2019-TIOL-GST-309 Dated: Friday, September 26, 2019

GST NEWS

GST - A tale of SEZ, fake exports and breathtakingly mega ITC fraud

HIGH COURT CASES

2019-TIOL-2260-HC-AHM-GST

Ramesh Bhaidas Sonwane Vs State Of Gujarat

GST - Petitioner invites the attention of the Bench to the impugned order of confiscation made u/s 130 of the Act and points that the authority has only referred to the deficiencies noticed at the time when the vehicle was intercepted and confiscated; that paragraph 5 where reasons are required to be recorded is left totally blank and no finding has been recorded; that in paragraph 6, the officer has confiscated only the goods in question, despite which, in the calculation of tax, the authority has calculated fine in lieu of confiscation of conveyance; that being a non-speaking order, the same cannot be sustained.

Held: By way of ad interim relief, the respondents are directed to forthwith release the Truck upon the petitioner paying the amount of Rs.58,576/, as stipulated in the impugned order, as fine in lieu of confiscation of conveyance subject to the final outcome of the petition - Notice issued returnable on 10.10.2019: High Court [para 3]

Ad interim relief granted: GUJARAT HIGH COURT

2019-TIOL-2259-HC-AHM-GST

Jilani Shahnavaz Mulla Vs State Of Gujarat

GST - Seizure of conveyance - Petitioner submits that even if an order of confiscation is passed under section 130 of the CGST Act, at best, the petitioner would be required to pay a fine equal to the tax payable on the goods being transported - Counsel for Revenue disputes the aforesaid position by inviting the attention of the court to the second proviso to sub-section (2) of section 130 as well as sub-section (3) of section 130 of the Act.

Held: Noticed to be issued returnable on 10th October, 2019 - By way of ad-interim relief, the second respondent is directed to release the vehicle of the petitioner (viz. truck) upon the petitioner paying a fine of Rs.1,05,254/- as proposed in the notice dated 15.7.2019 issued under section 130 of the Act in lieu of confiscation of conveyance - such amount is to be treated as a deposit - petitioner shall also file an undertaking before this court to the effect that in case an adverse order is passed against him under section 130 of the CGST Act, he shall pay the differential amount subject to his right to challenge such order: High Court [para 3 to 5]

- Ad interim relief granted: GUJARAT HIGH COURT

2019-TIOL-2258-HC-AHM-GST

Brandthought Retail Pvt Ltd Vs State Of Gujarat

GST - Petitioner has already deposited tax and penalty as per the provisions of section 129 of the Goods and Services Tax Act - by way of interim relief, the respondents are directed to forthwith release truck along with the goods contained therein, subject to the final outcome of the petition - Notice to be issued returnable on 9 th October 2019: High Court [para 3]

- Notice issued: GUJARAT HIGH COURT

2019-TIOL-2257-HC-AHM-GST

Navrang Roadlines Pvt Ltd Vs UoI

GST - Seized documents - Petitioner submits that despite their repeated requests to provide a copy of the data that is lying with the respondents, they have not been acceded and that, in the meanwhile, the statutory period for filing the income tax return is likely to be over.

Held: Notice to be issued, returnable on 3rd October 2019 and in the meanwhile respondents are directed to furnish the copies of the relevant documents to the petitioner as envisaged under sub-section (5) of section 67 of the CGST Act, on or before 28th September 2019: High Court [para 2]

- Notice issued: GUJARAT HIGH COURT

2019-TIOL-2256-HC-AHM-GST

Meena Agency Ltd Vs State Of Gujarat

GST - Court had permitted release of the truck together with the goods in question in view of the fact that the petitioner had deposited tax and penalty under section 129 of the IGST Act – Notice to be issued returnable on 27 September 2019: High Court

- Notice issued: GUJARAT HIGH COURT

2019-TIOL-2255-HC-AHM-GST

Prakashsinh Hathisinh Udavat Vs State Of Gujarat

GST - Petition invites attention of the Bench to the order of seizure made under rule 139(2) of Rules, 2017 - Petitioner's car came to be seized when the petitioner had gone to the tax office for attending some proceeding there - It is submitted that the impugned order of seizure is totally without any authority of law, inasmuch as, sub-section (2) of section 67 of the CGST Act does not empower the respondents to act in such an arbitrary manner.

Held: Having regard to the submissions, Notice to be issued returnable on 27 th September 2019: High Court

- Notice issued: GUJARAT HIGH COURT

2019-TIOL-2254-HC-AHM-GST

Rafiqbhai Mamadbhai Manakiya Vs State Of Gujarat

Held: Noticed to be issued returnable on 10th October, 2019 - By way of ad-interim relief, the second respondent is directed to release the vehicle of the petitioner (viz. truck) upon the petitioner paying a fine of Rs.62,024/- as proposed in the notice dated 12.7.2019 issued under section 130 of the Act in lieu of confiscation of conveyance - such amount is to be treated as a deposit - petitioner shall also file an undertaking before this court to the effect that in case an adverse order is passed against him under section 130 of the CGST Act, he shall pay the differential amount subject to his right to challenge such order: High Court [para 3 to 5]

- Ad interim relief granted: GUJARAT: GUJARAT HIGH COURT

2019-TIOL-2252-HC-P&H-GST

Jagdish Kumar Sehgal Vs UoI

GST - Petition seeks quashing of the letter/recovery notice - Petitioner, a government contractor, had been issued a Work order and had successfully completed the work - petitioner does not dispute the liability as regards the deposit of GST pertaining to this work.

Held: In such circumstances, there would be no warrant for interference - petitioner seeks some indulgence by drawing out an installment schedule so that some reasonable time would be afforded for deposit of the GST amount - even such submission cannot be accepted as no provision is cited in support - Petition dismissed: High Court

- Petition dismissed: PUNJAB AND HARYANA HIGH COURT

2019-TIOL-2251-HC-MUM-GST

Jitendra's Auto World Vs UoI

GST - Petitioner challenges the decision of GST council taken on 22nd December 2018.

Held: Bench notes that what has been annexed to the petition is not the minutes of the decision of the 31 st GST council meeting but the agenda of the 31 st GST Council meet to be held on 22 nd December 2018 - Petition to come up for admission in its normal course at which time petitioner would explain the above lapse: High Court

- Matter posted: BOMBAY HIGH COURT

2019-TIOL-2246-HC-ALL-GST

Shikhar Constructions Vs State Of UP

GST - Petitioner submits that though the impugned order is appealable u/s 112 of the Uttar Pradesh Goods and Services Tax Act, 2017 before the Appellate Tribunal but as at present, no Appellate Tribunal is functioning in the State of U.P., therefore, the present writ petition has been filed - Petitioner further submits that they are ready to deposit the amount as per the provisions of Section 112 of the Act, 2017, which is a pre-condition for filing the appeal; that fifteen days time be given to them.

Held: Prayer is allowed - if petitioner fails to comply and submit a receipt within the stipulated period, the petition would stand dismissed without reference: High Court

- Matter posted: ALLAHABAD HIGH COURT

2019-TIOL-2244-HC-MAD-GST

AA Traders Vs Superintendent of GST & CE

GST - The present petitions were filed to challenge proceedings initiated against the petitioners - Such proceedings are summons issued u/s 70 of the CGST Act calling upon the petitioners to appear along with requisite documents and details in respect of an enquiry being held by the Revenue in connection with alleged evasion of GST by the petitioners - Without doing so, the petitioners directly filed the present writ petitions.

Held - Though the petitioners claim that the summons were issued by granting short time for them to appear, such a request is not liable to be entertained as it is for the petitioners to approach the Revenue and seek sufficient time for appearance - Without doing so, the petitioners directly filed the present writ - Hence the writs are dismissed as being non-maintainable: HC

- Writ petitions dismissed: BOMBAY HIGH COURT

2019-TIOL-2238-HC-AHM-GST

India Logistics And Cargo Movers Vs State of Gujarat

GST - Petitioner has challenged the notice dated 16.5.2019 issued in Form GST MOV-10 as well as the detention/confiscation order dated 16.5.2019/28.5.2019 issued by the third respondent in Form GST MOV-11 and seeks a direction to the respondent authorities to forthwith release truck No.GJ-27-X-3752 along with the goods contained therein.

Held : On reading the impugned order of confiscation in its entirety, it is manifest that the third respondent has not assigned any reason whatsoever as to why the goods and conveyance were required to be confiscated - the third respondent 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 respondents should be aware that orders of confiscation under section 130 of the CGST Act/GGST Act have serious civil consequences for the transporter as well as the owner of the goods, therefore, the least that is expected of the authorities discharging duties under these Acts is that they should properly apply their minds to the facts of the case before taking drastic action under the provisions of section 130 of the CGST Act/ GGST Act - Passing orders in a perfunctory manner has been done in the present case without considering the explanations tendered by the affected parties and without assigning reasons, therefore, amounts to abdication of duties on the part of the officer concerned and causes immense prejudice to the parties - since none of the 14 invoices relate to the parties whose goods are confiscated, under the circumstances, the goods belonging to them could not have been confiscated by the respondent authorities - it appears that the impugned order has been passed without any application of mind and without considering the explanation submitted by the petitioner and Anjani Synthetics Limited and in undue haste - Moreover, despite the fact that out of 61 consignments, the third respondent has noticed deficiencies only in respect of three consignments, the conveyance of the petitioner is also sought to be confiscated, that too without assigning any reasons as to how the petitioner has sought to evade payment of tax - It may be noted that while there appears to be a format for an order under section 130 of the CGST Act, such format also provides a column for assigning reasons therefor, however, that column has been left blank. - the impugned order is totally bereft of any reasons, in the absence of which the order stands vitiated due to non-application of mind on the part of the maker of the order - The impugned order dated 28.5.2019, therefore, cannot be sustained - Under the circumstances, no useful purpose would be served in remanding the matter to the third respondent - petition succeeds and is, accordingly, allowed. The impugned order dated 28.5.2019 passed by the third respondent in exercise of powers under section 130 of the CGST Act/GGST Act is hereby quashed and set aside - The respondents are directed to forthwith release the conveyance, namely, truck No.GJ-27-X-3752 along with the goods contained therein: High Court

- Petition allowed : GUJARAT HIGH COURT

2019-TIOL-2230-HC-KERALA-GST

Bridge Hygiene Services Pvt Ltd Vs State Tax Officer

GST - Default in filing of returns from July 2018 onwards - Grievance in the writ petition is against orders of assessment passed by the 1st respondent under Section 62 of the GST Act, pursuant to a best judgment assessment - case of the petitioner is that although there is a provision under the Act for an automatic setting aside of the best judgment assessment in circumstances where the registered dealer furnishes a valid return within 30 days of service of the assessment order, the petitioner sees this provision as futile in his case inasmuch as even if the petitioner were to file the returns within the extended time of 30 days from the date of receipt of the best judgment assessment orders, he would not be in a position to pay the admitted tax liability as reflected from the returns – petitioner praying for quashing of the orders passed on the ground that they did not adhere to the yardstick indicated in s.62 of the Act.

Held: Statutory provisions are clear with regard to the time frame within which the assessee has to file his return and pay tax based on the said returns if he wants the assessment done on best judgment basis to be cancelled - Statutory provisions enable the assessee, who is aggrieved by the assessment order passed on best judgment basis, to furnish his returns within a further period of 30 days and pay tax thereon on the basis of the return filed by him, and in that event, the order of the proper officer passed on best judgment basis will stand automatically withdrawn – petitioner informs that he would not be able to pay the admitted tax liability on account of paucity of funds – Statutory prescription of 30 days from the date of receipt of the assessment order passed under sub section (1) of Section 62 has to be strictly construed against an assessee and in favour of the revenue, since this is a provision in a taxing statute that enables an assessee to get an order passed against him on best judgment basis set aside - The provision must be interpreted in the same manner as an exemption provision in a taxing statute - Court may not be justified in granting an extension of the period contemplated under sub section (2) of Section 62, so as to enable the assessee to file a return beyond the said period for the purposes of getting the benefit of withdrawal of an assessment order passed on best judgment basis under Section 62(1) of the GST Act - Under such circumstances, prayer sought for in the writ petition cannot be granted - Writ petition fails and is, accordingly dismissed: High Court [para 4, 5, 7]

- Petition dismissed: KERALA HIGH COURT

2019-TIOL-2229-HC-AHM-GST

Jamshed Vs State of Gujarat

GST - Petitioner disputes the fact of service of GST MOV-10 notice upon them - Counsel for Respondent Revenue to ensure that a copy of the notice be duly furnished to the petitioner forthwith - petitioner is required to remain present before the respondent authority on 25.09.2019 - Matter stand over to 26 September 2019: High Court [para 3.1]

- Matter posted: GUJARAT HIGH COURT

2019-TIOL-2228-HC-AHM-GST

Sri Ramakrishna Traders Vs State Of Gujarat

GST - Petitioner submitted that the petitioner has already paid the amount of tax and penalty as computed by them.

Held : By way of interim relief, the respondents are directed to release the Truck along with the goods contained therein subject to the petitioner paying the differential amount of tax and penalty between the amount paid by the petitioner and the amount computed by the respondents u/s 129: High Court

- Interim relief granted: GUJARAT HIGH COURT

2019-TIOL-2220-HC-P&H-GST

CMI Ltd Vs Directorate General GST

GST - Allegation of availment of false input tax credit based on forged/non-existent sale invoices - case booked by DGGSI upon raiding the company premises and seizure of certain documents as a part of investigation - Petitioner seeks photocopy of seized documents and directions restraining the respondents from taking coercive steps against summoned Director of the company.

Held: It is not disputed that for furnishing of photocopy of seized documents, petitioner Company has to make a proper application under Section 67(5) of Central Goods and Services Tax Act, 2017, whereupon Proper Officer shall take appropriate action - As regards, taking of coercive steps, it is not disputed that investigations are barely at initial stage, which do not warrant grant of such prayer - petitioner seeks withdrawal of petition to enable his client to take action in accordance with law - Petition dismissed as withdrawn: High Court

- Petition dismissed: PUNJAB AND HARYANA HIGH COURT

2019-TIOL-2219-HC-KERALA-GST

SR Enterprises Vs CSGST

GST - Petitioner is aggrieved by notice of detention under Section 129(3) of the Act - goods were consigned from West Bengal under cover of E-way bill which was generated on 23.08.2019 and was valid up to 16.09.2019 - consignment, however, reached Parassala check post only on 18.09.2019 after expiry of validity period of e-way bill consequent to which detention notice was issued demanding tax and penalty quantified at twice the tax payable under the consignment - Petitioner has paid the tax amount and detention is for non-payment of penalty amount of Rs.3,56,100/- u/s 129 of the Act.

Held: Bench deems it appropriate to direct the 2nd respondent to release the consignment and vehicle covered by detention notice to the petitioner on the petitioner furnishing a bank guarantee for the amount of Rs.3,56,100/-; adjudication process be completed within a period of one month: High Court

- Petition disposed of: KERALA HIGH COURT

2019-TIOL-2218-HC-AHM-GST

Sakul Nazar Mohmd Vs State Of Gujarat

GST - Petitioner submits that s.129 of the Act does not contemplate detention of goods on any ground other than the grounds stated therein and that, under valuation of an invoice cannot be a ground for detention of goods under section 129 of the CGST Act when all the necessary documents as required under section 68 of the CGST Act read with rule 138(A) of the rules have been furnished.

Held: Valuation report prepared by Value Team Professional (Government registered valuer) does not inspire confidence - By way ad-interim relief, the respondent-authorities are directed to forthwith release truck along with the goods contained therein - The petitioners, however, shall file an undertaking to the effect that in case, ultimately, they fail in the case, they shall pay the amount of liability under the impugned order - Notice issued returnable on 03.10.2019: High Court [para 3, 3.1]

- Notice issued: GUJARAT HIGH COURT

2019-TIOL-2217-HC-KERALA-GST

G Nxt Power Corporation Vs UoI

GST - Petitioner has been granted drawback of Central Excise component and denied IGST paid as cash - The petitioner by filing the instant writ petition contends that he is entitled for refund of IGST paid during the transition period - Petitioner submits that the denial of refund of IGST on a transaction which is otherwise zero-rated transaction is illegal, contrary to Article 265 of Constitution of India and prays for appropriate directions for refund of the IGST paid by the petitioner - Counsel for Respondent Revenue submits that the voluntary or erroneous payment of IGST is required to be refunded to petitioner, however, the petitioner has already drawn or availed the higher rate of duty drawback and, therefore, while ordering refund of IGST the petitioner is required to refund the higher rate of duty drawback already availed by the petitioner with interest - Petitioner submits that the respondents, if insists upon refund of higher rate of duty drawback by the petitioner with interest, the respondents are also required to pay interest to petitioner from the date on which the petitioner requested for refund of IGST.

Held: Court has suggested refund of IGST after adjusting the higher rate of duty drawback availed by the petitioner without refunding IGST amount which the counsel has consented - Petition disposed of with directions: High Court [para 4]

- Petition disposed of: KERALA HIGH COURT: KERALA HIGH COURT

2019-TIOL-2197-HC-DEL-GST

Sales Tax Bar Association Vs UoI

GST - Petitioner has highlighted several grievances with regard to the functioning of the GSTN system - Court vide order dated 12.09.2019 in W.P. (C) 10284/2018 - 2019-TIOL-2157-HC-DEL-GST, has already directed the petitioners to raise all their grievances in relation to the working of the GST Network, including those not raised in that petition, in bullet points and to place the same before the respondents, following which meetings would be held between the representatives of all stakeholders including the petitioners, with a view to resolve all such issues - Taking into consideration the nature of the difficulties being faced by the petitioner; its members, and, other tax payers, Bench directs the respondents to circulate on their website the enlarged scope of IT-Grievance Redressal Committee - grievances raised by the public at large or by the petitioner association should be redressed as early as possible, and preferably within two weeks of the same being so raised - directions should be implemented in the next four weeks - Matter to be listed on 15.10.2019: High Court [para 2, 7, 8, 10]

- Matter listed: DELHI HIGH COURT

2019-TIOL-2194-HC-AHM-GST

Enprocon Enterprise Ltd Vs ACST

GST - Petitioner submits that respondents have exercised powers of provisional attachment of property u/s 83 of the GGST Act whereby, the three bank accounts of the petitioner have been attached; that apart from such action, the respondents have also provisionally attached the office premises of the petitioner and which is worth more than a crore rupees and the same is more than the amount estimated by the respondents, which may become due and payable in case an assessment order is passed against the petitioner - It is submitted that, therefore, there is no justification for attaching the bank accounts over and above the attachment of the office premises when the liability that may arise is already protected by the attachment over the office premises.

Held: On a perusal of the order dated 30.7.2019 passed by the Assistant Commissioner of State Tax, Unit 22, Ahmedabad under rule 139(4) of the GGST Rules, pursuant to the search of the premises of the petitioner under sub-section (2) of section 67 of the GGST Act, 2017, it is evident that the properties in respect of which the prohibition order has been passed were not found at the premises which came to be searched - Under the circumstances, the attachment of such property appears to be beyond the scope of the powers of the Officer concerned under sub-section (2) of section 67 of the Act - By way of interim relief, the order dated 30.7.2019 issued under rule 139(4) of the GGST Rules as well as the attachment of the above-referred three bank accounts of the petitioner under section 83 of the GGST Act, 2017, are hereby stayed: High Court [para 5, 6, 8]

- Interim relief granted: GUJARAT HIGH COURT

AAR CASES

2019-TIOL-306-AAR-GST

Metro Dairy Ltd

GST - Applicant is a manufacturer of dairy products viz. UHT milk, milkshake, curd and lassi - Applicant has procured capital goods and input services that are common to the production of both taxable and exempted goods and seeks to know to what extent and in what proportion the input tax credit is admissible on such capital goods and input services - Applicant also submits that commercial production of taxable goods started in December 2018 but that of exempt goods did not begin in 2018-19 and, therefore, they should be eligible for credit of the entire input tax on input services.

Held: Based on the proviso to rule 43(1)(d) of the GST Rules and further prescriptions under rule 43(1)(e), (f) and (g) of the Rules, the applicant is required to compute the admissible amount of the input tax credit on the capital goods used for both taxable and exempt supplies in the tax periods over the useful life of such capital goods, calculated from the date of invoice - applicant should reverse the balance amount of the input tax on the said capital goods that has already been credited to its electronic credit ledger - as commercial production of exempted goods did not begin in 2018-19, the entire input tax on input services, subject to rule 42(2), is an admissible credit during 2018-19: AAR