Friday, August 7, 2020
Home CST & VAT / GST Three Years of GST: Top 30 Judgments in 2020

Three Years of GST: Top 30 Judgments in 2020

By Mariya Paliwala -

We have seen everything in this period-transitioning from existing regime to new era, understanding the provisions of GST, analyzing what impact it had rather still having on business, making GST compliances from return filing to reconciliations and as soon as one tax period completed, audit requirements also came into the picture.

  • Amba Industrial Corporation Vs Union of India & Anr.

The Punjab and Haryana High Court directed the respondent authority to permit the petitioner to upload TRAN-I on or before June 30, 2020, and in case Respondent fails to do so, the Petitioner would be at liberty to avail ITC in question in GSTR-3B of July 2020. No doubt, the respondents would be at liberty to verify the genuineness of claim(s) made by the Petitioner.

●       Rajinder Bassi and others Vs State of Punjab

In the present case, there are allegations on the petitioner of having caused loss to State-Exchequer to the tune of Rs 20 crores appx. by evasion of payment of GST and he has applied for grant of interim bail, mainly on account of the prevalent conditions of the spread of COVID-19 virus.

The Supreme Court, vide its order dated March 23, 2020, had directed all the States/Union Territories to consider as to which of the prisoners ‘may’ be released on interim bail or parole during the pandemic so as to decongest the jails and to prevent the outbreak of COVID-19 virus in prisons. They further clarified that the purpose was to prevent the overcrowding of prisons so that in case of an outbreak of coronavirus in the prisons, the spread of the disease is manageable. They make it clear that they have not directed the States/ Union Territories to compulsorily release the prisoners from their respective prisons.

The Punjab and Haryana High Court held that no Special Relief in Bail due to COVID-19 if there is no reported case of COVID-19 within the premises of jail and it is relatively safe.

●       NELCO Ltd. Vs Union of India

The Bombay HC held that the rights and privileges accrued during the existing law have been saved under Section 174 of the CGST Act. If, before and after the GST regime, the availability of Input Credit is conditional, then it cannot be that it is without any limit in the transitional period. With the advent of an entirely new tax regime, the earlier credit could have lapsed, but as and by way of concession, it is permitted to be carried forward for a limited time.

Thus time limit in Rule 117(2) of the Central Goods and Services Tax Rules, 2017 is traceable to the rulemaking power conferred in Section 164(2) and the credit envisaged under section 140(1) being a concession, it can be regulated by placing a time limit, therefore, the time limit under Rule 117(1) is not ultra vires the Central Goods and Services Act, 2017.

●       Bharti Airtel Limited Vs Union of India & Ors.

The High Court of Delhi held that the failure of the Government to operationalize the statutory returns, GSTR 2, 2A, and 3 prescribed under the CGST Act, cannot prejudice the assessee. The GSTR 3B which was merely a summary return as an alternative did not have the statutory features of the returns prescribed under the Act.

Therefore, if there were errors in capturing ITC on account of which cash was paid for discharging GST liability instead of utilizing ITC which could not be captured correctly at that time, the return should be allowed to be rectified in the very month in which the ITC was not recorded and the cash paid should be available as a refund. The High Court read down the circular which did not permit such rectification as being contrary to the scheme of the CGST Act.

  • Union of India Vs Brand Equity Treaties Limited & Ors.

The Supreme Court stayed Delhi HC decision in case of Brand Equity Treaties Limited Vs Union Of India which permitted the assessee to file Form Tran-1 on or before June 30, 2020.

Earlier in In Brand Equity case Delhi High Court Court has directed the Department to allow all assessees to claim an input tax credit in TRAN-1 by 30.6.2020.  The direction would apply to all those who could not file TRAN-1 and claim the input tax credit.

●       Tax Bar Association Vs. Union of India

The Rajasthan High Court in PIL filed by Tax Bar Association granted a big relief direction to file GSTR 9 and 9C without late fees till February 12, 2020, on the grounds of technical glitches being faced by the taxpayers in filing of GSTR 9/9C on the GSTN portal. The High Court turned down the arguments of UOI on the basis that it is a legal right of the taxpayers to file return up till the last date.

  • Kabeer Reality Private Limited Vs Union of India

The High Court of Madhya Pradesh held that there is no necessity to determine the taxable person, as the liability has been self-assessed by the petitioner itself. So far as the determination of the taxable person in the present case is concerned, the case of revenue rests on the GSTR declaration made by the petitioner itself, and therefore, there was no need for determination of the taxable person. Since the liability has already been quantified by the petitioner itself, only attempts are being made for recovering revenue dues under Section 79 (1)(c) of the Act of 2017. It was the petitioner itself, who did not receive the notice issued by the Department, and now, at this juncture cannot blame the Department.

●       Govind Agarwal Vs State of U.P. and Another

The High Court of Allahabad rejected anticipatory bail and held that this is not to be a fit case in which indulgence of granting anticipatory bail should be exercised because it has come on record that the applicant’s firm was found indulging in running a business from bogus address and a huge transaction is shown to have been done without there is any such big transaction reflected from the account of the firm.

  • Union of India Vs. Adfert Technologies Pvt. Ltd.

The Supreme Court rejected a Special Leave Petition filed by the department against the order of the High Court of Punjab and Haryana allowing the Respondent to carry forward unutilized pre-GST credit, noting that being a vested right it cannot be denied on the ground of time limit. Further, the HC also directed the Petitioners to permit the Respondents to file or revise were already filed incorrect TRAN-1 either electronically or manually.

●       Refex Industries Ltd. Vs Assistant Commissioner of CGST & Central Excise

The Madras High Court held that the use of the word ‘delayed’ connotes a situation of deprival, where the State has been deprived of the funds representing tax component till such time the Return is filed accompanied by the remittance of tax. The availability of ITC runs counter to this, as it connotes the enrichment of the State, to this extent. Thus, Section 50 which is specifically intended to apply to a state of deprival cannot apply in a situation where the State is possessed of sufficient funds to the credit of the assessee.

Therefore, the court noted that the proper application of Section 50 is one where interest is levied on belated cash payment but not on ITC available all the while with the Department to the credit of the assessee. The latter being available with the Department is neither belated nor delayed.

●       Amar Cars Private Limited Vs Union of India

The Gujarat High Court in this case in which the GST department has raised Interest Demand on Gross GST without considering the Input Tax Credit (ITC), directed the department to not to take any coercive steps for the purpose of recovery of the interest.

●       Shiv Agro Vs State of Gujarat

The Gujarat High Court said that for a final decision regarding the confiscation of goods and conveyance under GST, the applicant has to file a statutory appeal under Section 107 of the G.S.T. Act before the appellate authority. Filing writ petition before a court will not be able to solve the issue since they will not interfere in the matter since form GST MOV11 has already been passed by the concerned authority.

  • Mohit Minerals Pvt. Ltd. Vs Union of India

The Gujarat High Court set aside IGST on Ocean Freight and held that no tax is leviable under the IGST Act, 2007, on the ocean freight for the services provided by a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India and the levy and collection of tax of such ocean freight under the impugned Notifications is not permissible in law.

  • Refex Industries Limited v. The Assistant Commissioner of CGST & Central Excise

The Madras High Court held that interest under Section 50 of the Central Goods and Service Tax (CGST) Act, 2017 can be levied only on belated ‘cash’ components of tax and not on the ‘ITC’ component.

The High Court, inter alia, relied on the newly inserted proviso to Section 50(1) of the CGST Act to opine that this recently inserted proviso, as per which interest shall be levied only on the ‘cash’ part of the tax inserted with effect from August 01, 2019, clearly seeks to correct an anomaly in the provision as it existed prior to such insertion, hence should thus, be read as clarificatory and operative retrospectively.

●       Mahadeo Construction Co. Vs Union of India

The Jharkhand High Court held that Section 79 of the CGST Act empowers the authorities to initiate garnishee proceedings for recovery of tax where “any amount payable by a person to the Government under any of the provisions of the Act and Rules made thereunder is not paid”. So interest liability under section 50 is although automatic, but its computation and demand can be raised only after initiation of Adjudication proceedings under Section 73 or 74 in case the assessee disputes the demand of interest.

  • Sutherland Mortgage Services INC Vs Principal Commissioner

The Kerala High Court held that it is true that the issue relating to the determination of place of supply is not expressly enumerated in any of the clauses as per clauses (a) to (g) of section 97(2) of the CGST Act, but there cannot be any two arguments that the said issue relating to the determination of place of supply, which is one of the crucial issues to be determined as to whether or not it fulfills the definition of place of service, would also come within the ambit of the larger issue of ‘determination of liability to pay tax on any goods or services or both’ as envisaged in clause (e) of Section 97(2) of the Act. The Advance Ruling Authority has proceeded on a tangent and has missed the said crucial aspect of the matter and has taken a very hyper-technical view that it does not have jurisdiction for the simple reason that the said issue is not expressly enumerated in Section 97(2).

  • Union of India Vs LC Infra Projects (P.) Ltd.

The High Court of Karnataka held that before penalizing the assessee by making him pay interest, the principles of natural justice ought to be complied with before making a demand for interest a Show Cause Notice is required to be issued to the assessee under subsection (1) of Section 50 of the GST Act. The consequence of demanding interest and non-payment thereof is very drastic.

●       Valerius Industries Vs Union of India

The Gujarat High Court held that the power under Section 83 of the Central GST Act, 2017 is a drastic power that should be used sparingly and only on substantive weighty grounds.

It observed that attachment of bank accounts and trading assets should be the last resort and that blockage of the input tax credit by way of computer entry was illegal. The Court was of the view that subjective satisfaction, which is required for the purpose of Section 83, is not dependent on Section 67.

It noted that just because a search has been undertaken resulting in the seizure of goods, it itself may not be sufficient to arrive at the subjective satisfaction that it is necessary to pass an order of provisional attachment to protect government revenue. The High Court also held that the order for attachment can only be passed by a Commissioner and not by subordinate officers.

  • Mahendra Kumar Indermal Vs Deputy Assistant Commissioner (ST)

The Andhra Pradesh High Court in the absence of the authorization in writing by the competent authority, set aside the Order of Prohibition passed by Deputy Assistant Commissioner on the ground of competency of the authority and have found that the power so exercised by Deputy Assistant Commissioner (ST) is not in conformity with the provisions of the Act without reference to the order of authorization in writing, which has proved to be illegal and without jurisdiction.

  • M/S Walchandnagar Industries Limited Vs The Commercial Tax Officer

The Andhra Pradesh High Court held that rejection of petitioner’s requests for adjournment and personal hearing during prevalent COVID-19 pandemic is a failure of the rules of natural justice. It is not valid to make ex-parte assessment and levy penalty proceedings by rejecting requests for personal hearing and adjournment. It appears that the respondent’s understanding of the law as declared by the Hon’ble Supreme Court of India is clearly misconceived.

  • Daily Fresh Fruits India Private Limited. Vs Asst. State Tax Officer

The Kerala High Court in the detention quashed detention order on the ground of the wrong classification of goods and on the ground that this was a bonafide case of dispute in the classification of goods and directed release of goods.

  • Jai Baba Amarnath Industries Vs State of U.P.

The Allahabad High Court in the exercise of power under Article 226 of the Constitution of India can pass appropriate orders for compliance of the statutory provisions contained in various enactments. In the present case, a provision has been made in Section 109 for the creation of the GST, Appellate Tribunal, but the reasons best known to the respondents only for the State of U.P. said Appellate Tribunal has not been constituted.

●       Srinidhi Marketing Vs Union of India

The High Court of Andhra Pradesh held that as per Section 50 of the Central Goods and Services Act, 2017, interest is payable on the delayed payment of tax and that as per the interest statement filed along with the impugned letter, dated February 07, 2020, there was a delay in filing GSTR-3B and hence, interest on ‘cash set off’ and ‘ITC set off’ has been calculated and payment thereof has been asked for, recovery of interest against the petitioner, insofar it relates to ITC set off, shall remain stayed.

●       S. Gurushankar Vs CIT

The Madras High court while addressing the issue under consideration is whether the AO is correct in disallowing deduction under Section 80-IB i.e tax holiday for 5 years, held that tax holiday cannot be granted on the bogus transaction.

●       Aditya Gupta Vs. Union of India

The Rajasthan High court denied the bail to Accused in 22 Crore Goods and Service Tax (GST) Input Tax Credit (ITC) Fraud Case, where the petitioner and his co-accused had created fictitious firms and had claimed tax input credit more than Rs. 22 Crores.