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While filing Form TRAN-1, the Petitioner had inadvertently claimed a lower amount of credit vis-à-vis what was available to them. The Petitioner had made another error by updating the difference in table 7d instead of the prescribed form 7b. In order to rectify the said errors, the Petitioner had made a request for extension, which had been rejected by the Revenue on the ground that several opportunities were extended to taxpayers for rectification of errors.

Aggrieved, the Petitioner challenged the rectification rejection order before the Madras HC. The HC observed that the error was inadvertent in nature. It was further observed that the era of GST is nascent and therefore, a rigid view should not be taken in procedural matters. It was further observed that the consequence of such transition is only the availment of the credit and not the utilization itself.

In view of the above, the HC allowed the Petition and consequently directed the Revenue to enable the modification and transition.

Carlstahl Craftsman Enterprises Private Limited [W.P. No.11119 of 2020]

What seems to be a rewind of the previous year, the COVID-19 pandemic has brought similar situations in the country, such as travel restrictions and the phenomena of Work From Home. However, the situation this time around is hopeful with the advent of the vaccination drive, which has resulted in rather smooth functioning of the economy. Similar to the previous year, the Tax and Customs authorities have extended a number of reliefs. Further, the Judicial authorities have also given a number of judgements, having a far-reaching impact!

Compiling all such developments, we are glad to bring you the 9th Edition of our ‘Vision 360’ Newsletter in association with TIOL. We have covered all the judicial and legislative developments in Direct, Indirect Tax other regulatory areas. 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.

CBIC vide Circular No. 09/2021 – Customs dated 08 May 2021 has extended the facility of acceptance of an undertaking in lieu of bond by Customs formations from 08 May 2021 till 30 June 2021. It has been clarified that the Importers / Exporters availing this facility shall ensure that the undertaking furnished in lieu of bond is duly replaced with a proper bond by 15 July 2021.

On account of the second wave of the COVID-19 pandemic and the consequent travel restrictions around the Country, the CBIC has provided certain relaxations. The same have been summarized hereunder:

Notification No. 08/2021 – Central Tax dated 01 May 2021 - Interest Waiver

• Prescribes interest rate of 9% for the first 15 days from the due date and 18% thereafter on late filing of GSTR-3B for the months of March and April 2021 for taxpayers having an aggregate turnover of more than Rs. 5 crores in the preceding F.Y.;
• Prescribes NIL interest for the first 15 days from the due date and 9% for the next 15 days and 18% thereafter on late filing of GSTR-3B for the months of March and April 2021 for taxpayers having an aggregate turnover up to Rs. 5 crores in the preceding F.Y.;
• Prescribes NIL interest for the first 15 days from the due date and 9% for the next 15 days and 18% thereafter on late filing return under proviso Section 39(1) of the CGST Act for the months of March and April 2021 for taxpayers having an aggregate turnover up to Rs. 5 crores in the preceding F.Y.;
• Prescribes NIL interest for the first 15 days from the due date and 9% for the next 15 days and 18% thereafter on late filing return under proviso Section 39(1) of the CGST Act for the quarter ending March 2021 for taxpayers having an aggregate turnover up to Rs. 5 crores in the preceding F.Y.

Notification No. 09/2021 – Central Tax dated 01 May 2021 - Late Fees Waiver

• Waives off late fee payable for the period of 15 days from the furnishing of GSTR-3B for the months of March and April 2021 for taxpayers having an aggregate turnover of more than Rs. 5 crores in the preceding F.Y.;
• Waives off late fee payable for the period of 30 days from the furnishing of GSTR-3B for the months of March and April 2021 for taxpayers having an aggregate turnover up to Rs. 5 crores in the preceding F.Y.;
• Waives off late fee payable for the period of 30 days from the furnishing quarterly return for the quarter ending March 2021 for taxpayers having an aggregate turnover up to Rs. 5 crores in the preceding F.Y.

Notification No. 10/2021 – Central Tax dated 01 May 2021 - GSTR-4 Due Date Extension

• Extends the due date for filing of Form GSTR-4 i.e., Annual Return for the FY 2020-21 for taxpayers who have opted for the composition scheme from 30 April 2021 to 31 May 2021. The notification shall be deemed to have come into force with effect from 30 April 2021.

Notification No. 11/2021 – Central Tax dated 01 May 2021 - ITC-04 Due Date Extension

• Extends the time period for furnishing declaration in Form ITC-04 i.e., details of goods / capital goods sent to job worker and received back to 31 May 2021 for quarter January to March 2021.

Notification No. 12/2021 – Central Tax dated 01 May 2021 - GSTR-1 Due Date Extension

• Extends the time limit for furnishing the details of outward supplies in Form GSTR-1 for the month of April, 2021 to 26 May 2021.

Notification No. 13/2021 – Central Tax dated 01 May 2021 - Notifies Amendment Rules

• Notifies Central Goods and Services Tax (Third Amendment) Rules, 2021 to amend the CGST Act in the following manner:
  • Inserts second proviso in Rule 36(4) of the CGST Rules to provide that the condition in Rule 36(4) ibid i.e., 105% of eligible visible ITC from Form GSTR-2B, is to be seen cumulatively for the period April and May 2021.
  • Inserted proviso in Rule 59(2) of the CGST Rules to provide that for dealers who have opted for quarterly filing of Form GSTR-1 and were eligible to file monthly B2B sales till 13th of succeeding month to pass on the ITC to the recipient using Invoice Furnishing Facility (‘IFF’) can now furnish details using IFF for the month of April 2021 till 28 May 2021.

Notification No. 14/2021 – Central Tax dated 01 May 2021 - COVID-19 Reliefs

• In view of the second wave of COVID 19 pandemic, it has been notified as under:
  • Where any time limit for completion or compliance of any action, by any authority or by any person, falls during the period from the 15 April 2021 to 30 May 2021, the time limit for completion or compliance of such action, shall be extended up to the 31 May 2021, including for the purposes of:
    • completion of any proceeding or passing of any order or issuance of any notice, intimation, notification, sanction or approval;
    • Filing of any appeal, reply or application or furnishing of any report, document, return, statement or such other record.
  • However, such extension of time shall not be applicable for the compliances of the provisions of the CGST Act, as mentioned below –
    • Chapter IV– Time and Value of supply
    • Procedure for Registration, Special provisions relating to casual taxable person and non-resident taxable person, Tax Invoice, Furnishing of details of Outward Supplies, Levy of Late Fees, Interest on delayed payment of Tax, Power to Arrest, Liability of partner of firm to pay tax, Penalty of certain offences, Detention, seizure and release of goods and conveyances in transit
    • Furnishing of Returns, except those prescribed
    • Inspection of goods in movement, in so far as e-way bill is concerned; and
    • Rules made under the provisions specified at clause (a) to (d) above;
  • However, for the purpose of verification of the registration application and where the approval falls during the period of from 01 May 2021 to 31 May 2021, then, the time limit for the same has been extended up to 15 June 2021.
• Where the notice has been issued for rejection of refund claim and the time limit for issuance of order falls during the period of from 15 April 2021 to 30 May 2021 then the time limit for issuance of order shall be extended to the later of:
  • 15 days after the receipt of reply to the notice from the registered person or
  • 31 May 2021
• The Notification shall come into force with effect from 15 April 2021.

The Petitioner, an exporter of tea, had exported transactions without payment of IGST. The Petitioner had claimed excess drawback on such exports. Despite the transactions being zero-rated supplies, the Petitioner remitted IGST, CGST and SGST on the purchase of tea and such tax was credited in its electronic credit ledger. Accordingly, the Petitioner claimed refund of such IGST u/s. 54(3) of the CGST Act, which came to be rejected by the Revenue on the ground that drawback at a higher rate had already been claimed. 

Aggrieved, the Petitioner challenged the orders confirming the rejection of refunds. The Revenue had relied on CBIC’s Circular No. 37/2018 – Customs dated 09 October 2018 which inter alia provides that by declaring drawback serial number, the exporters consciously relinquished their IGST/ITC claims.

The HC observed that in terms of Section 54(3) of the CGST Act, the Petitioner is either entitled to duty draw back or ITC. Thus, an option has been extended to an assessee engaged in zero-rated sale to either claim the benefit of duty drawback or the benefit of refund of ITC. The HC further relied upon the judgement of Madras HC in the case of Real Prince Spintex Private Limited [2020 (35) GSTL 369], wherein, under similar facts, the HC had allowed the Petition and consequently the refund claim.

In view of the above observations, the HC set aside the refund rejection order and directed to refund the sanctioned amounts to the Petitioner. It was further held by the HC that 37/2018 – Customs dated 09 October 2018 will not stand in the way, as a circular cannot stand in the way of a benefit offered under a statutory scheme.

Chaizup Beverages LLP [W.P. Nos. 10969, 10972 and 10978 of 2020]

The CBIC vide Notification No. 07/2021 - Central Tax dated 27 April 2021 has suitably amended Rule 26 of the CGST Rules to allow registered persons to furnish return in FORM GSTR-3B and details of outward supplies in FORM GSTR-1 or using Invoice Furnishing Facility (IFF), verified through Electronic Verification Code (EVC) during the period 27 April 2021 to 31 May 2021.

In light of the severe COVID-19 pandemic raging unabated across the country, and in view of requests received from taxpayers, tax consultants and other stakeholders to further extend various Direct Tax due dates, the Government has decided extended certain timelines vide Press Release dated 24 April 2021.

Accordingly, to address the hardships being faced by various stakeholders, the Central Government has decided to extend the time limits to 30 June 2021 in the following cases where the time limit was earlier extended to 30 April 2021 through various notifications issued under the Taxation and Other Laws (Relaxation) and Amendment of Certain Provisions Act, 2020, namely:-

• Time limit for passing of any order for assessment or reassessment under the IT Act;
• Time limit for passing an order consequent to direction of DRP under section 144C of the IT Act;
• Time limit for issuance of notice under section 148 of the IT Act for reopening the assessment where income has escaped assessment;
• Time Limit for sending intimation of processing of Equalisation Levy u/s. 168 of the Finance Act 2016.

The Government has further decided that the time for payment of amount payable under the Direct Tax Vivad se Vishwas Act, 2020, without an additional amount, shall be further extended to 30 June 2021.

The Revenue Department had ordered for provisional attachment on Appellant’s receivables from their customers. Aggrieved, the Appellant had preferred a Writ Petition before the Himachal Pradesh HC challenging the vires of attachment order passed by the Revenue u/s. 83 of the CGST Act. However, the HC dismissed such Appeal as the Appellant had the option of alternative remedy under the CGST Act.

Aggrieved, the Appellant approached the SC on questions, whether the orders of provisional attachment are in consonance with the conditions stipulated in Section 83 and whether the HC was right in concluding that the provisional attachment not be challenged in a writ petition. Upon referring to Section 83 of the CGST Act, it was observed by the SC that:

• The power to order a provisional attachment is entrusted during the pendency of proceedings under any one of six specified provisions: Sections 62, 63, 64, 67, 73 or 74;
• The power to order a provisional attachment has been vested by the legislature in the Commissioner;
• Before exercising the power, the Commissioner must be ‘of the opinion that for the purpose of protecting the interest of the government revenue, it is necessary so to do’
• The order for attachment must be in writing; and
• Provisional attachment is of any property including a bank account belonging to the taxable person.

In view of the above, it was further observed that before the Commissioner can levy a provisional attachment, there must be a formation of ‘the opinion’ and that it is necessary ‘so to do’ for the purpose of protecting the interest of the Government Revenue. The power to levy a provisional attachment is draconian in nature. 

It was further observed that, conscious as the legislature was of the draconian nature of the power and the serious consequences which emanate from the attachment of any property including a bank account of the taxable person, it conditioned the exercise of the power by employing specific statutory language which conditions the exercise of the power. 

Firstly, the language of the statute indicates the necessity of the formation of opinion by the Commissioner. Secondly, the formation of opinion before ordering a provisional attachment. Thirdly, the existence of opinion that it is necessary so to do for the purpose of protecting the interest of the government revenue. Fourthly, the issuance of an order in writing for the attachment of any property of the taxable person; and lastly, the observance by the Commissioner of the provisions contained in the rules in regard to the manner of attachment. 

It was further observed that each of these components of the statute is integral to a valid exercise of power. It is evident that the statute has not left the formation of opinion to an unguided subjective discretion of the Commissioner. The formation of the opinion must bear a proximate and live nexus to the purpose of protecting the interest of the Government Revenue.

In respect to the Rules for provisional attachment, the SC observed that in terms of Rule 159(5) of the CGST Rules, the person whose property is attached is entitled to dual procedural safeguards: (i) An entitlement to submit objections on the ground that the property was or is not liable to attachment; and (ii) An opportunity of being heard. It was further observed that even if the property, arguably, was validly attached in the past, the person whose property has been attached may demonstrate to the Commissioner that it is not liable to be attached in the present. 

The second significant aspect of sub-Rule (5) is the mandatory requirement of furnishing an opportunity of being heard to the person whose property is attached. In the instant case, there has been a breach of the mandatory requirement of Rule 159(5) and the Commissioner was clearly misconceived in law in coming into conclusion that he had a discretion on whether or not to grant an opportunity of being heard.

The SC further observed that Revenue while ordering a provisional attachment u/s. 83 was acting as a delegate of the Commissioner in pursuance of the delegation effected u/s 5(3) and an appeal against the order of provisional attachment was not available u/s 107 (1). As the Appeal was not maintainable under the CGST Act, it was observed that the Writ Petition before the HC was sustainable. 

In view of the above observations, the SC set aside the judgement of the Himachal Pradesh HC and allowed the Appeal.

Radha Krishna Industries vs. State of Himachal Pradesh and Ors. [Civil Appeal No 1155 of 2021]

The CBIC vide Notification No. 27/2021 – Customs dated 20 April 2021 has exempted Remdesivir and active pharmaceutical ingredients from the levy of Customs Duty, until 31 October 2021. Further, a conditional customs duty exemption has been granted for the ingredient Beta Cyclodextrin (SBEBCD) used in the manufacture of Remdesivir, till 31 October 2021.

GLS Comments:

Given the current situation of the COVID-19 pandemic, and the scarcity of vaccines, it was utmost important to provide such exemption upon import of vaccine ingredients. This would definitely help increase the production and supply of the anti-COVID-19 drugs, especially in view of the sudden surge in the demand of Remdesivir in the last few days.

The Ministry of Commerce and Industry vide Notification dated 16 April 2021 has approved the Production Linked Incentive (PLI) Scheme for White Goods (Air Conditioners and LED Lights) to be implemented over FY 2021-22 to FY 2028-29 with a budgetary outlay of Rs. 6,238/- crores.

This Scheme proposes to boost the domestic manufacturing and attract large investments in the White Goods manufacturing value chain. Support under the Scheme will be provided to companies/entities engaged in manufacturing of components of Air Conditioners and LED Lights in India as under:

• Air Conditioners:
  • Air Conditioners (Components – High value Intermediates or Low Value Intermediates or sub-assemblies or a combination thereof):
    • Large Investments
    • Normal Investments
  • High Value Intermediates (Copper Tubes, Aluminium Foil and Compressors)
    • Large Investments
    • Normal Investments
  • Low Value Intermediates (PCB assembly for controllers, BLDC motors, Service Valves and Cross Flow fans for AC and other components)
    • Large Investments
    • Normal Investments
• LED Lights:
  • LED Lighting Products (Core Components like LED Chip Packaging, Resisters, ICs, Fuses and large-scale investments in other components etc.)
    • Large Investments
    • Normal Investments
  • Components of LED Lighting Products (like LED Chips, LED Drivers, LED Engines, Mechanicals, Packaging, Modules, Wire Wound Inductors and other components)
    • Large Investments
    • Normal Investments

Incentive

This PLI Scheme shall extend an incentive of 4% to 6% on incremental sales (net of taxes) over the base year of goods manufactured in India and covered under target segments, to eligible companies, for a period of 5 years subsequent to the base year and one year of gestation period.

The applicants will have to fulfill both criteria of cumulative incremental investment in plant and machinery as well as incremental sales over the base year in that respective year to be eligible for PLI. The first year of investment will be FY 2021-22 and the first year of incremental sale will be FY 2022-23. Actual disbursement of PLI for a respective year will be subsequent to that year.

Eligibility

Incentive under the Scheme shall be provided to Companies making brown field or green field Investments for manufacturing in target segments in India. The eligibility shall be subject to thresholds of cumulative incremental investment and incremental sales of manufactured goods (as distinct from traded goods) over the base year for the respective year. The Applicants must meet all the threshold conditions to be eligible for disbursement of incentive as detailed under Annexure A to the notification.

It has been further provided that any entity availing benefits under any other PLI Scheme will not be eligible under this scheme for same products but the entity may take benefits under other applicable schemes.

Tenure

This Scheme shall be provided for a period of 5 years subsequent to the base year as defined and one year of gestation period for fructifying investment to be implemented over FY 2021-22 to FY 2028-29. It has been further provided that FY 2019-20 shall be treated as the base year for computation of cumulative incremental investment and incremental sales of manufactured goods as well as for prequalification criteria.

Beneficiaries

It has been further provided that the selection of companies for this Scheme shall be done so as to incentivize manufacturing of components or sub-assemblies which are not manufactured in India presently with sufficient capacity. Companies investing in basic/core components will have a higher priority.

GLS Comments

Hon’ble PM of India, Sh. Narendra Modi vide tweet dated 07 April 2021 had provided that this PLI Scheme for White Goods is yet another initiative that will strengthen the movement to create an Aatmanirbhar Bharat. The Government estimates that over the period of 5 years, this PLI Scheme will lead to incremental investment of Rs. 7,920/- Crore, incremental Production worth Rs. 1,68,000/- Crore, exports worth Rs 64,400/- Crore, earn direct and indirect revenues of Rs 49,300/- crore and create additional four lakh direct and indirect employment opportunities.

The Air Conditioning and LED Manufacturers in India shall look to capitalize on this opportunity and explore their eligibility to avail maximum benefits under this scheme.