Recent Supreme Court Judgments on GST: A Comprehensive Overview

The Supreme Court of India has been delivering judgments on various petitions and appeals related to Goods and Services Tax (GST). These rulings have significant implications for GST administration, field formations, taxpayers, and professionals. This article provides a concise overview of some of the recent Supreme Court judgments, ensuring wider access for taxpayers and professionals seeking up-to-date information.

Bail granted to applicant as investigation was complete

• The petitioner sought bail in the proceedings initiated under Section 132 before the High Court in relation to the allegation with regard to the transportation of unmanufactured tobacco.
• It was alleged that such procurement of unmanufactured tobacco was for clandestine manufacture and supply of zarda without payment of leviable duties and taxes. However, the High Court of Rajasthan dismissed the application. Therefore, the petitioner filed special leave petition before the Supreme Court.
• The Honorable Supreme Court held that the petitioner was arrested on 21.07.2022 and while in custody, the investigation had been completed. It was also held that the bail should be granted as there can be no apprehension of tampering, intimidating or influencing in view of the fact that evidence to be tendered by the department would essentially be documentary and electronic.

 [Source: In Ratnambar Kaushik v. Union of India (2022) 12 TMI 263; (2022) 145 taxmann.com 296 (Supreme Court)] 

Pre Show Cause Notice Consultation

• Pre-show cause consultation notice not issued but high court directed show cause notice to be considered was communication for pre-SCN consultation.
• Assessee provided with sufficient opportunity to satisfy tax authorities that there was no case for issuance of SCN.
• Thus, principles of natural justice stood substantially complied with.
• Assessee was granted liberty to raise all legal grounds before assessing officer to be decided on merits. 

[Source: Yaduka Agrotech Pvt. Ltd. v. Commissioner of CGST (2022) 66 GSTL 385; (2022) 12 TMI 262; (2022) 145 taxmann.com 155 (Supreme Court)] 

Modification in Bail Order

• An appeal was preferred by Union of India against Allahabad High Court Order dated 15.09.2021 in Hardeep Singh Banga v. State of Uttar Pradesh (2022) 65 GSTL 447; (2021) 9 TMI 1005 (Allahabad).
• In High Court Order, anticipatory bail was granted till the inquiry was to be concluded by the Proper Officer of GST Department under Section 70 (1) of the GST Act, on their execution of a personal bond of Rs. 5 crore and Indemnity bond to the tune of Rs. 25 crore on behalf of applicants before the Proper Officer concerned on certain conditions.
• It was held that the personal liberty guaranteed under Article 21 of the Constitution of India is a fundamental right and in every case, arrest is not necessary.
• Where the implication of a person is for a non-bailable offence, he can apply for anticipatory bail under Section 438 Cr.PC. If the applicants cooperate with the inquiry, there is no requirement of their arrest.
• For one of the aged 92 years respondent, it was directed that keeping in view his age, he shall be permitted to participate in inquiry through online mode as already directed by the High Court.

[Source: Union of India v. Hardeep Singh Banga (2022) 65 GSTL 385; (2022) 9 TMI 1206; (2022) 142 taxmann.com 531 (Supreme Court)]

Maintainability of Writ when alternate Remedy is available

• The appellant preferred a writ appeal before Apex Court by way of Special leave petition against dismissal of writ in BM Construction, Coochbehar v. Additional Commissioner of CGST- C.O. No. 72 of 2021 decided on 14.12.2021 by Calcutta High Court.
• In view of the fact that appellate remedy was available under section 107 of CGST Act, 2017, the apex court held that the writ jurisdiction was not maintainable against the High Court order and that High Court was right in not entertaining the writ petition.
• The appeal was therefore, dismissed. 

[Source: B.M. Construction v. Additional Commissioner of CGST & Central Excise (2022) 65 GSTL 129; (2022) 142 taxmann.com 555 (Supreme Court)]

Exemption from IGST / Cess under Advance Authorization Scheme

• Exemption from levy of IGST under section 3 (7) and compensation cess leviable under section 3 (9) of Customs Tariff Act, 1975 were subject to the conditions that the export obligation shall be fulfilled by physical exports only and shall also be subject to ‘pre-import condition’.
• Mandatory fulfilment of ‘Pre-import condition’ incorporated in Foreign Trade Policy of 2015-2020 and Handbook of Procedures 2015-2020 through Notification No. 33/2015-20 and Notification No. 79/2015-Customs, both dated 13-10-2017 for availing exemption from IGST and GST compensation cess, can not be characterized as arbitrary or unreasonable.
• The introduction of the ‘pre-import condition’ may have resulted in hardship to the exporters, because even whilst they fulfilled the physical export criteria, they could not continue with their former business practices of importing inputs, after applying for Advance Authorization (AA), to fulfil their overseas contractual obligations.
• Inconvenience or hardship is not a ground for the court to interpret the plain language of the statute differently, to give relief.
• The exemption from the requirement of pre import conditions continues in respect of the old levies, which are, even as on date, not part of the GST regime. That clearly sets them apart from the new levies, the payment of which is insisted (after which refund can be sought) as a part of a unified system of levy, assessment, collection, payment, and refund.
• When reform by way of new legislation is introduced, the doctrine of classification cannot be applied strictly, and that some allowance for experimentation, to observe the effect of the law, is available to the executive or legislature.
• There is no constitutional compulsion that whilst framing a new law, or policies under a new legislation – particularly when an entirely different set of fiscal norms are created, overhauling the taxation structure, concessions hitherto granted or given should necessarily be continued in the same fashion as they were in the past. 

[Source: Union of India v. Cosmo Films Ltd. (2023) 97 GST 544; (2023) 5 TMI 42; (2023) 149 taxmann.com 473 (SC)]

GST on one-time lease premium

• Levy of GST on one-time lease premium towards letting of plots of land on lease basis (long term lease) is constitutionally valid (Bombay High Court Judgment upheld).
• The question of exemption granted by Notification No. 12 of 2017-CT (Rate) dated 28.06.2017 w.e.f., 01.07.2017 has not been gone into and kept open.
• Scope and ambit of the expression in Clause 2 (a) of Schedule-II “licence to occupy land is a supply of services” of the Central Goods and Services Act, 2017 is also not examined.
• The special leave petition was dismissed and high court order not interfered with. 

[Source: Builders Association of Navi Mumbai v. Union of India and Others (2023) 6 TMI 637; (2023) 109 GSTR 463 (Supreme Court)]

Anticipatory Bail vis-à-vis Revenue Interest

• Uttarakhand High Court rejected the anticipatory bail in connection with summons issued to appellant.
• It was submitted that that since Section 132 (i) (iii) prescribes punishment for a term which may be extend to one year and the entire case is based on documentary evidence and other electronic evidence which are available on record, thus the appellant is not required for any custodial interrogation.
• The respondents objected on the ground to protect the interest of revenue.
• The Apex Court allowed appeal and held that appellant is entitled to be granted anticipatory bail without imposing any condition as suggested by Learned Additional Solicitor General. In such circumstances, it is provided that in case the appellant is arrested, he shall be liable to be released forthwith, subject to such terms and conditions which the Trial Court/Investigating agency may deem fit and proper to impose.
• The Apex Court relied upon Subhash Chouhan v. Union of India (2023) 147 taxmann.com 211 (Supreme Court); Criminal Appeal No. 523/2023, Anatbhai Ashokbhai Shah v. State of Gujarat & Ors. vide judgment and order dated 17th February, 2023. 

[Source: Rajesh Kumar Dudani v. State of Uttarakhand (2023) 3 TMI 682; (2023) 148 taxmann.com 88 (Supreme Court)]

Taxation of Goods & Services

• Same activity can be taxed as ‘goods’ and ‘services’ provided the underlying contract is indivisible and on aspect of services, there may be levy of service tax.
• There is distinction between sale of goods and contract of service.
• What is relevant is intention of contracting parties and whether contracting parties intend to transfer both, goods and services, either separately on in indivisible manner or in on composite manner. 

[Source: CC, CE & ST v. Suzlon Energy Ltd. (2023) 73 GSTL 298; (2023) 4 TMI 409 (Supreme Court)] 

Update on Safari Retreats Case 

• Apex court has granted on 18.04.2023 Special Leave Petition (SLP) against judgment in Safari Retreats Pvt. Ltd. v. Chief Commissioner of GST (2019) 25 GSTL 341; (2019) 74 GST 500; (2019) 5 TMI 1278; (2019) 105 taxmann.com 324; (Orissa)wherein High Court had read down Section 17(5)(d) of CGST Act, 2017 to give benefit of ITC to taxpayer on goods and services consumed in construction of shopping mall for against GST payable on rentals received from tenants in shopping mall.
• Apex Court shall decide this issue of constitutional validity of section 17(5)(d) of CGST Act, 2017.

[Source: Chief Commissioner of Central Goods and Services Tax v. Safari Retreats (P.) Ltd. (2023) 97 GST 799; (2023) 149 taxmann.com 319 (Supreme Court)]

Conclusion: These recent Supreme Court judgments on GST have far-reaching implications for the administration of GST, field formations, and taxpayers. By keeping abreast of these rulings, taxpayers and professionals can navigate the GST landscape more effectively.