You are currently viewing GST Case Digest Series: High Court Tax Cases, 2018

GST Case Digest Series: High Court Tax Cases, 2018

GST is known as the Goods and Services Tax which is an indirect tax which has replaced many indirect taxes in India such as the excise duty, VAT, services tax, etc. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017 and came into effect on 1st July 2017. The Goods and Services Tax (GST) is a value-added tax levied on most goods and services sold for domestic consumption. The GST is paid by consumers, but it is remitted to the government by the businesses selling the goods and services. Goods and Service Tax (GST) is levied on the supply of goods and services. Goods and Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition. GST is a single domestic indirect tax law for the entire country. GST is set to bring a change in the system of indirect taxation by bringing  transparent and corruption-free tax administration, removing the current shortcomings in indirect tax structure. GST is bound to be business-friendly as well as consumer-friendly. In India, it is set to drastically improve the positions of each of these stakeholders. Petition in Karnataka HC challenging the Validity of Circular Imposing Maximum GST on Payment into Horse Racing Totalisator A Petition has been filed in the Karnataka High Court challenging the validity of circular imposing maximum Goods and Services Tax ( GST ) on Payment into Horse Racing Totalisator. The Karnataka High Court has sent notice to the Revenue, Union and State Governments in relation to a writ petition filed by Bangalore Turf Club Ltd & Mysore Turf Club Ltd. The petitioner was represented by Senior Counsel N. Venkataraman and Advocate Dinesh Kumar. Justice S. Sujatha, who has heard the matter, will decide on the interim application for stay on 17th April. Kerala HC to decide the Constitution

al Validity of Savings & Repeal Provisions of Kerala GST Act, 2017 In Sheen Golden Jewels (India) Pvt. Ltd. vs. State of Kerala, admitting the challenge on the Constitutional validity of Savings and Repeal Provisions of Kerala GST Act, 2017, Justice A. Muhamed Mustaque of Kerala High Court has issued the notice to the Revenue Department and has directed the State to file counter. The High Court also granted the stay against all coercive proceedings till the matter is disposed of. The petitioner is being represented by Senior Counsel N. Venkataraman, Advocate K.P. Abdul Azeez and Advocate Akhil Suresh. The High Court has posted the matter for 14th April for fixation of date, for final hearing. GST: PIL filed in Rajasthan HC Challenging Vires of AAR & AAAR A Public Interest Litigation ( PIL ) has been filed before Rajasthan High court challenging provisions of Central and State GST Acts regarding the constitution of  ‘Authority for Advance Ruling’ ( AAR ) and Appellate Authority for Advance Ruling ( AAAR ). The bench comprising of Chief Justice Pradeep Nandrajog and Justice Vinit Kumar Mathur has issued notice returnable after four weeks.

Petitioner has challenged the vires of Constitution of AAR and AAAR, also the petitioner practising extensively in GST apprised that this defective structure leans in favour of bureaucracy and goes against the basic independent intent of judiciary. Chopra said “It is for the GST Council and Government to decide the fate of ambiguous GST law and its independence per se. Kerala HC directs KGST Authorities to allow Revision of VAT Returns subject to Dept Circular The Kerala High Court, while disposing of a petition filed by M/s KNR Walayar Tollways Pvt. Ltd directed the Kerala Goods and Services Tax ( KGST ) Authorities to consider the request for revision of returns by the petitioners on the basis of the circular issued by the department in November relating to the right of the assessees under the Act to submit revised returns. The Court further asked the department to take a decision on applications filed by the petitioners in the light of the above Circular within one month. Allahabad HC directs GST Dept to release Goods on Strength of Security and Bank Guarantee While granting an interim relief to M/s Lg Electronics India Pvt. Ltd, a two-judge bench of the Allahabad High Court, on Thursday directed the GST authorities to release the goods on furnishing security and Bank Guarantee as per the GST laws. In the instant case, the goods belong to the petitioner have been seized by the Goods and Services Tax department for want of E-Way Bill.

Accepting the request of the respondents, the bench comprising Justices Pankaj Mithal and Saral Srivastava observed that “In the meantime, the seized goods of the petitioner, as well as the vehicle, be released by the authorities forthwith on the petitioner furnishing security other than cash and bank guarantee of the proposed tax and penalty and indemnity bond of the value of the seized goods.” GST: Kerala HC permits release of Goods by furnishing Bond, directs Expedite Adjudication The Kerala High Court recently permitted the assessee, M/s Vajra Rubber Products (P) Ltd to release goods detained by the State GST department by furnishing a bond. While disposing of the writ petition, Justice P B Suresh Kumar also directed the authorities to complete adjudication within seven days in terms of section 129 of the Act. Earlier, the goods were seized by the GST authorities by finding that there was no nexus between the documents accompanied and the actual goods under transport. In the light of the decision of the Division Bench in the above case, the bench directed the competent authority to complete the adjudication provided for under Section 129 of the statutes referred to above, within a week from the date of production of a copy of the judgment. It was also directed that if the petitioner complies with Rule 140(1) of the Kerala Goods and Services Tax Rules, 2017, the goods detained shall be released to them forthwith.

Transitional Credit is Vested Right and can’t be Denied: Gujarat HC Issues Notices to Centre-State Govts, GST Council & GSTN While admitting a petition challenging the provisions of Gujarat Goods and Services Tax (GGST) Act, the Gujarat High Court has issued notices to GST Council, GSTN,  State Government and  Central Government and observed that the transitional credit is vested right which cannot be denied by the Government. The petitioners, M/s Willowood Chemicals Pvt. Ltd filed the writ petition before the Gujarat High Court challenging the Constitutional validity and vires of Rule 117 of the Gujarat Goods and Services Tax Rules, 2017 and Form GST Tran-1 issued in relation thereto vis-à-vis Section 140(3), Section 164 of the Central Goods and Services Tax Act, 2017. Collection of Post-dated Cheques during Inspection not permissible under GST: Gujarat HC sets aside Provisional Attachment of Bank Accounts In M/s. Remark Flour Mills Pvt. Ltd vs. State of Gujarat, the Gujarat High Court slammed the practice of collecting post-dated cheques during inspection is not permissible under the Goods and Services Tax ( GST ) laws.

The Court, while allowing a petition filed by the assessee, pointed out that the authority had failed to provide reasons for the exercise of such drastic power of attachments of bank accounts. Allowing the petition, the Court observed that the authority had failed to provide reasons for the exercise of such drastic power of attachments of bank accounts. The Court set aside the provisional attachments of the bank accounts, imposing two conditions namely – (1) Petitioner should maintain stock worth minimum sum of Rs.50 lacs till the final disposal of the case & (2) Petitioner shall file an undertaking to this effect. GST: Bombay HC Extends Due Date for Filing TRAN-1 for Identified Taxpayers While disposing of a bunch of writ petitions relating to return filing glitches in the GST portal, a division bench of the Bombay High Court extended the due date to file TRAN-1 by identified taxpayers to 10th May 2018. Earlier, in compliance with the Bombay High Court orders, the Central Board of Indirect Taxes (CBIC) had decided to give a fresh opportunity to certain taxpayers who could not file TRAN 1 on or before 27.12.2017 due to technical glitches in the official portal, Goods and Services Tax Network ( GSTN ).

As per the circular issued by the Board, such taxpayers identified by the GSTN can file TRAN-1 by 30th April. Petition challenging GST on Advocates Services: Gujarat HC Issues Notice to Centre A Writ petition has been filed before the Gujarat High Court challenging the vires of the Section 17(2) and 17(3) of the Central Goods and Services Tax Act, 2017 & The Gujarat (State) Goods and Services Tax Act, 2017 regarding the levy of Goods and Services Tax ( GST ) on Advocates stating that the lavy violates Article 14, 19, 21 & 265 of the Constitution of India. While admitting the petition on the files, the Gujarat High Court issued notices to Centre, State and GST Council on Monday. The petitioner prayed for introducing mechanism for availing input tax credit on the expenses done with respect to goods and services availed by the advocates.

The petitioner has been actively filing public interest litigation/writs significant among them are Demonetisation, Tribunals under Finance Act, 2017; GST provisions relating to AAR/AAAR and Appointment of Technical Member in NCLT. Next date of hearing is fixed on 21.06.2018. GST TRAN 1 Relief: Madhya Pradesh HC directs Petitioner to approach Govt’s IT Grievance Redressal Committee While disposing a writ petition filed by M/s J K Tyres, a two-Judge bench of the Madhya Pradhesh High Court asked the petitioners to make use of the relief granted by the Government in its recent circular and to approach the IT Grievance Redressal Committee for relaxation in TRAN-1. Before the High Court, the petitioners sought for a direction from the Court to reopen the GST portal immediately enabling them to revises the filed FORM TRAN1 so that the Electronic Credit Ledger is updated with the revised input credit. Accepting the above submission, the bench comprising Justice Sanjay Yadav and Justice Ashok Kumar Joshi said that “Learned counsel appearing for the petitioner does not dispute the issuance of said circular. In view whereof, instead of dwelling upon the grievance raised in present petition, the petitioner is set at liberty to avail the remedy as is provided vide circular dated 03.04.2018.”

Petitioner Entitled to C-Form under CST in respect of High Speed Diesel as Central Government didn’t notify it under CGST: Chhattisgarh HC In Shree Raipur Cement Plant vs. State of Chhattisgarh Finance Department & Ors., the Chhattisgarh High Court held that the petitioner is entitled to be issued C Form under the Central Sales Tax Act, 1956 read with the Central Sales Tax (Registration and Turnover) Rules, 1957 in respect of high speed diesel purchased by it in the course of inter-State trade and used by it in the course of manufacturing of cement, after the promulgation of the Central Goods and Services Tax Act, 2017 with effect from 1-7-2017“The petitioner’s registration certificate under the CST Act, 1956 is still valid for the goods defined in Section 2(d) of the CST Act, 1956, including high speed diesel, and the petitioner is entitled for issuance of C-Form for inter-State purchase / sale of high speed diesel against the said C-Form. Accordingly, the respondents shall be liable and are directed to issue C-Form to the petitioner in respect of high speed diesel to be purchased by the petitioner and used in the course of manufacture of cement” observed the Court. Goods Detained under GST laws cannot be Released unless Adequate Security is furnished: Kerala HC The Kerala High Court has held that the goods detained by the authorities under the Goods and Services Tax ( GST ) Laws cannot be released without furnishing adequate security. In the instant case, a consignment of marble, granite slabs, and tiles that were being transported at the instance of the petitioner was detained by the State GST officers finding a defect in the E-Way bill used by them. “I am of the view that the ends of justice would be served by directing the 1st respondent to release the goods and the vehicle to the petitioner on the petitioner furnishing a bank guarantee for the security amount demanded in Ext.P3 detention notice, before the said authority.” Petition in Gauhati HC against GST on Processed Tea A petition has been filed before the Gauhati High Court challenging the Central Government’s decision to impose Goods and Services Tax (GST) on processed tea.

The petitioners, Gauhati Tea Warehousing Association (GTWA) challenged the vires of a clarification issued by the Ministry of Finance on November 15 2017, that processed tea, including black and white teas, falls outside the definition of agricultural produce given in notifications issued under the Integrated Goods and Services Tax and Union Territories Goods and Services Tax Acts. Therefore, exemption from GST is not available for their loading, packing, and warehousing. According to the respondents, tea used for making the beverage, such as black and white tea, is a processed product made in tea factories after carrying out several processes, such as drying, rolling, shaping, refining, oxidation and packing on green leaf and is the processed output of the same.

Thus it is not eligible for the exemption available for loading, unloading, packing, storage or warehousing of agricultural produce Digital Copy of E-Way Bill sufficient for Transportation under GST: Allahabad HC M/S Bhumika Enterprises vs State Of U.P. And 3 Others CITATION:   2018 TAXSCAN (HC) 103 The Allahabad High Court in Bhumika Entreprises v. State of U.P & Ors ruled that the consignment need not be supported with the hard copy of the E-way Bill as the current Goods and Services Tax ( GST ) laws permits possession of digital copies. E-way bills can also be stored in electronic form on a mobile phone or another device. Under GST, ferrying goods worth more than Rs 50,000 within or outside a state will require securing an electronic-way or e-way bill through prior online registration of the consignment. “Since the tax invoice indicating the tax charged and the same admittedly found during the course of inspection/detention and E-way bill-02 has been downloaded much before the seizure order, we see no justification in the impugned seizure order and therefore, we have no option but to allow the present writ petition and to set aside the seizure order dated 27.3.2018 as well as the show cause notice issued under Section 129(3) of the Act for imposition of penalty,” the bench said Delhi HC Asks Govt to file Status Report on Mismatch b/w GSTR-1 and GSTR-3B A two-judge bench of the Delhi High Court, while considering a petition filed by Sales Tax Bar Association and anr, directed the Central Government to file Status Report on mismatch b/w GSTR-1 and GSTR-3B. In the instant case, the petitioner approached the Court contending that as per the status report of the Goods and Services Tax Network (GSTN), the grievance mechanism set up by the Government is ineffective. According to them, the reply furnished should be effective and must disclose the method and manner in which the issue has been resolved. Some specific instances with reference to typical reply have been highlighted.

“Prima facie we find merit in the submission that replies under the grievance mechanism should specifically deal with the issue raised and indicates the manner in which the same has been resolved and addressed,” the bench said. GST Rules on Refund of Input Tax Credit on account of Inverted Duty Structure challenged before HC Rule 89(5) of the Central GST Rules, 2017 and Rajasthan GST Rules, 2017 relating to the refund of input tax credit on account of inverted duty structure has been challenged in the Rajasthan High Court, Jodhpur Bench (Principal Seat) wherein High Court has issued notices to Union of India, Government of Rajasthan and GST Council and sough their reply within four weeks’ time. Further, restraining the refund of input tax credit availed on input services would lead to result in blockage of funds / working capital in the form of tax paid on input services and affecting the cost competitiveness of small businesses and also paralyzing their  working capital / liquidity which is an essential key for their survivor

. The treatment of Input and Input Services on different yardsticks and making input tax credit on input eligible to be considered part of Net ITC and tax paid on Input Services ineligible for being considered as part of Net ITC, is against the principal of the fiscal neutrality and seamless flow of the credit which are the foundation principles of the GST. Matter was heard by the bench consisting of Chief Justice and Justice Dinesh Ji Mehta. Notice have been issued by the Hon’ble High Court to the Respondents and sought their reply within a period of 4 weeks. GST on Free Tickets: Madhya Pradesh HC dismisses PIL based on News Reports A division bench of the Madhya Pradesh High Court recently refused to allow a Public Interest Litigation relating to levy of Goods and Services Tax (GST) on free tickets on the ground that the petition was based on newspaper reports.

The petitioner, in the instant case, approached the High Court seeking a direction to the respondents to pay GST @ 18% on complimentary tickets given for the four IPL matches held in Usha Raje Holkar Stadium, Indore. According to the petitioner, Kings XI Punjab took the Usha Raje Holkar Stadium from the Madhya Pradesh Cricket Association for the IPL matches held on 04, 06, 12 & 14th of May, 2018 @ Rs.3.00 crore per match on the basis of sitting capacity of the stadium. They distributed free passes of the matches worth of Rs.80.00 lac to the respondents. Dismissing the petition, the bench observed that “The present petition is also based on the newspapers report, hence, same is not liable to be entertained and accordingly dismissed. However, liberty is granted to the petitioner that he can approach this Court if he collects some credible material in respect of the allegations made in the petition.”

Transitional Credit is Substantive Right and can’t be taken away by Procedural Requirements: Gujarat HC issues notice to Centre and GST Council While admitting a petition challenging the provisions of Central Goods and Services Tax (CGST) Act, the Gujarat High Court has issued notices to Centre and GST Council. The petitioner contended that transitional credit is substantive right and cannot be taken away by procedural requirements. The petitioner M/s Jay Chemical Ltd has filed the writ petition before the Gujarat High Court challenging the Constitutional validity and vires of Rule 117 of the Central Goods and Services Tax Rules, 2017 and Form GST Tran-1 issued in relation thereto vis-à-vis Section 140(5), Section 164 of the Central Goods and Services Tax Act, 2017. Petitioner further contended that it violates Article 14, Article 19(1)(g), Article 265 and Article 300A of Indian Constitution. Calcutta HC relaxes Bail Conditions for GST Defaulters, says Provisions for Compounding of Offences under GST are Very Stringent While relaxing the norms for granting bail to the accused persons in a 40 crore rupees GST scam, the Calcutta High Court expressed a view that the provisions for compounding of offence under the new Goods and Services Tax (GST) law is very stringent. “If one gives a bare perusal of the provisions and even the provision under SubSection (2) of Section 138 which deals with compounding of offences, I have left no option but to observe that the said provision is also very stringent,” Justice Shivakant Prasad said. “However, the order dated 9th July, 2018 be modified to the extent that the petitioners be enlarged on bail by furnishing personal recognition bond of Rs.10 lakh each and on further condition to deposit 50% of the evaded amount respectively as discussed in the foregoing paragraph with further condition remaining the same as ordered earlier subject to the satisfaction of the learned Additional Chief Judicial Magistrate, Sealdah,” the Court said. Detention of Goods under GST justifiable for Mere infraction of Procedural Rules: Kerala HC Overrules Single Bench’s Decision A division bench of the Kerala High Court has overruled the decision of the Single bench in M/S Indus Towers Limited Vs. The Assistant State Tax Officer, and held that the power of detention contemplated under Section 129 of the SGST Act can be exercised on the ground of non-compliance of Rule 55 and 138 of the Kerala GST Act, 2017.

Quashing the order, the bench held that “the finding that the transaction would not fall within the scope of taxable supply under the statute, cannot be sustained for reason of there being no declaration made under Rule 138. The resultant finding that mere infraction of the procedural rules cannot result in detention of goods though they may result in the imposition of penalty cannot also be sustained. If the conditions under the Act and Rules are not complied with, definitely Section 129 operates and confiscation would be attracted. The respondents are entitled to an adjudication, but they would have to prove that in fact there was a declaration made under Rule 138 before the transport commenced. If they do prove that aspect, they would be absolved of the liability; otherwise, they would definitely be required to satisfy the tax and penalty as available under Section 129.”

TRAN-1 Uploading Glitches: Kerala HC directs authorities to allow ITC during Migration to GST The Kerala High Court, while considering a writ petition, directed the GST authorities to allow the claim for input tax credit to the petitioner for the period of migration to the new tax regime if the filing of GST TRAN-1 could not be done for reasons not attributable to the petitioner. Before concluding, the Court added that “To set a time frame, I may also observe that if the petitioner applies within two weeks after receiving this judgment, the Nodal Officer will consider and take steps within a week thereafter. If the uploading of GST TRAN-1 is not possible for reasons not attributable to the petitioner, the authority will also enable him to take credit of the input tax available at the time of Migration.” GST: Madhya Pradesh HC directs State Tax Dept to Remove Check posts A two-judge bench of the Madhya Pradesh High Court in Vijay Kuamr Nagpal vs Union Of India issued an interim order directing the State Tax department to take necessary steps to implement the notification abolishing check posts in the State as the Goods and Services Tax ( GST ) has implemented. While posting the matter to 6th August, the division bench comprising of Justice P.K Jaiswal and Justice S.K Awasthi added that “In the meanwhile, they shall take appropriate steps in pursuant to the notification issued on 24/06/2017 and 1/07/2017, by which all the check posts have been abolished, directing the officers for removal of the check posts and file a detailed affidavit regarding compliance of the aforesaid provisions, within a period of two weeks from today.”

Advocate Romesh Dave appeared for the Department. Dept cannot insist for Cash / DD to release Goods when Penalty paid through GST Portal: Kerala HC The Kerala High Court, last week held that the department cannot insist the assessee to make payment in cash or demand draft to release goods under the Kerala Goods and Services Tax (KGST) Act, 2017 when the penalty amount has already been remitted by the assessee using the GST portal. Justice Dama Seshadri Naidu observed that “the 1 st respondent’s insistence that the petitioner should pay the amount either in cash or through demand draft cannot be sustained. As is further evident from Ext.P7, the petitioner is a dealer registered under the CGST. Cumulatively viewed, the petitioner’s paying the penalty under Ext.P5 receipt to the portal of GST is eminently sustainable. Therefore, I direct that the 1st respondent authority, release the goods, after receiving Ext.P5 receipt.” Breaking: GST Evasion by issuing Fake Invoices: Calcutta HC grants Bail to Accused Persons  The Calcutta High Court on Tuesday granted a conditional bail to the persons arrested for GST evasion using fake invoices in the name of dummy companies. The persons were asked to furnish a bond of the sum of Rs. 50,00,000/- each on condition to deposit of Rs. 39 crore to the Government Exchequer.

While granting a conditional bail to the accused persons, the Court added that “the economic offence having deep rooted conspiracy and involving huge loss of public funds needs to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing a serious threat to the financial health of the country. While granting bail, the Court has to keep in mind the nature of the accusations, the nature of evidence in support thereof the severity of the punishment which conviction will entail, the character of the accused, reasonable apprehension of the witnesses being tampered with, the larger interest of the public/ State and others similar consideration are required to be taken into consideration.” Are CAs and Advocates’ eligible to become GST Tribunal Members?: Delhi HC issues Notice on Petition challenging GST Provisions A petition challenging the provisions of the Central Goods and Services Tax ( GST ) Act prohibiting the Chartered Accountants and the advocates from becoming Members of the GST Tribunals, the Delhi High Court has issued the notice to the State/ Centre Governments and the GST Council. The matter has been listed for 15th October 2018. Speaking to Taxscan, Petitioner’s Advocate Mr. Puneet Agarwal said that, “We have challenged the Constitutional validity of GST Appellate Tribunal before the Hon’ble Delhi Court as the constitution of tribunal Bench is going against the basic doctrine of ‘Seperation of Powers’ which is the basis for the existence of any democracy”

. “The law in current form have given executive dominance over Judiciary which is against the law laid down by Hon’ble Supreme Court of India as in the case of Madras Bar Association in 2010, and in several other cases”, he also said. Petition in Madras HC against constitution of GST Appellate Tribunal A petition challenging the constitution of the appellate tribunal under the Goods and Services Tax (GST) has been filed before the Madras High Court. A petition filed by Advocate V Vasanthakumar sought for declaring Sections 109 and 110 of the Central Goods and Services Tax (CGST) Act 2017 as unconstitutional as the same are void, defective and unconstitutional, being violative of doctrines of separation of powers and independence of judiciary. The provisions are relating to constitution of the AT and qualification, appointment and condition of services of its member. A petition on a similar issue is currently pending before the Gujarat High Court. Constitution of GST AAR Challenged by Revenue Bar Assn: Madras HC Issues Notice Revenue BarAssociation vs Union of India 2018 TAXSCAN (HC) 119 The Revenue Bar Association has filed a writ petition before the Madras High Court challenging the constitution of Authority for Advance Rulings (AAR) & Appellate Authority for Advance Rulings (AAAR) by the State of Tamil Nadu. The Court, while admitting the petition, has issued notice to the respondents, Centre and State governments and the GST Council. The petitioners urged to declare Chapter XVII of both the CGST Act & Tamil Nadu GST Act pertaining to AAR/AAAR constitution as void, defective & unconstitutional, and also prayed for urgent stay of the impugned provisions and notifications in this regard. The matter further posted to 3rd October 2018. Senior Advocate Arvind Datar, assisted by Adv. Rahul Unnikrishnan & Adv. Karthik Sundaram appeared on behalf of the petitioners. GST: Calcutta HC transfers Appeal filed in Wrong Forum, Directs to Disposal within Four Weeks The Calcutta High Court, while disposing a writ petition, transferred an appeal filed by the assessee in a wrong forum with a direction to the first appellate authority to decide the matter within four weeks. In the instant case, the petitioner, Supersmelt Sponge Private Limited has preferred an appeal against the order imposing penalty and confiscation of goods detained by the department. The appeal was not registered in the website

. Consequently, the hardcopy of the appeal was submitted to the Commissionerate at Bolpur. “The petitioner is at liberty to proceed with its appeal before the appropriate forum, in accordance with law. All the points with regard to the stay of the order impugned in the appeal proceedings are kept open to be decided in such appeal, in accordance with law. Since the owner of the vehicle is not before the Court, seeking the release of the vehicle, no order need be passed on such issue at this stage. It is expected that, the appeal is disposed of within four weeks from the date of receipt of the appeal papers,” the Court said. Calcutta HC freezes Service Tax Audit Post-GST While granting an interim relief to the petitioners, Infinity Bnke and Infinity Infotech, the Calcutta High Court has granted stay against audit notices issued by Central Tax officers for conducting audit of last 5 years under service tax, after the introduction of GST. Before the High Court, the petitioners pleaded that the provisions of clause (k) of subsection (2) of Section 94 of the Finance Act, 1994 is unguided and gives uncontrolled power of delegation. While granting the stay order, Justice Debangsu Basak said that “Since sub-rule 2 of Rule 5A of the Service Tax Rules, 1994, as substituted by notification dated December 25, 2014 was declared ultra vires by Mega Cabs Pvt. Ltd. (supra), it would be appropriate to grant interim stay of the proceedings. Such stay will continue till November 30, 2018 or until further orders whichever is earlier.” Advocates J.K. Mittal, Paritosh Sinha, Amitava Mitra and P. Chaturvedi appeared for the petitioners. The matter was listed to November 2018. GST TRAN-1 can’t be Re-Opened in the absence of Genuine Attempt to File E-Returns or Technical Glitches: Gujarat HC While rejecting a plea for re-opening the Form GST TRAN-1, a two-judge bench of the Gujarat High Court has held that the return could not be re-opened since there was no genuine honest attempt on the part of the petitioner to file the return in time or the return was failed to upload due to technical errors in the GST Portal. “We are conscious, as pointed out by the counsel for the petitioner that some High Courts have intercepted and obviated the genuine difficulties in uploading the returns due to technical errors.  However, facts of each case would have to be minutely examined. Unless there is some prima­facie evidence of genuine attempts at filing the returns having failed on account of technical errors,   accepting a bald declaration by the petitioner would virtually amount to extending the time limit for filing the returns and this would lead to chaotic results,” the bench said. GST on Goods supplied in Duty-Free Shops: Madhya Pradesh HC asks CBIC to Issue Clarification A two-judge bench of the Madhya Pradesh High Court has asked the Central Board of Indirect Taxes and Customs (CBIC) to issue a clarification regarding the leviability of the Goods and Services Tax (GST) on the goods supplied through the duty-free shops in the International Airports in India. Before the High Court, the petitioners contended that the duty-free shops at international airports in India are located beyond the customs frontier of India and any transaction that takes place in a duty-free shop is said to have taken place outside India and petitioner is not liable to pay any CGST, SGST and IGST. Under the old tax regime, duty-free shops were exempt from the levy of central sales tax (CST) and value-added tax (VAT) as the sale from such shops were considered as exports and supplies were taking place beyond the ‘customs frontiers’ of India. Rajasthan HC restrains Proceedings for Non-Filing of GST Returns since Migration was not Completed The Rajasthan High Court, while granting an interim relief to the assesse, asked the department to not take any coercive steps against assesse for non-filing of GST Returns since the assesses application for migration was not completed. Before the High Court, the petitioners argued that they had applied well in time for registration under the GST Act to enable them to migrate within a specific time period. However, in spite of various reminders, the concerned authorities have not completed the process of migration and now have closed the provision for migration to the GST regime. Justice Sandeep Mehta issued notice to the Government granted four weeks to reply. “In the meantime, no coercive steps shall be taken against the petitioner on account of non-filing of GST Returns,” the Court said. Constitution of GSTAT Prima Facie inconsistent with SC Ruling: Madras HC A two-judge bench of the Madras High Court, while hearing a petition challenging the constitution of the Appellate Tribunal ( GSTAT ) under the Goods and Services Tax (GST) regime, noted that the provisions of Sections 109 and 110 of the Central Goods and Services Tax (CGST) Act 2017 are prima facie contrary to the Apex Court’s decision in Union of India vs. R.Gandhi. The bench comprising Chief Justice Indira Banerjee and Justice P T Asha also directed to issue notice to the Central and State Governments, GST Council and the Attorney general of India in this regard. According to the petitioner, the provision is contrary to the decision of the Supreme Court in Union of India v R. Gandhi wherein it was categorically enunciated that Bench of National Company Law Tribunal / National Company Law Appellate Tribunal should consist of one Judicial Member and one Technical Member or the Judicial Member should be equal or in majority in compare to the Technical Member and in no circumstances the number of Technical Member should be in majority compared to Judicial Members. Gujarat HC Strikes down GST Provision denying Cenvat Credit on Stock of Goods purchased prior to One Year to First Dealers In a landmark ruling, a two-judge bench of the Gujarat High Court has struck down the provision relating to Transitional Credit providing for 1 year time limit of purchases for claiming excise duty credit inter alia in the cases of first stage dealers and importers struck down as unconstitutional by Hon. Justices Akil Khureshi and Biren Vaishnav of the Gujarat High Court were allowing a petition filed by Filco Trade Centre Pvt. Ltd. “Though the impugned provision does not make hostile discrimination between similarly situated persons, the same does impose a burden with retrospective effect without any justification”, the bench also added. State GST Officers has Power to Inspect, Search and Seize Goods under IGST Act: Madhya Pradesh HC A two-judge bench of the Madhya Pradesh High Court has held that the State GST Officers are also authorized to exercise the powers to inspect, search, and seize the goods under the Integrated Goods and Services Tax (IGST) Act, 2017. “On due consideration of the arguments of the learned counsel for the parties so also the provisions of Section 4 of the IGST Act, we are of the view that officers appointed under the MPGST Act are authorized to be proper officers for the purpose of IGST and, therefore, the contention of the petitioner that no notification was issued and in absence of any notification under Section 4 of the IGST Act has no force, we cannot accept the contention of the petitioner that the action of the respondent No.4 is wholly without jurisdiction,” the bench said. Petition on Retrospective Amendment in GST Laws denying Benefit of Refund of Unutilized Input Tax Credit: Gujarat HC Stays Demand The Gujarat High Court has granted an interim stay of a demand notice wherein the petitioner challenged the retrospective amendment in the Goods and Services Tax (GST) laws where a change was brought in refund provision, denying the benefit of refund of unutilized input tax credit. A bench comprising Justices Anant S Dave and Biren Vaishnav observed that “Considering the above, prima facie, we are inclined to issue Notice returnable on 10.10.2018. Meanwhile there shall be ad-interim relief as prayed for in para 17(D) meaning thereby the impugned demand notice dated 21.6.2018 and its operation and implementation is stayed hereby.” Gujarat HC allows Payment of GST Arrears in Installments A two-judge bench of the Gujarat High Court has allowed the payment of GST Arrears in ten instalments. The division bench comprising of Justice Akil Kureshi and Justice b N Karia directed the petitioners M/s Indus Projects Ltd, to pay the tax dues of Rs. 3.85 crores in instalments by paying 20% amount initially and five per cent of the remaining amount between 1st and 5th day of every month. While delivering an oral order, Justice Akil Kureshi directed to send a notice to the department and said that “On the condition that before the returnable date the petitioner deposits 20% of the outstanding amount and further continues to deposit 5% thereof between 1st and 5th of every month thereafter until any other order is passed, there shall be stay against coercive recoveries of the dues. Direct service is permitted.” The matter further posted to 10th October 2018. Gujarat HC Upholds Provision prescribing Time limit for filing GST TRAN-1 A two-judge bench of the Gujarat High Court has recently upheld the provisions of the GST Laws wherein a time limit was prescribed for claiming transitional credit under the old tax regime in form GST TRAN-1.The bench further held that “Combined effect of the powers conferred to subordinate legislature under sub-sections [1] and [2] of Section 164 of the CGST Act would convince us that the prescription of time limit under sub-rule [1] of Rule 117 of the CGST Rules is not ultra vires the Act. Likewise, such prescription of time limit cannot be stated to be either unreasonable or arbitrary. When the entire tax structure of the country is being shifted from earlier framework to a new one, there has to be a degree of finality on claims, credits, transfers of such credits and all issues related thereto. The petitioners cannot argue that without any reference to the time limit, such credits should be allowed to be transferred during the process of migration. Any such view would hamper the effective implementation of the new tax structure and would also lead to endless disputes and litigations.” “Merely because the rule in question prescribes a time frame for making a declaration, such provision cannot necessarily be held to be directory in nature and must depend on the context of the statutory scheme,” the bench added. Bombay HC asks GST Dept to Re-open TRAN-1 to Rectify Errors A two- judge bench of the Bombay High Court has asked the Central Government to re-open the facility to file GST TRAN-1 to allow the tax payers to rectify the human typo errors. Form TRAN 1 helps businesses get benefit of input tax credit due as on or before June 30, 2017, transferred under the GST regime. While granting an interim relief to the petitioners, the bench added that “In the above view, it appears to us that it would be appropriate that the Central Government issues a general and/or special order under Section 172 of the Act addressing the above issue on general or special basis, taking into account the ground realities Lottery is a ‘Good’: Calcutta HC upholds GST Levy on Lotteries The Calcutta High Court has upheld the constitutional validity of bringing lotteries under the purview of Goods and Services Tax ( GST ) and held that a lottery can be treated as ‘goods’ for the purpose of West Bengal GST Act. “CGST Act, 2017 and WB GST Act, 2017 cannot be held to be unconstitutional. Lotteries come within the scope and ambit of CGST Act, 2017 and WB GST Act, 2017. Therefore, the lottery can be taxed under the CGST Act, 2017 and WB GST Act, 2017. The second issue is answered accordingly,” the Court said. Advocates, Mr. Abhratosh Majumdar,  A.A.G., Mr. T. M. Siddique, Mr. Avra Majumder appeared for the State. Gauhati HC dismisses Petition challenging Service Tax Demand Post-GST The Gauhati High Court, on Friday dismissed a number of petitions challenging the service tax demand after the GST– rollout on 1st July 2017. Earlier, the Court granted interim relief to the petitioner M/s Mascot Entrade Pvt Ltd and stayed a show cause notice issued by the department demanding service tax for want of jurisdiction after the implementation of the new tax regime. Further, the Court have dealt with only one issue which is whether 174 have saved 173, and informs that a judgment and theory of larger bench earlier squarely covering the issue ( Rayala Corporation case ) can be overruled by a later judgment of smaller bench. It’s not a loss , all grounds are open. So it is not a dismissal per se,” Advocate Nitu Hawelia, Counsel for Mascot case said”. Petition seeks Interest for Delayed IGST Refunds: Gujarat HC issues notice to Centre and GSTN M/s. SARAF NATURAL STONE vs UNION OF INDIA 2018 TAXSCAN (HC) 113 The Gujarat High Court has issued the notice to Centre and GSTN on a petition challenging the provisions of Central Goods and Services Tax (CGST) Act,  seeking interest for delayed IGST Refunds. The petitioner M/s Saraf Natural Stone has filed the writ petition before the Gujarat High Court seeking directions against GST department for providing the interest on the delayed refund that is beyond 60 days and compensation in for the delay of provisional refund. The next date of the matter is 23.11.2018. While speaking to Taxscan, CA Abhishek Chopra said that, “The claim made by petitioner appears to be legally correct and the same shall be good news for exporters as they have been getting the delayed refund which blocks their working capital cycle and the cost of capital has posed serious threats to the business.” Delhi HC allows Manual Filing of GSTR-3B A two-judge bench of the Delhi High Court has allowed the petitioners to file GSTR-3B manually. Justice S. Ravindra Bhatt and Justice A K Chawla held that “As the deadline for completing this form and availing the credit is 20.10.2018, the respondents are hereby directed to permit the petitioners to fill the GSTR-3 form manually in a manner, as to permit it to claim a credit, subject to the final outcome of the proceedings. It is clarified that in the GSTR-3B form, the petitioner can claim transitional as well as the post 01.07.2017 input tax credit.” GST: Complete Sealing of Premises is Illegal, says Delhi HC A two-judge bench of the Delhi High Court has held that the complete sealing of the business premises is illegal under the GST laws. Justice S. Ravindra Bhatt and A K Chawla held that “Given the plain text of the statute i.e. especially Section 69(4), which merely authorizes the concerned officials to search the premises and if resistance is offered, break-open the lock or any other almirah, electrical device, box, etc. containing books and documents, the complete sealing of the premises, in the opinion of the court is per se illegal. Even if it were assumed that the respondents temporarily restrained the petitioner from using its premises, for a few hours, till the books of accounts are made available in order to secure the evidence available in the premises that could not have assumed the life on “its own”, at least indefinitely. In these given circumstances, this petition has to succeed. Since the premises have been in the possession of the respondents for over a month, a direction is issued to remove the seal forthwith – within the next 12 hours and hand over the premises to the petitioner.” Gujarat HC Stays Service Tax Audit Post-GST Rollout The Gujarat High Court has stayed a communication to submit Service Tax audit report against the petitioners, M/s OWS Warehouse Services LLP. Before the High Court, the petitioner has challenged the communication issued by the Comptroller and Auditor General of India calling upon the petitioner to submit Service Tax audit at the hands of the officers of the CAG. “Under the circumstances, issue Notice, returnable on 28.11.2018. By way of ad interim relief, the impugned order dated 09.10.2018 is stayed. In other words, the CAG shall not carry out any further Service Tax audit of the petitioner. Direct service permitted,” the bench said. Calcutta HC grants Bail to GST Defaulters The Calcutta High Court, last week granted bail to the GST defaulters who evaded tax by using fake invoices. The petitioners, Sanjay Kumar Bhuwalka and Neeraj Jain were arrested on 12.05.2018 due to their involvement in the business of generating and selling of fake tax invoices to various entities without supplying the underlying goods or services, thereby facilitating irregular availment and utilization of input tax credit by such entities to whom such fake invoices were issued. GST: Punjab and Haryana HC orders to release detained Goods on Furnishing Security In an assessee-favour ruling, the Punjab and Haryana High Court has asked the GST department to release the detained goods on furnishing security other than bank guarantee or cash. While granting an interim relief to the petitioners, Justice Rajesh Bindal and Justice Mahabir Singh Sindhu said that “Considering the fact that the legal issues sought to be raised by the petitioners need examination in detail by the GST Council and the goods detained are still in custody of the Departments concerned, we deem it appropriate to direct the respondents to release the goods on furnishing of security other than bank guarantee or cash. The needful be done within one week. As there is no dispute regarding identity of the goods, the release shall not be treated as provisional.” GST Provision denying credit of Excise Duty paid on Capital Goods in Transit as on 1st July 2017 is Valid: Gujarat HC A two-judge bench of the Gujarat High Court has upheld the constitutional validity of the provisions of section 140 (5) of the Central Goods and Services Tax (CGST) Act, 2017 and clarified that the provision denying the credit of excise duty paid on capital goods which were in transit as on 01.07.2017, post GST rollout, is not violative of Article 14 and 19(1)(g) of the Constitution of India. It was, therefore, held that “Under the circumstances, we do not find that the statute in any manner violates Article 14 or 19(1)(g) of the constitution. It can also not be seen as taking away an existing right to claim CENVAT Credit of the duty paid on capital goods. Even in the earlier statute right to claim the credit of duty paid would arise or accrue only upon receipt of such capital goods at the place of manufacturer VAT Re-Assessment Order passed after GST rollout is Valid: Karnataka HC In a significant ruling, the Karnataka High Court has held that the re-assessment order passed under the Karnataka Value Added Tax (KVAT) Act after the rollout of the Goods and Services Tax Act ( GST ) cannot be held as invalid. The Court further added that “therefore, the larger constitutional questions raised in the present writ petition and as sought to be canvassed by the learned Senior Counsel for the petitioner like the substitution of Entry 54 in List II, effect of Article 246-A inserted by the 101st Constitutional Amendment Act of 2016, the sunset Clause as the learned Senior Counsel chose to name it, namely Clause 19 of the said 101st Constitutional Amendment Act etc, are all the questions which can be raised and considered only in an appropriate case to which these amended Constitutional and statutory legal provisions under the GST law regime are applicable for a tax period which falls after 01/07/2017. The Entry 54 of List II and KVAT Act, 2003 for the tax period in question, viz. 2012-13 was very much in existence for the said period and these provisions are not under challenge. Merely passing of the re-assessment order after 01/07/2017 does not get adversely affected on the basis of the said arguments sought to be canvassed by the learned counsel for the petitioner.” Re Opening of GST TRAN-1 to Rectify Errors; Bombay HC asks CBIC to resolve Issue within 12 Weeks In a petition seeking amendment of GST Form TRAN-1, a two-judge bench of the Bombay High Court has asked the petitioners to file a representation before the Central Board of Indirect Taxes (CBIC) and directed the Board to address the grievance within a period of twelve weeks. Before concluding, the bench said that “However, Petitioners would have to file representation to the Central Board of Indirect Taxes and Customs (CBIC). This representation would be considered by the CBIC for verification and the bona fides of the claim made by the Petitioners. If satisfied, Petitioners would be allowed to amend the TransI form to reflect the correct amount of credit available. The CBIC will decide the Petitioners’ representation as expeditiously as possible and preferably within a period of twelve weeks from the date the representation, is received by the CBIC . Kerala HC directs GST Dept to release detained Goods as the Discrepancy in E-Way Bill was a Clerical Error  SABITHA RIYAZ vs THE UNION OF INDIA CITATION:   2018 TAXSCAN (HC) 106 In a recent ruling, the Kerala High Court directed the State GST officials to consider release of goods in view of the CBIC Circular No. 64/38/2018-GST, dated 14th September 2018 since the discrepancy in the E-Way Bill was due to a typographical error. Allowing the petition, Justice Dama Seshadri Naidu observed that “Indeed, the Central Board of Indirect Taxes and Customs has come across many minor discrepancies in the e-way bills, resulting in summary detention of the goods. Then, it has issued this circular. I reckon the distance between Kerala and Uttarakhand is a matter of record and thus verifiable. As I have already noted, the eway bill showed the distance as 280 Kms, instead of 2800 Kms—one zero missing. This cannot be anything other than a typographical error, and a minor at that. Under these circumstances, I hold that the 11th respondent will consider the petitioner’s request for release in terms of the circular, expeditiously.” Levy under Rajasthan Agriculture Produce Marketing Act is Fee, Not Abolished after GST: Rajasthan HC  A two-judge bench of the Rajasthan High Court has held that the levy under section 17 of the Rajasthan Agriculture Produce Marketing Act, 1961 is a ‘ Fee ’ and not a cess and therefore, the same is not abolished after the rollout of Goods and Services Tax ( GST ). “By a combined effect of Section 174 of CGST Act and RGST Act, the levy governed by only those enactments have been abolished, which have been enlisted in said sections. The market fee leviable under the Act of 1961 neither finds mention in any of the repeals and saving provisions, nor can it be so done, as the market fee is leviable under a separate enactment under the State’s power to legislate under Entry 66 of the List-II of the VIIth Schedule,” the bench added. GST: Kerala HC orders to take Photographs of Goods since Issue was Misclassification While ordering the release of goods seized by the State Goods and Services Tax ( GST ) department, the Kerala High Court imposed a direction that since the dispute was on the misclassification of the goods, the department should take the photographs of the goods to know the nature of the same. While allowing the petition, Justice A Muhamed Mustaque said that “Therefore, the writ petition is disposed of with the following directions: (i) Photographs and negatives shall be taken with regard to the nature of the goods. (ii) Goods shall be released on furnishing Bank Guarantee, applicable to the petitioner.” Notice by affixation can be resorted if Other Modes are not Practicable: Allahabad HC Quashes Order of cancellation of GST Registration In an assessee-favour ruling, the Allahabad High Court has held that the ‘Notice by Affixation’ cannot be treated as a proper service if the Revenue had tried all the other modes of service of notice under section 169 of the Central GST Act is attempted by the Revenue. Allowing the petition, the Court further said that “we are of the definite opinion that the petitioner was not served with any show-cause notice before passing of the impugned order and service through affixation could not have been resorted to in the facts and circumstances of the case. The order impugned, therefore, is in violation of the principles of natural justice. Apart from the above, a bare reading of the impugned order dated 27.01.2018 discloses that it has been passed only on the basis of prima-facie opinion and the material on which such a prima-facie opinion was formed has not been indicated. The Assistant Commissioner could not have passed the order on the basis of prima-facie opinion until and unless he was of a definite opinion that the petitioner has closed down the business.” GST TRAN-1 Reopening to rectify Human Errors: Bombay HC to re-consider Petition If Govt do not consider Representation A two-judge bench of the Bombay High Court has permitted the petitioners to again approach the Court in case the representation for re-opening the GST TRAN-1 form to rectify the errors remained not answered by the Nodal Officer or the Grievance Redressal Committee. The High Court appreciated the fact that the Petitioner made a proper stepwise representation i.e. first before the Commissioner of CGST and then before the GST Council. In the case of O/E/N India Ltd, this exercise was not carried out and therefore, the High Court directed O/E/N to make the representation before CBIC.  The petitioner was represented by Advocates Shreyash Shah and Rukshin Ghiara and assisted by Kunal Shah (Chartered Accountant GST can’t be Deducted from Salary of Employees sponsored by UPNL: Uttarakhand HC A division bench of the Uttarakhand High Court has directed the State Government to not to deduct GST or Service Tax from the salary of the employees sponsored by the Uttarakhand Purv Sainik Kalyan Nigam Ltd (UPNL). “It is reiterated that the Principal Employer is the State Government. The master-servant relationship exists between the State Government and its employees, even though sponsored by the UPNL. The employees sponsored by UPNL are discharging similar duties which are being discharged by their counterparts. They are qualified and fulfill other eligibility criteria, as per the recruitment and promotion rules,” the bench said. GST paid under a Wrong Head by Mistake can be Transferred to the Right Head: Kerala HC The Kerala High Court has directed the GST department to transfer the tax amount paid by the petitioner under a wrong head instead of another by mistake. In the instant case, the goods transported by the petitioner was detained by the department and imposed tax and penalty on the same. To get the goods released, the petitioner agreed to pay the whole amount. However, the amount was paid under the head ‘SGST’ instead of ‘IGST.’ “So I hold that the 2nd respondent will release the goods forthwith along with the vehicle and, then, ensure that the tax and penalty already stood remitted under the ‘SGST’ is transferred to the head ‘IGST’,” the Court said. Appeal filed against Karnataka HC’s Decision upholding VAT Re-Assessment Order passed after GST rollout The order of the Karnataka High Court permitting the tax department to pass VAT Re-Assessment Order after the GST rollout will now consider by the division bench on appeal. The petitioners, Propel Jewel has filed an appeal against the Single Bench order holding that the re-assessment order passed under the Karnataka Value Added Tax (KVAT) Act after the rollout of the Goods and Services Tax Act cannot be held as invalid. It was further submitted that the amount taxed becomes due only after passing and issuance of assessment order and demand notice, especially when it is admitted that the assessment order has been passed and demand notice has been issued only on 31-03-2018 and therefore the finding of the learned Single Judge that the demand becomes due when sale or purchase has taken place, is against law and the provisions of Article 265 of the Constitution. Read More:

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