The Gujarat Authority of Advance ruling (AAR) ruled that GST payable on Amount forfeited on account of breach of agreement of sale of land.
The applicant, has submitted that they want to sell factory land to Mr. B for Rs.1 crore. Mr. B showing acceptance to the sale agreement, gives advance money amounting to Rs. 20 lakhs which is 20% of the total sale amount. Now for some reasons Mr. B could not complete the transaction upon which Fastrack forfeits an amount of Rs. 20 lakhs.
The applicant has sought the advance ruling on the issues whether the amount forfeited on account of breach of agreement of sale of land is liable to GST or not and who will be considered as Service Receiver and Service Provider.
The coram of Sanjay Saxena and Mohit Aggarwal ruled that the amount forfeited by Fastrack will attract GST.
“As per Section 7(1) of the CGST Act, 2017, activities referred to in Schedule II are covered under the scope of supply of goods and service. Clause 5(e) to Schedule II to CGST Act 2017, declares that ‘agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act’ shall be treated as supply of service. The amount, which was received from Mr. B and forfeited by the applicant, was a part of the terms and condition of an agreement held between the applicant and Mr. B (customer). This means that while entering into the agreement, Mr. B was well aware about the terms and condition of the contract that in absence of breach of agreement or non- fulfillment of terms and condition of payment as per the contract, the amount given as an advance would become forfeited by the applicant being settlement of exit of the contract,” the AAR said.
The AAR further said that the amount forfeited/ received by the applicant is covered under supply of service as per clause 5(e) of Schedule II of CGST Act, 2017 and therefore, liable to GST.
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The Delhi High Court held that the central government can authorize initiation of proceedings and relief of freezing assets, disgorgement of property.
The petitions had been filed by Shriraj Investment & Finance Limited and Casper Consumer Electronics Pvt. Ltd. under the purview of 241, 242, 246 read with 339 of the Companies Act, 2013, before the NCLT. It was stated that the letter calls for freezing and disgorgement of assets of 157 companies to be sold despite the fact such companies are functional. The above letter was impugned through the virtue of section 212(14) of the Companies Act. The officers of the Central government were obliged to go forth with scrutinizing the reports of the above companies. It was stated that “it was humanly impossible to examine such a report, consisting of lakhs of pages within two days and then pass the impugned order”.
It was further stated that Section 212(14A) of the Companies Act came into effect on August 15th 2019, wherein for the first time power of disgorgement of properties came into effect. However, in the present case on dated June 29th, 2019, the order for disgorgement was issued hence it is a premature letter without any power. It was also stated that NCLT can’t decide jurisdiction of any issue. It was also argued that such power of disgorgement, even otherwise, can be ordered only after trial and not at filing of charge sheet as unless the State proves its case of disgorgement, no order can be passed by NCLT for such an action.
The single bench of Justice Yogesh Khanna held that With regards to the contention of invoking jurisdiction, it was ordained that “once the proceedings have been initiated before NCLT and if the NCLT is seized with the company petition, all contentions including power of the respondent to initiate such proceedings before NCLT must be raised before such forum and be determined in those proceedings.
“Disgorgement occurring in Section 212 (14A) cannot be read in blissful isolation whereas, the length and breadth of the Act, chapter and verse bespeaks of such properties/ shares/ debentures, to be frozen/ liquidated/disposal/ sold for utilization in furtherance of public interest by way of sale, recovery of undue gains to alleviate the wrong done to persons/ financial institutions,” the court said.
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The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad bench has held that a mere act of failure to file under protest letter while reversing the credit refund cannot be a reason to reject refund claim of the taxpayer.
Judicial Member Ramesh Nair was considering an appeal filed by M/s Prayosha Healthcare Pvt Ltd, who availed the Cenvat Credit in respect of service tax paid on sales commission. The audit officers have raised objection that the sales commission is not an admissible input service. On the objection of the audit party, the appellant have reversed the Cenvat credit. Thereafter, they have filed refund claim within one year from the date of reversal on the ground that as per subsequent development of law in case of M/s. Essar Steel India Ltd. V/s. CCE, the Cenvat credit is admissible on sales commission.
However, the department rejected the refund claim by holding that the sales commission is not input service and also on the ground that the appellant have admittedly reversed the amount without under protest hence, the appellant had agreed to the audit, on the basis of which the audit para was closed and the queries were settled.
While concluding the matter in favour of the assessee, the Tribunal held that the reversal was made on the objection of the audit party.
“Though the reversal was not made under protest but the appellant has right to claim refund within one year as mandated under section 11B of Central Excise Act,1944., therefore only on the ground that the appellant has not filed under protest letter while reversing the credit refund cannot be rejected on this ground. As regard the merit that whether the sales commission is admissible input service or otherwise the issue is subjudice before the Hon’ble High Court of Gujarat in the case of Essar steel India Ltd. and also before the Hon’ble Supreme Court in the case of the Cadila Health Care Ltd. Therefore, at this stage the merit cannot be decided,” the Tribunal said.
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The Central Board of Indirect Taxes and Customs (CBIC) issued the instructions on issuance of Show Cause Notices (SCNs) in a time bound manner.
A detailed analysis to pursue trends in cases of GST evasion & fraudulent ITC availment booked viz-a-viz number of SCNs issued against for the FY 2017-18 (w.e.f. July, 2017), 2018-19 & 2019-20, have been made and it is observed that in GST evasion cases booked and in the Fraudulent ITC cases booked, during the above mentioned period, SCNs have been issued only in a few cases.
Apparently, cases of ITC frauds or GST evasion are covered under the provisions of Section 74 of CGST Act, 2017 (the extended period clause). However, there may be certain other situations where issuance of a notice under Section 73 of the CGST Act, 2017, is intended.
The Board has examined the matter in the background of issuance of SCNs in a meagre number of cases booked/detected as mentioned above. It may be seen that the last date for filing the Annual Returns for the FYs of 2017-18, 2018-19 & 2019-20 is already over. As a result, the time limit of three years/five years for issuance of orders under Section 73 & Section 74 of the CGST Act, 2017 has already kicked in.
If the issuance of SCNs is pushed to close proximity of the end dates/last dates, it may leave very little time with the adjudicating authority to pass orders within the stipulated period mentioned in sub-section (10) of Section 73/ Section 74. This might result in a situation where either the adjudicating authority is not able to pass orders within the prescribed time period or the quality of adjudication suffers. It is felt that the present situation warrants for extra efforts on the part of field formations and strict monitoring at supervisory level.
The Board said that Principal Director General / Director General(s)/Principal Chief Commissioner(s)/Chief Commissioner(s) within their jurisdiction may take stock of the pending investigation cases/other cases which warrant issuance of show cause notices and take appropriate action to ensure timely completion of investigation(s) and issuance of SCNs well before the last date. The respective Pr. Chief Commissioners/Chief Commissioners may draw an action plan so that no case is pending investigation beyond one year. Needless to mention that once SCN is issued, timely adjudication must follow.
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The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad bench has held that the expenses including legal fee paid to Distiller’s Association of Maharashtra to meet the legal expenses to file a case before the High Court shall be allowed as cenvat credit since the litigation was filed for the members of the Association, including the Company.
The appellant-Company is engaged in the manufacture of Pet preforms, jars, containers with caps. They are also availing Cenvat Credit in respect of duty paid inputs, input services, as well as capital goods under the Cenvat Credit Rules, 2004. During course of audit under EA-2000 by the Central Excise Audit officers, it was noticed that they had availed Cenvat Credit of Service Tax Rs. 24,19,434/- paid on legal consultancy services under reverse change mechanism. It was observed that the bills for legal consultancy services were issued by advocate Shri Murari B. Madekar to M/s Sunrise Containers Pvt. Ltd., Umbergaon. The bills were raised for the services given in a legal case of Distiller’s Association of Maharashtra vs. State of Maharashtra and ors. On enquiry from the appellant they had informed that there was one case filed by the Distiller’s Association of Maharashtra against State of Maharashtra in the High Court, Mumbai vide WP no. 557 of 2016 and M/s Sunrise Containers Pvt. Ltd. is one of themembers of the said Distiller’s Association of Maharashtra.
The department disallowed the cenvat credit holding that since the legal case for which the legal services of advocate was provided, it is to Distiller’s Association of Maharashtra and not to M/s Sunrise Containers Pvt. Ltd. exclusively because they are only one of the members of the said Distiller’s Association of Maharashtra. It was further observed that the service does not fall under ‘input services’ given under Rule 2(l) of Cenvat Credit Rules, 2004 for the reason that the legal service was not used in or in relation to manufacture of final products of the appellant.
While allowing the plea of the appellant, Judicial Member Mr.Ramesh Nair noted that there is no dispute that the legal case was filed by the Distiller’s Association of Maharashtra which consists of many member manufacturers.
“Therefore, the beneficiary of the outcome is not only the appellant but all the members which means that the service was availed by all the members of the association. Though the invoice was raised in the name of appellant but the services availed against the said bills has benefitted to all the members of the association. I agree with the submission of the learned counsel that even though the case was filed in the name of Distiller’s Association of Maharashtra but since the bill was raised in the name of the appellant, appellant is prima facie entitled for Cenvat Credit but only to the extent of portion of services related to the appellant. In this position, the Cenvat Credit attributed to the appellant needs to be re-worked out. Therefore, entire case needs a reconsideration. As regard the issue whether legal service is an input service or otherwise, I find that legal service is directly for the case related to manufacture of the final product. Moreover, the legal service is prescribed as input service in the inclusion clause of definition of input service. Accordingly, I hold that the legal service is an admissible input service,” the Tribunal said.
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The Allahabad High Court held that the designated committee is not vested with discretion to reject declaration filed on SVLDRS-1.
The petitioner, M/s Magma Industries Limited filed its declaration on SVLDRS-1, under the Scheme. It disclosed the amount of disputed duty payable under the Act at Rs. 47,56,751/- and the Estimate Amount Payable (EAP) Rs. 14,27,025.30/-.
The disputed duty payable or ‘tax dues’ disclosed was the sum of the alleged short-paid duty and the evaded duty. The Designated Committee did not dispute the computation of disputed duty payable and EAP disclosed by the petitioner yet instead of issuing a demand on SVLDRS-3 it issued a demand on SVLDRS-2, to the petitioner. It also computed the EAP at Rs. 14,27,025.30. It included the amount of Rs.2,18,516/- already paid by the petitioner, during the investigation.
The division bench of Justice Naheed Ara Moonis and Justice Saumitra Dayal Singh concluded that the ‘tax dues’ of the petitioner stood ‘quantified’ for the purpose of Section 121(r), 123(c), 124(1)(d) and 125(1)(d) before the cut-off date 30.06.2019 at Rs. 45,38,231 and even if it may have been otherwise permissible to interpret those provisions in a manner that in the case of a pending enquiry, investigation or audit, no declaration may be filed unless the revenue authority had first communicated in writing the ‘quantified’ amount of ‘tax dues’/duty demand proposed under the Act, yet, that interpretation would stand blocked, at the instance of the revenue authorities, by virtue of the binding interpretation of the law offered by the CBIC, under section 133 of the Scheme.
The court held that the reasoning given by the Designated Committee in the impugned order runs contrary to law. The Designated Committee was obligated to deal with the declaration filed by the petitioner, on merits. No discretion was vested in the Designated Committee to take a different view. Even though the Circular has not been referred to or dealt by the Designated Committee, by virtue of the clear language of Section 133 of the Scheme, it was further obligated to necessarily act in accordance with that law.
The court while quashing the impugned order remitted the matter back to the Designated Committee to issue the necessary SVLDRS-3 within a period of thirty days from today. Petitioner shall have thirty days therefrom to deposit that amount and obtain a Discharge Certificate, in accordance with law.
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The Delhi High Court while dismissing as many as 10 petitions filed by the Income Tax Commissioner held that Section 153A addition cannot be made in absence of incriminating materials found, seized at the time of search.
The appellant, Revenue stated that the ITAT has erred in confirming the orders of the Commissioner Income Tax (Appeal) and directing the Assessing Officers to delete the additions made under Section 68 of the Act on account of unexplained credits and under Section 69C of the Act on account of unexplained expenses.
Mr. Ajit Sharma, the counsel for the petitioner submitted that the ITAT has completely misread and misinterpreted the provision of Section 153A of the Act and has failed to appreciate that the mandatory provision of Section 153A of the Act requires the AO to assess the total income of six assessment years under Section 153A of the Act and this cannot be done if the scope of Section 153A is limited to only undisclosed income. He submits that the mandate under Section 153A of the Act is to issue the notice for six assessment years and assess the total income irrespective of incriminating material discovered during the search.
The appellant Revenue contends that in the present cases incriminating documents or materials had been found during the course of the searches and consequently by virtue of Section 153A of the Act, the Assessing Officer had to assess the total income of six years under Section 153A of the Act. Learned counsel further submits that the assessments were not completed under Section 143(3) in the present cases, consequently, prior to the date of search i.e. 18th June, 2013, the assessment of the respondents had not attained finality.
The division bench of Justice Manmohan and Justice Navin Chawla noted that even in the present appeals filed by the appellant/Revenue there is no specific ground that any incriminating material had been found during the search. The Tribunal’s finding that “It is an admitted fact that in the search action under Section 132 of the Act, no incriminating document/material was found and seized at the time of search and also subsequently” is correct and suffers from no perversity. Consequently, it is not open to the appellant to contend that incriminating documents or materials had been found and seized during searches.
The court opined that the questions of law raised in present appeals have been settled by earlier Division Bench in Kabul Chawla and assessment of the respondents had attained finality prior to the date of search and no incriminating documents or materials had been found and seized at the time of search. Consequently, no addition can be made under Section 153A of the Act as the cases of respondents are of non-abated assessments.
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The Thomson Reuters has invited applications for the post of Business Unit Controller.
The Business Unit Controller is responsible in all aspects of accounting for an entity or a group of entities, work with 3rd Party providers for statutory and tax reporting, yearend submissions, and other accounting areas. The objective is to ensure compliance with Thomson Reuter’s Accounting policies and Local Tax & GAAP requirements. The jobholder is expected to interact closely with various groups including but not limited to Business Units, General Accounting organization, Group Finance, Tax, Treasury, Internal Audit and 3rd party providers and to manage the relationship with our local statutory auditors.
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The Government notified the SBI Cards and PhonePe to undertake Aadhaar authentication service of Unique Identification Authority of India (UIDAI).
The government empowered under sub-section (1) of section 11A of the Prevention of Money-laundering Act, 2002 on being satisfied that the reporting entities namely M/s. SBI Cards and Payment Services Limited and M/s. PhonePe Private Limited. comply with standards of privacy and security under the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 and it is necessary and expedient to do so, and after consultation with the Unique Identification Authority of India established under sub-section (1) of section 11 of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 and the regulatory authority, namely the Reserve Bank of India notifies the reporting entity to undertake Aadhaar authentication service of the Unique Identification Authority of India under section 11A of the Prevention of Money-laundering Act, 2002.
Earlier, the government notified 24 Insurance Companies as reporting entities to undertake Aadhaar authentication service of the Unique Identification Authority of India under section 11A of the Prevention of Money-laundering Act, 2002.
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The Supreme Court dismissed the transfer petition of Union of India pending before Various HC challenging constitutional validity of Section 16(2)(c) of the CGST Act.
These transfer petitions have been filed by the Union of India under Article 139A read with Article 142 of the Constitution of India seeking transfer of two Writ Petitions to this Court, i.e., M/s. Cummins Technologies vs Union of India’ pending before the High Court of Madhya Pradesh at Indore and ‘M/s. SPL Infrastructure Private Limited v. Assistant Commissioner of State Tax, Narasannapeta and Ors.’ pending before the High Court of Andhra Pradesh at Amaravati. In both these Writ Petitions, the constitutional validity of Section 16(2)(c) of the Central Goods and Services Tax Act, 2017 has been challenged.
Moreover, the constitutional validity of Section 16(2)(c) of the CGST Act has been challenged in 34 other writ petitions, which are stated to be pending across nine High Courts in the country.
Section 16(2)(c) of Central Goods and Services Tax Act, 2017 provides that a registered dealer would be eligible for claiming input tax credit on the goods purchased on the condition that the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilization of input tax credit admissible in respect of such supply.
According to the Solicitor General, since the issue has implications on a number of matters pending across the country and also ramifications of huge amounts payable under the said Act, it would be appropriate if this Court hears all the matters.
Even though the Solicitor General insisted for transfer of cases pending before various High Courts to this Court, we are not inclined to entertain these transfer petitions, for the reason that various High Courts are already seized of the matters. In particular, in the matter before the High Court of M.P., Indore Bench, counter affidavit is already stated to have been filed.
The three judge bench headed by the Chief Justice, Justice Surya Kant and Justice Hima Kohli requested the High Court of Madhya Pradesh, Indore Bench to dispose of the Writ Petition, pending adjudication before it, as early as possible and preferably within a period of two months’ time from the date of communication of this Order.
“So far as other Writ Petitions, which are pending before various High Courts, it is open for the parties to bring this Order to the notice of the concerned High Courts and seek expeditious disposal of their cases,” the Apex Court said.
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The Ministry of corporate Affairs (MCA) issued the Office Memorandum wherein it extended the time for holding of AGM for the Financial Year ended on March 31, 2021.
The Central Government has received representations seeking extension of time for holding Annual General Meeting (AGM) for the financial year 2020-21 ending on 31st March 2021 citing many difficulties faced due to second wave of Covid-19 and consequent lockdowns etc.
Accordingly, it has been decided to advise the Registrar of Companies (RoCs) to accord approval for extension of time for a period of two Months beyond the due date by which companies are required to conduct their AGMs for the financial year 2020-21 ended on 31st March 2021.
“Please take this action with utmost urgency and issue an order before the close of the office today and forward the copy of the order to this office before for consolidation and uploading it on the MCA21 website. Also display this order on the Notice Board of your respective offices,” the MCA in the Office Memorandum said.
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The Delhi High Court ruled that the income tax department ought to maintain confidentiality of seized material from Newslaundry under Section 138 of Income Tax Act.
The Petitioners, Newslaundry are heading a news organization, the Petitioners herein have sources, contacts and other information on the digital machines. It is the fiduciary duty of the Petitioners to protect them and keep it confidential.
Senior counsel Siddhartha Dave, representing the petitioners stated that the apprehension of a leak would not have arisen had the department given them an opportunity to delete personal data before taking it away.
The seized data might contain personal photos and information pertaining to investigative stories. The senior lawyer argued that any data breach would be in violation of right to privacy and therefore a direction should be passed to the Income Tax authorities to not leak any data and delete whatever is of no relevance to the proceedings.
“It is further submitted that the legal communication regarding existing cases is present in the personal laptop and phone of the Petitioners. If in any circumstances, the leaks are committed, it shall be a clear breach of the attorney client privilege as well as whistleblowers confidentiality,” the plea added.
Seized material is in safe custody of the Income Tax department. Seized material shall not be leaked. It will be illegal to leak such material, said lawyer Ajit Sharma for the department.
The respondent assures and undertakes before the court that the seized material shall not be leaked and the concept of confidentiality as enshrined in the Income Tax Act shall be abided. The said undertaking given by the respondent is accepted by the court and respondent is held bound by it, the court recorded.
The division bench of Justice Manmohan and Justice Navin Chawla held that the Income Tax department is bound by its assurance to maintain confidentiality of the material seized during a survey operation at news portal Newslaundry’s premises and to ensure that it is not leaked.
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The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) ruled that the assessment made on assessee as HUF is not valid as on that date HUF was not in existence.
The assessee, K.Ramesh Reddy (HUF) did not file any return of income for AY 2002-03. K.Ramesh (Individual) filed return of income for AY 2002-03. In the case of Sri K Ramesh Reddy (Individual) an assessment under section 143(3) of the Income Tax Act was completed on 31.3.2005. During the course of assessment proceedings in the case of K.Ramesh Reddy (Individual), the assessee took stand stating that all the income (other than the rental income derived by him from Renuka Commercial complex which is his separate property) that arose during the previous year relevant to assessment year 2002-03 belonged to his erstwhile joint family dated 25.2.2005 addressed to the then AO.
However the assessee has not filed the Return of income in the status of HUF for the assessment year 2002-03. Since the income chargeable to tax in the hands of the HUF has escaped assessment, the proceedings under section 147 of the Income Tax Act were initiated in the status of HUF by recording the reasons. Notice under section 148 of the Income Tax Act was issued by the then AO, Bangalore on 15.04.2005. However the assessee did not file the Return of income in the status of HUF in response to the said notice.
The coram headed by the Vice President N.V.Vasudevan and Accountant Member B.R.Baskaran clarified that a Hindu undivided family is a taxable entity and is a juristic person. It can only be proceeded against in the manner provided in the Act or under the general principles of the Hindu law after the disruption of the family. The general law does not provide for any machinery to determine the liability of the individual members of the undivided family before disruption. Unfortunately, the machinery provisions ofSection 171and the corresponding provisions in Section 25A are limited in scope to tax only the Hindu undivided family, which has been ‘hitherto assessed’. Undoubtedly, after Hindu undivided family had been disrupted and in the view of the fact that assessments were completed after the HUF got disrupted, it must be held, therefore, that the proceedings were irregular and without jurisdiction.
The ITAT allowed the appeal of the Assessee and held that the assessment in the hands of the HUF is liable to be held as invalid and consequently annulled. In view of the above conclusion the other grounds of appeal are not taken up for consideration.
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The Delhi High Court held that the benefit under Form SVLDRS-1 cannot be availed if the amount of Excise Duty is neither quantified nor communicated.
The petitioner, M/s No.1 World Wide Express Pvt. Ltd. had filed the application under the SVLDRS, however, no response thereto has been received from the respondent. The petitioner claims that the respondent has neither rejected nor accepted the proposal of the petitioner company, however, in February 2020, petitioner was orally informed that the same has been rejected as the Deputy Commissioner till date has not calculated any duty/tax liability. The petitioner states that a copy of such order, however, has not been supplied to the petitioner.
Ms.Preeti Goel, the counsel for the petitioner submits that though no reason for rejection has till date been communicated to the petitioner, the above orally stated reason is also incorrect inasmuch as by a notice addressed by the Assistant Commissioner, Central Excise and Service Tax, CGST, Delhi (South) to M/s Carex Cargo Express Private Limited, a demand of Rs.87,88,387/- excluding interest towards service tax liability and GST liability to the tune of Rs.1,34,25,218/- excluding interest has been raised and demanded against the petitioner. She submits that therefore, there was a ‘quantified’ demand of tax against the petitioner and the petitioner cannot be denied the benefit of SVLDRS.
The division bench of Justice Manmohan and Justice Navin Chawla held that the application form annexed by the petitioner itself shows its rejection as also the reason for the rejection. The petitioner, therefore, cannot plead ignorance of the same.
The court relied on the decision in the case of Karan Singh vs. Designated Committee Sabka Vishwas Legacy Dispute Resolution Scheme and Another wherein it was held that in terms of Section 121(r) of the Finance Act, 2019, the word ‘quantified’ means a written communication of the amount of duty payable under the indirect tax enactment; a unilateral quantification by the petitioner does not render him eligible to avail the benefit of the scheme. It was further held that the benefits of the scheme would be available to only such cases where the Department quantifies the amount and not the Assessee.
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The Maharashtra Authority of Advance Ruling (AAR) ruled that managerial, leadership services provided by the Corporate Office to its Group Companies covered under “supply of service”.
The applicant, M/s. B. G. Shirke Construction Technology Pvt. Ltd, the applicant’s Registered/ Corporate Office is in Pune. The “Shirke Group” is in the business of Civil Construction, Structural Engineering, Fabrication & Erection of Transmission Tower Materials, and Aviation Chartering, etc.
The applicant has sought the advance ruling on the issue of whether the managerial and leadership services provided by the Registered/Corporate Office to its Group Companies can be considered as “supply of service”, in terms of Section 7 of CGAT Act, 2017.
The coram of Rajiv Mangoo and T.R.Ramnani held that the managerial and leadership services provided by the Registered/Corporate Office to its Group Companies can be considered as “supply of service”, in terms of Section 7 of CGAT Act, 2017 and the lump sum amount charged by the Registered/Corporate Office on its Group Companies would be liable to GST under Section 8 of CGST Act, 2017.
The AAR further ruled that the Applicant can continue to charge certain lump sum amount, as has been done in the past, in terms of second Proviso to Rule 28 of CGST Rules, 2017, as most of the recipients of such services are eligible for full credit, barring one or two related persons, who would comply with the provisions of Section 17 of CGST Act, 2017, at their respective ends.
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The Maharashtra Authority of Advance Ruling (AAR) ruled that 18% GST payable Treated Water obtained from Sewage Treatment Plant (STP).
The applicant, Rashtriya Chemical and Fertilizers (RCF) is engaged in the business of manufacture and sale of fertilizers and industrial chemicals to customers. RCF has two manufacturing plants located in Maharashtra one at Trombay and the other at Thal RCF has warehouses/ distribution networks across various states in India. RCF has been successfully operating one STP at its Trombay premises since January 2000. This plant uses OVA Selvage Water and converts it into water fit for industrial use. This water is then used in the RCF factory for manufacture of the fertilizers. The water supplied by the STP meets about 60% of the daily process water requirement of the Trombay unit. The balance process water requirement is being met by the Municipal Corporation of Greater Mumbai (MCGM).
The applicant has sought the advance ruling on the issue whether “Treated Water” obtained from STP [classifiable under Chapter 2201] is taxable at 18% by virtue of Sl. No. 24 of Schedule – III of Notification No. 01/2017- Integrated Tax (Rate) dated 28th June 2017 (as amended) as “Waters, including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening matter nor flavoured (other than Drinking water packed in 20 litres bottles)”.
The coram of Rajiv Mangoo and T.R.Ramnani noted that the term ‘waters’ is specifically prescribed for the levy of taxes under Entry No.24 of schedule rates. Eventually, the authority concluded and held that the purified “Treated water” from the sewage is covered under Entry No. 24 of HSN 2201.
The AAR opined that the “Treated water” obtained from sewage is covered under term “waters”. Hence it is taxable and same would be taxable at the rate of 18% (9 % SGST and 9% CGST) or IGST under Entry 24 of Schedule-III of Notification No. 1/2017 Central Tax (Rate) dated June 28, 2017 as amended by Notification No. 06/2018 and Central Tax (Rate) dated January 25, 2018.
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The Orissa High Court directed the GST Authority to Re-Open Online Portal to enable filing of Form TRAN-1 Electronically or accept manually by November 1, 2021.
The Petitioner, M/s. Sunny Motors is a partnership firm that is in the business of sale of motorcycle, scooters, spare parts. It is trading in the name of M/s. Sunny Motors in Cuttack. The Petitioner has a registration certificate under the Goods and Services Tax Rules of Odisha.
The Petitioner was unable to upload the GST TRAN-1 form on account of “some unavoidable and unforeseen circumstances”. It is in the background that the Petitioner has filed the present petition. A representation was made by the Petitioner on 12th June, 2019 to the Secretary, Goods & Service Tax Council (GST Council) praying that he should be permitted to submit the GST TRAN-1 application manually.
According to the Petitioner, it did not hear from the Opposite Parties thereafter. It may be mentioned that in response to the notice issued in the present petition, a counter affidavit has been filed by the Opposite Parties in which inter alia, it is stated that the 32nd GST Council meeting the case of the Petitioner was taken up. The Petitioner was not allowed the facility of ITC since “as per GST system log, there is no evidence of error or submission or filing of TRAN-1”. It is accordingly submitted that the case of the Petitioner cannot be considered.
The division bench of Chief Justice, Dr. S. Muralidhar and Justice B.P. Routray issued the direction to the respondent authority to either open the portal and permit the Petitioner to file TRAN-1 form electronically on or before 1st November, 2021 or accept the TRAN-1 form from the Petitioner manually before that date. It will be open to the authorities to verify the genuineness of the claim of the Petitioner in accordance with law and pass appropriate orders.
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The Tripura High Court allowed the utilisation of the amount available in the electronic credit ledger as restrictions cannot be imposed for more than 1 year.
Mr. J Bansal, counsel for the petitioner, M/s Sahil Enterprises pointed out that as can be seen from demand-cum-show cause notice the Commissioner of Central Goods and Services Tax, has invoked the powers under Rule 86A of Central Goods and Service Tax Rules, 2017 by disallowing the debit of an amount equivalent to Rs.1,11,60,830/- from the electronic credit ledger of the petitioner. He submitted that provisional attachment under Rule 86A can be made only for a period of one year and no more. In the present case, the attachment of the petitioner’s ledger account was ordered on 21st May 2020. More than a year has passed since then. Such attachment, therefore, must be lifted.
The petitioner is a trader and on the purchases made the petitioner had paid Goods and Services Tax(GST). According to the department, the purchaser in turn has not deposited this tax with the Government revenue. The petitioner cannot be saddled with the liability of paying this tax on account of lapses on part of the purchaser. It is in this context, the petitioner has challenged the vires of Section 16(2)(c) of the Central Goods and Service Tax Act, 2017.
On the other hand, the Asstt. Solicitor General, Mr. Bidyut Majumder and Attorney General Mr. Paramartha Datta appearing for the respondents contended that the petitioner has claimed tax credit without the tax being deposited with the Government revenue. In order to safeguard the interest of the revenue, therefore, the Commissioner had exercised powers under Rule 86A of the said rules.
The division bench of Justice S.G. Chattopadhyay and Justice Akil Kureshi observed that the restrictions that can be imposed on use of amount available in electronic credit ledger of a person can be by way of a temporary measure for a period not exceeding one year. The decision to impose such restriction would be taken by the Commissioner or a person authorised by him upon being satisfied that the input tax credit has been fraudulently availed or is ineligible. In such a case, after recording reasons in writing restriction on use therefore of would be imposed. This is an interim measure and, therefore, cannot take shape of a permanent arrangement.
“If the department wants to permanently disallow credit of accumulated amount in the ledger of a dealer, it must adjudicate the issue and pass an order after bi- parte hearing. Sub-rule (3) of Rule 86A clearly brings about this legislative intent while it provides that such restrictions shall cease to have effect after the expiry of a period of one year. Two things are significant in this sub-rule; first, there is no scope of extension of this time and secondly, upon expiry of a period of one year the effect of the restriction seizing to take effect would be automatic,” the court said.
The court held that the department cannot continue to subject the petitioner’s electronic credit ledger to the restrictions imposed by the Commissioner, on 21st May 2020. The same shall be released. In other words, it would be open for the petitioner to utilise the amount credited in the said ledger for the purpose of payment of its taxes in accordance with law.
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