The National Informatics Centre (NIC) had earlier released an update on the generation of E-Way Bills for the movement of gold, gold jewellery, and precious stones. Accordingly, the ‘EWB for Gold’ option has been currently removed from the E-Way Bill portal. Consequently, the E-Way bill for Gold option will be accessible once notified.
In pursuance of the Government recommendations, a facility for the generation of E-Way Bills for the transportation of gold has been incorporated to the E-Way Bill portal. The National Informatics Centre ('NIC') has published an update dated 12 September 2022, apprising the details of the E-Way Bill for gold. E-Waybill for Gold will be mandatory when all the items belong to HSN Chapter 71 only. Moreover, if other items which do not belong to HSN Chapter 71 exists along with HSN Chapter 71, then it will be treated like a normal E-Way Bill and the details of Part-B shall be required. If the respective state has notified the requirement for the generation of an E-Way Bill in which taxpayer is registered, the taxpayer should review the notices and exemptions issued by their respective states. The E-Way Bill for gold consists primarily of two parts, as follows:
Part-A of E-way Bill for gold
Part-B of E-way Bill for gold
We are glad to bring you the 24th 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 month of August 2022. Following are some key highlights of this Newsletter:
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 CBIC vide Circular No.180/12/2022-GST dated 09 September 2022 has issued guidelines for filing/revising TRAN-1/TRAN-2 in terms of order passed by Hon’ble Supreme Court in the case of Union of India vs. Filco Trade Centre Private Limited.
The Apex Court on 22 July 2022 vide the landmark judgment had directed re-opening of GSTN portal for filing Form TRAN-1 and TRAN-2 for a period of 2 months. Further, the Apex Court also directed the GST Council to issue appropriate guidelines in scrutinizing the claims. Subsequently in Miscellaneous Application No. 1545-1546/2022, the Apex Court vide order dated 02 September 2022 has extended the time for opening the GST Common portal for further period of 4 weeks i.e. from 01 October 2022 to 30 November 2022.
In pursuance to the aforementioned order, the CBIC vide the captioned Circular had issued various guidelines for filing TRAN-1/TRAN-2 or revising earlier filed TRAN-1/TRAN-2 as tabulated hereunder:
Sr. No. |
Guidelines |
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· The Applicant may file declaration in FORM GST TRAN-1/TRAN-2 or revise earlier filed TRAN-1/TRAN-2, which is duly signed or verified through electronic verification code on the common portal. · In cases where the Applicant is filing a revised TRAN-1/TRAN-2, the Applicant can download the TRAN-1/TRAN-2 furnished earlier by him.
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· The Applicant also needs to upload the pdf copy of a declaration in the format as attached in Annexure ‘A’ of the captioned circular; · The Applicant claiming credit in table 7A of FORM GST TRAN-1 on the basis of Credit Transfer Document (CTD) also needs to upload the pdf copy of TRANS-3, containing the details in terms of the Notification No. 21/2017- CE (NT) dated 30.06.2017.
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3 |
· The Applicant cannot claim transitional credit filed in table 5(b) & 5(c) of FORM GST TRAN-1 in respect of such C-Forms, F-Forms and H/I-Forms which have been issued after the due date prescribed for submitting the declaration in FORM GST TRAN-1 i.e. after 27.12.2017.
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· While filing a claim in FORM GST TRAN-2, the Applicant shall file the entire claim in one consolidated FORM GST TRAN-2, instead of filing the claim tax period wise, as referred to in rule 117(4)(b)(iii) of the GST Rules; · In such cases, the Applicant shall mention the last month of the consolidated period in the column ‘Tax Period’ for which the claim is being made.
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· The Applicant shall download a copy of the TRAN-1/TRAN-2 filed on the common portal and submit a self-certified copy of the same, along with declaration in Annexure ‘A’ and copy of TRANS-3, where ever applicable, to the jurisdictional tax officer within 7 days of filing of declaration. · The Applicant shall provide all the requisite documents/records/returns/invoices, in support of his claim of transitional credit to the concerned tax officers for verification.
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· The Applicant is allowed to modify/edit, add or delete any record in any of the table of the said forms before clicking the Submit button. Once Submit button is clicked, the form gets frozen, and no further editing of details is allowed. · Thereafter this form would then be required to be filed on the portal using File button, with Digital signature certificate (DSC) or an EVC.
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7 |
· It is further clarified that those registered persons, who had successfully filed TRAN-1/TRAN-2 earlier, and who do not require to make any revision in the same, are not required to file/ revise TRAN-1/TRAN-2 during this period. · In cases where the credit availed by the Applicant on the basis of FORM GST TRAN-1/TRAN-2 filed earlier, has either wholly or partly been rejected by the proper officer, the appropriate remedy in such cases is to prefer an appeal against the said order or to pursue alternative remedies available as per law.
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· The declaration in FORM GST TRAN-1/TRAN-2 filed/revised by the Applicant will be subjected to necessary verification by the concerned tax officers. · After the verification of the claim, the jurisdictional tax officer will pass an appropriate order thereon on merits after granting reasonable opportunity of being heard to the Applicant. · Thereafter the transitional credit allowed as per the order passed by the jurisdictional tax officer will be reflected in the Electronic Credit Ledger of the Applicant on the common portal.
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The CBIC vide the captioned Circular also clarified that, once the Applicant files TRAN-1/TRAN-2 or revises the said form filed earlier, no further opportunity will be given to the Applicant to again file or revise the form either during this period or subsequently.
The Apex Court vide order dated 02 September 2022 has extended the time for opening GST Common Portal for a further period of 1 month. It has also been clarified that all questions of law decided by the respective High Courts concerning Section 140 of the CGST Act read with the corresponding Rule/Notification or direction are kept open
The CBIC vide instruction No. 04/2022-23 [GST – Investigation] dated 01 September 2022 has issued guidelines for initiating prosecution under the CGST Act. The Instructions inter alia provide that any person who violates the provision of section 132 of the CGST Act, may be subjected to criminal proceedings and prosecution. Following are the key highlights of the Instructions.
Sanction of prosecution
SC’s observations in RE: Radheshyam Kejriwal [(2011)3SCC 581]
Monetary limits
Authority to sanction prosecution
Procedure for sanction of prosecution
Appeal against Court order in case of inadequate punishment/acquittal
Procedure for withdrawal of prosecution
General guidelines
Publication of names of persons convicted
Monitoring of prosecution
Compounding of offence
Transitional Provisions
A global e-tender was floated by M/s. Diesel Locomotive Works in April 2019, to procure turbo wheel impeller balance assembly under the Make in India scheme. Bharat Forge Ltd., one of the bidders, had approached the Allahabad High Court, inter alia, assailing that neither the Notice Inviting Tender (‘NIT’) nor the bid documents mentioned the relevant Harmonised System of Nomenclature (‘HSN’), which is adopted by the GST Council to indicate the GST rates. It was contended that they had quoted the correct GST rate of 18%, whereas the top three tenderers quoted at 5%, accordingly their overall prices were lower in comparison. Due to the non-disclosure of the HSN Code in the bid document, the correct tax rate for all bidders was not disclosed, and thus the public tender violated Article 19(1)(g) of the Constitution. The High Court allowed the petition, and directed the Central Government to verify the HSN Code from taxing authorities and indicate the same on bid documents.
Aggrieved, the Central Government challenged the HC’s order before the Apex Court. The main contention argued was the maintainability of the writ of mandamus as there was no breach of statutory duty by the Government. Further, it was argued that the bid documents clearly stated that the Government would not be responsible for misclassification taxes and duties, therefore mandating the Government to seek HSN Code clarification was not feasible.
The Supreme Court upheld the writ, and consequently quashed the mandamus issued by the HC. The Apex Court ruled that the State is not duty bound to mention HSN Codes in public tender documents. The court was of view that there should be a 'public duty' for invoking mandamus, and not necessarily a statutory duty. It can be imposed by common charter, common law, custom or even contract. Referring to a catena of judgments, the Court noted that the writ of mandamus has a wide scope and should be invoked whenever a public duty is breached. It was further held that judicial review is limited for state contracts and they can only intervene when the state acts arbitrarily, or whimsically against public interest. The court noted that it was Bharat Forge’s duty to enquire about the HSN code and other tax rates.
Union of India vs. Bharat Forge Limited and Anr. [2022-TIOL-67-SC-GST]
GLS Comments:
The HSN classi¬fication of railway products has been a perpetual issue right from the Excise days, which has re-ignited under the GST regime as well. Where inconsistencies and scope for multiple interpretations in the applicability of HSN codes to products sold in the same industry will exists, possibility of different price bids will remain. While the Allahabad HC had intended to provide a level playing field to the bidders, ensuring no misclassification, it would not have been feasible. The responsibility of classifying the goods and charging the tax correctly, always rests upon the seller. Shifting such grave responsibility on the shoulders of the buyers would have created a havoc in the industry.
Moreover, the Apex Court has rightly held that the State is not duty-bound to mention the HSN Codes on the tender. This would amount to shifting the responsibility of correct tariff classification on the State. Further, non-mentioning of HSN Codes does not amount to any action against the public interest at large.
The Petitioner had generated an E-Way Bill for inter-State transport of his goods. During the interception of the consignment, it was observed that the E-Way Bill had been expired while the vehicle was in transit. Consequently, the vehicle had been detained for the alleged violation of section 129 of the CGST Act r/w. Rule 68 of the CGST Rules. The entire proceedings, including the vehicle detention, show-cause notice, and the adjudication order, were passed on the same date. The Petitioner had paid the entire demand of tax along with interest and got the vehicle released on the same date. Thereafter, the Petitioner had preferred an appeal which came to be rejected. Aggrieved, the Petitioner preferred a Writ before the Jharkhand HC.
The Petitioner submitted that the entire proceedings was held ex parte and no proper opportunity of furnishing a reply or hearing was given to them. The Petitioner further stated that it was a bona fide error and there was no intention to evade tax. The Revenue on the other hand contented that the provisions of sec 129 does not contemplate the requirement of an intention to evade tax in order to impose tax liability, interest, and penalty hence, the order passed against the Petitioner did not suffer from any legal infirmity. The Revenue further contended that on the request of the Petitioner itself, the vehicle was released after the payment of tax and interest as they did not want to submit anything on the issue, therefore the case was adjudicated ex parte.
The HC observed, that the proceedings against the Petitioner were initiated and concluded on the same date. Therefore, the HC held that the adjudication order and the appellate order both suffered from procedural infirmities and deprived the Petitioner/Driver an adequate opportunity to defend themselves. Accordingly, the HC allowed the writ, dismissing the adjudication and the appellate orders.
AMI Enterprises Private Limited [W.P. (T) No. 2312 of 2022 dated 10 August 2022]
GLS Comments:
It would be pertinent to note that in a similar matter, the Apex Court in RE: Satyam Shivam Papers Private Limited [Special Leave to Appeal (C) No(s). 21132 of 2021] had affirmed the judgement of the Telangana HC holding that tax evasion cannot be presumed on mere non-extension of validity of e-way bill by the Assessee.
The Petitioner had filled a GST refund claim during July 2021, which had been granted in tranches in January and March 2022, without interest despite substantial delay. Aggrieved, the Petitioner preferred a Writ before the Delhi HC. The Revenue contended that delay in processing the refund owing to the COVID-19 outbreak. The Revenue further relied on the Supreme Court's Suo moto extension order and the judgement of the Madras HC in RE: GNC Infra LLP [2022-TIOL-55-HC-MAD-GST], wherein had been held that Suo moto extension order by the SC would apply to refund u/s. 54 of the CGST Act.
The HC observed that the statutory rate of interest is pegged at 6% u/s. 56 of the CGST Act. The said interest gets triggered after the expiry of 60 days from the date of receipt of application for refund, which is compensation for use of money. It was further observed that neither the SC’s limitation order, nor the Madras HC’s judgement in RE: GNC Infra [supra] concern the point in issue i.e., grant of interest on refund withheld beyond the period prescribed under the Act. Thus, the submissions of the Revenue are not sustainable.
In view of the above observations, the Delhi HC held that the Revenue could not have retained the money beyond the period stipulated under Section 56 of the CGST Act. The HC further directed the Revenue to grant the applicable interest on delayed refund.
Ankush Auto Deals [2022-TIOL-1098-HC-DEL-GST]
The Petitioner, a partnership firm, engaged in manufacturing and trading veneer had been duly registered under the CGST Act. While trying to upload an E-way Bill, the Petitioner realised that the registration had been cancelled. Aggrieved, the Petitioner filed an application for revocation of the cancellation order. In response, the Revenue stated the cancellation was the ground that as per the inspection report no business activity, stock, or employees was found at the Petitioner's principal place of business during the investigation. Thereafter, an SCN had been issued proposing rejection of revocation application. Aggrieved, the Petitioner had filed an Appeal, which came to be rejected. Thus, the Petitioner preferred a Writ before the Allahabad HC.
The HC observed that cancellation of GST registration has serious consequences as it takes away the fundamental right to engage in business activity. The HC further highlighted certain lacunas in the SCN, such as opaqueness of the allegations and also no relevant report or inquiry conducted to form the opinion was relied upon in the SCN. In view of the above, it was held that a vague show-cause notice without any allegation or proposed evidence against the petitioner is violative of principles of administrative justice. The HC further held that the harassment caused to Petitioner since 2020 was due to the Department's arbitrary actions, Consequently, the Court ruled that the registration of the Petitioner be renewed.
DRS Wood Products [TS-405-HC(ALL)-2022-GST dated 12 August 2022]
GLS Comments:
The Allahabad HC in the instant case has rightly set aside the order upholding the rejection of revocation application of GST registration cancellation, on the basis of a vague SCN, which did not record the allegations / alleged contraventions of the assessee. It would be pertinent to note that as a settled principle of law, a vague SCN is void ab initio. The Bombay HC in RE: Royal Oil Field Private Limited [2006 (194) ELT 385 Bom] had held that a notice which does not disclose the material based on which the consequent adverse action is proposed to be taken, is vague and unsustainable.
When the SCN, which is the foundation on which the department has to build up its case, is vague and lack details, it has to be held that the impugned order based on such an SCN is bad in law and cannot be sustained.
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