We are glad to bring you the 41st Edition of our ‘Vision 360’ Newsletter in association with TIOL. In this edition, we have covered the key judicial and legislative developments in Direct, Indirect Tax other regulatory areas in the months of February 2024. Following are some key highlights of this Newsletter:
🔹 International landscapes in the field of taxation across the globe witnessed numerous modifications and amendment;
🔹 A detailed comprehensive perspective from an industry expert, covering a variety wide range of topics, including such as recent tax reforms, emerging trends in the industry trends, and updates from the global tax arena;
🔹 An article discussing the recent ruling by the Hon’ble Madras High Court emphasizing the importance of safeguarding ITC in GST despite reporting discrepancies in GST returns, highlighting the need for a balanced approach by tax authorities and;
🔹 Judicial and Regulatory updates in the Direct Tax, Indirect Tax and Regulatory fronts!
We hope that reading of the newsletter would bring an enriching experience to you! Your valuable feedback is always welcome at consult@gsladvisors.com or updates@gsladvisors.com
The Petitioner had claimed refund application on export of IT services under LUT, without payment of IGST. While the refund application for the period April 2019 to June 2019 was allowed, the subsequent applications were proposed to be rejected vide SCN on the premise that the specific goods are not consumed in the process of provision of output service. Subsequently, vide orders, the applications were rejected on the ground that the expenses incurred on specific goods were required to be capitalised in the books of accounts as per AS 10. Aggrieved, the Petitioner preferred Writs before the Allahabad HC challenging the rejection of refund applications.
The Petitioners argued that their refund of unutilised input tax credit of was withheld on inconsistent and irrational grounds. The Allahabad HC observed that when the facts and circumstances in a subsequent assessment year are the same, no authority, whether quasi-judicial or judicial can be allowed to take a contrary view. The arbitrary withholding of refund claims for specific periods, despite past precedents and the absence of any material change in circumstances, is contrary to the principles of fairness and equity.
The HC observed that any attempt by the issuing authority to expand the scope of inquiry or introduce new allegations beyond those articulated in the SCN would constitute a violation of the principles of natural justice and any action taken beyond the confines of the SCN, is void ab initio and cannot be sustained. The HC set aside the impugned orders.
Samsung India Electronics Private Limited [2024-VIL-239-ALH]
The transitional credit claimed by the Petitioner had been rejected by the Revenue on the ground that subject invoices booked by the Petitioner on July 31, 2017, were beyond the period of 30 days from the appointed date u/s. 140(5) of the CGST Act. It was the allegation of the Department that the appointed date i.e., July 01, 2017 is to be included for the purpose of computation of time-period of 30 days, contemplated u/s. 140(5).
Aggrieved, the Petitioner preferred a Writ before the Gauhati HC challenging the TRAN-1 rejection. The HC observed that in the absence of any specific provision in the CGST Act, regarding calculation of time, the provisions of Section 9 of the General Clauses Act, is clearly applicable, which provides that if a particular time-period is given from a certain date within which an act is to be done, the day on that date is to be excluded, meaning thereby, that the period is to be calculated by excluding the day from which the period is to be reckoned.
Accordingly, for the expression, ‘within a period of thirty days from the appointed day’, occurring in Section 140(5) of the CGST Act, the period has to be reckoned by excluding the appointed day. The subject invoices, booked on July 31, 2017 were within the period of thirty days from the appointed day. Accordingly, the Writ was allowed.
Surendra Steels Private Limited [2024-VIL-234-GAU]
The Petitioner had filed an Appeal before the GST Commissioner (Appeals) with a delay of 66 days. The said Appeal was rejected on the ground of limitation u/s. 107(4) of the CGST Act, which provides for a period of 30 days beyond the normal limitation for filing of Appeal within three months from the date of receipt of order.
Aggrieved, the Petitioner preferred a Writ Petition before the Allahabad HC, relying on the Calcutta HC judgement in RE: S.K. Chakraborty & Sons [2023-VIL-855-CAL] to argue that Section 5 of the Limitation Act, which provides for admission of Appeal in case of sufficient reason, would be attracted, as Section 107 of the CGST Act does not expressly exclude the inclusion of Section 5 of the Limitation Act.
The Allahabad HC judgment held that the judgement in RE: S.K. Chakraborty & Sons (supra) failed to adequately consider the authoritative pronouncements of the SC in the RE: Singh Enterprises [2007-VIL-02-SC-CE] and Hongo India Private Limited [2009-VIL-22-SC-CE], wherein it was held that Section 107 of the GST Act operates as a complete code in itself and specifies the limitation periods for filing appeals and implicitly excludes the application of general limitation provisions such as Section 5 of the Limitation Act. Basis the above observations, the HC dismissed the Writ filed by the Petitioner.
Yadav Steels [2024-VIL-173-ALH]
The Petitioner had challenged an order of the Department, on the ground of violation of principle of natural justice. The Department had inadvertently served personal hearing notices to the Petitioner on incorrect e-mail ID.
The HC observed that the Petitioner had, much in advance brought to the notice of the Department so far as his correct email address is concerned. The HC opined that because of technicalities, the notices for personal hearing were not served upon the Petitioner and he has not been provided with a fair opportunity of personal hearing. Basis the said observation, the HC set aside the order, and directed the Respondents to grant a personal hearing opportunity.
Raghava HES Navayuga JV [2024-VIL-155-TEL]
The Finance Minister Smt. Nirmala Sitharaman commenced the Union Budget ’24 speech by highlighting the achievements of the Government in the past 10 years! With an aim to make India ‘Viksit Bharat’ by 2047, the Government is now working with an approach to development that is all-round, all-pervasive and all-inclusive. Given that the Lok Sabha elections are approaching, not much changes were expected in the tax front. Nonetheless, this Interim Budget, is a well-balanced in lines with the ‘Sabka Saath, Sabka Vikas, Sabka Vishwas’ initiative.
Attached is the detailed analysis of the Union Budget 2024-25 in association with TIOL, covering key areas of Policy Initiatives, proposals in Direct Tax, Indirect Tax, excerpts from the Industry leaders and much more…..
We hope that reading of the Newsletter on Budget would bring an enriching experience to you! Your valuable feedback is always welcome at consult@glsadvisors.com or updates@glsadvisors.com
Right at the beginning of the new year, as the nation gears up for the Lok Sabha elections, all eyes are focused on the imminent budget announcement slated for February 1, 2024. The prevailing expectation is that the budget shall be presenting an opportunity to address lingering concerns and lay the groundwork for sustained economic growth in the coming years. Interestingly, the spotlight of Budget 2024 is projected to concentrate on streamlining Customs law compliance rather than delving extensively into GST law, which is typically addressed in GST Council meetings. While the Central GST Act may witness amendments to align with recent changes in GST Rules. As we await the unveiling of Budget 2024, the nation anticipates a critical moment that will not only impact economic policies but also contribute to the discourse leading up to the elections.
In this edition of our newsletter, we have curated a diverse range of articles including insights from the industry experts that cover a variety of topics, including recent tax reforms, emerging trends in the industry, and updates from the global tax arena. Alongside these updates, here are the salient developments covered in this Newsletter:
In addition, thereto, true to our view of bringing news which are beyond facts, we have covered all the judicial and regulatory developments in direct and indirect taxes with interesting insights. We have also covered developments of the erstwhile indirect tax laws, which can be helpful precedents for disposing the pending litigations.
We are pleased to present to you the 39th Edition of our 'Vision 360' Newsletter in partnership with TIOL. This edition encapsulates the pivotal judicial and legislative advancements in Direct Tax, Indirect Tax, and other regulatory domains throughout the month of December 2023. We trust that perusing this newsletter will provide you with an enriching experience. Your valuable feedback is always appreciated and can be shared with us at consult@gsladvisors.com or updates@gsladvisors.com
The CBIC vide Notification No. 56/2023 – Central Tax dated December 28, 2023 has extended the time limit specified u/s. 73(10) of the CGST Act for issuance of orders till April 30, 2024 for the F.Y. 2018-19 and till August 31, 2024 for the F.Y. 2019-20. Thus, effectively, the Revenue Department has time till January 31, 2024 for issuance of Show Cause Notices (u/s. 73 of the CGST Act) for the F.Y. 2018-19 and till May 31, 2024 for the F.Y. 2019-20.
GLS Comments:
The aforementioned notifications have been issued by the CBIC, by virtue of powers conferred by Section 168A of the CGST Act. Notably, Section 168A empowers the Government to issue notifications to extend time limits prescribed under the CGST Act, specifically in cases where compliance is hindered due to force majeure. The section explicitly defines force majeure as instances such as war, epidemic, flood, drought, fire, cyclone, earthquake, or any other calamity affecting the Act's provisions.
Interestingly, Section 168A starts with a non-obstante clause. Thus, the time-limit prescribed under the Act can only be extended in special circumstances laid down under the said section. It is clear from reading Section 168A that it can only be invoked when required actions cannot be completed due to force majeure events. It is well settled principle that force majeure cannot be claimed just because something is difficult to do; the Department has to show that it was impossible to carry out the required functions.
Currently, there is no force majeure situation happening in the country, and the notifications extending time limits do not mention force majeure reasons. Also, the impact of COVID-19 has passed, and the Supreme Court has not granted further extensions to taxpayers. This raises the question of whether the Department can issue such notifications under Section 168A without force majeure circumstances. It would be pertinent to note that the previous Notification issued u/s. 168A, extending the time-limit for issuance of notices, has been challenged before the Allahabad HC in RE: Graziano Transmissioni [[Writ Tax No. 1256 of 2023]. It would be interesting to see the outcome of the said case.
Coming to the end of the year 2023, we must take a moment to look at appreciate how far we have come. The umpteen developments on the tax side carry wide-ranging implications for taxpayers and the overall GST framework. Given the nascent stage of GST, the CBIC has introduced an amnesty scheme for filing of Appeals before the Appellate authority, upon payment of prescribed pre-deposit. In addition to the amnesty scheme, the CBIC has regularly issued circulars and advisories on various issues such as ITC reversal on non-payment of tax by vendors, differences in ITC availed in GSTR-3B vis-à-vis ITC available in GSTR-2B, etc. Such moves by the Board affirm the trust of the taxpayer on the Revenue.
In this edition of our newsletter, we have curated a diverse range of articles including insights from the industry experts that cover a variety of topics, including recent tax reforms, emerging trends in the industry, and updates from the global tax arena. Alongside these updates, here are the salient developments covered in this Newsletter:
In addition, thereto, true to our view of bringing news which are beyond facts, we have covered all the judicial and regulatory developments in direct and indirect taxes with interesting insights. We have also covered developments of the erstwhile indirect tax laws, which can be helpful precedents for disposing the pending litigations.
We are pleased to present to you the 38th Edition of our 'Vision 360' Newsletter in partnership with TIOL. This edition encapsulates the pivotal judicial and legislative advancements in Direct Tax, Indirect Tax, and other regulatory domains throughout the month of November 2023. We trust that perusing this newsletter will provide you with an enriching experience. Your valuable feedback is always appreciated and can be shared with us at consult@gstlegal.co.in or updates@gstlegal.co.in
CBIC vide Instruction No. 05/2023-GST dated December 13, 2023 has instructed the Revenue authorities that the decision of the SC in RE: Northern Operating Systems Private Limited (NOS) [2022-VIL-31-SC-ST] should not be applied mechanically in all the cases.
The CBIC clarified that the SC in its judgment held that the secondment of employees by the overseas group company to NOS was a taxable service of 'manpower supply' and therefore, Service Tax was applicable on same, only after taking every fact into consideration. Accordingly, there may be multiple types of arrangements in relation to secondment of employees of overseas group company in the Indian entity. In each arrangement, the tax implications may be different, depending upon the specific nature of the contract and other terms and conditions attached to it.
Relying on the judgement of the Apex Court in RE: Fiat India Private Limited [2012-VIL-01-SC-CE], noted that each case depends on its own facts, and a broad resemblance to another case is not decisive. Thus, the uniqueness of each case should be considered in determining tax implications. The CBIC further clarified that the extended period of limitation u/s. 74(1) of the CGST Act in cases involving secondment can be invoked only when there is evidence of fraud, wilful misstatement, or suppression of facts to evade tax. Mere non-payment of GST is not sufficient to invoke this provision.
GLS Comments:
The aforesaid instruction is a welcome clarification, especially since the Revenue authorities have been bombarding the taxpayers with investigations on all kinds of secondment arrangement irrespective of the facts of each case. Interestingly, the said instruction does not provide a rationale relating to levy of taxation, but only emphasizes that the precedent decision cannot be universally applied.
It may be noted that recently, the demand of GST on secondment of employees has been challenged before the Delhi HC in RE: Metal One Corporation Private Limited [2023-VIL-816-DEL]. Similar writ has been filed by Alstom Transport India Limited [W.P. No. 23915/2023]. Both the matters have been stayed and pending for hearing. It would be interesting to see the outcome of these Writs.
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