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The Petitioner had preferred a Writ before the Uttarakhand HC challenging the imposition of penalty by the Revenue on account of clerical error in mentioning the Invoice number in the E-Way Bill. The Petitioner argued that except the invoice number which was mentioned incorrectly attributable to human error, all other details were correctly entered in the EWB. The Petitioner further relied upon Circular No. 64//38/2018-GST dated 14 September 2018 wherein it was clarified that if during the course of investigation of a vehicle carrying the goods, certain minor discrepancies, made in the EWB or the tax invoices, are to be overlooked, prior to invocation of penal provisions.

The HC observed that implications of the Circular have to be rationally and logically construed. It was further observed that section 129 is not to be invoked invariably, under all the circumstances, where it does not affect the financial implications or the liabilities. The HC further opined that Assessee was not backed with a clever intent to deceive the revenue, and particularly all the other particulars and entries were correct. Hence, the error which crept in giving the invoice number would fall to be within an exception of the circular.

In view of the above, it was held that imposition of penalty on account of human error, is pardonable under the above-mentioned Circular. Accordingly, the order imposing the penalty was set aside with consequential relief.

Sonal Automation Industries [Writ Petition (M/S) No. 1969 of 2021 dated 27 April 2022]

The DGFT vide Public Notice No. 13/2015-2020 dated 09 June 2022 has amended Para 5.15 of the Handbook of Procedures 2015-20 (‘HBP’) for Export Promotion Capital Goods (‘EPCG’) Scheme so as to extend the last date for filing of the annual report for the year 2022-23 from 30 June 2022 till 30 September 2022. 

Further, the DGFT clarified that the penalty of Rs. 5000/- will be imposed for late filing of annual returns from 2022-23 onwards. These amendments are applicable for EPCG authorization issued under FTP 2015-20.

The Indian Judiciary has been quite busy over the last couple of months delivering some key judgements that would have a considerable impact on the industry! Not just the Supreme Court, but the High Courts have also delivered some spectacular judgements, which certainly re-affirms the faith of the taxpayers in the Judiciary and cautions the Revenue to not exceed its jurisdiction. We have covered all such developments in this Newsletter. Apart from this, following are the key developments covered in this Newsletter:

• A detailed piece on the recent landmark judgement by the Apex Court, striking down the levy of IGST on ocean freight;
• A detailed article on Risk analysis and whether it can lead to Risk management;
• The Taxation of Crypto Currencies, which has resulted in a block-chain of interpretations;
• A brief note on the public comments on Crypto Asset Reporting Framework (CARF) released by OECD;
• Judicial and Regulatory updates in the Direct Tax, Indirect Tax and Regulatory fronts!

Compiling all such developments, we are glad to bring to you the 21st Edition of our ‘Vision 360’ Newsletter in association with TIOL. We have covered the key judicial and legislative developments in Direct, Indirect Tax other regulatory areas in the months of April and May 2022. We hope that reading of the newsletter would bring an enriching experience to you! Your valuable feedback is always welcome at consult@gstlegal.co.in or updates@gstlegal.co.in 

The DGFT vide Policy Circular No. 39/2015-20 dated 07 June 2022 relaxes the documentary requirements of submitting 'Bill of Export' for supplies made to SEZ prescribed under the Foreign Trade Policy (‘FTP’), in case of supplies made to SEZ units under Advance Authorization. This requirement was challenged by several exporters before various High courts in the country on the ground of non-availability of this provision for the period covered upto FTP 2009-14. 

In most of the cases, Hon'ble Courts have granted relief to the Advance Authorization holders. Accordingly the DGFT has decided to relax this condition of requirement of submission for all such supplies made prior to 01 April 2015.

The DGFT has further notified that for the purpose of discharge of export obligation under Advance Authorizations, in case of supplies made to SEZ units prior to 01 April 2015, the exporters can submit corroborative evidence in lieu of 'Bill of Exports' such as:

The Petitioner had dispatched a consignment of tobacco products from Panipat to Nepal. However, on account of the COVID-19 pandemic and the consequent travel restrictions imposed by the Nepal Government, the goods were unloaded at Gorakhpur. Accordingly, till the arrangement of a driver and vehicle was made, period specified in E-way bill expired. Therefore, a second e-way bill was generated by Petitioner to dispatch the goods to its destination at Nepal.

The Revenue authorities had intercepted and seized the goods and vehicle on the premise that owing to pandemic situation, the Petitioner should not have exported the goods, and instead of getting the second e-way bill generated, should have extended the validity of the 1^st E-Way Bill within 8 hours of its expiry.

Aggrieved, the Petitioner preferred a Writ before the Allahabad HC contending that there was no intention of evasion of tax. The HC observed that the goods were covered by valid documents, and hence the entire proceedings were totally arbitrary, illegal and without jurisdiction. It was further also the goods were intercepted and seized by the Respondents on hyper-technical ground and assumptions, without there being any allegation of intention to evade payment of tax. It was also observed that the second e-way bill was generated bona fide and in circumstance beyond control of the Petitioner. Furthermore, it was held that the action of the Respondents was evidently an act of harassment to the Petitioners, and breach of their fundamental rights guaranteed under Article 14 of the Constitution of India and blatant abuse of power by the respondents.

The HC further relied on the Apex Court’s ruling in Satyam Shivam Papers Private Limited [2022-TIOL-07-SC-GST] where it was held that no presumption can be drawn that there was an intention to evade tax on account of non-extension of the validity of the e-way bill. Basis the above observations, the HC quashed the orders of the Respondent and directed release of goods and vehicle along with costs of Rs. 1 lakhs (Rs 50,000 to be paid to exporter and goods transport agency each).

Gobind Tobacco Manufacturing Co. And Another [WRIT TAX No. 600 of 2022 dated 17 May 2022]

The Petitioner had effected legitimate exports for the period July, September and October 2017. However, during the filing of the return in Form GSTR-3B, the Petitioner had inadvertently reported the same as outward taxable supplies instead of zero-rated supplies. Accordingly, the refund claimed by them in respect of the legitimate exports had been denied.

Aggrieved, the Petitioner filed a Writ before the Madras HC. The HC observed that the export incentives had been given to encourage exports, so that there was inward remittance of foreign currency and the procedure prescribed under the CGST Rules is not intended to defeat such legitimate export incentives. It was further observed that the procedures under the prescribed CGST Rules cannot be applied strictly to deny legitimate export incentives. The HC further drew referred to the SC decision in Auriya Chamber of Commerce [1986 (25) ELT 867 (SC)] wherein the Court had held that “procedures are nothing but handmaids of justice and not mistresses of law”.

Basis the above observations, the HC disposed of the writ and directed the Revenue to obtain the data directly from the Petitioner and its counterparts in the customs Department and if indeed there was an export and a valid debit of tax by the Petitioner, the refund shall be granted. Thus, in conclusion, HC asserted that, “procedural infraction shall not come in the legitimate way of grant of refund under the IGST Act r/w CGST Act, and the Rules made thereunder”.

Abi Technologies [ W.P(MD). No. 4562 of 2022 dated 28 April 2022]

The Petitioner filed a Writ before the Patna HC challenging the demand order and the appellate order issued by the Revenue in violation of principles of natural justice. The Petitioner submitted that their Appeal against the demand order had been rejected on the sole ground of non-submission of certified copy of the original order.

The HC observed that such an order is bad in law for two reasons i.e. (a) Violation of principles of natural justice-fair opportunity of hearing, (b) Order passed ex parte in nature, does not assign any sufficient reasons from the record, also the authorities not have adjudicated the matter on attending facts and circumstances. Accordingly, the HC set aside the demand order and the appellate order.

Further, the HC direct the Revenue to de-freeze/ de-attach the bank account of the Petitioner immediately. Furthermore, the HC direct the Revenue to decide the case on merit expeditiously and to pass a speaking order.

Shree Murliwala Textile [Patna HC CWJC No.6697/2022 dated 09 May 2022]

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:

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