Recent Supreme Court Pronouncements In GST

During last few weeks, Supreme Court of India has pronounced few judgments in relation to GST law and its implementation. There pronouncements have far reaching impact and bearing on GST administration and powers of field formations, besides directly impacting the taxpayer.

 SCN for recovery of refund granted by duly adjudicated order

• The Apex Court has held that a show cause notice under section 74(1) of CGST Act, 2017 can be issued against a refund order granted as per duly adjudicated order.
• The petitioner in SLP before Supreme Court and High Court contended that it was not open to the Revenue Authorities to reopen refund granted pursuant to an adjudication on refund application but it can only file an appeal.
• High Court held that the provisions of section 74 does not make any distinction between refund orders passed with or without adjudication and that the said provision does not provide that an order of refund after adjudication cannot be reopened.
• Supreme Court declined to interfere and held that petitioner may urge before the Authorities that the show cause notice travels beyond the reasons stipulated in section 74 of the CGST Act, 2017.

[Source: In Ganesh Ores (P.) Ltd. v. State of Orissa (2022) 59 GSTL 257;
(2022) 4 TMI 755; (2022) 137 taxmann.com 164 (SC) Order dated 28.03.2022]

Legislative Powers v. GST Council’s Powers

Supreme court of India has held as follows in land mark judgment dated 18.05.2022 in Union of India v. Mohit Minerals :

• GST Council’s recommendations are only recommendatory and are not binding on centre and states.
• Both centre and states can legislate on GST
• According to article 246A of Constitution of India, both Parliament and state legislature have simultaneous or equal power to legislate on matters of taxation.
• Constitution does not envisage a repugnancy provisions and GST Council must work in a harmonious manner to achieve a workable solution
• Indian federalism is a dialogue in which state and centre always engages in a dialogue.
• GST Council is an area of political contestations. It impacts federalism. Article 246 treats states and centre as equal. Article 279 provides that state and centre cannot act independent of each other. This also points towards competitive federalism.
• GST is not leviable on ocean freight
• Union SLP against Gujarat High Court order which stuck-down levy of GST on dismissed and SLP decided in favour of assessee.

[Source: In Union of India v. Mohit Minerals Pvt. Ltd. (2022) 5 TMI 968; (2022) 138 taxmann.com 33; (2022) TIOL 49-SC-GST-LB (Supreme Court) Judgment dated 19.05.2022]

Use of DIN by States

• Supreme Court has directed the Union of India and GST Council to issue an advisory to all the States for implementation of Document Identification Number (DIN) in respect of all the notices and communications being sent or issued by State GST offices.
• It has also directed that use of DIN in all GST related documents be implemented at the earliest possible.
• Electronic generation DIN is already in use by the CGST officers which provides authenticity to the documents / communications issued by the Department.
• States like Kerala and Karnataka already use DIN.

[Source: Pradeep Goyal v. Union of India & Others
WP (Civil) No. 320/2022; Order dated 18.07.2022] 

CBIC directed to open portal for two months for transitional credit

• Supreme Court has directed CBIC to open GST portal for two months for claiming transitional credit under GST law for taxpayers.
• Availing transitional credit via TRAN-1 and TRAN-2 form shall open from 1.9.2022 to 31.10.2022 for two months.
• Any aggrieved registered assessee can file the relevant form or revise the already filed form irrespective of whether the taxpayer has filed writ petition before the High Court or whether the case of the taxpayer has been decided by Information Technology Grievance Redressal Committee (ITGRC).
• GSTN has to ensure that there are no technical glitch during the said time.
• The concerned officers are given 90 days thereafter to verify the veracity of the claim/transitional credit and pass appropriate orders thereon on merits after granting appropriate reasonable opportunity to the parties concerned.
• Thereafter, the allowed Transitional credit is to be reflected in the Electronic Credit Ledger.

 [Source: Union of India & Another v. Filco Trade Centre Pvt. Ltd. & Another
(2022) 7 TMI 1232; (2022) 140 taxmann.com 535 (Supreme Court) SLP No. 32709 -32710/2018 order dated 22.07.2022]

 GST on Tour Operators in relation to services Haj & Umrah

• Supreme Court has In All India Haj Umrah Tour Organizer Association Mumbai v. Union of India (2022) 7 TMI 1233 (Supreme Court), has held that Service Tax shall be payable on service provided by Haj Group Organizers (HGOs) and Private Tour Operators(PTOs).
• It observed that to enable Haj pilgrims of India to undertake Haj pilgrimage, there is a bilateral agreement executed every year between the Kingdom of Saudi Arabia and the Government of India. As per the bilateral agreement, a quota of number of pilgrims is assigned to India. Out of the said quota, normally only 30% is allocated to HGOs. The rest of the quota is made available to the Haj Committee.
• The place of provision of service is the location of the service receiver in accordance with clause (i) of Rule 2 of place of provision rules, which will be in taxable territory. As per Item (iv) of sub-clause (b) of Clause (i) of Rule 2 of the place of provision of service Rules of 2012, the location of the service receiver will be the usual place of residence of the Haj pilgrim in India. Therefore, the service rendered by the HGOs to Haj Pilgrims is taxable for service tax as the service to Haj pilgrims is provided or agreed to be provided in taxable territory. The service is rendered by providing or agreeing to provide Haj pilgrimage tour package.
• It must be noted here that Clause 5A of the Mega Exemption Notification (Notification No. 25/2012-ST dated 20.06.2012) grants exemption to the service rendered by Haj Committees in respect of a religious pilgrimage. Thus, the same Mega Exemption Notification makes a clear distinction between ‘religious ceremony’ and ‘religious pilgrimage’. As Haj Committees render services only in respect of Haj pilgrimage, the religious pilgrimage referred to in Clause 5A as regards the Haj Committee, is Haj pilgrimage. Thus, the Mega Exemption Notification exempts the two specified organisations that render services in respect of a religious pilgrimage. The service rendered by HGOs to Haj pilgrims is to facilitate them to reach at the destination to perform rituals/religious ceremonies. No religious ceremony is performed or conducted by the HGOs. The religious ceremony is conducted by Haj pilgrims or by someone else in the Kingdom of Saudi Arabia.
• The Haj Committees are statutory bodies working under the control and supervision of the Government. The Haj Committees are the agencies and instrumentalities of the State. Apart from arranging visits of Haj pilgrims for the purposes of Haj pilgrimage, there are important statutory duties assigned to the Haj Committee – the Central Government has all pervasive control over the Haj Committee. The State Governments have the same control over the State Committee. On the other hand, there are no onerous duties attached to HGOs. They earn profit by rendering service to Haj pilgrims. Except for the stringent conditions for the registration, the Government has no control over HGOs.
• The Exemption Notifications under the IGST and the GST Acts so far as the Haj pilgrimage is concerned, are pari materia with the Mega Exemption Notification.
• The petition was dismissed.

[Source: In All India Haj Umrah Tour Organizer Association Mumbai v. Union of India (2022) 7 TMI 123; (2022) 140 taxmann.com 562 (Supreme Court) Order dated 26.07.2022]