CA in Jaipur | CA. Yogesh Jangid |ITR Filing 2023 | Company Registration | NGO Registration | Income Tax Raid Cases | Audit | Inc Incroporation | CPA in India | Subsidy | Project Funding | GST | GST Raid Cases | Income Tax Notice Faceless | DRI Cases |

Remedy Cannot Be Availed Under Writ Jurisdiction When Alternate Remedies Not Availed Efficaciously

editor — Wed, 29 May 2024 04:45:27 +0000

Introduction

In legal battles, the route you take to challenge a decision can significantly impact the outcome. This is vividly illustrated in the case of Rajesh Kumar Dubey v. Union of India [CWJ Case No. 5113 of 2024]. The Hon’ble Patna High Court emphasized that writ jurisdiction cannot be invoked when alternate remedies have not been pursued effectively. This decision underlines the importance of adhering to procedural timelines and exhausting all available legal remedies before seeking extraordinary judicial intervention.

Facts of the Case

Details of the Petition

Rajesh Kumar Dubey, the petitioner, filed a writ petition challenging an appellate order dated January 9, 2024. This order had dismissed his appeal on the grounds of delay. The appeal in question was against an order dated August 16, 2019, which had cancelled Dubey’s GST registration.

Key Dates of the Case

Reason for Delay in Filing the Appeal

The petitioner delayed the appeal by over one year and five months beyond the extended limitation period, citing reasons that were not deemed satisfactory by the court. This significant delay became the crux of the legal contention.

Issue

The primary issue was whether the remedy under writ jurisdiction could be availed when the petitioner had not diligently pursued the available alternate remedies. This question is crucial as it addresses the balance between procedural compliance and judicial discretion.

Held

Legal Basis for the Decision

The Patna High Court referred to Section 107 of the Bihar Goods and Services Tax Act, 2017, which mandates that appeals must be filed within three months, with a possible extension of one month for justifiable delays.

Application of Limitation Period

The court also took into account the Supreme Court’s extension of limitation periods due to the COVID-19 pandemic, which provided relief for delays occurring between March 15, 2020, and February 28, 2022. Despite this extended period, the petitioner’s appeal was still significantly late.

Petitioner’s Lack of Diligence

The court noted that Dubey failed to utilize the available remedies within the stipulated time. This lack of diligence in adhering to procedural timelines was a critical factor in the court’s decision.

Supreme Court’s Intervention

The Supreme Court’s guidance in the case of In Re Cognizance for Extension of Limitation was pivotal. It underscored that extraordinary jurisdiction under Article 226 of the Constitution should not be invoked when alternate remedies are available and have not been exhausted effectively.

Analysis of the Case

Reasons for the Delayed Appeal

The petitioner’s reasons for delay did not satisfy the court, which highlighted the importance of timely action in legal proceedings. Delays, especially those exceeding a year beyond the permissible period, undermine the legal process’s integrity.

Importance of Timeliness

Timeliness in legal actions ensures that justice is served efficiently. The extended delay by the petitioner disrupted the orderly administration of justice and demonstrated a lack of serious commitment to following procedural rules.

Value of Exhausting Alternative Remedies

Exhausting all available remedies before approaching higher judicial forums like the High Court under writ jurisdiction ensures that all possible solutions have been considered. This step is essential for maintaining judicial order and respecting lower courts and tribunals’ authority.

The Law Behind the Decision

Section 107 of the BGST Act, 2017

Section 107 specifies the appeal process under the BGST Act, including the time limits for filing appeals and the conditions for extending these limits. It is designed to ensure that appeals are handled promptly and efficiently.

Article 226 of the Constitution

Article 226 grants High Courts the power to issue certain writs, but this power is to be used sparingly and not as a substitute for other available remedies. It emphasizes the extraordinary nature of writ jurisdiction, meant for situations where no other remedy exists.

Precedent Cases

Past cases like In Re Cognizance for Extension of Limitation provide a framework for understanding how courts view delays and the conditions under which writ jurisdiction can be invoked. These precedents guide current judicial decisions and ensure consistency in legal interpretations.

category

High Court Advocates Direct Communication, Urges Tax Department to Inform Taxpayers Prior to Action

editor — Wed, 10 Apr 2024 05:01:01 +0000

Introduction:

Certain demographics, including senior citizens, technologically hesitant individuals, Non-Resident Indians (NRIs), and those prone to forgetfulness, might be unaware of the Income Tax Department’s actions against them. The department initiates proceedings by uploading show-cause notices or summons to its online portal, without directly notifying these taxpayers via email or letter. Consequently, individuals who infrequently check the tax portal, as is common, may face unforeseen penalties and complications. This operational method by the tax authorities has raised concerns about its fairness.

High Court’s Critique:

Recently, the High Court criticized the tax authorities’ approach, highlighting the unreasonableness of expecting taxpayers to constantly monitor the e-portal for updates. In a case concerning the Munjal BCU Centre of Innovation and Entrepreneurship, the Punjab and Haryana High Court quashed a show-cause notice from November 2022. The court emphasized that legal provisions dictate the manner in which notices and orders must be served, rejecting the notion of notices being “presumed” received solely by placement on the e-portal.

Importance of Natural Justice:

An expert underscored the significance of natural justice in legal proceedings, emphasizing the principle of “audi alteram partem,” which requires both parties to be heard. Lack of communication regarding assessments, penalties, or other actions could result in hardships for taxpayers, missed deadlines, and ignorance of their right to respond, thereby increasing burdens for all parties involved.

Case Example: Munjal BCU:

Munjal BCU, dedicated to fostering innovation and startups in Ludhiana, received initial notices and reminders solely through the online tax portal. The court deemed this insufficient opportunity for the organization to present its case.

Historical Context:

Before 2009, the tax department primarily relied on physical mail for communication, transitioning to electronic means later. Placing communications solely on the income tax portal can pose tracking challenges, especially for certain demographics uncomfortable with technology. While portal accessibility is convenient, supplementary notifications via email and/or physical mail are necessary.

Expected Changes:

The court’s decision is expected to prompt the department to communicate through emails for various matters, including notices and summons.

Practitioners’ Concerns:

Tax practitioners have noted issues with recent proceedings, including notices not being visible on the portal and unreasonable response timeframes.

category

Merely uploading SCN under the category “Additional Notices” instead of “Notices” on the GST portal does not constitute sufficient intimation to the taxpayer

editor — Tue, 09 Apr 2024 05:43:22 +0000

Introduction:

The Hon’ble Delhi High Court, in the case of Anhad Impex v. Assistant Commissioner, addressed the issue of whether the misplacement of a Show Cause Notice (SCN) in the “Additional Notices” category instead of “Notices” on the GST portal constitutes sufficient intimation to the taxpayer. This analysis examines the court’s findings and the implications for similar cases.

Facts of the Case:

Introduction:

Facts of the Case:

M/s. Anhad Impex ("the Petitioner") received an Impugned Order dated November 29, 2023, from the Assistant Commissioner ("the Respondent"), creating a demand under Section 73 of the CGST Act.
The Petitioner asserted that they never received the SCN, which formed the basis of the Impugned Order, thus depriving them of the opportunity to respond or participate in adjudication proceedings.
SCNs are typically uploaded under the "Notices" section on the GST portal, but in this instance, it was placed in the less accessible "Additional Notices" category, leading the Petitioner to miss it.
The Respondent contended that uploading the notice on the GST portal suffices as per Section 169 of the CGST Act.

Issue:

Whether the misplacement of the SCN in “Additional Notices” rather than “Notices” warrants the invalidation of the demand order?

Held:

The court noted that the Petitioner's lack of response to the SCN indicated a lack of proper and timely intimation.
Placing the SCN under "Additional Notices" instead of "Notices" made it less accessible, infringing upon principles of natural justice and provisions of the CGST Act.
Referring to precedents such as East Coast Constructions & Industries Ltd. v. Asstt. Commissioner and Murugesan Jayalakshmi v. State Tax Officer, the court emphasized the importance of proper categorization on the portal.
Consequently, the Impugned Order was set aside, with directions for the Petitioner to respond to the SCN, and the Respondent to re-adjudicate the matter with a personal hearing within four weeks.

category

CBDT Issues Interim Action Plan for F.Y. 2024-25: Emphasizes Adherence

editor — Tue, 09 Apr 2024 04:36:03 +0000

The Central Board of Direct Taxes (CBDT) has released a Circular dated April 05, 2024, denoted as F.No. 380/01/2024, intended for internal departmental utilization. This circular delineates the Interim Action Plan tailored for the Financial Year 2024-25. It is imperative to disseminate this document among all officers within your jurisdiction for requisite action and to ensure unwavering compliance within the specified timeframes for each critical area of focus.

The comprehensive Interim Action Plan for the Financial Year 2024-25 is available for reference and download at the following link: https://www.nyca.in/wp-content/uploads/2024/04/CBDT_Releases_Interim_Action_Plan_for_F.Y._2024-25__for_departmental_use-_Urges_Strict_Compliance.pdf

category

Income Tax Returns Now Invalid if Not Verified Within 30 Days or by Due Date, Whichever Is Later

editor — Sat, 06 Apr 2024 10:10:44 +0000

The CBDT issued Corrigendum dated April 04, 2024 to Notification No. 02 of 2024 dated March 31, 2024 regarding the Time limit for verification of return of income after uploading.

In the Notification no. 02 of 2024 issued by the DGIT(S), Bengaluru bearing the subject “Time limit for verification of return of income after uploading” dated March 31, 2024: –

Paragraph at s. no. 5 shall read as under:

It is further clarified that where the return of income is not verified within 30 days from the date of uploading or till the due date for furnishing the return of income as per the Income-tax Act, 1961 – whichever is later – such return shall be treated as invalid due to non-verification.

The Notification can be accessed at: https://incometaxindia.gov.in/communications/notification/corrigendum-notification-no-2-2024.pdf

category

Income Tax Department enabled the Form 10IE for AY 2024-25 for filing on the income tax e-filing portal

editor — Sat, 06 Apr 2024 09:56:22 +0000

The Income Tax Department has enabled Form 10IE for AY 2024-25 for filing on the income tax e-filing portal.

Please note: This Form 10IE is applicable to those who opt for the old Tax regime for A.Y .2024-25 as the new Tax regime is the default Tax regime.

Source #Income Tax Portal

category

Delhi High Court Invalidates Demand Order Due to Lack of Recorded Personal Hearing

editor — Fri, 05 Apr 2024 06:05:12 +0000

The Delhi High Court recently ruled on a GST case involving Electra Power Transmission Systems and the Commissioner of Delhi Goods and Service Tax.

Facts of the Case

Held

The main issue was whether the demand was justified given the petitioner's claim of appearance and attempted compliance, marred by administrative errors.
The petitioner argued that they did attend the hearing and submitted a reply, but due to an office error, crucial documents weren't uploaded. They sought another chance to present their case fully, with all necessary documentation.
The respondent maintained that the petitioner's response was unsatisfactory and noted their absence at the hearing, justifying the demand based on procedural defaults.
The Delhi High Court set aside the impugned order and remitted the case for re-adjudication. The court instructed the petitioner to submit all relevant documents and be given another hearing. No comment was made on the merits of the arguments, preserving all rights.

category

Audit wing of SGST Authority shall keep all proceedings in abeyance if the subject matter is pending before the CGST Authority

editor — Thu, 04 Apr 2024 10:57:29 +0000

The Audit division of the State Goods and Services Tax (SGST) Authority is mandated to suspend all actions if a matter is pending before the Central Goods and Services Tax (CGST) Authority, according to a ruling by the Calcutta High Court in the case of Mahabir Prasad Kedia v. Assistant Commissioner of State Tax [MAT No. 2388 of 2023 dated January 9, 2024].

Facts:

Mr. Mahabir Prasad Kedia, the Appellant, received an audit memo highlighting several discrepancies.
Upon receiving the audit notice, the Appellant informed the SGST Authority about a show cause notice (SCN) issued by the anti-evasion wing of the CGST Department on March 28, 2023, addressing the same issues for the financial years 2017-2018 to 2021-2022.
The Appellant responded to the Impugned SCN on May 04, 2023, and the matter was pending adjudication.
Despite the Appellant's submission, the audit wing of the SGST Authority overlooked it and proceeded with the matter.
The subject was pending adjudication by the CGST Authority, to whom the Appellant had submitted a reply on May 02, 2023.

Held:

The Calcutta High Court ruled that the SGST Authority's audit division should suspend proceedings concerning the discrepancy noted, as the matter was under consideration by the CGST Authority.
Following this decision, the SGST Authority issued an SCN on December 29, 2023, clarifying that the audit wing should not proceed with the matter.
Consequently, the appeal, along with related applications and writ petitions, was disposed of.
The SGST Authority was directed to halt all proceedings regarding the noted discrepancy, including the show cause notice issued on December 29, 2023, and adhere to the adjudication order from the CGST Authority regarding the Impugned SCN.

category

Tax Liability cannot be imposed merely because the financial statement did not provide State-wise turnover

editor — Thu, 04 Apr 2024 10:14:35 +0000

The imposition of tax liability solely based on the absence of state-wise turnover information in financial statements has been contested in the legal realm. This matter was addressed by the Hon’ble Madras High Court in a recent case involving Tvl. Future General India Insurance Co. Ltd. versus Assistant Commissioner (State Tax) [WP No. 3534 OF 2024, dated February 16, 2024].

Facts:

Tvl. Future General India Insurance Co. Ltd. (“the Petitioner”) operated as a private general insurance firm, specializing in insurance services. On August 16, 2021, the Petitioner was served with an audit notice by the Assistant Commissioner (State Tax) (FAC) (“the Respondent”). In response, the Petitioner diligently furnished the necessary documents and addressed the discrepancies highlighted in the audit reports. Subsequently, after issuing both an intimation and a show cause notice (“the SCN”), the Competent Authority issued the assessment order on December 30, 2023 (“the Impugned Order”).

Within the Impugned Order, the issue of defect No. 10 arose, relating to variations in turnover between the Profit & Loss account and balance sheet, as opposed to the figures in GSTR-9. The Petitioner explained that these disparities stemmed from the inclusion of Pan-India operations in the financial statements, whereas GSTR-9 solely focused on turnover within Tamil Nadu. The Petitioner even provided a certificate from a Chartered Accountant, specifically outlining the turnover within Tamil Nadu, amounting to Rs. 80,89,05,068/-. However, despite this clarification and despite the Petitioner having already paid taxes on the stated turnover, the Respondent imposed State Goods and Services Tax (SGST) and Central Goods and Services Tax (CGST) at 18% each (36% combined) on the aforementioned turnover.

Dissatisfied with the assessment order, the Petitioner sought recourse by filing a writ petition before the Hon’ble High Court of Madras.

Top of Form

Issue:

The central question revolves around whether tax liability can be established solely due to the absence of state-wise turnover information in financial statements.

Held:

In its ruling on Writ Petition No. 3534 OF 2024, the Hon’ble Madras High Court made the following determinations:

The Court acknowledged the variation in turnover for entities operating across multiple states, emphasizing the importance of distinguishing total turnover from state-wise turnover.
It criticized the Competent Authority's decision to impose GST at a higher rate of 36% instead of the appropriate 18%, despite the Petitioner having already paid tax on the turnover in question.
The Impugned Order was deemed invalid and the case was remanded to the Respondent for reconsideration.
Furthermore, the Court directed the Respondent to afford the Petitioner a fair opportunity, including a personal hearing, and instructed issuance of a fresh assessment order within a maximum period of two months, in compliance with legal provisions.

category

GST Applicability to Compensation for Liquidated Damages in Agreements

editor — Wed, 03 Apr 2024 10:27:09 +0000

In a recent ruling by the Andhra Pradesh Authority for Advance Ruling (AAR) in AAR No. 12/AP/GST/2023 dated December 21, 2023, significant clarity was provided regarding the GST implications of compensation collected for liquidated damages under contractual agreements. This ruling pertains to the case of South India Krishna Oil & Fats (P.) Ltd. (“the Applicant”), a manufacturer of edible oils, and sheds light on whether such compensation amounts are subject to GST and the related input tax credit implications.

Facts of the Case:

The Applicant, engaged in the production of edible oils, enters into agreements with customers for the supply of specified quantities of edible oils at agreed-upon rates, with delivery within specified timelines.
Instances arise where customers fail to lift the agreed quantities of edible oils within stipulated delivery dates, leading to breach or non-performance of contractual obligations.
In response to such breaches, the Applicant collects compensation amounts, termed "Liquidated Damages or Trade Settlement," from defaulting customers.

Held:

The AAR observed that as per the definition of "consideration" under Section 2(31) of the CGST/APGST Acts, it encompasses any payment made in response to or for the inducement of the supply of goods or services.
It was opined that the compensation amounts paid by customers to the Applicant for non-performance or breach of contract constitute consideration for tolerating an act or situation under an agreement.
Consequently, such compensation amounts were deemed to constitute a supply of service and were subject to CGST at 9% and SGST at 9% each under Chapter Heading No. 9997 at Serial No. 35 of Notification No. 11/2017-Central Tax (Rate) dated June 28, 2017.
Additionally, it was held that since GST is leviable on the collection of compensation for liquidated damages, the restriction of Input Tax Credit (ITC) of common services under Rules 42 and 43 of the CGST/APGST Rules does not apply.

category