The Concept of GST was introduced in India in the Budget Speech of 28th February 2006 by the then Finance Minister. Since then, there has been a constant endeavor for the introduction of the GST in the country whose culmination has been the introduction of the Constitution (122nd Amendment) Bill in December 2014.
GST is a positive step towards shifting Indian economy from the informal to formal economy. It is important to utilise experiences from global economies that have implemented GST before us, to overcome the impending challenges. The Introduction of GST helps to avoid cascading of taxes. Also, there were certain taxes levied by the State Governments were not allowed as set off for payment of other taxes being levied by them.
The Goods and Services Tax (GST) shall be levied on the supply of goods or services or both at each stage of supply chain starting from manufacture or import and till the last retail level. So basically, any tax that is presently being levied by the Central or State Government on the supply of goods or services is going to be converted into GST.
GST is a dual levy where the Central Government shall levy and collect Central GST (CGST) and the State shall levy and collect State GST (SGST) on intra-state supply of goods or services. The Centre shall also levy and collect Integrated GST (IGST) on inter-state supply of goods or services.
In the recent case M/s .A. Rangasamy Engineers (Pvt.)Ltd v. CTO, the Madras High Court held that the assessee is entitled to interest for delayed payment of refund in case of excess payment of tax. While dismissing the order of the assessing officer, Justice Vaidyanathan said that, section 24(4)of the Tamil Nadu General Sales Tax Act, 1959 provides for interest on delayed refund even if the assessee had not made a separate claim for the same.
The Court analyzed the provisions of Section 24-(4) of the Tamil Nadu General Sales Tax Act, 1959, which says that, “Where the tax paid under this Act is found to be in excess on final assessment or revision of assessment, or as a result of an order passed in appeal, revision or review, the excess amount shall be refunded to the dealer after adjustment of arrears of tax, if any, due from him. Where the excess amount is not refunded to the dealer within a period of ninety days (from the date of the order of assessment or revision of assessment and in the case of order passed in appeal, revision or review, within a period of ninety days from the date of receipt of the order), the Government shall pay by way of interest, where the amount refundable is not less than one hundred rupees, a sum equal to a sum calculated at the rate of one per cent or part thereof such amount for each month or part thereof after the expiry of the said period of ninety days.”
In the recent decision A.V. Shine v. CTO and Anr, the Single bench of the Kerala High Court held that 90% reduction under section 23B(d) of the KGST Amnesty scheme is confined only for interest and penalty and the same is not available in respect of the tax amount. The writ petition was filed by an individual who claimedthe benefit of amnesty in terms of Section 23B(d) of the KGST Act. According to the petitioner, the above provision entitles him for waiver of 90% of the interest and the entire amount due as penalty and interest. He claims that while submitting application for amnesty, petitioner was informed that the he will have to pay 10% of the penalty amount as well as interest thereon in addition to 10% interest along with tax dues. According to the petitioner, the manner of computation is totally illegal and not in accordance with the statutory provision. Dismissing the petition, Justice Shaffique said, “In respect of amnesty scheme available in respect of demands relating to the period 1st April, 2000 to 31st March, 2005, the reduction granted is 90% of the interest on the tax amount and for the amount of penalty and interest thereon. The contention is that the reduction is for 90% of the interest on tax amount and also the entire amount of penalty and interest thereon. If such was the intention of the Legislature, definitely there was no reason to have specifically mentioned it, whereas what the Legislature has done was that after the word tax amount, a comma is inserted and thereafter the words ‘and for the amount of penalty and interest thereon’ is incorporated, which apparently indicates that the words “reduction of 90%” is on the interest on the tax amount as well as on the amount of penalty and interest thereon. A different view is not possible.”
A Public Interest Litigation has been filed before the Bombay High Court seeking postponement of the much anticipated indirect tax law, i.e Goods and Services Tax (GST) Act. As the Central Government and State Governments are all set to implement the GST from next month onwards, Dr. K. S. Pillai, a retired professor from the King Edward Memorial Hospital, Parel, filed the PIL highlighting the flaws in the procedure. The petition says that if the GST is implemented as proposed, it will cause confusion and chaos in daily needs of the common people, especially in the supply of essential medicines, food & drink items and they might be disrupted by unpreparedness on part of the authorities. “Implementation in the middle of the financial year will result in maladjustments among the government departments. With the past fiscal year budget provisions, traders with old stocks trying for clearance will face difficulties at all levels. The implementation must at least be as per the global conventional financial year so that the world can follow our system successfully,” the petition reads. Accordingly, the petition has also sought directions to the government to create more public awareness about the GST.
The Bombay High Court on Thursday reserved its order after hearing a PIL seeking postponement of the implementation of India’s much awaited indirect tax law, i.e Goods and A bench comprising Justice VK Tahilramani and Justice SK Shinde heard arguments from Additional Solicitor-General Anil Singh and submissions made by petitioner Dr KS Pillai, who appeared in person. Under GST, multiple state taxes such as value-added tax, purchase tax, entertainment tax and central taxes including central excise duty, countervailing duty, service tax and a number of cesses would be subsumed with a view to create a seamless national market. The move is expected to increase efficiency and boost growth and the Government is all set to rollout the GST Law from July 1st onwards. For the smooth rollout of the GST regime, the government has already deferred the implementation of provisions relating to TDS (Section 51) and TCS (Section 52) of the CGST / SGST Act 2017 after considering the opinion of the traders. Further, the provisions relating to E-way Bills have also been postponed due to lack of IT system.
A division bench of the Bombay High Court, today dismissed the plea seeking postponement of the new indirect tax law, i.e, the Goods and Service Tax (GST), which already been launched by the Government on July 1st. A bench of Justice VK Tahilramani and Justice SK Shinde had earlier reserved the judgment just before the rollout of the much awaited tax reform. He contended that the government has not followed the three-months’ period for disposing these representations as per the established procedure for new major changes as tax reforms,” the petition reads. According to him, the implementation of GST at this time will cause confusion and chaos in daily needs of the common people, especially in the supply of essential medicines, food & drink items and they might be disrupted by unpreparedness on part of the authorities. Overruling the above submissions, the bench said that the levy and collection of taxes on goods and services has sanction of law and therefore, the decision to implement the law cannot be disturbed.
A division bench of the Delhi High Court on Wednesday issued notice to the Central Government and the GST Council seeking for clarification on the applicability of reverse charge mechanism on legal services (not restricted to representational services) on lawyers. Justices S. Muralidhar and Prathibha M Singh directed the Government to clarify the position in order to remove ambiguities in the provisions relating to RCM on lawyers. The bench further clarified that any lawyer or law firm that has been registered under the CGST Act, or the IGST Act or the DGST Act from 1″ July, 2017 onwards will not be denied the benefit of such clarification as and when it is issued. It also said that if an appropriate clarification is not able to be issued by the Respondents 1 and 2 by the next date, the Court will proceed to consider passing appropriate interim directions.
A division bench of the Delhi High Court today said that all the legal services provided by advocates including senior advocates and Law Firms are subject to GST under reverse charge mechanism till the pronouncement of the final order. The division bench comprising of Justices S Muralidhar and Pratibha M Singh, while passing the order questioned the legal sanctity of the press release issued by the Ministry of Finance on 15th July 2017. While concluding, the bench observed that no coercive action would be taken against advocates, law firms of advocates including Limited Liability Partnerships (LLPs) of advocates providing legal services for non-compliance with any legal requirement under the CGST, DGST, or IGST Act. It further held that the benefit of the interim order shall not be denied to any advocate, law firm of advocates, LLPs of advocates who are providers of legal services, who have registered under the CGST, DGST, or IGST Act from 1st July 2017.
A Public Interest Litigation has been filed in the Delhi High Court challenging the imposition of 12% Goods and Services Tax (GST) on Sanitary Napkins. A bench comprising of Acting Chief Justice Gita Mittal and Justice C Hari Shankar issued notices to the Centre and Goods and Services Tax Council directing them to file their response. “Impugned levy is diametrically opposed to the commitment towards securing just and humane conditions of work enshrined in Article 42 of the Directive Principles of State Policy. Further, considering the importance of sanitary napkins in ensuring women access to the workplace in particular, and public spaces in general, during the period of mensuration, the impugned levy also violates the right of women to an adequate means of livelihood and also compromises their health, thus falling afoul of the commitment contained in Articles 39 and 47 of the Directive Principles of State Policy. Though the same may not be enforceable in the strict sense, there can be no cavil that it is the duty of the State to adhere to the commitments contained in the Directive Principles while framing laws, and it cannot be permitted to act to the contrary as it has done in the present case”, the petition also added. The Court posted the matter for hearing on November 15.
The petition seeks to exempt sanitary napkins from the levy of GST. Under the present GST regime that rolled out on July 1, sanitary napkins are in the 12% tax category. The Petitioner organization contents that the exemption is necessary to make access to basic menstrual hygiene products easier for women. According to them, only 12% women in India can afford sanitary napkins, thus leaving the basic hygiene product out of the reach of 88% women and girls. The Chief Justice has issued notices to parties that are made Respondents to the PIL and has given a returnable date of 4 weeks from 20th July 2017.
Two Tax lawyers, Medha Lila Gope and Nitu Hawelia approached the Gauhati High Court against the action of the officers of Bureau of Investigation of Economic Offences (BIEO). The petitioners contented that the Officers unauthorizedly seized the goods of M/s Kumar Traders, M/s Kumar Enterprise and M/s Maa Karni Traders from their Amingaon godown. On a prayer by Gope the Court has further restricted the officers of the department not to put the dealers into any further harassment on account of the search and seizure made on July 27, 2017. Gope and Hawelia were assisted by advocate Namita Gogoi and others. GST was implemented from 1st July 2017 all over India. After more than a month of GST rollout, this can be treated as the first case law under the Assam GST Act.
M/s D Pauls Travels and Tours Ltd., is a travel agency, has approached the Delhi High Court challenging the levy of tax on double taxation effect of GST provisions on inter-state supply of services under the newly implemented Goods and Services Tax (GST) regime. The petitioners strenuously argued before the Court that there is ambiguity in interpretation of certain provisions of the Central Goods and Services Tax Act (CGST) and Integrated Goods and Services Tax Act (IGST). They contended that the provisions are contrary to Articles 14 and 19(1) (g) guaranteed under the Constitution. The petitioner have prayed that it be recognised, via court direction or government clarification, that entities like itself are entitled to charge their customers tax under the IGST Act and not under the CGST Act and to full input tax credit under IGST Act in relation to the services supplied in another State or Union Territory, without the requirement of being a “registered person” in every such State or Union Territory. Senior Advocate Anup J Bhambani, Advocates Rajat Arora, Jaypreet Singh and Avinesh Singh were appeared on behalf of the petitioners. The matter will be taken up next on September 18
A division bench of the Delhi High Court in recently admitted a writ petition challenging the constitutionl validity of the GST Compensation Cess on coal under the new indirect tax regime, rolled out on last July in the country. while admitting the plea, a bench comprising Justices S Muralidhar and Prathibha M Singh have noted that there is prima facia case in the contentions of the petitioners. “To facilitate the implementation of this interim order, it is necessary for the officers of the concerned Department, charged with the responsibility of levying and collecting Clean Energy Cess on coal to depute a team to the Petitioner’s business premises to verify on how much of the stock of coal Clean Energy Cess under the FA, 2010 already stands paid. Subject to the Petitioner furnishing to the satisfaction of the officers proof of such payment, the Petitioner will be given credit for such payment and will not be required to make any further payment under the impugned Act for effecting sales and clearances. Till such time the said exercise is completed, no coercive steps will be taken against the Petitioner to recover the levy under the impugned Act.”
The Rajasthan High Court, last day admitted a petition seeking exemption to supply of construction services to affordable houses constructed under the Government approved Housing projects. The petitioners, Reverence Infrastructure (India) LLP, has approached the High Court impugning notifications issued under the CGST, and SGST whereby 9% percent tax was made applicable to two-third of the value of the intra-state services involving construction of complex building or civil structure and 18% was imposed on % on two-third of the value of inter-state services of construction of building or sale of its units thereof. They further contended that in the budget speech of the financial year 2016 – 2017, the then Finance Minister Mr. Arun Jaitely proposed for exemption of Service Tax on construction of affordable houses upto 60 square metre. “The purported implementation of the Impugned Notifications will increase the financial burden on the Petitioner and will adversely impact the already meagre margins of the Petitioner in the project.” Advocate Sanjay Jhanwar appeared on behalf of the petitioners.
The Rajasthan Tax Consultants Association has approached the High Court pointing out the technical and various other mistakes committed by the Central Government while implementing the new Goods and Services Tax (GST) laws. While admitting the petition, the Rajasthan High Court today issued notice to the Government. The petitioners impugned the legality of the cut off/ time limits prescribed in the Notifications issued by the Government by claiming that they are irrational, unrealistic and overlook the ground realities and various technical glitches/short comings persisting on GSTN portal. Advocate Sanjay Jhanwar, who appeared for the petitioners argued that though he is a great supporter of GST, the technical flaws and lack of preparation on the IT side would create great inconvenience to the businesses. Considering the allegations raised in the petition, the Court admitted the petition and issued a Show Cause Notice to the central Government seeking explanation with regard to the issues pointed out in the petition. The Government have to reply by 13th September.
The Delhi High Court, recently restricted the Central Government from taking any coercive actions against the Gold Dore Bar importers on account of additional customs duty or Countervailing Duty (CVD) paid at the time of importation in connection with the new notification issued. The bench of Justices S Muralidhar and Pratibha M Singh was hearing a petition challenging the constitutional validity of the impugned notification issued on August 17, whereby the government required reversal of 5/6th of the CENVAT (Central Value Added Tax) credit which had already accrued to the Petitioner. While granting interim relief to the petitioners, the division Bench of observed that the Petitioners have made out a prima facie case for grant of interim relief in their favour. Further, the balance of convenience is in their favour for grant of interim relief. The petitioners were represented by Senior Advocate Neeraj Kishan Kaul, who was briefed by PDS Legal’s Partner Tarun Gulati, Senior Principal Associate Kishore Kunal, and Associate Prashant Tahiliani.
In a significant ruling, Justices S Muralidhar and Prathba M Singh has granted an interim relief to the petitioners to import goods without payment of Integrated Goods and Services Tax (IGST) to the extent of advance authorization scrip obtained by them prior to July 1st. The order would be a major relief to the exporters who are under a threat of losing working capital on a daily basis due to the payment of IGST post implementation of the Goods and Services Tax (GST). Advocates Abhishek Rastogi and Rashmi Deshpande from Khaitan & Co appeared for the petitioners.
In a petition challenging the vires of the Central Goods and Services Tax (CGST) Act, 2017, Telangana State Goods and Services Tax (SGST) Act, 2017, a division bench of the Hyderabad High Court has issued notices to the Centre and Telangana State government and the GST Council. The petitioners by S Raj Kumar and two other advocates, urged that both the Acts must be declared as invalid since it violates the provisions of the Constitution. While admitting the petition, a bench comprising Acting Chief Justice Ramesh Ranganathan and Justice A Shankar Narayana has adjourned the matter. The petitioner contended that the Constitution 101 Amendment Act 2016 which facilitated enacting the Central Goods and Services Tax Act, the Integrated Goods and Services Tax Act and the Telangana State Goods and Services Act, 2017, is damaging the basic features of the Constitution.
A division bench of the Kerala High Court recently directed the Commercial Tax Officer to release detained goods on payment of 50% of demand as per the new Goods and Services Tax (GST) law. Justices Antony Dominic and Dama Seshadri Naidu was hearing a writ appeal against the order of the Single Judge wherein the Court asked the department to release the detained goods on payment of 50% of such demand along with execution of a simple bond. “However, taking note of the provisions of Rule 140 (2) obliging a dealer to produce the goods as and when demanded, and considering the inconvenience and prejudice that is likely to be caused on account of the delay, we need hardly emphasise the necessity for an expeditious adjudication even in cases goods are released provisionally. However, in this case, it is unnecessary for us to deal with that issue at greater length as the Government Pleader himself has agreed that the adjudication will be completed, within one week,” the bench added.
A division bench of Delhi High Court comprising Justice S. Muralidhar and Justice Prathibha M. Singh has admitted petition challenging Integrated Goods and Services Tax (IGST) on Banking Services provided to its head office situated in Singapore. The petition filed by DBS Bank through Advocate Abhishek A Rastogi and Advocate Rashmi Deshpande from Khaitan & Co. The petition has challenged constitutional validity of the certain provisions of Section 7(5)(a) of the IGST Act to levy IGST on Banking Services provided to its head office situated abroad as the place of supply of services is outside India. The Petitioner pointed out that there was no levy of Service Tax on such transactions under the erstwhile regime but the provision under Section 7(5)(a) of the IGST Act deems such transactions to be an inter-state supply and hence is violative of Article 14 of the Constitution of India.
A division bench of the Rajasthan High Court, today granted interim relief to the Rajasthan Tax payers in a writ petition filed by the Rajasthan Tax Consultants Association due to the problems faced by the taxpayers on account of the technical glitches at the GSTN portal. The petitioners, Rajasthan Tax Consultants Association had approached the High Court pointing out the technical and various other mistakes committed by the Central Government while implementing the new Goods and Services Tax (GST) laws. Moreover, the central and the state departments have been directed to provide separate district wise email addresses for remedy of issues and opting for composition scheme. The court further directed that a registered person can send emails to the respective district email ids in case of any technical errors in the GSTN portal and the department is bound to redress the same at the earliest. These benefits would however be available only in the state of Rajasthan. The matter is listed for further hearing on 05.10.2017.
All India Association of Tax Lawyers and the Tax Bar Association, Berhampur, on Tuesday, challenged the levy of Goods and Services Tax (GST) before the Orissa High Court. Before the High Court, the petitioners challenged the levy of Central Goods and Services Tax (CGST) and Odisha GST Acts as they encroach upon the autonomy of the State Governments in their power to levy taxes. They also highlighted the flaws in the procedure in which the Union Government had implemented the GST. “Unfortunately, the GST termed as the biggest tax reform in the last 70 years, has been implemented in haste without any preparedness coupled with declaration of arbitrary deadlines in compliances which has resulted in unending, extreme hardship for tax payers and consultants causing anxiety and health issues,” the petition reads. The petitioners also sought for a direction to the Government to refrain from coercive measures like levying penalties, fines, late fees and other punitive measures, they have also prayed for relief to the tax payers and assesses by simplifying the GST to end the dependence on online compliances and restore filing of returns off-line.
In a significant ruling, the Kerala High Court allowed to release goods detained by the Commercial Tax Department, Kerala by stating that only the Central Government is vested with the right to prescribe documents which must be carried while transporting goods from one state to another under the Integrated Goods and Services Tax (IGST) Act. Justice Jayasankaran Nambiar, while overruling the contentions of the department, clarified that neither the State Government or the State Legislature has power to make Rules/law to regulate the interstate movement of goods. Analyzing the above provisions, the Court observed that the Central Government has, till date, not notified the documents that have to be carried by a transporter of the goods in the course of interstate movement. It was therefore, held that “Under the said circumstances, and finding that neither the State Legislature nor the State Government would have the power to make laws/rules to govern interstate movements of goods in the course of trade, and for the purposes of levy of tax, I am of the view that detention in Ext.P5, for the sole reason that the transportation was not accompanied by the prescribed documents under the IGST Act/CGST Act/CGST Rules, cannot be legally sustained.”
Justices Akil Khureshi and Biren Vaishnav of the Gujarat High Court, on a petition filed by Filco Trade Centre Pvt. Ltd, issued notice to the Centre seeking its response on allowing Cenvat Credit on stock of goods purchased prior to one Year under the new Goods and Services Tax (GST) regime. The petitioners have challenged the condition contained in clause (iv) of subsection (3) of section 140 of the Central GST Act. The case of the petitioners was that they have sizable stock of goods purchased prior to the said period and on which, by virtue of the said condition, no cenvat credit would be available. Admitting the petition, the division bench issued notice to the Central Government considering the fact that the legislation itself is under challenge.
The Madras High Court, while disposing a petition filed by the Coimbatore Corporation Contractors Welfare Association, directed the Commissioner of Commercial Taxes to consider the representation on revising of rate of tax on works contract under the new Goods and Services Tax (GST) regime. The petitioner, an association registered under the provisions of the Tamil Nadu Societies Act challenged the levy of 12 per cent GST on works contract. After hearing the above contentions, Justice Sivagnanam said that “since the petitioner’s representations are pending, it is appropriate for the respondent to respond to the same by giving them a reply. The appropriate person who would be in a position to give reply is that the Commissioner of Commercial Taxes shall give a reply. Because all other authorities are the department of Highways and National Highways etc., who would not be in a position to specifically address the issue pointed out by the petitioner.” The Court further directed the Commissioner of Commercial Taxes to consider the representation given by the petitioner/ association and pass orders within a period of four weeks from the date of receipt of a copy of this order.
Sales Tax Bar Association has filed a petition before the Delhi High Court highlighting several technical glitches on the portal (software) of the Goods and Services Tax Network (GSTN) Portal. The Sales Tax Bar Association is an association of more than 1700 members constituting lawyers, Chartered Accountants and tax professionals. “To hold that GSTN is operating the common portal in complete defiance of the express provisions of the CGST and DGST Act / Rules and that therefore, no tax can be validly collected since the machinery to collect and operate the provisions of law does not infact exist. GSTN is operating in complete defiance and in violation of Article 14, 19, 21, 265 and 300A of the Constitution of India”, the petition also stated. The Court posted the matter for further hearing on 11th December, 2017.
A division bench of Gujarat High Court has dismissed a PIL which sought that the decisions taken by the GST council at its Guwahati meeting be declared null and void on the ground that it violated the model code of conduct (MCC). A Public Interest Litigation was filed on 10th November in High Court against the State Election Commission and the chairman of GST council. The petitioner said since the elections have been announced in Gujarat, the decision by the GST council to cut tax and introduce new GST rates on various items may influence the voters. The petitioner also said that he was not concerned with the merit or demerit of the decisions taken at the council meet, and was only concerned with the “open violation of the model code of conduct”.
The Realty contractors have approached the Bombay High Court challenging the discrepancy in GST rates for Contractors and Sub-contractors. Currently, 18 per cent tax is charged on under-construction properties under the GST regime. The petitioners alleged that the Government has allowed deduction of land value by the developer, making his effective tax rate 12 per cent. However, the sub-contractors have to pay 18 per cent as tax. The petitioners want the Government and GST Council to fix the anomaly and bring parity in GST rates charged from contractors and subcontractors, or provides a mechanism to make good their losses. If there is an anti-profiteering mechanism to ensure tax benefits are passed on to consumers, then why not the opposite, they ask.
A division bench of the Allahabad High Court, while quashing a penalty imposed under the Uttar Pradesh Goods and Services Tax (UPGST) Act, said that a transit State, i.e, Uttar Pradesh, cannot impose penalty on ground of absence of Transit Declaration Form (TDF) since the goods were transported from Rajasthan to Assam and no goods ewre supplied or consumed within U.P. The petitioner is a dealer from Rajasthan. The UP GST authorities has detained the goods belongs to the petitioner while transporting the same to Assam. On verification, it was noted that the goods were transported without Transit Declaration Form required to be accompanied with such goods in accordance with the notification dated 21.07.2017 under Rule 138 of the U.P. GST, Rule 2017. “Then, as to absence of TDF, though it amounted to a breach of the Rules, yet, in the entirety of the facts & circumstances of this case, as admitted to the revenue, it does appear that goods were being transported from Rajasthan to Assam. Also, since the goods had reached near the exit point in the State of U.P. and there is no allegation that the goods were being or had been unloaded inside the State of U.P., we are of the opinion that the goods were infact being transported from Rajasthan to Assam as disclosed in the Tax Invoice and other documents found accompanying the goods. The breach was purely technical,” the bench said.
A division bench of the Madhya Pradesh High Court last week dismissed a Public Interest Litigation (PIL) challenging the levy on confectionary items. The bench comprising Justices P K Jaiswal and Virender Singh refused to admit the petition by stating that the petitioner has an option to contest the same before the Council or Commissioner, GST. Before the High Court, the petitioners challenged the levy of GST on the confectionery items on the ground that it does not come within the purview of taxes at the rate of 18% to 28%, as imposed by the Government. Dismissing the petition, bench held that “Under the Central Goods and Services Act, 2017, specific provision is there to raise objection before the Council or Commissioner, GST, and this Court is not an Expert Body to examine this question.”
While admitting a Public Interest Litigation (PIL) challenging the constitutional validity of the GST Compensation Cess, the Bombay High Court last day issued notices to (1) Union of India, (2) Comptroller and Auditor General of India, (3) 14th Finance Commission of India, (4) Goods and Service Tax Council, (5) Niti Ayog, (6) State of Maharashtra and (7) the Attorney General of India. The petitioner, a law teacher, challenged the validity of the Goods and Services Tax (Compensation to States) Act, 2017, and 15 other laws related to the compensation cess contending that the Act was introduced to levy additional cess on certain goods such as luxury cars, coal and schemes such as the Swachh Bharat to make good the losses to states in the first five years. It was argued that at the time of the passage of the GST Act, the government never proposed to introduce new cess, hence the compensation act and related acts should be examined for their validity. A bench comprising Justices Shantanu Kemkar and Rajesh Ketkar has not allotted a specific date for this case, hence, it will come up for hearing as per the CMIS date. Senior Advocate S B Talekar appeared for the petitioners.
The Gauhati High Court, last week stayed a show cause notice issued by the department demanding service tax from the petitioner M/s Mascot Entrade Pvt Ltd for want of jurisdiction after the implementation of the new Goods and Services Tax (GST). Before the High Court, the counsels for the petitioner, Medha Lila Gope and Nitu Hawelia pleaded that the implementation of the Central Goods and Services Tax (CGST) and omission of Entry 92C of the Constitution, the Service Tax department has no jurisdiction to levy Service Tax. Accepting the contentions of the petitioners, Justice Suma Shyam stayed the notice and held that it was issued without jurisdiction since the Constitution has omitted service tax.
In a petition relating to double taxation issue on imported goods sold from one Customs-bonded warehouse to another, the Delhi High Court issued notices to the Union government, the GST Council and the Central Board of Excise and Customs (CBEC). Recently, the CBEC had issued a circular clarifying that any supply of imported goods taking place before the goods crosses Customs frontiers of India should be treated as an inter-state supply and such transaction for sale and transfer would be subject to IGST. This is without prejudice to the levy of Customs duty and collection of duty at ex-bound stage. He pointed out another issue that the company paying the taxes will not be able to get input tax credit. Suppose a company imports goods and keeps it in its Customs-bonded warehouse. It then sells it to another company which keeps the goods in its own bonded warehouse. The second company will have to pay Customs duty and integrated GST (IGST) twice. Also since the first company has not paid duties, the second one will not get the credit. The matter listed for hearing on March 8.
Having concerns over the issues on entertainment tax which has been subsumed into the Goods and Services Tax (GST), the PVR group has filed an appeal before the Allahabad High Court. Before the High Court, the petitioners contended that Uttar Pradesh government had earlier, promised to allow multiplexes and cine malls retain a portion of entertainment tax for five years, on the basis of investments they make. However, this has been broken after the tax was subsumed into GST. After admitting the petition on file, the High Court issued a notice to the state Government asking it to explain its scheme of entertainment tax. The firm has challenged the new tax on the principle of promissory estoppels, which is a legal principle that says a promise is enforceable by law even if made without formal consideration.
The Kerala High Court, in M/S Indus Towers Limited Vs. The Assistant State Tax Officer, held that the power of detention contemplated under Section 129 of the SGST Act can be exercised only in respect of goods which are liable to be confiscated under Section 130 of the SGST Act. While allowing the petition, Justice P.B Suresh Kumar clarified that goods cannot be detained merely for infraction of Rule 138(2) of the State SGST Rules when there is no taxable supply when goods are transported on delivery chalans so long as the authenticity of the delivery challan is not doubted andAllowing the petition, the bench, relying on the FAQs by the Central Board of Excise and Customs (CBEC) released on 31.03.2017, observed that a combined reading of section 129 and 130 would indicate that the goods can be detained only when it is suspected that the goods are liable to confiscation. Further, according to section 130, the goods can be confiscated when a taxable supply is made and there is a violation of procedure with the intention to evade the payment of tax. “If that be so, mere infraction of the procedural rules like Rules 55 and 138 of the State GST Rules cannot result in detention of goods though they may result in imposition of penalty. In other words, detention of goods merely for infraction of the procedural rules in transactions which do not amount to taxable supply is without jurisdiction.”
Another petition has been filed before the Delhi High Court on ground of technical glitches in the Goods and Services Tax Network (GSTN) wherein the petitioners, M/s Bhargava Motors were unable to file GST TRAN-01. The Petitioner, being a trader was not liable to be registered under the Central Excise Act but was in possession of invoices evidencing payment of excise duty under the existing law i.e. Central Excise Act. That- on this account the petitioner was entitled to a credit of Rs.74,96,069/. That besides this, the Petitioner was entitled to credit of approx. Rs. 10.5 Lacs as per proviso to Section 140 (3) of the CGST Act, 2017.
The Gujarat High Court, recently admitted a petition challenging the constitutional validity of the provisions relating to the Authority of Advance Ruling (AAR) and the Appellate Authority of Advance Ruling (AAAR) under the Central Goods and Services for being coram non judice as it has no judicial member on it. Admitting the petition for hearing, the High Court has issued notice to the Centre, the GST Council and the Government of Gujarat on a petition moved by Nipun Praveen Singhvi wherein he said before the pre-GST regime, the Authority of Advance Ruling was headed by a judicial member, but after GST, the government has “eliminated” judicial member from AAR and AAAR. “In terms of section 96 of the CGST and SGST Act, the Parliament has abdicated its authority by empowering the Central Government and the state Government to frame Rules which amounts to delegation of essential functions and granting of uncanonised power to the executive to control vital bodies that perform, in essence, judicial functions,” it added.
The Gujarat High Court, while admitting a petition challenging the levy of Integrated Good and Services Tax (IGST) on Ocean Freight payable on transportation of goods by a vessel, has sent notice to the Central Government. A bench comprising Justices Akil Khureshi and Justice B N Karia was hearing a writ petition wherein the petitioner challenged the constitutional validity of the Notification No. 10/2017-Integrated Tax [Rate] dated 28th June 2017, as per which they were asked to pay tax at the prescribed rate all over again on the ocean freight. Advocate JK Mittal, the counsel for the assessee contended that the petitioners are paying IGST on the entire value of imports; inclusive of the ocean freight, and therefore, they cannot be asked to pay tax on the ocean freight all over again under a different notification. Further, in case of CIF contracts, the service provider and service recipient both are outside the territory of India. Hence, no tax on such service can be collected even on reverse charge mechanism. It further contended that in case of High Sea sales, the burden is cast on the petitioner as an importer whereas, the petitioner is not the recipient of the service at all. It is the petitioner’s seller of goods on high sea basis who has received the services from the exporter/ transporter. Counsel for the petitioner further submitted that the impugned Notifications are ultra vires the Act and are in any case in exercise of excessive delegation of powers of subordinate legislation.
After blaming the Central Government for technical glitches in the Goods and Services Tax ( GST ) regime, the Bombay High Court today asked the Government to wake up and take measures to address the issues of the taxpayers. The Court further gave a deadline of 24th April 2018 to rectify its flaws in implementing the new tax regime. At previous hearing, the bench had observed that it had come across several other petitions in different courts with grievances against GST. The bench had also hoped the Union government would “wake up” and take corrective measures.
The Kerala High Court, while quashing an order of the Kerala GST authorities, has held that the goods cannot be seized merely for the reason that the goods were intended to be supplied to an unregistered firm. The Court, while allowing a writ petition by M/s Age Industries Pvt Ltd, held that transporting goods to an unregistered person is not prohibited under the GST regime. “The specific case of the petitioner is that the consignment was intended to be supplied to three parties for the quality appraisal on job work basis. Such transactions are not prohibited. Such goods in terms of the provisions contained in the CGST and SGST Act are to be transported on delivery challans. The question whether the person to whom such goods are supplied has registration is irrelevant in the context of the statutes.”
In a petition challenging Rajasthan Government’s decision to not extend benefits earlier promised under the state investment promotion scheme, after the rollout of the new tax regime, the High Court has issued the notice to the Centre, Rajasthan Government, and the GST Council. In 2014, the Rajasthan Investment Promotion Scheme was announced to give entertainment tax exemption to multiplexes, water, and theme parks, among other sectors for seven years. There was the exemption from entry tax for companies making the investment of more than Rs 7.5 billion on capital goods. “Any deviation by the state government will be tested in courts, based on the principle of promissory estoppel,” he added. The principle of promissory estoppel means if a party changes position substantially on a promise, the other party can petition to enforce the promise, even if the essential elements of a contract are not present.
Due to lack of tax exemptions under the Goods and Services Tax (GST) regime for investing in industrially marginal areas of Uttarakhand, J&K, Himachal Pradesh and the North East, the suppliers to major Fast Moving Consumer Goods ( FMCG ) Companies have approached the Uttarakhand High Court. Under the old tax regime, several tax exemptions were given to the manufacturers who would invest in some areas with a view to promoting investments in the exempted zones. The denial of credit on capital goods… in these cases appears to be an unintended omission as section 140 of the CGST Act doesn’t cover the proportionate availing of credit”, said Abhishek A Rastogi, partner, Khaitan & Co, and an advocate for the manufacturers.
The Madras High Court has dismissed the petition which sought to bring Petrol and Diesel under the Goods and Services Tax ( GST ) regime. A division bench comprising of Justice M. Sathyanarayanan and Justice R. Hemalatha yesterday dismissed the petition filed by Activist K.K. Ramesh said that the court could not interfere in Government’s policies. While dismissing the petition, the division bench said that the process was involved in the legislature, in which the court could not give any direction. The petitioner said that the main aim of GST is one nation one tax. But, petrol and diesel had not come under the GST.
The Kerala High Court recently permitted the assessee, M/s Vajra Rubber Products (P) Ltd to release goods detained by the State GST department by furnishing a bond. While disposing of the writ petition, Justice P B Suresh Kumar also directed the authorities to complete adjudication within seven days in terms of section 129 of the Act. Earlier, the goods were seized by the GST authorities by finding that there was no nexus between the documents accompanied and the actual goods under transport. In the light of the decision of the Division Bench in the above case, the bench directed the competent authority to complete the adjudication provided for under Section 129 of the statutes referred to above, within a week from the date of production of a copy of the judgment. It was also directed that if the petitioner complies with Rule 140(1) of the Kerala Goods and Services Tax Rules, 2017, the goods detained shall be released to them forthwith.
While admitting a petition challenging the provisions of Gujarat Goods and Services Tax (GGST) Act, the Gujarat High Court has issued notices to GST Council, GSTN, State Government and Central Government and observed that the transitional credit is vested right which cannot be denied by the Government. CA Abhishek Chopra, GST Consultant to the petitioner opined that “The GST is a value-added tax and Cenvat credit or Value added tax are the vested right of an assessee is which acquired under existing law. Further, there were specific provisions under Central Sale Tax Act, 1956 read with the Central Sales Tax (Gujarat) Rules, 1957 which provides for the mechanism for assessment of tax etc. in the event of non-compliance with provisions including non-submission of forms. Therefore disallowance of carry forward of the acquired right of input tax credit under VAT Act that too before assessment under the Central Sales Tax Act, 1956, is wholly arbitrary and confiscatory. In the disguise of Section 140(1) of Gujarat GST Act, the government is adjusting future liability against current credit.Further, Section 140(1) of the Gujarat GST Act is ultra vires to the Article 279A of the Constitution of India inasmuch as the Article 279A of the Consultation of India does not empower the Goods and Services Tax Council to make recommendation for adjustment of a tax liability which may arise in future under Central Sales Tax Act, 1956, which is a Central legislation, against a accrued/ acquired right under the scheme of Value Added Tax Act, which is a state legislation.”
While granting an interim order to M/S Seth Prasad Agro Private Limited, the Allahabad High Court held that the seizure of goods under the Uttar Pradhesh Goods and Services Tax Act involving an inter-State transaction is valid under the new tax regime as the similar provision is provided in the Central GST and IGST Act. The petitioner was manufacturer of of ‘Tasla’ which is categorised as an agricultural implement. The goods and vehicles of the petitioner were seized by the GST department while transporting the same from one State to another. “In this way the power of seizure under the IGST Act read with Central G.S.T. Act is analogues to that under Section 129 of the U.P. G.S.T. Act. In view of above, the impugned order of seizure cannot be held to be bad in law only for the reason that the wrong provision of Act has been mentioned while passing the same as the power of seizure is clearly traceable under the relevant Act as well.” The bench further held that the impugned order is to be treated to have been passed under IGST Act read with Section 129 of the Central G.S.T. Act rather than the one passed under U.P.G.S.T. Act.
While granting an interim relief to M/s Lg Electronics India Pvt. Ltd, a two-judge bench of the Allahabad High Court, on Thursday directed the GST authorities to release the goods on furnishing security and Bank Guarantee as per the GST laws. In the instant case, the goods belong to the petitioner have been seized by the Goods and Services Tax department for want of E-Way Bill. Accepting the request of the respondents, the bench comprising Justices Pankaj Mithal and Saral Srivastava observed that “In the meantime, the seized goods of the petitioner, as well as the vehicle, be released by the authorities forthwith on the petitioner furnishing security other than cash and bank guarantee of the proposed tax and penalty and indemnity bond of the value of the seized goods.”
A Petition has been filed in the Karnataka High Court challenging the validity of circular imposing maximum Goods and Services Tax ( GST ) on Payment into Horse Racing Totalisator. The Karnataka High Court has sent notice to the Revenue, Union and State Governments in relation to a writ petition filed by Bangalore Turf Club Ltd & Mysore Turf Club Ltd. The petitioner was represented by Senior Counsel N. Venkataraman and Advocate Dinesh Kumar. Justice S. Sujatha, who has heard the matter, will decide on the interim application for stay on 17th April.
In Sheen Golden Jewels (India) Pvt. Ltd. vs. State of Kerala, admitting the challenge on the Constitutional validity of Savings and Repeal Provisions of Kerala GST Act, 2017, Justice A. Muhamed Mustaque of Kerala High Court has issued the notice to the Revenue Department and has directed the State to file counter. The High Court also granted the stay against all coercive proceedings till the matter is disposed of. The petitioner is being represented by Senior Counsel N. Venkataraman, Advocate K.P. Abdul Azeez and Advocate Akhil Suresh. The High Court has posted the matter for 14th April for fixation of date, for final hearing.
A Public Interest Litigation ( PIL ) has been filed before Rajasthan High court challenging provisions of Central and State GST Acts regarding the constitution of ‘Authority for Advance Ruling’ ( AAR ) and Appellate Authority for Advance Ruling ( AAAR ). The bench comprising of Chief Justice Pradeep Nandrajog and Justice Vinit Kumar Mathur has issued notice returnable after four weeks. Petitioner has challenged the vires of Constitution of AAR and AAAR, also the petitioner practising extensively in GST apprised that this defective structure leans in favour of bureaucracy and goes against the basic independent intent of judiciary. Chopra said “It is for the GST Council and Government to decide the fate of ambiguous GST law and its independence per se. “
The Kerala High Court, while disposing of a petition filed by M/s KNR Walayar Tollways Pvt. Ltd directed the Kerala Goods and Services Tax ( KGST ) Authorities to consider the request for revision of returns by the petitioners on the basis of the circular issued by the department in November relating to the right of the assessees under the Act to submit revised returns. The Petitioner was an assessee under the Kerala Value Added Tax Act. The sole grievance of the petitioner, under the writ petition, was that the respondent authorities did not respond to their applications for revision of returns for the period 2014-’15 and 2015-’16. The Court further asked the department to take a decision on applications filed by the petitioners in the light of the above Circular within one month.
In Evergreen Seamless Pipes and Tubes Pvt. Ltd.& Ors vs. Union of India & Ors., the Bombay High Court upheld the Constitutional validity of One Year Limitation for GST Transitional Credit under Section 140(3)(iv) of the CGST Act, 2017. The division bench comprising of Justice Prakash D. Naik and Justice S.C. Dharmadhikari observed “The availment of CENVAT Credit or input tax credit is clearly termed as a concession. With the conditions imposed, the concession could have been availed of. In the absence of a substantive provision granting such concession, there would have been no concession at all. Thus, one cannot pick and choose a condition for challenge by alleging that the availment is undisputedly conditional but one of the conditions, though having nexus with the availment, is unconstitutional or arbitrary and excessive… Once we are of the opinion that there is nothing indefeasible or absolute in the right claimed under the existing law or in transitional arrangements set out, or in the substantive provisions permitting availing of input tax credit, then, all the more the challenge must fail. We cannot also by any comparative analysis of the Central and State Law hold that this condition, as imposed, is unreasonable.”
The Bombay High Court has upheld the validity of Goods and Services Tax ( GST ) on Long-term lease premium. The petitioners has challenged an order levying/collecting the Goods and Service Tax (GST) on the one-time lease premium charged by City Industrial and Development Corporation ( CIDCO ) while letting plots of land on the lease basis. “It is entirely for the legislature, therefore, to exercise the powers conferred by sub-section (2) of section 7 of the GST Act and issue the requisite notification. Absent that notification, merely going by the status of the CIDCO, we cannot hold that the lease premium would not attract or invite the liability to pay tax in terms of the GST Act”, the bench added. While dismissing the petition, the bench also said that “We are, therefore, of the clear view that the demand for payment of GST is in accordance with law. The said demand cannot be said to be vitiated by any error of law apparent on the face of the record”.
A petition has been filed before the Gauhati High Court on the ground of technical glitch in the Goods and Services Tax Network (GSTN) wherein the petitioner, M/s SRKM Steel Pvt. Ltd, was unable to replace Authorised Digital Signature of the Deceased Director with the Digital Signature of the New or Existing Director. Mr D. Saikia, Senior Additional Advocate General appearing for the respondent, Taxation Department submitted that a system is in place by which a substituted Director can also be included for the purpose of authorized signatory in the event the earlier authorized signatory is dead. It is stated that the said system is as per Rule-19 of the Assam GST Rules, 2017. The Bench in its order directed Mr B. Choudhury, counsel assisting Mr D. Saikia to inform the learned counsel for the petitioner about the system in place. “The petitioner may avail the opportunity to do the needful.” said the Court. The matter will be again taken up on 9th May.
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