There were a lot of changes in the Goods and Services Tax ( GST ) regime in the year 2019. Here is the top 30 High Court judgments on GST delivered in 2019.
The Kerala High Court has upheld the constitutional validity of the VAT assessments post-GST rollout. The petitioner had questioned the constitutional validity of Section 174 of the Kerala State Goods and Service Tax Act, 2017. According to the petitioner, the Savings & Repeals Provisions under the said section is violative of clauses 2, 17 & 19 of the 101st Constitutional Amendment Act, 2016.
A two-judge bench of the Gujarat High Court has nullified the clause 4(i) of Circular dated 1.3.2018 issued by the Central Board of Indirect Taxes and Customs (CBIC) which deals with the imposition of GST on Distribution Companies.
The Court also observed that, the ancillary charges collected by electricity distribution company towards application fee, meter rent, charges for shifting of lines, etc are covered by entry 25 of exemption notification relating to transmission and distribution of electricity. According to the Court, the same would constitute composite supply and therefore also held to be exempt as per section 8 of the GST Acts since principal supply is exempt.
A three-judge bench of the Kerala High Court has held that the supply of medicines, consumables, and implants provided by the hospitals to in-patients during the course of the medical treatment is not subject to Value Added Tax ( VAT ) as same would constitute ‘composite supply.’
Citing Supreme Court judgment, the full Bench comprising Justice K Vinod Chandran, Justice A Muhammed Mustaque and Justice Ashok Menon observed the sale, if any made, in the course of the treatment of a patient in a hospital, is with the sole intention of curing the patient.
This petitioner has challenged an enquiry initiated by The Superintendent of CGST & Central Excise (AE) Mumbai. The petitoner contended that he is already being subjected to enquiry by CGST Authorities at Jaipur who have issued him a summons dated 7.9.2017. In the above view, it is his contention that two parallel proceedings / enquiries under the same subject are without jurisdiction. Thus, the enquiry by respondent No. 2 in Mumbai being later in point of time be quashed.
The Gujarat High Court has ruled that, price revision will not be allowed in Contract due to the change in Goods and Services Tax (GST). Interestingly, the order was passed in March 2018, but reserved for publication till last week.
While dismissing the petition, the division bench comprising Justice M.R Shah and Justice A.Y Kogje observed that, “the grant of any relief as prayed in the present petitions would tantamount to varying terms and conditions of the tender document / rate contracts which in exercise of powers under Article 226 of the Constitution of India shall not be permissible”.
The Odisha High Court, in a significant ruling, held that input tax credit is available in respect of GST paid while constructing the immovable property intending to let out for rent.
The bench comprising Chief Justice K S Jhaveri and Justice K R Mohapatra has observed that the very purpose of the Act is to make uniform provision for the levy, collection of tax, the intrastate supply of goods and services, both Central or State and to prevent multi-taxation.
The Karnataka High Court has directed the petitioner to approach the jurisdictional Nodal Officer to revise the GST TRAN-1 for non-technical errors. The Court also directed the Nodal Officer to consider the grievances of the petitioner within four weeks after providing an opportunity of hearing to the petitioner.
A two-judge bench of the Hyderabad High Court has held that the interest under section 50 of the Central GST Act, 2017 is payable on the total tax liability including a portion of which is liable to be set-off against the input tax credit.
Justice V. Ramasubramanian and Justice P Keshava Rao said that “the liability to pay interest under Section 50 (1) is self-imposed and also automatic, without any determination by any one. Hence, the stand taken by the department that the liability is compensatory in nature, appears to be correct.”
- M/s Jayyam Global Foods (P) Ltd vs Union of India
The Madras High Court has held that the Squad Officer cannot detain the goods and impose the penalty for a bonafide misclassification under the Goods and Services Tax ( GST ) regime. Justice G R Swamynathan held that in such cases at best the inspecting authority can alert the assessing authority to initiate the proceedings for assessment of any alleged sale, at which the petitioner will have all his opportunities to put forward his pleas on law and on fact.
The Allahabad High Court has held that the ‘reasons to believe’ are mandatory to conduct search and seizures procedure adopted as per the State GST Acts. The Court held that, “it is essential that the officer authorizing the search should have ‘reasons to believe.’ The principles that are culled out from the catena of decisions referred above is that the ‘reasons to believe’ should exist and should be based on reasonable material and should not be fanciful or arbitrary. It is also established that this Court in exercise of its powers under Article 226 cannot go into the sufficiency of the reasons and should not sit as an appellate court over the reasons recorded. It is also well established that the reasons may or may not be communicated to the assessee but the same should exist on record,”
A two-judge bench of the Gujarat High Court has held that the department cannot detain the goods on failure to fill Part-B of the E-way Bill if the supply is not taxable under GST. The Court observed that on perusal of the impugned order imposing tax and penalty against the petitioner, it is revealed that the basis for computing the additional tax is the IGST paid by the petitioners.
The Allahabad High Court has held that the appellate authority is not empowered to condone delay beyond 30 days.
Justice Saumitra Dayal Singh observed that “in view of the decision of the Supreme Court cited by Sri B.K. Pandey, learned Standing Counsel in the case of Singh Enterprises Vs. Commissioner of Central Excise, Jamshedpur reported in 2008 (3) SCC 70 paragraph no. 8 as also the Full Bench decision of this Court in Commissioner of Income Tax I; Commissioner of Income Tax Central; Janpad Thok Kendriya Upbhokta Sahkari Bhandar Limited Vs. Mohd Farooq; New Cawnpore Floor Mills Pvt Ltd; Commissioner of Income Tax reported in 2009 (317) ITR 305, the delay condonation application filed beyond the period of thirty days could not be condoned and it was clearly not maintainable by the appellate authority.
The Allahabad High Court has held that, Goods and Services Tax ( GST ) not leviable on duty free shops. The division bench comprising of Justice Pankaj Kumar Jaiswal and Justice Rajnish Kumar said that, “On a careful reading of Section 7 (2) along with Sections 2 (10), 2(4) of IGST Act and Sections 2 (11) and 2 (13) of Customs Act, 1962, it is concluded that “crossing the customs frontier of India” under the IGST Act means crossing the limits of custom area which includes the area of customs port, customs airport or land customs station or a warehouse and also any area in which imported goods are ordinarily kept before clearance by customs authority. The DFS located in the custom airport, the custom warehouse are both part of the custom area as defined under Section 2 (11) of the Customs Act, 1962. The supply of imported goods to and from the DFS do not cross the customs frontier and hence these supplies will be an inter-State supply in accordance to Section 7 (2) of the IGST Act. Consequently, they cannot be an inter-State supply liable to CGST and SGST under Section 9 of the CGST Act and SGST Act”.
The Court also said that, “The supply of warehoused goods by the DFS at the departure terminal is to departing International passengers i.e. the passengers travelling from India to a foreign destination. Thus, the goods supplied are never cleared for home consumption and the warehoused goods are exported by the DFS, therefore the levy Customs duty and of the IGST do not arise”.
The Allahabad High Court has upheld a First Information Report (FIR) against GST evaders under the Criminal Procedure Code. The two-judge bench comprising Justices Manoj Misra and Suresh Kumar Gupta held that the contention of the petitioner that no first information report can be lodged against the petitioner under the provisions of the Code of Criminal Procedure for offences punishable under the Indian Penal Code, as proceeding could only be drawn against him under the U.P. Goods and Services Tax Act, 2017, is liable to be rejected.
The Karnataka High Court has held that if the assessee purchaser proves that the seller has already discharged the tax liability, then the department cannot deny the benefit of input tax credit to such buyer.
Justice S Sujatha observed that the benefit of input tax cannot be deprived to the purchaser dealer if the purchaser dealer satisfactorily demonstrates that while purchasing goods, he has paid the amount of tax to the selling dealer. If the selling dealer has not deposited the amount in full or a part thereof, it would be for the revenue to proceed against the selling dealer.
A two bench of the Gujarat High Court comprising Justices J B Pardiwala and A C Rao has set aside the press release dated 18th October 2018 as the same found to be illegal to the extent that its para-3 purports to clarify that the last date for availing input tax credit relating to the invoices issued during the period from July 2017 to March 2018 is the last date for the filing of return in Form GSTR-3B.
The Gujarat High Court has restricted the Goods and Services Tax (GST) authorities from arresting a city-based trader Vimal Goswami merely on suspicion of tax evasion. The bench comprising J B Pardiwala and Justice A C Rao clarified that the authorities should not use the power to arrest without ‘completing their homework’ namely determining the tax liability and ascertaining the evasion.
The Madras High Court has ruled that the constitution of GST Appellate Tribunal ( GSTAT ) is unconstitutional. The division bench comprising of Justice S. Manikumar and Justice Subramonium Prasad has held that the number of judicial members must exceed the number of technical members.
The Gujarat High Court has quashed an order of detention of goods citing the Ground that it is a Non-Speaking Order. The division bench comprising of Justice Harsha Devani and Justice Sangeeta K. Vishen observed that, the department without applying his mind to the facts of the case appears to have mechanically passed the impugned order without assigning any reasons worth the name for confiscating the goods and conveyance.
The division bench comprising of Justice Harsha Devani and Justice Sangeeta K. Vishen observed that, “In exercise of powers under sub-section (2) of section 67 of the CGST Act, it is not permissible for the authorised officer to use coercive measures against family members to find out the whereabouts of the taxable person. It is shocking to see that in premises where there are three ladies, namely, the petitioner’s mother, wife and young daughter, male officers together with a CRPF Officer have stayed throughout day and night despite the fact that the goods, articles and things were already seized on 11.10.2019. The entire exercise carried out by the concerned officers from 12.10.2019 to 18.10.2019 was totally without any authority of law and in flagrant disregard of the provisions of the Act and the rules and in total abuse of the powers vested in them under the Act”.
The Gujarat High Court has ruled that, if upon verification of the documents and on verification of the goods, no discrepancy is found, the conveyance shall be allowed to move further.
The division bench comprising of Justice Harsha Devani and Justice Sangeeta K. Vishen observed that, “The reasons for issuance of the notice for confiscation under section 130 of the CGST Act in Form GST MOV-10 are that upon preliminary verification of the dealer online, 42 e-way bills have been generated on December 2018, wherein, IGST has been shown to Rs.3,64,30,800/- and it appears that, dealers have not paid the same or that the purchases are not genuine. If that be so, nothing prevents the respondents from taking appropriate action against petitioner in accordance with law under the relevant provisions of the CGST Act. However, when the conveyance in question was carrying the goods which were duly accompanied by documents and no discrepancy was found in connection therewith, there was no reason for the third respondent to confiscate the same. The impugned order of confiscation passed by the third respondent under section 130 of the CGST Act, therefore, cannot be sustained”.
Dr. Justice Anita Sumanth observed that, “I am of the view that the claim of the petitioner is liable to be accepted. Goods and Service Tax was introduced with much fanfare in 2017 with discussions preceding the enactment nearly from 2009 onwards. The scheme of Goods and Service Tax (GST) was to provide a comprehensive indirect tax levy subsuming various indirect tax enactments that had been in force prior thereto. Empowered committees were set up to deliberate extensively on the various details of the GST model to be implemented after taking into account the views of the State and Central Governments. The first discussion paper on GST in India set out the salient features that were incorporated in the report of the Thirteenth Finance Commission issued in December 2009. Prior to enumerating the Central and the State taxes to be integrated with GST”.
The Madras High Court has quashed GST department’s proceedings against the petitioner to the recovery of Tax. Justice Ravichandra Babu observed that, “It is seen that except issuing the proceedings under Section 79, no other proceedings was ever issued against the petitioner determining their tax etc., liability, amounting to Rs.53,28,645/- as claimed in the impugned proceedings”.
The court observed that the in the present case the tax was not paid by the petitioner Company in the Government account within the due date, and accordingly it is a case of tax not being paid, within the period prescribed, or when due. The court hence ruled that “we are unable to accept the contention of learned counsel for CGST that no show-cause notice was required to be given in this case”.
The Gauhati High Court held that search and seizure made by the police officials without invoking the provisions of Section 67 of the Assam Goods and Services Tax Act (AGST Act) and following the procedure prescribed therein would be an aberration of the established procedure of law.
The division bench comprising of Justice Achintya Malla Bujor Barua and Justice Nelson Sailo held that if the authorities under the AGST Act of the State of Assam are of the view that the appellants are required to be proceeded with or prosecuted under the AGST Act, it would be appropriate to invoke the provisions of Section 67 of the AGST Act and proceed accordingly. But without invoking the provisions of Section 67 of the AGST Act and following the procedure prescribed therein, it would be inappropriate to allow the police authorities of Assam to continue with the detention and the seizure of the trucks.
The Kerala High Court has ruled that, State Legislature did not have power to Amend the Kerala Value Added Tax Act ( KVAT Act ) which is not in existence after the introduction of the Constitution (One Hundred and First Amendment) Act, 2016.
Justice A.K Jayasankaran Nambiar observed that, the assessment in respect of which period of limitation for reopening the assessment under section 25 of the KVAT Act was to expire by 31-03-2017 can be reopened up to 31-03-2018 by virtue of an amendment to the third proviso to section 25(1) of KVAT Act.
The Kerala High Court has upheld the constitutional validity of Section 42(3) of the Kerala Value Added Tax Act, 2005 which retrospective effect of the said provision to re-open assessments that have already become final under the KVAT Act. Justice A.K Jayasankaran Nambiar of the Kerala High Court observed that, “Section 42 of the KVAT Act was amended through a Notification dated 13.11.2016, and the amendment was given retrospective effect from 01.04.2005, the date on which the KVAT Act was brought into force in the State of Kerala. The legislative power of the State legislature to amend the Act with retrospective effect, cannot be disputed for the power to legislate carries with it the power to legislate retrospectively also”.
The Madhya Pradesh High Court has ruled that Non-filing of Return and Non-payment of GST within the due date is an Offence. While denying the Bail Application, the Court also observed that the taxpayer has to declare their tax liability for a month in GST return (GSTR-1) by 10th day of the subsequent month. And pays liability so declares in return GSTR-3B. The due date for payment of GST liability for a month is the 20th day of the subsequent month.
The Kerala High Court held that, there is a stipulation contained under clause 44 of tender notice that, the Sales Tax as per Rules from time to time is liable to be paid by the petitioner. So after the introduction of CGST Act 2017, the petitioner is liable to pay GST.
The Kerala High Court has allowed the petitioner to upload the Form GST TRAN-1 despite having attempted to do so on 27.12.2017. Justice A.K Jayasankaran Nambiar found merit in the contention of the Petitioner that accrued tax credits could not be denied on account of a procedural defect placing reliance on judgments of the Delhi High Court and the recent judgment of the Himachal Pradesh High Court in the case of Messrs Jay Bee Industries Vs Union of India (CWP No 2169 of 2018) dated 16.11.2019.”