitioner may have merits in the appeal and the Petitioner having deposited the pre-deposit amount. Hence, the Impugned Order was set aside, subject to the Petitioner’s making payment of the cost of Rs.25,000/- with the concerned GST authorities.
Author’s Comments
If the appeal is filed after the period of condonation permitted in Section 107(4) (3+1 months), the Appellate authority does not have statutory authority to condone the delay, not even if the reasons are ample and deserve to be entertained. The appeal must be dismissed for being fatally belated because the Legislature has allowed Appellate authority this much authority and not more.
The Honorable Supreme Court has decided in Singh Enterprises v. CCE 2008 (221) ELT 163 that where the period of limitation is specifically provided in the statute, admitting appeals albeit for ‘sufficient cause’ would render statutory provisions impossible. And Appellate Authority thus being the denuded of authority to condone (due to lapse of maximum time permitted) is barred from examining the cause and condone the delays even for a “good and sufficient” reason.
The Honorable Allahabad High Court in the case of M/s. Yadav Steels v. Additional Commissioner and Anr. [Writ Tax No. 975 of 2023 dated February 15, 2024] and in the case of M/s. Abhishek Trading Corporation v. Commissioner (Appeals) and Anr. [Writ Tax No. 1394 of 2023 dated January 19, 2024] has decided that the Central Goods and Services Tax Act, 2017 is a special statute and a self-contained code in itself and Section 5 of the Limitation Act is not applicable to give power to First Appellate authority to condone the delay beyond statutory time limit allowed.
24. Whether the transporter is required to carry original copy of tax invoice during the transportation of goods?
No, the Honorable Karnataka High Court in the case of Kolvekar Logistics v. Joint Commissioner of Commercial taxes (Appeals), Hubbali [Writ Petition No. 100347 of 2022 dated April 22, 2024], quashed the orders and held that in the light of the Rule 138-A of the State Goods and Services Tax Act and Section 68 of the Central Goods and Services Tax Act and Rule 48 of the Central Goods and Services Rules, 2017 and as per Rule 48(1)(b) of the CGST, it is only the duplicate copy which is meant for transporter and the triplicate copy is meant for supplier as per clause (c). Therefore, held that the transporter is not required to carry the original tax invoice, but the law mandates him to carry the duplicate copy. The Honorable Court noted that the Petitioner was penalized, and faced an additional tax demand because the original tax invoice was not carried by the transporter, only a xerox copy was presented. The Honorable Karnataka High Court relying upon the judgement of Divya Jyothi Petrochemicals Co. v. Joint Commissioner of Commercial Taxes (Appeals) [Writ Petition No. 100378 of 2022 dated February 28, 2024], wherein it was held that rule 48 of the CGST Rules, deals with the manner of issuing the Invoice. Accordingly, the Invoice shall be prepared in triplicate in case of supply of goods. The original copy marked as such is meant for the recipient or the purchaser and therefore, the same will not be carried by the transporter. As per rule 48(1)(b) of the CGST Act, it is only the duplicate copy is meant for the transporter and the triplicate copy is for the supplier as per clause (c) of rule 48(1) of the CGST Act. The Honorable Court held that the transporter is not required to carry the original tax invoice, but as per rule 48(1)(b) of the CGST Act, transporters are mandatorily required to carry the duplicate copy. Thus, the court quashed the Impugned Orders and directed the Respondent to refund the tax, and the penalty amounts paid by the Petitioner within three months.
Author’s Comment
“Due Process” of law demands, the exercise of specific powers conferred to the Proper officer within specific boundaries of the law. Passion to protect the interest of revenue does not authorize by-passing of the law. 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.
Intercepting officers fuelled by their past experiences are lured into passing such perverse orders. But, First Appellate authorities are expected to bear the ‘Creatures of Statute’ effect and justify their Quasi-judicial role to overcome trust deficiencies with the taxpayers and to quash such orders of over-passionate adjudicating authorities.
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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 [email protected])
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