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The Petitioner had committed an inadvertent error in reporting the credit in Form GSTR-1 in regard to the outward supplies and Intra-state sales had been erroneously reported as inter-state sales, as a result the CGST and SGST credit was reflected in the IGST column. The Petitioner had requested for amendment of GSTR-1, which had been rejected by the Respondents in August 2019 on the ground that there was no provision to grant the amendment sought. Aggrieved, the Petitioner filed a Writ before the Madras HC seeking a mandamus directing the Respondents to permit correction in Form GSTR-1 for the relevant period. 

Referring to the relevant provision of Return filing under the CGST Act, the Madras HC observed that a registered person who files a return involving intra-State outward supply is to indicate the collection of taxes in Form GSTR-1 and the details of tax payment therein are auto populated in Form GSTR -2-A of the buyers. Any mismatch between Form GSTR-1 and Form GSTR-2A is to be notified by the recipient by way of a tabulation in Form GSTR-1A.

It was further observed by the HC that Forms in GSTR-2A and GSTR-1A were not notified by the Revenue. The statutory procedure contemplated for seamless availment was, as on date, unavailable. The HC noted that it is nobody’s case that the error was deliberate and intended to gain any benefit, and in fact, by reason of the error, the customers of the petitioner would be denied credit, owing to the fact that the credits stands reflected in the wrong column.

The HC further observed that had the requisite Form GSTR-1A and Form GSTR-2A been notified, the mismatch between the details of credit in the Petitioner’s and the supplier’s returns might well have been noticed and appropriate and timely action taken. The HC further remarked that in the absence of an enabling mechanism, assessees should not be prejudiced from availing credit that they are otherwise legitimately entitled to. Accordingly, the HC allowed the Writ petition and allowed to re-submit the annexures to Form GSTR-3B with the correct distribution of IGST, CGST and SGST.

GLS Comments:

The Madras HC has passed a well-reasoned order, keeping in mind the natural justice and the intent of the law. In this regard, it would be pertinent to note that Kerala HC in the case of Saji S. [2018 (19) G.S.T.L. 385] had permitted the request of transfer of tax liability from the head ‘SGST’ to ‘IGST’ as it would be inequitable for the Petitioners therein to suffer on the count that the transfer would take some time.

Similarly, the Andhra Pradesh HC in the case of Panduranga Stone Crushers [2019 (30) G.S.T.L. 385] had provided an interim relief allowed the rectification of a clerical error subject to the final outcome of the Writ Petition. 

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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

On account of the COVID-19 pandemic, the DGFT vide Public Notice No.26/2015-2020 dated 16 October 2020 has amended the Handbook of Procedures 2015-20 on monitoring of Export Obligation to extend the due date for submission of documents for EO fulfilment upto 31 December 2020 for all Advance Authorisations, wherever EO period is expiring or has expired between 01 February 2020 and 31 December 2020.

The DGFT vide Trade Notice No. 32/2020-21 dated 28 October 2020 has requested the requested the EPCs, Trade and Industry involved in export of items falling under Chapter 86, 88 and 89 to urgently submit data for their respective export items in required format to the RoDTEP Committee, so as to enable working out of suitable rates for export items.

The DGFT vide Trade Notice No. 33/2020-21 dated 28 October 2020 has informed the IEC holders to create login IDs through the online registration process before the roll out of next phase of the platform. The DGFT has further outlined various other action points for exporters and importers regarding revamped DGFT services into the new DGFT IT platform.

The Ministry of Finance vide Notification no. 31/2020-Customs (ADD) dated 16 October 2020 has extended the imposition of Anti-Dumping Duty on imports of Front Axle Beam and Steering Knuckles meant for heavy and medium commercial vehicles classifiable under tariff heading 73261910, 73261990, 73269099, 87085000 and 87089900 of the Customs Tariff Act, 1975, originating or exported from the People’s Republic of China, upto and inclusive of 30 November 2020.

On account of the COVID-19 pandemic and the requirement to maintain social-distancing, the CBIC vide Circular No. 47/2020 – Customs dated 20 October 2020 has allowed contactless delivery of international courier consignments, based on OTP validation. The CBIC has further laid down the procedure to be followed for OTP based contactless delivery being adopted by the domestic courier companies.

In order to bring in greater regulatory clarity and certainty for investors, the CBIC vide Circular No. 48/2020-Customs dated 27 October 2020 has clarified only inputs are allowed to be sent out from a Warehouse unit u/s. 65 of the Customs Act. However, capital goods can be sent to with the permission of the bond officer. Further the Circular specifies certain conditions that the job work shall be subjected to.

The CBIC has further allowed certain tools, fixtures, etc. to be sent out to the job work premises subject to due accounting of the goods by the warehouse unit u/s. 65 of the Customs Act in the specified account as per the GST provisions. The CBIC lastly clarifies that no restrictions is imposed in respect of sourcing of goods by the units, as the units are GST registrants, which are also allowed to procure goods from SEZ / FTWZs by following the applicable procedures.

The Petitioner had been exempted from payment of entry tax on account of the certificate granted under the Madhya Pradesh Udyog Nivesh Samvardhan Sahayta Yojna, 2004 and 2010. In terms of the Yojna, the Companies were entitled for 100% exemption in respect of payment of entry tax. 

The certificate was granted to the Petitioner in February 2017 with retrospective effect, and therefore, all entry tax assessment orders for the period 2004 to 2013 and subsequent assessment orders also upto 2015 became null and void as the exemption was granted for a period of 9 years that too with retrospective effect. However, the Respondent granted exemption only in respect of 5 assessment years, as the re-assessment for four years was not done. The Petitioner wrote letters to the authorities along with the exemption certificate for granting exemption for the remaining years. However, the Respondents did not grant the exemption.

The Respondents argued that that the statute does not provide for grant of exemption as the matter had become time barred. In respect thereto, the MP HC observed that he exemption certificate itself was granted only in the year 2017 and the cause of action arose for the first time in the year 2017 for grant of exemption as exemption certificate was granted with retrospective effect. Thus, there was a sufficient and reasonable cause in respect of condonation of the delay.

It was further observed by the HC that the Petitioner was certainly having a sufficient cause for condonation of delay, as exemption certificate was granted in the year 2017 and, therefore, the stand taken by the Department in respect of the limitation has got no meaning.  It was held by the HC that as the exemption had been granted with retrospective effect, the Respondent Department was certainly under an obligation to abide by the exemption certificates and to provide exemption in letter and spirit of the eligibility certificate. 

It had been further held that once exemption certificate was granted, the Department cannot take advantage of technicalities, especially when the certificate itself was granted in the year 2017 with retrospective effect. Basis the said observations, the HC allowed the Writ Petition and directed the Respondents to confer all benefits to the Petitioner in terms of the Entry Tax Exemption Certificate.

SRF Limited vs. State of Madhya Pradesh [W.P. No. 9628/2020]

The Input Tax Credit (‘ITC’) of the Petitioner had been restricted in Form W for the months of December 2013 to May 2014 for separate orders for every month. The restriction of the amount of ITC has been done predominantly on the head of (a) Prior sufferance of Taxes; (b) ITC on reversal on wastage; and (c) Ineligible claim of ITC on goods.

In respect of amount for prior sufferance of taxes, the Revenue had claimed that some of the sellers from whom the petitioner had purchased the goods had not paid tax to the Government. In this regard, the Madras HC observed that in the case of Infiniti Wholesale Limited [2017 (99) VST 341 (Mad)] had held that ITC cannot be disallowed on the ground that the seller had not paid tax to the Government, when the purchaser is able to prove that the seller has collected tax and issued invoices to the purchaser.

It was further observed that in the case of Shri Ranganathar Valves Private Limited [W.P. No. 41670 to 41670 of 2018] it had been held that the assessee would be entitled to avail ITC where such products had been used for the manufacture of export goods. In light of the said observations, the Madras HC set aside the issue with regard to restriction of the amount of ITC for prior sufferance of taxes is remanded back to the Assessing Officer for fresh consideration. It was further held that it is open for the assessing officer to issue a SCN to the petitioner calling for his objections with regard to ITC on reversal on wastage and Ineligible claim of ITC on goods.

Sri Ranganathar Valves Private Limited [W.P.Nos.38488 to 38493 of 2015]

The Petitioner had duly transitioned the credit of Service Tax and VAT under the GST Regime by filing Form TRAN-1. Subsequent to the filing of the Form, the Petitioner received confirmation of the same from GSTN portal, however, the said credit was not reflected in the Petitioner’s electronic credit ledger. In respect thereto, the Petitioner had filed a grievance on the GSTN Portal.

However, the Respondent did not allow the revision of TRAN-1 or manual application as there was no evidence of technical glitch as claimed by the Petitioner. Aggrieved, the Petitioner filed a Petition before the Bombay HC seeking a Writ of mandamus directing the Respondent’s to allow transitional credit.

The Bombay HC observed that despite the admitted successful filing of TRAN-1 by the Petitioner, the request for transitioning of credit had not been approved by the Respondent merely on the basis that there were no technical glitches on the GSTN side. It was further observed that there was no further explanation or clarification or evidence on the issue by the Respondents.

The Bombay HC also noted that the whole objective of digitization is to convenience the tax payers and not to harass them. Further, the GST system is still evolving in its implementation. Merely because there were no technical glitches in the GSTN with respect to the Petitioner’s TRAN-1 the claim of the Petitioner, if it was otherwise eligible in law, cannot be rejected for no apparent fault on the part of the Petitioner. It was observed that this cannot be the objective of the GST system or digitization. Such a situation cannot be countenanced as it would be wholly unfair and unjust.

Accordingly, the HC directed the Respondents to consider the case of the Petitioner on merits and take necessary action within 4 weeks.

BMW India Financial Services Private Limited [WP-LD-VC-85 of 2020]

The Petitioner had delayed in filing of some of their monthly GSTR-1 and GSTR-3B Returns. Therefore, the Petitioner remitted interest on such late filing of return on the net tax liability. However, the Respondent issued garnishee notices to the customers of the Petitioner and demanded interest the gross tax liability. Aggrieved, the Petitioner preferred a Writ before the Bombay HC.

The Bombay HC observed that Section 50 of the CGST Act was introduced by Finance (No. 2) Act, 2019 for charging interest on the net cash tax liability. The said amendment was made effective prospectively from 01 September 2020, although the GST Council in its 39th meeting had recommended to make the said amendment effective retrospectively w.e.f. 01 July 2017. Accordingly, in order to implement the decision of the GST Council in its true spirit within the present legal framework, field formations had been instructed to recover interest only on the net cash tax liability for the period 01 July 2017 to 31 August 2018 and the  keep those show cause notices in the call book till retrospective amendment in section 50 of the CGST is carried out.

In light of the above observations, the Bombay HC observed that no live issue survives for adjudication in the instant case as the question has already been answered by the Board. Accordingly, the Bombay HC quashed the garnishee notices issued by the Respondent to the customers of the Petitioner.

KLT Automotive and Tubular Products Limited [W.P. No. 983 of 2020]

GLS Comments:

Although the GST Council had firstly recommended levy of interest on net cash liability back in its 31st Council Meeting held on 22 December 2018, the same has been effectuated only recently in September 2020. The Telangana HC in the case of Megha Engineering and Infrastructure Limited [2019 (26) G.S.T.L. 183] on 18 April 2019 had held that the interest would be applicable on gross liability as the recommendations of the GST Council was only on paper.

However, subsequently, the Madras HC in the case of Refex Industries Limited [Writ Petition Nos.23360 and 23361 of 2019] had held that the amendment to Section 50 of the CGST Act clearly seeks to correct an anomaly in the law and therefore, should be read as clarificatory and to operate retrospectively. Subsequently, the CBIC had also cleared the air by issuing Press Release dated 26 August 2020 wherein it had been provided that although the amendment to Section 50 of the CGST Act has been made effective prospectively in view of technical limitations, no recoveries shall be made for the past period. Acordingly, as things stand today, there is no anomaly regarding interest on delayed filing of GST Returns.

The Central Government vide Notification S.O. 3874(E) dated 27 October 2020 had inter alia extended the due dates for filing declaration and making payment of tax dues thereof under the Vivad Se Vishwas Scheme. It had been notified that the declarant would be required to pay the amount within a period of 15 days from the date of receipt of certificate from the authority. 

It had been further provided that declarant who files declaration on or before 31 December 2020 can make payment without additional amount on or before 31 March 2021. Such requirement was contemplated to result into undue hardship for the declarant in whose case the period of 15 days expires before 31 March 2021.

In respect thereto, the CBDT vide Circular No. 18/2020 dated 28 October 2020 has clarified that when a declarant files a declaration on or before 31 December 2020, the Designated Authority shall allow the declarant to make payment without additional amount on or before 31 March 2021

The Government vide Notification dated 27 October 2020 has extended the due dates under the Direct Tax Vivad Se Vishwas Act, 2020 in the following manner:

• The due date for filing declaration under the Scheme has been extended to 31 December 2020;
• The due date for paying the amount under the Scheme has been extended to 31 March 2021; and
• After 01 April 2021, the declarants would be liable to pay the aggregate of the amount of disputed tax and 10% of the disputed tax

The CBDT had earlier extended the due date for all IT Returns for the FY 2019-20 to 30 November 2020. In order to provide more time to taxpayers for furnishing of IT Returns, it has been decided to further extend the due date for furnishing of IT Returns as under:

• The due date for furnishing of Income Tax Returns for the taxpayers (including their partners) who are required to get their accounts audited has been extended to 31 January 2021;
• The due date for furnishing of IT Returns for the taxpayers who are required to furnish report in respect of international / specified domestic transactions has been extended to 31 January 2021;
• The due date for furnishing of IT Returns for the other taxpayers has been extended to 31 December 2020.

Consequently, the date for furnishing of various audit reports under the IT Act including tax audit report and report in respect of international / specified domestic transaction has also been extended to 31 December 2020. Further, in order to provide relief to small and middle-class taxpayers, the CBDT has further extended the due date for payment of self-assessment tax for the taxpayers whose self-assessment tax liability is up to Rs. 1 lakh. 

Accordingly, the due date for payment of self-assessment tax for the taxpayers who are not required to get their accounts audited was extended from 31 July 2020 to 30 November 2020 and for the auditable cases, this due date was extended from 31 October 2020 to 30 November 2020. In order to provide further relief for small and middle-class taxpayers in the matter of payment of self-assessment tax, the due date for payment of self-assessment tax date has been extended in the following manner:

• Due date for payment of self-assessment tax has been extended to 31 January 2021 for taxpayers whose self-assessment tax liability is up to Rs. 1 lakh and whose IT Returns are due on 31 January 2021,;
• Due date for payment of self-assessment tax has been extended to 31 December 2020 for taxpayers whose IT Returns are due on 31 December 2020