GST Case Digest Series: High Court Tax Cases, 2020 Part 2

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. Cash can be seized in GST Search as it’s covered under definition of ‘Things’, says Madhya Pradesh HC. Smt. Kanishka Matta vs Union of India and Others CITATION:   2020 TAXSCAN (HC) 192 The Madhya Pradesh High Court said that cash can be seized in Goods and Service Tax (GST) search as it is covered under definition of ‘Things’. The petitioner, Mrs. Kanishka Matta is the wife of Mr. Sanjay Matta, who is the Proprietor of the firm functioning in the name and style of M/s. S. S. Enterprises.

The Firm is in the business of Confectionery and Pan Masala items. Resultantly, the court keeping in view the totality of the circumstances of the case, the material available in the case diary and also keeping in view Section 67(2) of the CGST Act, 2017, held that the authorities have rightly seized the amount from the husband of the petitioner and unless and until the investigation is carried out and the matter is finally adjudicated, the question of releasing the amount does not arise. GST: Gujarat HC upholds Provincial Attachment of Bank Accounts accused involved in bogus billing and fake generation of E­-Way Bill. JSK SONS vs STATE OF GUJARAT CITATION:   2020 TAXSCAN (HC) 193 The Gujarat High Court upheld provincial attachment of bank accounts accused involved in bogus billing and fake generation of E-­Way bills without the actual physical movement of goods. Therefore, the court said that no interference is required to be made in exercise of powers under section 83 of the GGST Act by the respondent authorities while exercising extraordinary powers under Articles 226 and 227 of the Constitution of India by provincially attaching the bank account.

Karnataka HC allows Petitioner to file application seeking Revocation of Cancellation of GST Registration. M/S M.S. RETAIL PRIVATE LIMITED vs THE UNION OF INDIA CITATION:   2020 TAXSCAN (HC) 194 The Karnataka High Court allowed the petitioner to file the application to revoke the cancellation of Goods and Service Tax (GST) registration before the Assistant Commissioner of Commercial Taxes, Bengaluru. The petitioner, M/s M.S. Retail Private Limited is engaged in the business of trading in bath fittings and sanitary ware. It was duly registered as a ‘taxable person’ under the provisions of the CGST Act read with the Karnataka Goods and Services Tax Act (KGST). The Single Judge bench of Justice M.I. Arun held that petition is disposed of granting liberty to the petitioner to file necessary applications seeking revocation of cancellation of registration. If such application is submitted, respondent, the Assistant Commissioner of Commercial Taxes, Bengaluru, shall consider the same and pass appropriate orders, as expeditiously as possible and in any event, in an outer limit of two weeks. Punjab & Haryana HC directs GST dept. to release Bank Account of UFV Global India Education. UFV INDIA GLOBAL EDUCATION vs UNION OF INDIA AND OTHERS 2020 TAXSCAN (HC) 198 The Punjab and Haryana High Court directed the GST Department to release the bank account of the petitioner, UFV global India Education on the grounds that the order can be in writing to attach any property or even the bank account of the taxable person if the proceedings are initiated and are pending but not in the case when the provisions in which the proceedings have earlier been initiated and are over.

Therefore, the court quashed the impugned orders with a direction to the respondents to release the bank account of the petitioners forthwith which has been provisionally attached. Advocates B.L Narasimha and Amrinder Singh appeared for the petitioner. Gujarat High Court issues notice on Plea challenging Provision blocking ITC due to non-filing of GSTR-3B by vendor. The Gujarat High Court issued a notice on a plea challenging provision blocking Input Tax Credit (ITC) due to the non-filing of GSTR-3B by the vendor. The writ applicant, M/s Kalpasutra Gujarat, a partnership firm through one of its partners has prayed that to issue a writ of Mandamus striking down Rule 86A of Central Goods and Services Tax Rules, 2017, in so far as it gives the power to block the Input Tax Credit at no fault of the registered recipient and declare it ultra vires of Section 16 of the CGST Act, 2017. The court said that it wants to understand from the respondents whether the omission on the part of the third party (Seller) in filing the GSTR-3B for the relevant period would be sufficient to block the Input Tax Credit of the writ applicant and whether for such action, the Department has invoked Rule 86A of the Central Goods and Services Tax Rules, 2017. TRAN-1: Andhra Pradesh High Court directs GST Dept to accept Online and Manual filing.

The Andhra Pradesh High Court directed the respondent Authority to either allow to submit GST TRAN-1 Form electronically or manually within 30 days. The Petitioner is a partnership concern doing business in pulses and turmeric registered requested the court to direct the Respondents to accept his Form GST TRAN-1 enabling him to claim transitional credit of the eligible taxes in respect of the excess input tax credit of Rs.1,92,095/- on the appointed day i.e., 01st July, 2017 in terms of Section 140(1) and (3) of the SGST / CGST Act, 2017 read with Rule 117 of the Central Goods and Services Tax Rules, 2017. The division bench of Justice C. Praveen Kumar and Justice Lalitha Kanneganti directed the respondent authority to permit the Writ Petitioner to submit GST TRAN-1 Form electronically or, in the alternative, manually, by fixing a cut off date, within a period of 30 days from the date of receipt of judgment, in which event, the same may be dealt with, in accordance with the law. SEZ Unit can claim Refund of ITC of GST distributed by ISD Unit: Gujarat High Court allows Britannia’s plea. The Gujarat High Court allowed Britannia Industries to petition for a claim of refund of Input Tax Credit (ITC) distributed by Input Service Distributor (ISD) under Section 54 of the CGST Act.

The Court ordered the Respondents to process the Petitioner’s claim within 3 months, for refund of unutilized IGST credit lying in Electronic Credit Ledger under Section 54 of the CGST Act. Transition Credit issue: Rajasthan HC allows petitioner to make application before GST Council.Trivedi Ventures LLP vs Union of India 2020 TAXSCAN (HC) 210 The Rajasthan High Court while addressing the transition credit issue allowed the petitioner to make an application before the GST Council. The petitioners prayed before the High Court that they may be permitted to file Form TRAN-1 in compliance of Central Goods and Services Tax Act, 2017 read with Central Goods and Services Tax Rules, 2017 in order to enable the petitioners to avail Transitional Credit in Electronic Credit Ledger. The division judge bench of Justice Chandra Kumar Songara and Justice Sabina in the light of the decision of the co-ordinate Bench in the case of Obelisk Composite Technology LLP Vs. Union of India & Others, granted the liberty to the petitioner to make an application before GST Council for forwarding the same to the GST Council to issue a requisite certificate of recommendation along with requisite particulars, evidence, and a certified copy of the order instantly and such decision be taken forthwith and if the petitioner’s assertion is found to be correct, the GST Council shall issue a necessary recommendation to the Commissioner to enable the petitioner to get the benefit of CENVAT credit within the stipulated time as stipulated by the Union of India. GST:

Madhya Pradesh High Court upholds Cash Seizure of about Rs. 66.43 lakhs. The Madhya Pradesh High Court while analyzing the scope and ambit of section 67(2) of GST Act has upheld Cash seizure of about Rs. 66.43 lakhs. The petitioner is the wife of Shri Sanjay Matta who is the Proprietor of the firm functioning in the name and style of M/s. S. S. Enterprises. The Firm is in the business of Confectionery and Pan Masala items. The respondents have stated that keeping in view Section 67(2) of the CGST Act, 2017 read with definition Clause makes it very clear that the respondents were justified in seizing the amount from the petitioner and the statute empowers them to do so. The respondents have also submitted the Case Diary in a sealed cover before this Court. The division judge bench of Justice S.C. Sharma and Justice Shailendra Shukla keeping in view the totality of the circumstances of the case, the material available in the case diary and also keeping in view Section 67(2) of the CGST Act, 2017, opined that the authorities have rightly seized the amount from the husband of the petitioner and unless and until the investigation is carried out and the matter is finally adjudicated, the question of releasing the amount does not arise. Delhi HC quashes RTI seeking GSTN’s minutes of board-meeting citing vagueness in CIC’s directions. GOODS & SERVICE TAX NETWORK vs INFORMATION COMMISSIONER, CIC & ANR 2020 TAXSCAN (HC) 228 The Delhi High Court sets aside order allowing RTI application seeking disclosure of Minutes of the Board Meeting & resolutions of Goods & Service Tax Network (GSTN) as it was vague in the direction of CIC.

“The CIC while looking at the aforesaid matter afresh may keep into account the observations of the Supreme Court to determine as to whether the demand of respondent No. 2 for minutes of all the Board Meetings for the stated period would fall in the category of being counterproductive and a misuse/abuse of the RTI Act that was frowned upon by the Supreme Court,” the bench said. GST: Kerala HC allows an Instalment facility to pay the Admitted Tax with interest to the taxpayer hit by COVID-19. PAZHAYIDOM FOOD VENTURES (P) LTD. vs SUPERINTENDET COMMERCIAL TAXES 2020 TAXSCAN (HC) 231 The Kerala High Court allowed an instalment facility to pay the admitted tax with interest to the taxpayer hit by financial difficulties due to COVID-19. The petitioner, Pazhayidom Food Ventures (P) Ltd.  is registered as a service provider under the Goods and Service Tax Act. The petitioner said that while he intends to pay the arrears of tax due for the assessment year 2018-2019, without contesting the same, the respondents have expressed their inability to permit him to pay the arrears of tax in instalments. The bench also clarified that if the petitioner defaults in any single instalment, he will lose the benefit of this judgment and it will be open to the respondent to proceed with recovery proceedings for realisation of the unpaid tax, interest and other amounts. GST Officials can keep accused in Custody to prevent Tampering of Evidence: Bombay HC refuses Anticipatory Bail.

Mr. Ashok Kumar vs Commissioner CGST & Central Excise 2020 TAXSCAN (HC) 232 The Bombay High Court has observed that, GST Officials can keep accused in Custody to prevent Tampering of Evidence. While rejecting the Anticipatory Bail, the Court said that the assessment is not a prerequisite for arrest under Goods and Service Tax (GST). The bench further imposed the condition that the applicant, Mrs. Sheelam shall respond to the notices/summons issued by respondent no.1 by attending to the office; shall attend concerned police station as and when called and co-operate in the investigation; shall not tamper with the evidence or attempt to influence or contact the complainant, witnesses or any person concerned with the case. Local Cable Operators files petition in Kerala HC against Press release asking all cable TV subscribers to insist for GST Invoice from Cable TV Operators. A writ petition has been filed before Kerala High Court by Local Cable Operators against the Press release issued by the Director-General of Goods and Service Tax Intelligence (DGGI) asking all cable TV subscribers to insist for GST invoice from cable TV operators. On Other hand, the GST Department, in its counter statement filed in the  Writ Petition has argued that the Local Cable TV operators are not authorized to raise bills on subscribers under TRAI regulations and their status is that of a mere “Collection Boy”. GST: Madras High Court restrains Govt. from appointing Technical Members to GSTAT until further orders. The Madras High Court restrained the Central Government from appointing technical members to the Goods and Services Tax Appellate Tribunals (GSTAT) until further orders.

A plea filed by the Revenue Bar Association (RBA) challenging the rules concerning the appointment and the terms of service governing the President and Members of the GSTAT that is the GSTAT (Appointment and Conditions of Service of President and Members) Rules, 2019. The division bench headed by the chief justice, A.P. Sahi held that since the matter continues to be adjourned on account of the respondent, let the matter be listed as prayed for by the learned counsel for the Union of India after two months and in the light of the above, we continue the interim order dated 03.10.2019 until further orders. The case has been posted to be taken up next on October 28. GST: Madhya Pradesh HC grants Bail to Promoters of Bhopal based Som Distilleries for alleged Tax Evasion.Jagdish Arora and another vs Union of India 2020 TAXSCAN (HC) 234 The Madhya Pradesh High Court granted the bail to the promoters of Bhopal based Som Distilleries for alleged Tax Evasion on furnishing a personal bond in the sum of Rs.5 lakhs. The applicants, Jagdish Arora and Ajay Kumar Arora were taken into custody by the Central Goods and Service Tax Department, while their formal arrest was shown under Section 69 of the CGST Act, and they have been in jail since July 9, 2020. Fifthly, the applicants shall submit their passports, if any, before the trial Court and shall not leave India without prior permission of this Court. Delhi High Court dismisses plea seeking lower GST on Sanitizers and Masks. The Delhi High Court dismissed the Public Interest Litigation (PIL) seeking lower Goods and Service Tax (GST) on sanitizers and Masks.

The PIL filed before the court prayed for the reduction in the GST on alcohol-based sanitisers from 18% to either 12% or 5%.The court also noted that the government has removed face masks and alcohol-based sanitizers from under the essential commodities category and is not regulating their prices anymore. Rajasthan HC directs GST Council to issue a recommendation to Commissioner to enable petitioners to get the benefit of CENVAT Credit. Trivedi Ventures LLP vs Union of India  2020 TAXSCAN (HC) 210 The Rajasthan High court directed the GST Council to issue a recommendation to the Commissioner to enable petitioners to get the benefit of CENVAT credit. In as many as 30 writ petitions, the petitioners have prayed that they may be permitted to file Form TRAN-1 in compliance of Central Goods and Services Tax Act, 2017 read with Central Goods and Services Tax Rules, 2017 in order to enable the petitioners to avail Transitional Credit in Electronic Credit Ledger. The Division Bench of Justice Chandra Kumar Songara and Justice Sabina disposed of in terms of the decision rendered by Coordinate Division Bench of this Court Principal Seat at Jodhpur in Obelisk Composite Technology LLP, wherein it was held that grant liberty to the petitioner to make an application before GST Council for forwarding the same to the GST Council to issue a requisite certificate of recommendation along with requisite particulars, evidence and a certified copy of the order instantly and such decision be taken forthwith and if the petitioner’s assertion is found to be correct, the GST Council shall issue a necessary recommendation to the Commissioner to enable the petitioner to get the benefit of CENVAT credit within the stipulated time as stipulated by the Union of India. GST: Kerala High Court upholds Inspection, Search, and Seizure for goods kept under illegal custody.

The Kerala High Court upheld the inspection, search and seizure under Section 67 of the CGST Act for goods kept under illegal custody and an amount of Rupees One Crore extorted from them. The division bench of Justice K. Vinod Chandran and Justice T.R. Ravi held that the proceedings initiated under Section 67 are not improper, illegal or that the actions projected before us were in any manner proceeded with, in an arbitrary or high-handed fashion. “We dismiss the appeal, leaving the parties to suffer their respective costs,” the bench said. Madras HC issues Notice to GST Commissioner for various TRAN issues. M/s.Amplexor India Private Limited vs Union of India 2020 TAXSCAN (HC) 239 The Madras High Court issued the notice to the Commissioner and Assistant Commissioner of Central Excise and GST for various TRAN issues. In the writ petitions, the constitutional validity of the retrospective amendment to Section 140 of the Central Goods and Services Tax Act, 2017 (CGST Act) and Rule 117 of the CGST Rules were challenged. Lastly, the bench seeked to ask, whether the deprivation of the benefit of transitional Input Tax Credit would amount to double taxation of the assessee as alleged. Madhya Pradesh HC grants Bail to Pakistani National accused of GST Evasion.

Ashok Dagar vs State of MP 2020 TAXSCAN (HC) 240 The Madhya Pradesh High Court recently granted the bail to the Pakistani National who is the accused in the Goods and Service Tax (GST) evasion on furnishing a personal bond in the sum of Rs.5 Lakhs. The applicant, Sanjay Matta who is a Pakistani national faces an allegation that he is indulged in clandestine clearance of mouth freshener, commonly known as ‘Pan Masala’, without payment of GST.Lastly, the petitioners shall submit their passports, if any, before the Trial Court and shall not leave India without prior permission of this Court. GST: Madras HC directs Tax Officials to grant GSTN for Transition of Credit. M/s. Guru Shoe Components and Company vs Goods and Services Tax Council 2020 TAXSCAN (HC) 245 The Madras High Court directed the Commercial Tax Officials Goods and Service Tax Network(GSTN) for migration or transition of credit. The petitioner, Guru Shoe Components and Company is a manufacturer of Insoles, presently registered as a dealer under the provisions of the Puducherry Goods and Services Taxes Act, 2017 (PGST Act), prior to which it was a dealer under the provisions of the Puducherry Value Added Tax Act, 2007 (PVAT). The petitioner made an attempt to transition/migrate existing credit available under the VAT scheme to the GST portal.

The court further directed that the appropriate authority issue necessary intimation to the petitioner permitting it to access the portal and upload the forms, within four weeks. GST: Citing COVID-19 pandemic, Delhi HC allows Samsonite to deposit Profiteered Amount within 6 months. M/S. SAMSONITE SOUTH ASIA PVT. LTD. vs UNION OF INDIA & ORS 2020 TAXSCAN (HC) 251 The Delhi HC via video conferencing allows Samsonite to deposit the principal profiteered amount of Rs. 21.2 crores (after adjustment of Rs. 3 crores which amount to GST) in 6 equated monthly installments keeping in view the COVID-19 pandemic situation. “The interest amount, as well as the penalty proceedings initiated by the respondents, are stayed till further orders,” the bench while listing the matter on 24th August 2020 along with other connected matters said. Service provided by Intermediary in India at location of Supplier of Service subject to GST: Gujarat High Court. The Gujarat High Court, while upholding the validity of section 13(8)(b) read with Section 2(13) of the IGST Act, 2017 held that the service provided by intermediary in India cannot be treated as “export of services” under the IGST Act, 2017. It was observed that it is rightly included in Section 13(8) (b) of the IGST Act to consider the location of supplier of service as place of supply so as to attract CGST and SGST.

“It therefore, appears that the basic logic or inception of section 13(8)(b) of the IGST Act, 2017 considering the place of supply in case of intermediary to be the location of supply of service is in order to levy CGST and SGST and such intermediary service therefore, would be out of the purview of IGST,” the bench observed. Gujarat HC reads down Explanation to GST Rule denying Refund of ‘Unutilized Input Tax’ paid on ‘Input Services’ as part of ITC. VKC FOOTSTEPS INDIA PVT. LTD vs UNION OF INDIA & 2 other(s) 2020 TAXSCAN (HC) 255 A two-judge bench of the Gujarat High Court has categorically held that the Explanation (a) to Rule 89(5) of the CGST Rules which denies the refund of “unutilized input tax” paid on “input services” as part of “input tax credit” accumulated on account of inverted duty structure is ultra vires the provision of Section 54(3) of the CGST Act, 2017. The division bench of Justice J.B. Pardiwala and Justice Bharghav D. Karia pronounced the order in the Group of 10 Matters that net ITC in the formula given under Rule 89(5) of CGST Rules 2017 will include the value of input services also. In effect, the assessees will be eligible to claim a refund of input services in case of an inverted duty structure. GST Officers cannot reject Refund Application after 15 Days: Delhi High Court.

JIAN INTERNATIONAL vs COMMISSIONER OF DELHI GOODS AND SERVICES TAX 2020 TAXSCAN (HC) 267 The Delhi High Court said that the officers have no right to find a deficiency in refund application after 15 days. The writ petition had been filed by the petitioner Jian International seeking a direction to the respondent, Commission of Delhi Goods to grant refund claimed under Section 54 of the CGST Act, 2017 as well as the grant of an interest in accordance with Section 56 of CGST Act. “Rules 90 states that within 15 days from the date of filing of the refund application, the respondent has to either point out discrepancy/deficiency in FORM GST RFD-03 or acknowledge the refund application in FORM GST RFD-02,” the bench observed. GST: Delhi HC stays Penalty proceedings of 75 Cr. against Patanjali Ayurved by Anti-Profiteering Authority. The Delhi High Court on Friday stayed the penalty proceedings initiated against Patanjali Ayurved for allegedly profiteering Rs 75 crore through sale of its products. The stay was subjected to the condition that it deposits the amount in question in the consumer welfare fund in six monthly installments. A bench of Justices Manmohan and Sanjeev Narula issued the direction on Patanjali’s plea challenging the March 12, 2020 order of the National Anti-profiteering Authority (NAA) holding that the company denied to its customers the benefits of reduction in Goods and Services Tax (GST) between November 2017 to March 2019. The interest amount as well as the penalty proceedings initiated by the respondent authority stay till further orders. The High Court tagged all similar matters for hearing together on August 24.

Assessee entitled to make Copy of Seized Documents under GST: Calcutta HC.  The High Court of Calcutta has held that the taxpayer is empowered to make a copy of the seized document under Section 67 (5) under Chapter XIV of the Central Goods and Services Tax Act, 2017. The division bench of Justice Samapti Chatterjee and Justice Hiranmay Bhattacharyya directed the appellant/petitioner to take steps in terms of Section 67 subsection 5 under Chapter XIV of the Central Goods and Services Tax Act, 2017 if he is so advised. If the appellant/petitioner takes steps as per said subsection 5 of Section 67 under Chapter XIV of the Central Goods and Services Tax Act, 2017, then the respondent no. 3 is directed to allow the appellant/petitioner to make copies of the seized documents by July 13, 2020, subject to compliance of statutory formalities. Punjab & Haryana HC directs GST-Authority to permit the upload of TRAN-I, petitioner may avail ITC in case of failure. The High Court of Punjab and Haryana directed the GST Authority to permit the Petitioner to upload TRAN-I on or before June 30, 2020, and in case of the respondent authority fails to do so, the Petitioner would be at liberty to avail Input Tax Credit (ITC) in question in GSTR-3B of July 2020.

“The Petitioner has challenged vires of Rule 117 (1A) of Rules, however, we do not think it appropriate to declare it invalid as we are of the considered opinion that Petitioner is entitled to carry forward Cenvat Credit accrued under Central Excise Act, 1944. The Respondents have repeatedly extended the date to file TRAN-I where there was a technical glitch as per their understanding. Repeated extensions of the last date to file TRAN-I in case of technical glitches as understood by Respondent vindicate the claim of the Petitioner that denial of unutilized credit to those dealers who are unable to furnish evidence of an attempt to upload TRAN-I would amount to a violation of Article 14 as well Article 300A of the Constitution of India,” the bench observed. Specific Power under GST is only Illustrative, doesn’t restrict General Power: Gujarat HC. The High Court of Gujarat, while validating the Rule 142(1)(a) of the CGST Rules, 2017 is valid and does not conflict with any of the provisions of the Central Goods and Services Tax Act, 2017 held that where a specific power is conferred without prejudice to the generality of the power already specified, the particular power is only illustrative and it did not in any way restrict the general power. “The challenge to the legality and validity of the show cause should fail to have regard to the scope of judicial review and the challenge to the validity of Rule 142(1)(a) of the Rules should also fail,” the bench said.

Allahabad HC grants Anticipatory Bail to GST Evader. In a recent order, the Allahabad High Court has granted anticipatory bail who was accused of evading tax under section 122/132 U.P. GST  Act, 2017. The Applicant Mr. Shahzad Alam, sought anticipatory bail before the high court. He was alleged by the Trade Tax Officer for evading paying tax under section 122/132 U.P. Goods and Service Tax Act, 2017. The Court also directed the Investigating Officer to conclude the investigation of the present case in accordance with law expeditiously preferably within a period of three months from the date of production of a copy of the order. CENVAT Credit can be claimed within three years from the Appointed Date: Calcutta HC directs to Reopen form GST TRAN II  The High Court of Calcutta ruled that in terms of the residuary provisions of the Limitation Act, the period of three years should be the guiding principle, and thus a period of three years from the appointed date would be the maximum period for availing of such CENVAT credit. “This court directs the respondent authorities to reopen the form TRAN II or accept the manual filing of GST TRAN II to allow the petitioner to claim transitional credit held in stock as on the appointed date after proper verification including the invoices submitted by the petitioner. It is made hereby clear that such exercise has to be completed within 30.06.2020 so as to enable the petitioner to submit his GST TRAN II,” the court said. Petition seeking GST TRAN-1 Re-opening: Delhi HC awaits SC decision.

The High Court of Delhi is awaiting the decision of the Supreme Court on the issue relating to GST Authority to open a portal to enable the taxpayers to seek transitional CENVAT Credit lying as a credit balance in its account instead of inadvertently claimed by it. The division bench of Justice Manmohan and Justice Sanjeev Narula awaits the decision of the Supreme Court in the case of Union of India Vs. Brand Equity Treaties Limited &Ors. which is to be listed on September 16, 2020, on the issue relating to GST Authority to open a portal to enable the petitioner to seek transitional CENVAT Credit lying as a credit balance in its account instead of inadvertently claimed by it. GST Authority must Open Common Portal by Friday to upload Form GST TRAN-1: Delhi HC. The High court of Delhi directed the Goods and Service Tax (GST) Authority to enable the facility of online portals by Friday so as to ensure the uploading of Form GST TRAN-1, for claiming CENVAT tax credit.

“The respondents are under an obligation to abide by the directions issued therein by adequately publicizing the said decision and uploading it on their website as also by opening its common portal to enable the petitioner and all similarly placed parties to upload Form for claiming CENVAT tax credit,” the bench said. Punjab and Haryana HC directs GST Authority to permit the Upload of TRAN-I by June 30, 2020, in case of failure ITC can be availed. The High Court of Punjab and Haryana directed the Goods and Service Tax (GST) Authority to permit Petitioner to upload TRAN-I on or before June 30, 2020, and in case Respondent fails to do so, the Petitioner would be at liberty to avail ITC in question in GSTR-3B of July 2020. “The Petitioner has challenged vires of Rule 117 (1A) of Rules, however, we do not think it appropriate to declare it invalid as we are of the considered opinion that Petitioner is entitled to carry forward Cenvat Credit accrued under Central Excise Act, 1944. The Respondents have repeatedly extended the date to file TRAN-I where there was a technical glitch as per their understanding. Repeated extensions of the last date to file TRAN-I in case of technical glitches as understood by Respondent vindicate the claim of the Petitioner that denial of unutilized credit to those dealers who are unable to furnish evidence of an attempt to upload TRAN-I would amount to a violation of Article 14 as well Article 300A of the Constitution of India,” the bench observed. Delhi HC directs GST Authority to Open Online Portal to enable Petitioner to File revised declaration TRAN-1 electronically or manually. The High Court of Delhi recently directed the GST Authority to open an online portal to enable Petitioner to file revised declaration TRAN-1 electronically, or manually.

“The case before us is one where there is a complete lack of understanding and fairness on the part of the Tax Department. The fact that Respondents have done nothing to solve the problem faced by the Petitioner, fueled with the adamant stand before us, contributes to the skepticism of GST technical infrastructure, which we feel should and can be easily avoided. Only if Respondents were to engage with the taxpayers with a genuine intention to solve the problems, confidence in the system can be built up and such matters would not reach courts,” the court while expressing anguish said. Bail to GST Offender If Investigation not completed within 3 Months: Rajasthan HC. The Rajasthan High Court in the light of the order passed by the Supreme Court ordered that in case of investigation is not completed in terms of aforesaid order passed by the Hon’ble Supreme Court, i.e., within three months from April 17, 2020, petitioner be released on bail by the trial court, subject to its satisfaction.

“It is further ordered that in case investigation is completed within three months from the date of the order passed by the Hon’ble Supreme Court, i.e., 17.04.2020, it would be open for the petitioner to move the trial court for bail. In case, any such application is filed by the petitioner, the same be disposed of by the trial court on merits in accordance with the law,” the court further observed. GST TRAN-1: Delhi High Court Judgment is Nullified by Finance Act, 2020. GST TRAN -1 is filed by those taxpayers who are eligible to claim the credit on the tax already paid in the pre-GST regime as per section 140 of the CGST Act, 2017 read with Rule 117 [CHAPTER – XIV- TRANSITIONAL PROVIISONS] of the CGST Rules, 2017. The credit can be by way of VAT/Service Tax/Excise Duty. In order to claim the complete amount as a credit, TRAN-1 is to be filed along with the particulars of stock carried forward.

This amendment may even affect those cases where the taxable person could not file GST TRAN-1 in time due to technical glitches with GSTN. In fact, this amendment would go against the specific promises given by the ruling party, those tax laws will not be amended with retrospective effect. Rajasthan HC grants Bail to Chartered Accountant creating Bogus Firms to grab GST Refunds. Gaurav vs State 2020 TAXSCAN (HC) 270 The High Court of Rajasthan allowed the bail application of the Chartered Accountant (CA), who is accused of creating bogus firms to grab GST refunds. The petitioner has devoured a huge amount of Rs.17 crores by fraudulent transactions and to date, only around one crore has been recovered in the matter. “In case of breach of any of the conditions of the undertaking(s), the State will be free to take appropriate proceedings, including applying for cancellation of the bail so granted,” the court said. Sec 17D of KGST Act do not specify Time Limit: Kerala HC quashes Assessment after 14 years. The High Court of Kerala quashed the reassessment proceedings under section 17D of the Kerala General Sales Tax Act (KGST), 1961 since the provision does not prescribe any time limit and no additional material to undertake the fast track assessment was presented by the department. “There is no justification for this department or material placed on record as per the provision of Section 17D, I am of the firm opinion that in the absence of any statutory period referred to Section 17D escaped assessment way of fast track assessment can be taken almost 14 years later. The reasonable period can be extended upon the period referred to by other provisions regarding the escaped assessment under Section 19,” the bench said. Delhi HC allows Bharti Airtel to rectify Errors in GSTR-3B.

The High Court of Delhi allowed the petitioner Bharti Airtel to rectify Form GSTR-3B for the period to which the error relates. Petitioner, Bharti Airtel Limited is engaged in the business of providing telecommunication services in India, including Delhi, by virtue of a license granted by the Department of Telecommunication, Government of India. With the implementation of GST, it took registration in each and every State and Union Territory and now has 50 registrations under GST laws for making payment of CGST, SGST, and IGST. The division bench of Justice Sanjeev Narula and Justice Vipin Sanghi observed that the Respondents Authorities have unable to expressly indicate the rationale for not allowing the rectification in the same month to which the Form GSTR-3B relates. Based on the above observations,  the bench allowed the Petitioner to rectify Form GSTR-3B for the period to which the error relates, i.e. the relevant period from July, 2017 to September, 2017. GST TRAN-1 can be filed till 30th June 2020: Delhi HC asks Govt to issue Directions.

In a significant ruling granting relief to all GST taxpayers, a two-judge bench of the Delhi High Court has directed the Central Government to allow the taxpayers to claim an input tax credit under Form GST TRAN-1 till 30th June 2020 since the statutory time limit for the same is a directory and therefore, the period of limitation of 3 years under the Limitation Act would apply. The judgment is a great relief to all those who could not file TRAN-1 and claim the input tax credit as the direction would apply in rem, said Advocate Ruchir Bhatia, the counsel appeared for one of the petitioners. Allahabad HC refuses to quash FIR Lodged under Cr.PC for GST Offences. The High Court of Allahabad held that there is also no bar in the Uttar Pradesh Act on lodging the First Information Report (FIR) under the Code for offences punishable under the Penal Code i.e Indian Penal Code and Criminal Procedure Code even though, for the same act or conduct, the prosecution can be launched under the U.P. Act. The division bench consisting of Justice Manoj Misra, and Justice Deepak Verma, while relying on the decision of the Apex Court held that the impugned first information report discloses commission of the cognizable offences, the prayer to quash the first information report cannot be accepted as investigation should not be shut out at the threshold if the allegations have some substance. GST Interest Recovery and Attachment of Bank Account can’t be done without Notice: Karnataka HC The High Court of Karnataka held that show cause notice is a prerequisite condition for quantification of interest or attachment of bank account without which, the proceedings would be null and void.

“Impugned demand has been set aside only on the ground of the breach of the principles of natural justice by granting liberty to the respondents to initiate action in accordance with law obviously for recovery of interest,” the division bench observed. ‘Wrong Destination’ not a Ground for Imposing Penalty under GST: Telangana HC. The High Court of Telangana held that penalty under the GST Acts cannot be levied on the ground of ‘wrong destination’ and any action of collecting penalty under threat of detention of the vehicle carrying goods for such an absurd reason is arbitrary and violative of Articles 14, 265 and 300-A of the Constitution of India. “Therefore, in our considered opinion, the impugned action of the respondents in collecting the amount of Rs.4,16,447/- from the petitioner towards tax and penalty under the CGST and SGST Act, 2017 under threat of detention of the vehicle carrying the said goods for an absurd reason (‘wrong destination’) when the vehicle in question carried all the proper documents evidencing that it was an inter-State sale transaction is clearly arbitrary, violative of Articles 14, 265 and 300-A of the Constitution of India,” the bench said. COVID-19:

Madras HC issues notice to Centre on Plea seeking Removal of GST on Masks. The Madras High Court on Tuesday issued notice to the Union government on a Public Interest Litigation (PIL) seeking removal of the 18% Goods and Service Tax (GST) on sanitizers and 5% GST on masks in these difficult times due to the COVID-19 pandemic or at least for next few months. The three-judge bench headed by Justice N.V. Ramana dismissed the PIL seeking removal of the 18% Goods and Service Tax (GST) on sanitizers and 5% GST on masks and said, “you are an advocate and we think you do not have work at this time but it does not mean that you will file anything.” Madhya Pradesh HC grants Bail to alleged GST Offender, kept in Jail with COVID-19 Infected Persons.  The Madhya Pradesh High Court on Tuesday granted bail to an accused person arrested in a GST evasion case by considering that he was kept in the jail wherein COVID-19 infected persons were found. “Having considered the submission made by counsel for the parties and also taking note of the prevailing COVID-19 infection and considering the fact that the applicant is in custody since 28.11.2019 and in the present scenario conclusion of the trial is likely to take time and also taking note of the submission of counsel for the applicant in respect of the condition relating to deposit of the amount, it is directed that the applicant-Lalit Kumar Gandhi will be released on bail subject to conditions,” the bench said. GST Interest Liability is Automatic, Leviable only after Completion of Adjudication Proceedings: Jharkhand HC.

The JharkhandHigh Court, on Tuesday, held that the Interest liability under Section 50 of the Central Goods and Service Tax (CGST), 2017 is automatic, but its computation and demand can be raised only after the completion of the adjudication proceedings under the Central Goods and Services Tax Act, 2017. While quashing the letter for recovery of interest, the bench said, “we have already held that though the liability of interest is automatic, but the same is required to be adjudicated in the event an assessee disputes the computation or very leviability of interest, by the initiation of adjudication proceedings under Section 73 or 74 of the CGST Act, in our opinion, till such adjudication is completed by the Proper Officer, the amount of interest cannot be termed as an amount payable under the Act or the Rules. Thus, without initiation of any adjudication proceedings, no recovery proceeding under Section 79 of the Act can be initiated for recovery of the interest amount.” No Special Relief in Bail Procedure due to COVID-19: Punjab and Haryana HC denies Bail in GST Offence Case.  The High Court of Punjab and Haryana rejected the bail application of a person accused of the creation of bogus invoices and other documents and held that there cannot be any special relief in the procedure due to the coronavirus outbreak.

“Before parting with this order, it is directed that the Superintendent, Jail would ensure that that all the required cautions and safeguards are duly adhered to whenever any new inmate is admitted to jail and would get him/her medically examined and keep him/her segregated from other inmates at least for a period of 14 days so as to rule out any chance of spread of epidemic within jail premises in case such fresh prisoner happens to be infected with COVID-19 although he may not initially have shown any such symptoms,” the court ordered while dismissing the interim bail application. Gujarat HC grants Anticipatory Bail to Accused of GST Offence. The High court of Gujarat granted anticipatory bail to a person accused of wrongful availment of Input Tax Credit (ITC) under Goods and Service Tax (GST). The applicant, ManmohanLalmanAgarwalapproached the High Court for an anticipatory bail in the event of their arrest in connection with the offense punishable under provisions of the GST Act. The applicant is alleged to have availed wrongful Input Tax Credit (ITC) under Goods and Service Tax (GST).

This is, however, without prejudice to the right of the accused to seek stay against an order of remand, if, ultimately, granted, and the power of the learned Magistrate to consider such a request in accordance with the law. It is clarified that the applicants, even if remanded to Police custody, upon completion of such period of Police remand, shall be set free immediately, subject to other conditions of this anticipatory bail order.” GST Authorities can’t Arbitrarily Confiscate Godown: Gujarat HC The Gujarat High Court held that Godown of dealers cannot be sealed by Goods and Service Tax (GST) authorities without having reasons to believe that goods stored were liable for confiscation. The bench further said, “the High Court is trying to find a way out, by which the seal can be removed without prejudice to the rights of the department to proceed against the dealers in accordance with law.” COVID-19: Madras HC denies release of Korean Nationals Arrested for GST Offence. The High Court of Madras through the video conferencing denied the Korean Nationals release from the Special Camp on the grounds of COVID-19 lockdown and safety issues. “Several Non-Bailable Warrants have already been issued to the Petitioners and that, there is every possibility of the Petitioners fleeing away from the clutches of Law, this Court while declining the relief sought by the Petitioners, without prejudice to the rights of the parties in the pending Habeas Corpus Petitions, directs the learned Additional Chief Metropolitan Magistrate (Economic Offences-I),

Egmore, Chennai to take up the case, after normalcy is restored post-COVID-19 lockdown, and proceed with the same on a day-to-day basis, without adjourning it beyond ten working days at any point of time,” the Single Judge Bench observed. GST Dept should Release the Seized Goods immediately after Security Deposit is made: Allahabad HC The High Court of Allahabad has reaffirmed that the GST dept.  should release the seized goods after the security of the equivalent amount is furnished. The petitioner, M/S Skipper Limited was required to furnish a bank guarantee equivalent to the amount of his liability determined under Section 129 of the Uttar Pradesh Goods and Services Tax Act, 2017 at the time of the seizure of goods and conveyance in transit. The seized vehicle and goods have been released on the strength of such security deposit. “The notice under Section 129(3) of the UPGST Act, 2017 is infructuous and the proceedings taken thereunder are liable to be treated as concluded,” the Court observed. GST Dept cannot detain Goods for bonafide Misclassifation: Kerala HC In a major relief to Hindustan Coca Cola, the Kerala High Court recently quashed the notices issued by the Goods and Service Tax (GST) department and directed to release the seized goods which were detained on the ground of bonafide misclassification of goods.

The High Court observed that the process of detention of the goods cannot be resorted to when the dispute is bonafide, especially concerning the eligibility of tax and, more particularly, the rate of tax. Rajasthan HC strikes down GST Demand against UltraTech for old unpaid dues of Binani Cement The High Court of Rajasthan today struck down the tax demand by the Goods and Service Tax (GST) Department of Rajasthan against UltraTech Cement for old unpaid dues of Binani Cement. “We are of the firm view that the authorities should have adopted a pragmatic approach and immediately withdrawn the demands rather than indulging in totally frivolous litigation, thereby unnecessarily adding to the overflowing dockets of cases in the courts,” said the division bench of the High Court of Rajasthan. GST on Works Contract: Orissa HC directs Govt to issue Instructions for Reimbursement of differential Tax Amount. A two-judge bench of the Orissa High Court, last week has directed the Government administrative departments to provide instructions for the reimbursement of differential tax amounts arising out of change in tax regime from Value Added Tax (VAT) to Goods and Service Tax in connection with the works contracts.

“The Administrative Departments should issue suitable instructions to the Competent Authority responsible for making payments to the works contractors to implement this revised guidelines,” the bench said. GST Rule prescribing Time Limit to file TRAN-1 not Ultravires: Bombay HC The Bombay High Court has recently held that the time limit prescribed to file TRAN-1 under Rule 117 of the Goods and Services Tax Rules is not ultra vires of the Central GST Act, 2017. With regard to the constitutionality of the provision, the Court ruled that “the time limit stipulated under Rule 117 of the Rules is not ultra vires of the Act. This Rule is traceable to the power conferred under section 164(2) of the Act. The time limit stipulated in Rule 117 is in consonance with the transitional nature of the enactment, and it is neither arbitrary nor unreasonable. Availment of input tax credit under section 140(1) is a concession attached with conditions of its exercise within the time limit.” Undervaluation of Goods in Invoice is No Ground for Detention of Goods u/s 129 of CGST: Chhattisgarh HC The Chhattisgarh High Court has held that undervaluation of goods in the invoice can not be the ground for the detention of goods under Section 129 of the Central Goods and Service Tax (CGST) Act, 2017. In the case of K.P. Sugandh Ltd. vs. State Of Chhattisgarh set aside the impugned order passed by the Income Tax Authorities, the petitioner requested for the release of the vehicle carrying goods belonging to the petitioners from the manufacturing centres to the dealer.

The Single Judge of the High Court of Chhattisgarh consisting of Justice P. Sham Koshy held that the undervaluation of goods in the invoice can not be the ground for the detention of goods under Section 129 of the Central Goods and Service Tax (CGST) Act, 2017. GST Scam: Calcutta HC allows Bail to Chartered Accountant If he is willing to Compound Offence While considering a bail application by a Chartered Accountant involved in a GST scam of rupees 98 Crore, a single bench of the Calcutta High Court directed the lower court to allow him to bail if the petitioner approaches the authorities for compounding the offence. “However, Section 41A(3) of the Code of Criminal Procedure does not provide an absolute irrevocable guarantee against arrest, while turning down the prayer for release of the petitioner on bail and thereby held that petitioner would not be entitled to be enlarged on bail but gave him the liberty to approach the authority for compounding of the offence under Section 138 of CGST Act. I once again reiterate and record that the petitioner may be released on bail by the learned Trial Court if he finds that he has approached the authority for compounding of the offence on deposit of at least 20% of the evaded amount on account of CGST,” the Court said. Calcutta HC stays Service Tax Audits Post-GST Rollout The Calcutta High Court has stayed the Service Tax Audits against Magma Housing Finance Ltd. The Petitioner has challenged impugned notices dated December 13, 2018, and April 25, 2019, which demands the details for Service Tax Audits. Counsel appearing on behalf of the respondent authorities has placed reliance on a coordinate Bench judgment of the Calcutta High Court in M/s. Gitanjali Vacation villa Private Limited & Anr. vs.

The Union of India & Anr. in W.P. 380(W) of 2019 wherein the Court had refused to pass any interim order Bail can’t be granted in consideration of Gravity of Economic Offence under CGST Act: Calcutta HC denies Bail to Chartered Accountant. The Calcutta High Court has rejected the bail application by a Chartered Accountant under Section 439 of the Code of Criminal Procedure, 1973 on behalf of the petitioner who has prayed for his enlargement on bail on any conditions in consideration of the gravity of Economic Offence under Central Goods and Services Tax Act (CGST). The Court came into conclusion in the light of judgment in case of P.V.Ramanna Reddy (supra), the petitioner is not entitled to be enlarged on bail, however, the petitioner is at liberty to approach the authority for compounding of the offence under Section 138 of CGST Act also the petitioner, who was the main accused was not entitled to regular bail. In the present case loss caused to Government Exchequer amounts to Rs.141,76,46,639/-. Therefore in such a huge economic offence, he should not be enlarged on bail.

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