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The Petitioner had preferred a Writ before the Punjab and Haryana HC against the detention of goods in transit u/s. 130 of the CGST Act. The Petitioner submitted that the Revenue authorities had intercepted and detailed the goods in transit basis the allegation on genuineness of the transaction despite the driver of the vehicle being in possession of all the requisite documents. 

The Revenue alleged that the inward supply to suppliers of the Petitioner is from a supplier who is not having inward supply and is only engaged in outward supply without paying any tax. In this regard, the HC observed that Section 130 is a penal provision which is invocable only in certain situations, where the contravention has occurred with an intent to evade taxes. 

The HC held that a person can be attributed with intent to evade taxes only if the contravention of the provisions has some direct nexus with his action. A person cannot be held liable u/s. 130 for contravention of the provisions by other person in the supply chain. Basis the above observations, the HC set aside the SCN issued by the Revenue for alleged contravention of Section 130 of the CGST Act.

Shiv Enterprises [2022-TIOL-169-HC-P&H-GST]

AUTHORS’ NOTES :

It shall be noted that under the erstwhile VAT regime, the Apex Court had affirmed the Delhi HC’s view in RE: Arise India Limited [2018-TIOL-11-SC-VAT] tha failure to distinguish between bona fide and nonbona fide purchasing, the dealer would be hit by Article 14 of the Constitution. It shall be further noted that as long as the purchasing dealer has taken all the necessary steps to verify that the tax invoice has been issued in accordance with the law, he cannot be expected to keep track of whether the selling dealer has in fact deposited the tax so collected or has been lawfully adjusted.

The GSTN vide its Advisory dated 23 February 2022 has informed upcoming GSTR-1/IFF improvements and enhancements on GST Portal for the taxpayers. Taxpayers will now be shown a table-wise consolidated summary before actual filing of GSTR-1/IFF. Taxpayers can now view and download detailed summary of the GSTR-1/IFF in a new PDF format. The new summary format has been aligned with the notified format of Form GSTR-1. It will also contain the total outward supplies liability of the taxpayer (other than reverse charge), to be auto-populated in Form GSTR-3B.

Amidst the commotion created by the announcement of the Union Budget ’22, the developments in the tax and regulatory space in the month of January 2022 seems to have taken the back-seat. However, these developments are not to be missed out, as the Judiciary and the Legislature had a lot in store for the taxpayers! Most notably, the Apex Court, taking cognizance of the rising COVID-19 cases, had once again restored the limitation relaxation order. This will greatly help those who had missed out on filing Appeals, applications in the past 2 years. Other notable development in the month of January is that the Board has clarified the issues pertaining to relaxation on necessity of Bank Guarantee for Authorised Economic Operators.

On the Direct Tax front, the CBDT has notified the e-Advance Ruling Scheme, 2022. The Board has also provided a one-time relaxation for verification of all ITRs e-filed for AY 2020-21. Further, in a move towards achieving the ‘Digital India’ goal, the NSE has launched a new digital portal for filing compliances with the Exchange!

Compiling all such developments, we are glad to bring to you in new Avatar, the 18th 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. 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 Petitioners were purchasers of goods and services. The Respondent refused to grant ITC on the said goods, basis the facts that the suppliers from whom the Petitioners claimed to had purchased the said goods was all fake and non-existing and the bank accounts opened by those suppliers was fake as well. Therefore, the documents submitted by the Petitioners were not accepted by the Respondent.

Basis the documents submitted by the Petitioners, the Calcutta HC observed that the at the time of the transaction, the suppliers were genuine and valid by relying upon all the supporting relevant documents required under law and the Petitioner with their due diligence had verified the genuineness and identity the names of the suppliers as registered taxable person. Further observed that the supplier was available at the Government portal showing their registrations as valid and existing at the time of transactions. 

In the view of the above observations, the Calcutta HC held that it cannot be said that there was any failure on the part of the Petitioners in compliance of any obligation required under the statute before entering the transactions in question or for verification of the genuineness of the suppliers in question. The case was disposed of by the Respondent concerned in accordance with law.

LGW Industries Limited & Ors. [2021-TIOL-2308-HC-KOL-GST]

Authors’ Notes:

As a matter of principle, credit cannot be denied to recipient on default of compliances by the supplier. It shall be noted that the Delhi HC in RE: Arise India Limited [TS-314-HC-2017-DEL-VAT] had held Section 9(2)(g) of Delhi VAT Act to the extent it disallows ITC to purchaser due to default of selling dealer in depositing tax, as violative of Articles 14 and 19(1)(g) of the Constitution of India. Thereafter, the Revenue had also preferred an SLP before the SC, against the Delhi HC judgement. The same came to be dismissed by the Apex Court in RE: 2018-TIOL-11-SC-VAT.

In a bid to lay down the foundation for the coming 25 years, the Hon’ble Finance Minister Smt. Nirmala Sitharaman has indeed announced an ambitious Budget. From proposing highway connectivity projects, to allocating resources for the ‘Nal Se Jal’ Scheme, and boosting infrastructure development in the North East, the Union Budget ’22 has undoubtedly laid down the stepping stone for the future.

Apart from the traditional sectors, the Government has also made strides to meet the objective of ‘Digital India’. The proposal to introduce the Digital Rupee, a currency backed by blockchain technology and setting-up of 75 digital banking units in 75 districts, stand testament to these developments. However, the digital sector takes a hit as the Government has also proposed to bring virtual currencies like cryptocurrency and NFTs under the tax net, despite ambiguity as to its legality.

Notably, on the direct tax front, the FM has urged the Revenue to defer filing of repetitive appeals against an assessee until the substantial question of law is decided by the jurisdictional High Court or the Supreme Court, which would considerably reduce the burden on the Judiciary.

As regards GST, it has been proposed to extend the final date for availment of credit from September to November, and to provide a mechanism to allow transfer of balance between electronic cash ledger of different states. However, certain underwhelming amendments have also been proposed which provides additional restrictions on ITC availment, basis the GST compliances of the suppliers.

On the Customs front, various laws have been proposed to be amended so as to essentially negate the Apex Court’s judgement in RE: Canon India, wherein, it had been held that the DRI is not a proper officer to issue Show Cause Notices.

Compiling all such developments, we are glad to bring you a detailed analysis on the Union Budget ’22 in association with TIOL. 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 Appellant, engaged in the business of supply of pumps, had received a purchase order from Bangladesh. Upon receipt of such purchase order, the parent Company of the Appellant, situated in Poland directly shipped the goods to the customer is Bangladesh. In view of the above, the Appellant had sought an advance ruling before the Gujarat AAR to ascertain whether the Appellant is liable to pay IGST on out and out transactions taking place beyond the Customs frontiers of India. The AAR had held that IGST will be leviable on such transactions prior to 01 February 2019. Aggrieved, the Appellant preferred an Appeal before the Gujarat AAAR.

The Gujarat AAAR observed that Entry 7 of the Schedule III covers supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India. The AAR further observed that the supply of goods in the instant case takes place from Poland, which is a non-taxable territory, to Bangladesh, which also is non-taxable territory, without the said goods entering into India, the transactions are covered by said Entry 7 of Schedule – III. In view of the above, the AAAR held that no GST is leviable on such type of transactions which have taken place with e ect from 01 February 2019 and onwards. 

SPX Flow Technology India Private Limited Order No: 02/11/2021

Authors’ Note:

The CGST Act extends to the whole of India only and not beyond it. Therefore, any transaction which takes place beyond the territories if India cannot be made exigible to GST. Accordingly, irrespective of the date of insertion of Entry No. 7 in Schedule III of the CGST Act, GST cannot be levied on such transactions which are beyond its jurisdiction. This view has been upheld by Maharashtra AAR in RE: INA Bearing India Private Limited [2018-TIOL-286-AAR-GST]

The CBIC vide Circular No. 02/2022 – Customs dated 19 January 2022 has clarified that the provisions of Section 28DA of the Customs Act relating to claim of preferential rate of duty and the issuance of CAROTAR would prevail over the dispensation of extended vide certain circulars relating to AEO benefits. Thus, the relaxation in furnishing of Bank Guarantee extended to various categories of AEO/AEO (MSME), would not be applicable in cases where the Competent Authority orders furnishing of Bank Guarantee for provisional release of goods under section 18 of Customs Act.

The Petitioner had filed a GST refund application for the period July 2018 to September 2018 in August 2020. However, the same came to be on the ground of certain deficiencies. Thereafter, another refund application had been filed in September 2020, which was rejected for deficiencies. Thereafter, the Petitioner filed the refund application for the third time in September 2020 itself, which came to be rejected on the ground of limitation. Aggrieved by the refund rejection, the Petitioner preferred a Writ Petition before the Bombay HC praying for restoration of the third refund application.

The Bombay HC observed that the Apex Court in RE: Misc. Application No. 665 of 2021 in Suo Motu Writ Petition (Civil) No. 3 of 2020] had had extended limitation periods from 15 March 2020 till further orders. The said order was extended from time to time. However, since the lockdown had been lifted and almost all the Courts and Tribunals started functioning either physically or by virtual mode, the extension of limitation came to end on 15.03.2021.

It was further observed that subsequently, the Apex Court in its order [2021-TIOL-246-SC-MISC-LB] withdrew its earlier suo moto directions which provided extension from limitation period for court proceedings and held that the period of 15 March 2020, to 02 October 2021 shall stand excluded from limitation period of any suit, appeal, application, etc. The HC further observed that the period of third application fell between the limitation periods passed by the SC. In the view of the above, the Bombay HC quashed the third refund rejection order passed by the Respondent and restored the same.

Saiher Supply Chain Consulting Private Limited [Writ Petition (L.) No. 1275 OF 2021]

GLS Comments:

It would be pertinent to note that the Madras HC in a similar matter in GNC Infra LLP [W.P. No. 18165 and 18168 of 2021] had also extended the Apex Court’s limitation relief order to Refund Applications. However, it shall be noted that the CBIC vide Circular No. 157/13/2021 – GST dated 20 July 2021 had categorically clarifi¬ed that proceeding that need to be initiated or compliances that need to be done by the taxpayers would continue to be governed only by the statutory mechanism and time limit provided/ extensions granted under the statute itself. Therefore, the cases of late ¬ling of refund, being a proceeding to be initiated by the taxpayers may not be eligible for the SC’s limitation extension order.

The Hopes are high among the masses, coming into 2022 despite the surging COVID-19 cases. With the near completion of the biggest ever vaccination drive globally along with the ongoing booster vaccination drive, India seems to equipped for come what may. The 8.4% GDP growth Q2 compared to 7.4% contradiction a year ago, goes to speak volumes about the economic growth of the Nation even in the face of adversity. Such growth is possible only when the judicial and adjudicating authorities work in harmony, keeping in mind the difficulties faced by the taxpayers.

In line with such harmonious development, the CBDT has notified the Faceless Appeal Scheme, 2021 and provided one-time relaxation for verification of all ITRs e-filed for AY 2020-21. The CBIC has extended the due dates for filing Annual Return and Reconciliation Statement for the F.Y. 2020-21. Similarly, the CBDT vide Circular No. 01/2022 dated 11 January 2022 has extended the due dates for filing Tax Audit Report and Transfer Pricing Report till 15 February 2022 and extended the due date for filing IT Returns till 15 March 2022. It shall also be noted that the CBIC has notified various key amendments in the GST Law.

Compiling all such developments, we are glad to bring you the 17th 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. 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. 

In light of the spread of the new variant of the COVID-19 and the drastic surge in the number of COVID cases across the country,the Supreme Court Advocates on Record Association ('SCAORA') had sought restoration of the order in RE: Suo Motu Writ Petition (C) No. 3 of 2020. The Apex Court, taking cognizance of the same, passed the following order dated 10.01.2022:

• the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as may be prescribed in respect of all judicial or quasi-judicial proceedings;
• Consequently, the balance period of limitation remaining as on 03.10.2021, if any, shall become available with effect from 01.03.2022;
• In cases where the limitation would have expired during the period between 15.03.2020 till 28.02.2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days  from 01.03.2022. In the event the actual balance period of limitation remaining, with effect from 01.03.2022 is greater than 90 days, the longer period shall apply;
• The period from 15.03.2020 till 28.02.2022 shall also stand excluded in computing the periods prescribed under the Arbitration and Conciliation Act, Commercial Courts Act, Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings.