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Legal Bombshell: 101st Constitutional Amendment Act PIL Thrown Out

editor — Fri, 19 Apr 2024 05:56:07 +0000

Introduction

In recent legal proceedings, the Patna High Court addressed a significant case involving the 101st Constitutional Amendment Act related to the Goods and Services Tax (GST). The Public Interest Litigation (PIL) filed by Amit Pandey challenged specific provisions within the amendment, alleging a violation of the Constitution’s basic structure. This article delves into the details of the case, examining the facts presented, the core issues debated, and the court’s ultimate ruling.

Facts of the Case

Amit Pandey, representing himself as the petitioner, initiated a writ petition before the Hon’ble Patna High Court. The crux of Pandey’s argument rested on the contention that certain sections of the 101st Constitutional Amendment Act, namely Sections 2, 9, 12, and 18, infringed upon the fundamental tenets of the Indian Constitution. Furthermore, Pandey asserted that the functioning of Parliament under the guidance of the Goods and Services Tax Council (GST Council) amounted to an abandonment of legislative responsibility.

In response, the Department, acting as the respondent, submitted a counter affidavit. The Department refuted the petitioner’s claims, emphasizing that the GST Council’s role was advisory in nature. It highlighted the Council’s function in addressing taxpayer grievances at both national and state levels, as well as its role in tax apportionment—a domain exclusively within the purview of Parliament.

Issue

The central issue at hand revolved around the constitutional validity of Sections 2, 9, 12, and 18 of the 101st Constitutional Amendment Act. Additionally, the debate encompassed the extent of parliamentary authority vis-à-vis the advisory role of the GST Council.

Held

Following deliberation, the Hon’ble Patna High Court, in the case of CWJC No. 7483 of 2017, dismissed the PIL brought forth by Amit Pandey. The court’s decision rested on two primary grounds. Firstly, it determined that the petitioner, being a legal professional, lacked the requisite locus standi to maintain the writ petition. Secondly, the court opined that individuals transitioning from Value Added Tax (VAT) to GST, as facilitated by the 101st Constitutional Amendment Act, did not constitute a marginalized group incapable of seeking legal redress.

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Bombay High Court Invalidates Registration Amendment Rejection: Lack of Reasons Criticized

editor — Sat, 13 Apr 2024 09:17:23 +0000

Introduction:

The Bombay High Court has invalidated the rejection of an application for registration amendment due to the lack of reasons provided for the rejection.

Facts of the case:

Issue:

Argument by the Petitioner:

Court Judgment:

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Delhi High Court Orders Refund of ₹35 Lakh to GST Petitioner, Emphasizing Voluntary Compliance and Due Process

editor — Fri, 12 Apr 2024 06:45:30 +0000

Introduction:

The Delhi High Court’s decision mandates a refund of ₹35 lakh to a GST petitioner, underscoring the significance of voluntary compliance and adherence to due process.

Facts of the Case:

Issue:

Held:

Petitioner's Argument: Citing precedent cases, the petitioner argued that the deposit was made involuntarily under coercion, warranting a refund with interest.
Respondent's Argument: The respondent contended that the deposit was voluntary and proceeded with recovery under Section 73 of the GST Act through a Show Cause Notice.
Court Judgment: The Delhi High Court ruled in favor of the petitioner, directing the refund of ₹35,00,000 with 6% interest per annum from the date of deposit. The court deemed the deposit as non-voluntary and contrary to guidelines issued by the CBIC.

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GST Penalty Overturned by Calcutta High Court Due to Emergency Vehicle Substitution, Showcasing Compliance Flexibility

editor — Fri, 12 Apr 2024 06:23:41 +0000

Introduction:

The Calcutta High Court’s decision to quash a GST penalty related to an emergency vehicle change highlights the court’s recognition of flexibility in enforcing compliance.

Facts of the Case:

The petitioner lodged an appeal against the dismissal of their writ petition by the Calcutta HC, which was filed 20 months following an adverse order on June 14, 2022. The delay was attributed to non-receipt of the original order and the demise of the petitioner's first lawyer.
The controversy arose from a tax and penalty imposition concerning the transportation of goods without a valid e-way bill on November 20, 2021. This was due to an emergency vehicle change, preventing the timely amendment of the e-way bill.

Issue:

The central issue revolved around the justification for imposing tax and penalty for the absence of a valid e-way bill during the transportation of goods.

Held:

Petitioner's Argument: The petitioner contended that the delay in filing the writ was genuine and challenged the penalty, citing an emergency vehicle change that hindered the timely amendment of the e-way bill.
Respondent's Argument: The respondent upheld the penalty, highlighting the lack of a valid e-way bill as a compliance failure.
Court Judgment: The High Court ruled in favor of the petitioner, acknowledging the absence of intent to evade tax and the genuine circumstances causing the appeal's delay. Consequently, the tax and penalty were ordered to be revoked.
Non-resident taxpayers
Persons subject to TDS under section 51 of the CGST Act.

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High Court of Madras sets aside GST penalty, emphasizes fair hearing and pre-assessment payments in tax disputes.

editor — Tue, 09 Apr 2024 07:10:27 +0000

Introduction

The High Court of Madras recently ruled on a case involving a works contractor for government departments, addressing penalties imposed under the Tamil Nadu Goods and Services Tax Act, 2017. The court emphasized the importance of fair hearings and pre-assessment payments in tax disputes.

Facts of the Case

The petitioner, a works contractor, received an assessment order on April 19, 2023, due to discrepancies in their GSTR 1 and GSTR 3B returns.
A show cause notice was issued in February 2023.
On April 12, 2023, before the assessment order was issued, the petitioner paid Rs. 3,00,000/- towards their tax liability, citing delayed payments from government departments as the reason for the discrepancies and delayed payment.
The petitioner contested the imposition of a 100% penalty on the dues under Section 74 of the Tamil Nadu Goods and Services Tax Act, 2017.

Issue

The core issue revolves around the justification of imposing a 100% penalty on the petitioner, considering the pre-order payment and the circumstances leading to the discrepancies.

Petitioner’s Argument

Held

The court set aside the impugned order and directed the respondent to remit an additional Rs. 3,00,000/-. Moreover:

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High Court of Gujarat Rules on GST Case

editor — Thu, 04 Apr 2024 04:44:00 +0000

In a significant legal development, the High Court of Gujarat has recently issued a noteworthy ruling in the case of OTSUKA PHARMACEUTICAL INDIA PVT LTD versus UNION OF INDIA. This ruling addresses a crucial aspect pertaining to the Goods and Services Tax (GST) regime, particularly focusing on the retrospective application of amendments to Rule 108 of the CGST Rules, 2017. The case, denoted as R/SPECIAL CIVIL APPLICATION NO. 13209/210/212/213/215 of 2023, reached its culmination on 27th March 2024.

Facts of the Case:

The petitioner, OTSUKA PHARMACEUTICAL INDIA PVT LTD, contested against the UNION OF INDIA, asserting that Rule 108(3) of the CGST Rules should not be applicable in their situation. They contended that their online appeals were based on the Order-in-Original made available by the adjudicating authority.
The crux of the issue revolved around the requirement for the petitioner to submit the decision or order being appealed against within seven days of filing the appeal under sub-rule (1) of Rule 108, and the subsequent issuance of a final acknowledgment by the appellate authority indicating the appeal number.

Held:

The High Court determined that the petitioner was indeed obligated to adhere to the stipulated timeline for submitting the decision or order appealed against, as outlined in Rule 108.
While acknowledging the justifiability of the appellate authority's rejection of appeals due to delays, the Court referenced the Minutes of the 48th Meeting of the GST Council. This documented the Council's acceptance of recommendations put forth by the Law Committee.
According to these recommendations, when an order subject to appeal is issued or uploaded on the common portal and is accessible to the appellate authority, the necessity for the appellant to furnish a certified copy of such an uploaded order becomes inconsequential due to its online availability.
Consequently, the retrospective effect of the amendment to Rule 108, effective from 26th December 2022, was affirmed by the Court as being clarificatory in nature.
In light of this clarification, the impugned order passed by the appellate authority rejecting the appeal on grounds of delay was deemed untenable. Therefore, the High Court proceeded to quash and set aside the impugned order.

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Madras High Court Strikes Down Excessive GST Demand on Trade Payables

editor — Sat, 30 Mar 2024 04:41:27 +0000

Introduction:

The Madras High Court invalidated the order demanding payment concerning all trade payables, asserting that it exceeded the boundaries outlined in the original show cause notice. This ruling is significant in the realm of audit cases and is poised to have widespread benefits.

Facts of the case:

The petitioner contested an order dated 31.12.2023, arguing its overreach beyond the purview of a preceding show cause notice by subjecting all trade payables to GST.
Following an audit report on 26.09.2023, the petitioner received a notice on 30.09.2023 proposing a tax of Rs. 43,66,708.14. However, the final order imposed a tax exceeding Rs. 90 crores, markedly surpassing the initial estimate.
Despite compliance with statutory Input Tax Credit (ITC) requirements, the petitioner faced penalties.
The crux of the matter lies in the imposition of GST on the entirety of the petitioner's trade payables, a move perceived by the petitioner as beyond the notice's scope and contrary to legal provisions.

Petitioner’s Argument:

The petitioner contends that the order unjustly expanded the taxable amount well beyond the initial estimation, unfairly taxing trade payables as a taxable supply despite adhering to ITC regulations.

Held:

The Madras High Court deemed the imposition of GST on trade payables, as reflected in financial statements, prima facie unsustainable.

The court nullified the order, instructing the petitioner to remit 10% of the disputed amount, excluding trade payables, and mandated a fresh review with adequate opportunity for the petitioner to present their case.

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Delhi High Court Alters Retrospective Revocation of GST Registration

editor — Thu, 28 Mar 2024 04:52:32 +0000

In the legal case of Supreme Enterprises versus Principal Commissioner of Goods and Service Tax, North Delhi, the Delhi High Court recently deliberated on the matter of retroactively canceling GST registration.

Facts of the case:

The petitioner contested an order issued on 07.07.2023, which retroactively annulled their GST registration starting from 18.01.2022. This cancellation stemmed from a show cause notice dated 06.06.2023, citing non-compliance with return filing requirements. However, the notice lacked specificity and failed to afford the petitioner adequate opportunity to respond.

The petitioner had previously sought cancellation of their GST registration multiple times due to business closure, but these requests were denied. Subsequently, they received a show cause notice lacking in detailed explanations or justifications.

The order for cancellation lacked clarity and reasoning, casting doubt on its validity. It did not sufficiently explain the grounds for cancellation or the resulting liabilities, nor did it justify the retroactive nature of the cancellation.

Held:

The court stressed that retrospective cancellation of GST registration must be grounded in objective criteria and not solely on non-compliance with return filing obligations. It recognized the significant ramifications of such cancellations for both the taxpayer and their customers, particularly concerning input tax credit.

Taking into account the petitioner’s cessation of business operations, the court amended the contested order to cancel the registration effective from the date of business closure, i.e., 26.07.2022. The petitioner was instructed to adhere to the necessary regulations outlined in Section 29 of the CGST Act, 2017.

Nevertheless, the court clarified that the authorities could still pursue steps for recovering any outstanding dues, including retrospective cancellation, in accordance with the law.

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