The Petitioner had been subjected to Form DRC-01A u/s. 74(1) and (5) of the CGST Act. The said Form DRC-01A, although in the form of an intimation, is as good as a final order in as much as it demands the Petitioner to pay the demand within 15 days vide Form DRC-03. Aggrieved, the Petitioner preferred a Writ before the Gujarat HC.
The HC held that intimation notice issued under DRC-01A is an intimation of tax ascertained by officer and cannot propose recovery of tax on failure to comply with the same. It was further held that as per the CGST Act, DRC-01A is followed by DRC-01 i.e., Show Cause Notice and then Order confirming demand therein and demand can be recovered only subsequent to issuance of such Order. In view of the above, the HC quashed the Form DRC-01A.
The CBIC vide various Notifications dated 21 May 2022, has regularized the Import and Export duties of various goods in the manner as tabulated hereunder:
Notification No. and Date |
Particulars |
Notification No. 25/2022 dated 21 May 2022 |
The Customs Duty upon import of Petrol has been reduced to Rs. 5 per litre |
The Customs Duty upon import of Diesel has been reduced to Rs. 2 per litre |
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The Customs duty on ferronickel, anthracite coal, coking coal, PCI coal has been reduced from 2.5% to Nil |
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Notification No. 26/2022 dated 21 May 2022 |
The Customs Duty upon import of coke and semi-coke of coal has been reduced from 5% to Nil |
The Customs Duty upon import of Naphtha has been reduced from 2.5% to 1% |
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The Customs Duty upon import of propylene oxide has been halved to 2.5% |
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The Customs Duty upon import of Ferro-nickel has been reduced from 2.5% to Nil |
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The export duty on Iron ore and concentrates Non- agglomerated has been increased from 30% to 50% |
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Notification No. 28/2022 dated 21 May 2022 |
The export duty on Iron ore and concentrates Agglomerated has been increased from 30% to 50% |
The export duty on Iron ore pellets has been increased from Nil to 45% |
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The export duty on Pig iron and spiegeleisen in pigs, blocks, or other primary forms has been increased from Nil to 15% |
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Notification No. 29/2022 dated 21 May 2022 |
The export duty on Flat rolled products of iron or non-alloy steel, hot rolled, not clad, plated, or coated has been increased from Nil to 15% |
The export duty on Flat rolled products of iron or non-alloy steel, cold rolled (cold-reduced), not clad, plated, or coated has been increased from Nil to 15% |
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Notification No. 29/2022 dated 21 May 2022 |
The export duty on Flat-rolled products of iron or non-alloy steel, of a width of 600 mm or more, clad, plated or coated has been increased from Nil to 15% |
The export duty on Bars and rods, hot-rolled, in irregularly wound coils, of iron or non-alloy steel has been increased from Nil to 15% |
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The export duty on Other bars and rods of iron or non-alloy steel, not further worked than forged, hot-rolled, hot-drawn or hot-extruded, but including those twisted after rolling has been increased from Nil to 15% |
The above-mentioned notifications shall come into force with effect from the 22 May 2022.
On account of the non-availability of Form GSTR-2B for the month of April 2022 on time i.e. by 14 May 2022, the CBIC vide Notification No. 05/2022 - GST (Central Tax) dated 17 May 2022, has extended the due date for furnishing return in Form GSTR-3B for the month of April 2022 till 24 May 2022
During the filing of Form GSTR-1 for the month of June 2019, the Petitioner had inadvertently missed out to tick mark on the column of 'Deemed Export' in respect of 9 invoices. Upon realization, the Petitioner had sought permission for rectification of Form GSTR-1, which had been granted to them. However, the Petitioner successfully amended only 4 out of the 9 invoices. Thereafter, the Respondent refused to grant another permission to rectify the balance 5 invoices. Aggrieved, the Petitioner preferred a Writ before the Gujarat HC.
The HC observed that Section 37(3) of the CGST allows rectification of returns for unmatched invoices. However, without going into the merits, the HC allowed the Writ, directing the Respondents to process the request of the Petitioner for carrying out amendment in its GSTR -1 returns pertaining to June 2019 with respect to ticking of the 'Deemed Export' column in regard to the balance 5 invoices, which the writ applicant did not amend in the first request.
Screenotex Engineers Private Limited [2022-TIOL-452-HC-AHM-GST]
Author’s Notes:
It would be pertinent to note that the Apex Court in RE: Bharti Airtel Limited [2021-TIOL-251-SC-GST], had denied rectification in Form GSTR-3B, stating the same to be impermissible under the law. However, the Gujarat HC in the instant case has exercised its discretionary power to allow rectification. Such liberal approach of the Courts are welcome.
During the course of audit of accounts conducted by CERA Audit party for the erstwhile regime, it was observed by the Revenue authorities that the petitioner is liable to pay service tax under reverse charge on services rendered at two quarries, for which, royalty had been paid by the petitioner to the Government of Tamil Nadu for mining stones since such royalty payments are liable to service tax consequent to the issuance of Notification No.22/2016 ST dated 13 April 2016. The Petitioner duly paid the ST, however, the same had been paid post the transitional date.
Accordingly, as the Petitioner could not avail the transitional credit of service tax paid, post the transitional date, the same had been claimed as refund. The refund application came to be rejected by the Revenue authorities mainly on the ground that there is no provision in the new regime to allow such refund. Aggrieved, the Petitioner preferred a Writ before the Madras HC.
The HC observed that the Petitioner should be allowed benefit of service tax paid under RCM post implementation of GST. The Court noted that neither refund under Section 142(3) of the CGST Act can be allowed being not eligible under erstwhile laws nor credit under Section 140(1) of the CGST Act can be allowed when time limit to transition such credit has lapsed. The Court invoked ‘Doctrine of Necessity’ and remanded matter back to department for reconsidering the Petitioner’s application for allowing GST credit under Section 142(3).
Ganges International Private Limited [2022-TIOL-325-HC-MADGST]
Authors’ Notes:
The Court exercised its discretionary powers to remand matter back for reconsideration under Section 142(3) for allowing credit. ‘Doctrine of Necessity’ is however misplaced in this case in the absence of statutory provisions to this effect. In past, the CESTAT has consistently allowed refund under Section 142(3) on similar facts.
Disclaimer:
The information provided in this update is intended for informational purposes only and does not constitute legal opinion or advice. Readers are requested to seek formal legal advice prior to acting upon any of the information provided herein. This update is not intended to address the circumstances of any particular individual or corporate body. There can be no assurance that the judicial/ quasi judicial authorities may not take a position contrary to the views mentioned hereinrra quis.
The Applicant had sought an advance ruling before the Haryana AAR to ascertain whether the ITC can be availed on third party canteen services and gift distribution. The Applicant further sought clarification in regarding GST liability on coupons distributed to employees.
The AAR held that the Applicant was neither eligible to avail ITC in respect of canteen services availed by it for its employees nor on business promotion activities. The AAR further held that the distribution of coupons among employees will attract GST. Aggrieved, the Applicant had preferred an appeal before the Haryana AAAR.
The Applicant argued that the restriction of ITC in respect of canteen services is not applicable when the said services are mandatory by law and not optional on the Applicant to its employees. It was argued that since the provision of canteen facility is mandatory to be provided under the Factories Act, such provision is covered under the exception of Section 17(5) of the CGST Act. The Applicant further argued that ITC in respect of promotional schemes shall be allowed to avoid the cascading effect.
The AAAR observed that Section 17(5)(b)(i) sub-clause ending with a colon and followed by a proviso which ends with a semi colon is to be read as independent sub-clause, independent of sub clause Section 17(5)(b)(iii) and its proviso [of sub-clause iii]. Thereby, the proviso to section 17(5)(b)(iii) is not connected to the sub-clause of Section 17(5)(b)(i) and cannot be read into it. Accordingly, it was ruled that ITC on GST paid on canteen facility is blocked credit u/s. 17(5) of the CGST Act and therefore would not be admissible.
As regards the second issue in relation to distribution of coupons among employees attracts GST liability, the AAAR ruled that distribution of coupons among employees does not attract GST.
As regards the issues relation to ITC on promotional schemes, the AAAR observed that sub section 17(5), clause (g) clearly forbids ITC admissibility on the items of personal consumption. Thus the items mentioned by the Applicant viz. sweets; dry fruits; electronic items and Gold and Silver Coins etc. are essentially being given to the relevant persons as items of personal use/ consumption. Thus, it was ruled that the Applicant was not eligible to take ITC on such business promotion expenses.
Muasashi Auto Parts India Private Limited [HAAAR/2020-21/06 dated 25 September 2020]
GLS Comments:
As the saying goes “The law is what is read, not what is written.” It seems that the Haryana AAR in the instant matter has followed the footsteps of Gujarat AAR in RE: Tata Motors [TS-437-AAR(GUJ)-2021-GST], who had interpreted Section 17(5) of the CGST Act in a similar fashion. In this regard, it shall be noted that Delhi HC in RE: Rodhee vs. Govt. of Delhi and Ors. [(2003) IILLJ 5 Del] had held that the intention of a semi-colon is to segregate two substantially similar topics from each other. If the said punctuation mark is not employed, a part of the foregoing words would have to be repeated once again or in the same context would have to be reiterated. It was further observed that if the proviso was not to operate on the first sub-section it should have ended with a full stop and not a semi-colon. Basis the same it was concluded that a statutory provision should not be interpreted only on the basis of the punctuation marks found therein.
The CBIC has enabled a new feature whereby Special Economic Zone ('SEZ') units can check the status of integration of their Bills of Entry (DTA Sale) with GSTN, on ICEGATE
The CBIC has enabled the functionality for amendments of Shipping Bills on ICEGATE. Following are the key guidelines issued in this regard:
The detailed guideline issued in relation to the amendment of SBs on ICEGATE has been attached herewith.
The Applicant had sought an advance ruling before the Haryana AAR to ascertain the availability of ITC of GST paid on construction of immovable property and further leasing out the premises. The AAR had held that the Applicant was not eligible to avail ITC in respect of inputs / capital goods used for creating warehouse for renting purpose. Aggrieved, the Applicant had preferred an Appeal before the Haryana AAAR.
The Appellant argued that Section 17(5)(d) of the CGST Act disallows ITC on construction of immovable property by a taxpayer on his own account. However, in the instant case as the construction of the immovable property is being done for further letting-out of the property, the said provision would not be applicable. The Appellant further relied upon the judgement of the Orissa HC in RE: Safari Retreats Private Limited [2019 (025) GSTL 0341], wherein the Court had allowed ITC on construction of immovable property for letting it out.
The AAAR observed that the construction of the immovable property had been done by the Appellant for itself i.e., with all the intentions to retain the ownership rights. Thus, the construction of the immovable property was construed to be done by the Appellant on his own account. The AAAR further observed that in terms of CBIC instruction vide F. No. 276/114/2015-CX.8A dated 09.02.2019, the judgement of the Orissa HC had not attained finality as it is pending before the Apex Court. Accordingly, the AAAR upheld the AAR order holding that the Appellant was not eligible to avail ITC as the construction of the immovable property was for his own account.
Dhingra Trucking Private Limited [HAAAR/2020-21/03 dated 30 September 2020]
GLS Comments:
The entire issue in the instant matter can be filtered down to the interpretation of the phrase ‘on his own account.’ The GST law nowhere defines the phrase. Accordingly, such situation calls for reference to the general rules of interpretation, which provides that there should be no additional inclusion of words and the provision must be construed strictly as per the plain language used by the Legislature. It is opined that the said term seeks to block ITC when the construction is being done for one’s own purpose. It cannot be said to block ITC in respect of immovable property intended for the purpose of leasing out. Such a situation blocking ITC for the purpose of re-sale, leasing-out, etc. would defeat the very objective of seamless flow of credit, especially for taxpayers engaged in real estate transaction.
However, the entire issue is very much interpretative in nature. Accordingly, it is contemplated that the issue of correct interpretation of Section 17(5)(d) of the CGST Act will have to be resolved by the Apex Court. It would be interesting to see the result in RE: Safari Retreats (supra), which would provide more perspective into the issue.
The GSTN has made available new functions for taxpayers on GST Portal in March 2022. Following are the highlights of the said new functions:
GST Portal
Registration
Returns
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