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Calcutta High Court’s Verdict on GST Pre-Deposit Requirements

editor — Fri, 12 Apr 2024 10:29:32 +0000

Introduction:

In a recent ruling, the Calcutta High Court addressed the clarification of GST pre-deposit requirements, specifically focusing on the interpretation discrepancy between the GST Department and the GST Law.

Facts of the Case:

Issue:

Petitioner’s Argument:

Respondent’s Argument:

Held:

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Tax Authorities cannot retain the tax deposited under the cancelled GST registration

editor — Wed, 10 Apr 2024 05:38:08 +0000

Introduction:

In the case of Yogesh Rajendra Mehra v. Principal Commissioner of Central Goods and Services Tax [Writ Petition No. 1632 of 2024 dated February 20, 2024], the Hon’ble Bombay High Court addressed the issue of whether tax authorities can retain tax deposited under a cancelled GST registration. The court provided significant observations and rulings on this matter.

Facts of the Case:

Mr. Yogesh Rajendra Mehra, a scriptwriter, obtained GST registration on July 19, 2018. However, his registration was cancelled on January 01, 2019, due to non-filing of subsequent returns. Subsequently, Mr. Mehra applied for and obtained a fresh GST registration on March 26, 2022. During the first quarter of 2022, his chartered accountant mistakenly deposited Rs. 1,22,220/- as tax under the cancelled registration instead of the new one. Mr. Mehra then applied for a refund of the erroneously deposited tax.

Issue:

The central issue revolves around whether tax authorities can retain tax deposited under a cancelled GST registration.

Held:

The Bombay High Court held that tax authorities cannot retain tax deposited under a cancelled GST registration. The court emphasized that taxpayers cannot be expected to file returns and deposit tax under an invalid registration number. It was noted that the tax deposited under the cancelled registration was not valid as the registration itself was non-existent. The court also criticized the tax authorities’ rejection of the refund application on technical grounds, ruling that any deficiency in filing an appeal within the prescribed limitation period does not render the appeal barred by limitation. Therefore, the court ordered the refund of the erroneously deposited tax amount of Rs. 1,22,220/- along with permissible interest to Mr. Mehra within four weeks.

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Employees get ₹3,731 crore GST penalty demand; Bombay HC strikes it down

editor — Thu, 04 Apr 2024 05:43:47 +0000

Should an employee of a company be held responsible for forking out penalties related to tax demands raised on the company by revenue authorities? Goods and Services Tax (GST) enforcement officials believed so when they slapped a demand last September for a ₹3,731 crore penalty on a taxation manager and other employees of global logistics major Maersk for alleged tax evasion of the same amount by the company.

In a judgment that could bring relief to other employees at firms in the midst of GST disputes, the Bombay High Court last week struck down the demand and show cause notices issued by the Directorate General of Goods and Service Tax Intelligence in the case, terming them bad and illegal.

Terming it “highly unconscionable and disproportionate” for revenue officers to hold employees responsible for liabilities of the company, a division bench of Justice GS Kulkarni and Justice Firdosh P Pooniwalla held it would not be incorrect to contend that the purpose of issuing the show cause notice to the petitioner who is merely an employee, was designed to threaten and pressurize them.

GST officials had alleged that a sum of ₹1561 crore was wrongly utilized as Input Tax Credit by Maersk and those credits were wrongfully distributed. While Maersk is a foreign company which does not have any employee or fixed establishment in India, solely for the purpose of representing and acting on its behalf before the Indian tax authorities, the firm had given the power of attorney to some employees of its steamer agent in India, incorporated as Maersk Line India Pvt. Ltd.

“This ruling is significant for employees of large-sized businesses, where potentially interpretative GST positions are adopted by employees without any malafide intention. Such imposition of substantial penalties in recent investigations had caused lot of unrest amongst such employees,” an expert said.

Source: https://www.thehindu.com/business/employee-gets-3731-crore-gst-penalty-demand-bombay-hc-strikes-it-down/article68025394.ece

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Madras High Court Invalidates GST Assessment Over ITC Disparity

editor — Tue, 02 Apr 2024 04:58:07 +0000

In a significant ruling, the Madras High Court addressed the validity of a GST assessment order in the case of Sri Lakshmi Silvers versus The State Tax Officer, Gugai Circle, Salem. The case centered on the adherence to procedural guidelines and principles of natural justice in GST assessments, particularly concerning disparities between GSTR-3B and GSTR-2A returns.

Facts of the Case:

The petitioner, engaged in the supply of base metals, faced a GST assessment order pertaining to the tax demand arising from differences between the Input Tax Credit (ITC) claimed in GSTR-3B returns and that reflected in the auto-populated GSTR-2A returns for the year 2019-20.
Despite receiving a notice and show cause notice, the petitioner, relying on their accountant, remained unaware, resulting in no response from their side.
The central issue revolved around the validity of the assessment order, particularly concerning principles of natural justice and adherence to specific circulars regarding GST return discrepancies.

Petitioner’s Argument:

Department’s Argument:

Held:

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Decision by High Court Allows Refund of Reversed ITC When Supplier Pays Tax

editor — Tue, 02 Apr 2024 04:23:57 +0000

The Delhi High Court, in the matter of Pedersen Consultants India Pvt. Ltd. v. Union of India and Ors. [W.P. (C) 1039/2024 dated March 19, 2024], resolved the writ petition, permitting registered entities to submit refund applications for reversed Input Tax Credit (ITC) when the supplier has subsequently filed returns and paid taxes.

Facts of the case:

In the matter of Pedersen Consultants India Pvt. Ltd. v. Union of India and Ors. [W.P. (C) 1039/2024 dated March 19, 2024], the petitioner, Pedersen Consultants India Pvt. Ltd., filed a writ petition. The petition sought direction for granting Input Tax Credit (ITC) benefits on invoices where the recipient had filed subsequent returns and paid taxes.
The petitioner argued that they were compelled by the Revenue Department to pay taxes on invoices where the supplier hadn't filed returns on time. However, the supplier later filed returns and paid taxes, potentially leading to double taxation. Hence, the petitioner sought a refund for the taxes paid on such invoices.
Responding to objections, the petitioner proposed filing a refund application under Section 54 of the Central Goods and Services Tax Act, 2017 (CGST Act). Additionally, they cited Notification No. 13/2022 dated July 05, 2022, advocating the exclusion of the period between March 1, 2020, and February 28, 2023, from the limitation for filing refund applications. The petitioner also requested exclusion of the period between filing the writ petition and the court's order.

Held:

The Delhi High Court, in W.P. (C) 1039/2024, dismissed the writ petition, allowing the petitioner to file a refund application under Section 54 of the CGST Act. The court directed the respondent to adjudicate the petitioner's claim in accordance with the law. Notably, the court recognized the petitioner's eligibility under the Notification, excluding the period from March 1, 2020, to February 28, 2022, for computing the limitation period for filing refund applications.

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Delhi High Court Facilitates Refund Requests for Overpaid Taxes, Streamlining Procedural Deadlines for Taxpayers!

editor — Wed, 27 Mar 2024 07:38:03 +0000

If the Tax Department has demanded payment for taxes from you because your supplier failed to remit them, and later it is discovered that your supplier did, indeed, pay the taxes, you should apply for a refund.

Facts of the Case & Timelines:

The petitioner was compelled to pay taxes on certain invoices for the fiscal year 2019-2020, due to the delayed filing of returns by Respondent No. 3.

Subsequently, it was revealed that Respondent No. 3 had filed returns and claimed Input Tax Credit (ITC) for the same invoices, resulting in double payment. Consequently, the petitioner sought a refund for the excess payment.

Issue:

The main issue revolved around whether the petitioner is eligible for a refund of the tax paid under the assumption of non-compliance by Respondent No. 3, leading to double payment.

Petitioner’s Argument:

The petitioner contended that they were compelled to make the tax payment due to the initial non-compliance by Respondent No. 3. With the subsequent filing of returns, they asserted their right to a refund of the tax paid for the mentioned invoices.

Respondent’s Argument:

The respondent argued against the petitioner’s refund claim, stating that it was not entertained because the petitioner had not filed a proper refund application as required by Section 54 of the Central Goods & Services Tax Act, 2017.

Held:

The Delhi High Court permitted the petitioner to submit an appropriate refund application in accordance with Section 54 of the Act. Furthermore, it decreed that the period from 01.03.2020 to 28.02.2023, as well as the period from the filing of the petition (19.01.2024) until the present date, should be excluded when calculating the limitation period for submitting a refund application.

The court refrained from discussing the merits of the case and reserved the right to adjudicate the refund claim according to the law.

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