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Insider Insights: Flour Mixes & Additives Tax Clarified!

editor — Sat, 08 Jun 2024 08:01:04 +0000

The Gujarat Appellate Authority for Advance Ruling has made it clear that flour mixes containing additives will attract an 18% Goods and Services Tax (GST) as they are considered as food preparations not specified for a lower tax rate in the law.

This decision was prompted by an application submitted by a company in Gandhinagar that sells flour mixes for various dishes like idli, dhokla, and dahi vada. The company argued that these mixes should fall under a category eligible for a 5% tax rate.

However, the authority, in its order issued on 29th May, stated that flour mixes with spices and other ingredients in unspecified proportions cannot claim the lower tax rate. This ruling upheld a previous advance ruling given by the Gujarat Advance Ruling Authority.

Referring to a 2018 revenue department order, the Authority highlighted that mixtures of flour made from ground pulses and cereals, including those with “very small amounts of additives”, are taxed at either zero or 5%. If unbranded, they are exempt from GST, and if branded and packed, they attract a 5% tax. Nevertheless, mixes with additives in unspecified proportions do not qualify for the lower rate.

The appellate authority emphasized that only flour mixes containing “very small quantities of specified substances” are eligible for the lower tax rate. In the case in question, the additives ranged from 5-27%.

Advance rulings enable companies to seek clarity on tax matters from the authorities, thereby helping to avoid legal disputes and ensuring certainty regarding their tax obligations.

Experts noted that the classification of products and services often leads to disputes. “Classification disputes are one of the most common areas of litigation under GST. Despite the issuance of circulars, differing interpretations of the clarifications provided in these circulars have often posed challenges,” one expert remarked.

Source: https://www.livemint.com/news/flour-mixes-with-additives-attract-18-gst-clarifies-gujarat-appellate-authority-11717764752547.html

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Tax Season Update: Over 7 Lakh Returns Filed So Far for Assessment Year 24-25

editor — Tue, 07 May 2024 05:01:39 +0000

As taxpayers gear up for the tax filing season for the assessment year 24-25, recent data from official sources sheds light on the progress made in filing returns. The figures reveal that a substantial number of returns have already been processed, indicating a proactive approach from taxpayers in meeting their tax obligations. Let’s delve into the details of this tax season update and explore the steps involved in filing Income Tax Returns (ITRs) online.

The significant number of verified returns underscores the active participation of taxpayers in adhering to tax regulations. Tax authorities attribute this positive trend to the concerted efforts of both taxpayers and regulatory bodies in ensuring timely compliance and accurate filing.

Filing ITRs has been made more convenient with the introduction of online platforms. The Income Tax Department’s e-filing portal offers a seamless experience, enabling taxpayers to file their returns from the comfort of their homes or offices.

Logging In

Accessing ‘File Income Tax Return’

Selection of Assessment Year

Indicating Filing Status

Choosing the ITR Type

Reason for Filing ITR

Validation of Pre-filled Information

E-verification of ITR

‘Pay Later’ Option

The Income Tax e-filing portal now offers a ‘Pay Later’ option, allowing taxpayers to complete the filing process before making tax payments.

Source: https://www.republicworld.com/business/personal-finance/over-7-lakh-returns-filed-in-tax-season-for-assessment-year-24-25/?amp=1

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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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Revenue Department is not empowered to seize Cash under GST

editor — Sat, 30 Mar 2024 10:09:45 +0000

The Delhi High Court, in the matter of Jagdish Bansal v. Union of India [W.P. (C) No. 16677 of 2023 dated February 26, 2024], granted relief to the petitioner by allowing the writ petition. The court instructed the Revenue Department to return the seized cash along with interest. The judgment emphasized that the Revenue Department lacks authority to seize cash under the applicable GST laws.

Facts of the case:

Search and seizure procedures were conducted at the premises of Jagdish Bansal, resulting in the confiscation of cash by the Revenue Department.

Displeased by this action, Jagdish Bansal filed a writ petition in the High Court, challenging the lawfulness of the cash seizure.

Issue:

The central issue at hand was whether the Revenue Department possessed the legal authority to seize cash under the GST framework.

Held:

In its ruling on W.P. (C) NO. 16677 OF 2023, the Delhi High Court made the following determinations:

Referencing the decision of the Delhi High Court in K.M Food Infrastructure Pvt Ltd Through Its Director Mukesh Kapoor Vs Director General DGGI Headquarters [W.P. (C) 328/2024 dated February 13, 2024], the court construed Section 67 of the Central Goods and Services Tax Act, 2017.
It observed that cash does not fall under the definition of goods but rather under the definition of money as outlined in Section 2(75) of the CGST Act.
The court reiterated that cash cannot be categorized as goods and therefore cannot be subject to seizure.
It concluded that there was no valid reason for the Revenue Department to retain the seized cash.
Consequently, the court deemed the impugned order as null and directed the Revenue Department to return the seized cash along with interest.

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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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Implications of Non-Compliance with GST Return Filing under Section 62 of CGST Act

editor — Tue, 26 Mar 2024 08:02:30 +0000

The Goods and Services Tax (GST) regime, implemented in India in 2017, mandates registered taxpayers to regularly file returns to declare their taxable supplies and corresponding tax liabilities. However, failure to comply with this obligation can lead to significant consequences under Section 62 of the CGST Act.

Understanding Section 62 of CGST Act:

Subsection (1):

Non-Filing Obligations: This subsection comes into effect when a registered taxpayer fails to file the prescribed return under Section 39 (monthly return) or Section 45 (annual return), even after receiving notice under Section 46.
Authority of Proper Officer: The designated official empowered by the government can assess the tax liability in the absence of a return by estimating it to the best of their judgment, based on available or gathered information.
Assessment Order Issuance: The officer issues a formal assessment order (Form GST-ASMT 13) determining the estimated tax liability, interest, and any applicable penalties.
Time Limit: The assessment order must be issued within five years from the due date for filing the annual return for the relevant financial year.

Subsection (2):

Rectification Opportunity: Taxpayers have a chance to rectify non-filing by submitting a valid return within 30 days of receiving the assessment order, leading to the withdrawal of the order.
Continued Liabilities: Even if the assessment order is withdrawn, the taxpayer remains liable to pay interest and late fees as per Section 50(1) and Section 47 of the CGST Act, respectively.

Additional Provisions:

Penalties under Section 62 of CGST Act:

Interest: Interest is levied on the assessed tax liability as per Section 50(1) of the CGST Act.
Late Fees: Additional late fees are charged under Section 47 for each day of delay in filing the return.
Potential Prosecution: Severe cases of non-compliance may lead to criminal prosecution under Section 132 of the CGST Act.

Consequences of Non-Compliance under Section 62:

Key Points of Section 62:

Applicability: Applies to registered persons failing to file returns under Section 39 or Section 45.
Assessment by Proper Officer: The officer estimates tax liability based on available information within a specified time frame.
Time Limit for Assessment: Assessment can be initiated within five years from the due date for furnishing the annual return.

Relief for Non-Filers:

Conclusion:

Section 62 of the CGST Act serves as a deterrent against non-filing of GST returns, empowering authorities to assess tax liability and impose penalties. However, it also provides an opportunity for rectification within a stipulated time frame, albeit with certain consequences. Taxpayers are strongly advised to adhere to prescribed deadlines to avoid unnecessary assessments, penalties, and legal complications.

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Discretion of Appellate Authority in Admitting Appeals Beyond Limitation Period

editor — Tue, 26 Mar 2024 04:48:21 +0000

In the case of Arvind Gupta v. Assistant Commissioner of Revenue State Taxes [Writ Petition Application No. 2904 of 2023 dated January 04, 2024], the esteemed Calcutta High Court determined that the Appellate Authority possesses the discretion to permit the submission of an appeal within one month after the expiration of the prescribed limitation period from the date of order communication, provided sufficient cause is demonstrated, as per Section 107(4) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”).

Facts of the case:

The Appellate Authority retains discretion to accept appeals submitted after the limitation period.
The Calcutta High Court, in Arvind Gupta v. Assistant Commissioner of Revenue State Taxes [Writ Petition Application No. 2904 of 2023 dated January 04, 2024], affirmed that the Appellate Authority possesses discretion to entertain appeals within one month after the expiration of the limitation period as per Section 107(4) of the Central Goods and Services Tax Act, 2017 ("CGST Act").
Arvind Gupta, the petitioner, appealed before the Senior Joint Commissioner of Revenue, mentioned in the annexure to FORM GST APL-01 the period of delay and reasons for the delay:

Issue:

Whether the Appellate Authority may exercise discretion to admit appeals submitted within one month after the limitation period?

Held:

Relied on, the Hon’ble Division Bench in the matter of S.K. Chakraborty v. Union of India & Ors. (MAT 82 of 2022) where the Bench held that the provisions of Section 5 of the Limitation Act, 1963 have not been expressly or impliedly excluded by Section 107 of the CGST Act under Section 29(2) of the CGST Act. Therefore, Section 5 of the Limitation Act, 1963 stands attracted. Hence, the Respondent has the discretion to allow an appeal to be presented within one month after the expiry of the period of limitation stipulated from the date of communication of the order upon sufficient cause being shown as per Section 107 (4) of the CGST Act. Paraphrase
Observed that, it was well within the power of the Respondent to consider the prayer of the Petitioner for condonation of delay. The Impugned Order passed by the Respondent that there is no scope to condone the delay beyond four months suffers from infirmity.
Noted that, the delay was evident from the annexure to FORM GST APL-01 and the Petitioner was prevented by sufficient cause for not preferring the appeal within the statutory period.
Held that, the Respondent failed to exercise its jurisdiction. The delay in presenting the appeal before the Respondent was condoned. The Respondent was directed to consider the appeal on merit and decide the same in accordance with law upon giving an opportunity of hearing to the Petitioner.

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