Newsletter

The Government vide Press Release dated 17 March 2021 has launched the Trade Infrastructure for Export Scheme (TIES) w.e.f F.Y. 2017-18 to assist the Central and State Government agencies for creation of appropriate infrastructure for growth of exports from the States. The Scheme provides financial assistance in the form of grant-in-aid to Central/State Government agencies for setting up or for up-gradation of export infrastructure. 

TIES can be availed by the States through their implementing agencies, for infrastructure projects with significant export linkages like Border Haats, Land customs stations, quality testing and certification labs, cold chains, trade promotion centres, export warehousing and packaging, SEZs and ports/airports cargo terminuses. The Scheme guidelines can be accessed at http://commerce.gov.in.

Under this scheme, financial assistance for a total of 44 export infrastructure projects has been approved for the F.Y. 2017-18, 2018-19, 2019-20 and 2020-21. Further, promotion of Districts as Export Hubs is being coordinated by the DGFT in collaboration with Department of Promotion of Industry and Internal Trade. This initiative has been undertaken to target export promotion, manufacturing and employment generation by making the States and the Districts oriented towards export growth.

The Apex Court, vide its judgement in the case of Canon India [TS-75-SC-2021-CUST], has created an uproar in the Industry by ruling that the DRI has no power to issue Show Cause Notices under the Customs Act. The SC had concluded that the entire proceeding in the said case initiated by the DRI by issuing SCN, as invalid and without any authority of law. Accordingly, the SC had set aside the SCN.

Consequent to the said judgement, the CBIC vide Instruction No. 04/2021 – Customs dated 17 March 2021 has referred to the case of Sh. Anil Aggarwal and 11 others where the adjudication of the SCN would get barred by the limitation of time on 18 March 2021 under Section 28 of the Customs Act, on account of the inability to proceed further due to the said judgement of the SC.

In respect thereto, the CBIC has instructed that fresh SCNs under Section 28 of the Customs Act, in respect of cases presently being investigated by DRI are required to be issued by Jurisdictional Commissionerates from where imports have taken place.

GLS Comments:

While the instant judgement of the SC has far-reaching impact on the Trade and Industry, the same might be devoid of merit. The Delhi HC in the case of Mangali Impex Limited and Ors. vs. UOI [2016 (335) E.L.T. 605 (Del.)], had inter alia held that post the amendment of the Customs Act in 2011, the DRI officers were empowered to initiate proceedings under the Customs Act. However, the operation of the Delhi HC judgement had been stayed by the SC and finality on the said judgement is still awaited.

The instant judgement in Canon India (supra), has added another twist to the tale of DRI jurisdiction qua Customs Act. It would now be interesting to see as to how the CBIC would interpret this judgement of the SC.

The Revenue had passed an order against the Petitioner on 08 July 2019, which had been dispatched on 29.08.2019 and received by the Petitioner on 30 July 2019. Aggrieved, the Petitioner had preferred an Appeal against the said Order. The Appeal had been dispatched by the Petitioner on 02 December 2019 by speed post and received by the Department on 04 December 2019. The said Appeal was dismissed by the Department as being time-barred.

Aggrieved, the Petitioner preferred a Writ before the Bombay HC contending that the Appeal had been filed within the prescribed time of three months. It was argued that the last date of extended period to file the Appeal was 30 November 2019, which was a Saturday. Accordingly, the Petitioner was legally within its right to file the Appeal on the immediately following working day i.e., 02 December 2019, with 01 December 2019 being a holiday on account of being a Sunday which would be within the limitation period. It was submitted that in terms of General Clauses Act, if any act or any proceeding is directed to be taken in any court within a prescribed period, then if the court is closed on that day or the last day of the prescribed period, the act or proceeding shall be considered as done or taken in due time if it is done or taken on the next day afterwards on which the court is open. The Petitioner further submitted that as the Appeal had been dispatched on 02 December 2019, it was within the limitation period and therefore, the Appeal ought to have been accepted.

The Bombay HC observed that in terms of the applicable Service Tax laws, the Appeal shall be presented within 2 months from the date of receipt of the decision or order of the adjudicating authority. Further, it was held that the Department may allow such appeal to be presented within a further period of one month. The HC also observed that as 01 December 2019 was a Sunday, the benefit of public holiday would be available to the Petitioner. It was further observed by the HC that the Appeal provisions of the ST Act provides that the Appeal is to be presented and not filed. Therefore, the date of receipt of the order or decision appealed against becomes very relevant.

In line with the said provisions and various SC judgements, the Bombay HC was of the view that the period prescribed in the law is 3 months, and not 90 days, from a specific date, the said period would expire in the third month on the date corresponding to the date upon which the period starts. Accordingly, it may mean 90 days or 91 days or 89 days. Basis the said observations, the HC held that the word ‘presented’ the appeal which was dispatched on 02 December 2019 was within 3 months even though it was not within 90 days and as such the condonation of delay has to viewed accordingly.

Skoda Auto Volkswagen India Private Limited vs. Commissioner (Appeals) and Another [WP (ST) No. NO.5497 of 2020]

The Petitioner, while filing a Form GSTR-1 for the month of February 2018, had inadvertently entered the GST registration number of the purchaser in Uttar Pradesh instead of Andhra Pradesh. The Petitioner realized the said error only when the purchaser notified the rejection of the credit, seeking amendment of the return, and threatening legal action. As the Petitioner was not able to revise the return, they preferred a Writ before the Madras HC seeking a direction to the Revenue to rectify the error.

The Madras HC observed that if the requisite statutory Forms such as GSTR-2 and GSTR-1A been notified, the error would have been captured earlier. The HC further noted that time for modification / amendment of GSTR-3B return was extended till the 31 March 2019, however, the Petitioner was unaware that a mistake had crept into its original returns. Accordingly, the Petitioner could not avail the benefit of extension for amendment.

Further, relying upon its own previous judgement in the case of Sun-Dye Chem [2020 VIL 524 (Mad)], the Madras HC held that the Petitioner should not be mulcted with any liability on account of the bona fide, human error and the Petitioner must be permitted to correct the same. Accordingly, the HC allowed the Appeal and directed the Respondents to enable amendment to GSTR-1 return within a period of 8 weeks.

Pentacle Plant Machineries Private Limited vs. Office of the GST Council [W.P. No.1022 of 2020]

GLS Comments:

In the previous year, the Delhi HC, in the case of Bharti Airtel Limited [2020 (38) GSTL 145] had held that correction mechanism is critical to sustain implementation of GST. The HC had reasoned that there is no cogent reasoning behind logic for restricting rectification only in period in which error is noticed and corrected, and not in period to which it relates. Notably, there is no provision under the CGST Act which would restrict such rectification. Accordingly, it can be seen that the Madras HC has correctly allowed the rectification of bona fide error in filing of Form GSTR-1. 

We are glad to bring you to bring to you the 7th Edition of our ‘Vision 360’ Newsletter in association with TIOL. We have covered all the judicial, legislative and regulatory developments in Direct and Indirect Tax. The Newsletter begins with an insightful article both in Indirect Tax and Direct Tax. Further, in the Sparkle Zone of this edition, we have covered a recent landmark SC judgement in relation to Royalty on Software service. 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 Notification No. 05/2021 - Central Tax dated 08 March 2021 has mandated e-invoicing w.e.f. 01 April 2021 for taxpayers having aggregate turnover of more than Rs. 50 crores in a Financial Year. Earlier, e-invoicing had been made applicable w.e.f. 01 January 2021 for taxpayers having aggregate turnover of more than Rs. 100 crores.

The Petitioner, situated in a Special Economic Zone in Mumbai, had been exporting electronic motors to notified markets and claiming benefit under the MEIS in the prescribed manner. In certain cases, where exports had been made from non-EDI portals, physical SBs were filed and physical MEIS applications had been filed. Such applications made by the Petitioner, were rejected on the ground that the declaration of intent on the SB had not been mentioned.

Aggrieved, the Petitioner had preferred a Writ before the Bombay HC. The HC observed that in the case of non-EDI cases, under the provisions of section 149 of the Customs Act, only manual corrections can be made by a party. It was further observed that the only lapse on the part of the Petitioner was that it had inadvertently mentioned ‘N’ in the reward column of the SB instead of ‘Y’.

It was observed by the HC that such an error is a procedural defect and is curable considering the fundamental objective of the scheme under Chapter 3 of the FTP 2015-20. The basic objective of the Exports from India Schemes is to provide reward to the exporters and to promote manufacture and export of notified goods to notified markets. Once this is done, the assessees are entitled to claim its reward.

The HC further observed that in the case of Pasha International vs. Commissioner of Customs [2019 (365) E.L.T. 669], among others, it has been held by the Madras HC that an assessee can be allowed to manually carry out corrections in the SBs in the case of Non-EDI bills and the Revenue can issue the necessary No-Objection Certificate to such party if such assessee has inadvertently committed a mistake while filing and uploading the SB and not claimed MEIS benefit.

Basis the above observations, the Bombay HC quashed the MEIS rejection letters and directed the Revenue to issue the required No Objection Certificate, basis which the Petitioner would be enabled to claim the benefit of MEIS.

Portescap India Private Limited vs. Union of India and Ors. [W.P. No. 2532 of 2019]

The Ministry of Finance vide Press Release dated 28 February 2021 has decided to extend the due date for filing Annual Return in Form GSTR-9 and Reconciliation Statement in Form GSTR-9C for the F.Y. 2019-20 till 31 March 2021 with the approval of Election Commission of India

The CBIC vide Notification No. 14/2020 – CT dated 21 March 2020 had notified that Dynamic QR Code would be required on B2C invoice issued by taxpayers having aggregate turnover of more than Rs. 500 crore, w.e.f. 01 December 2020. Further, the penalty had been waived for non-compliance of the provisions of the said notification till 31 March 2021, subject to certain conditions.

In respect of the said notification, the CBIC vide Circular No. 146/02/2021-GST dated 23 February 2021 has issued further clarifications:

The Ministry of Finance vide Press Release dated 22 February 2021 has clarified that the time limit for sanction of pending IGST refunds stands extended till 31 March 2021, in such cases where records have not been transmitted to ICEGATE due to GSTR1 and GSTR3B mismatch. The Ministry of Finance further provided that such facilitation overcomes the problem of refund blockage by allowing refunds subject to post refund audit scrutiny and undertakings of CA certificates by the exporters.

It has been further provided that the CBIC has also extended the facility for resolving invoice mismatch errors through customs officer interface on permanent basis. Earlier this facility was provided for a limited period i.e. in respect of shipping bills filed up to 31.12.2019. The exporter may now avail the facility of correction of Invoice mis-match errors in respect of all past shipping bills, irrespective of its date of filing subject to payment of prescribed fees.