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Bombay High Court’s Landmark Judgment on Provisional Attachment under GST

editor — Sat, 11 May 2024 06:43:39 +0000

Introduction

In a significant ruling, the Bombay High Court addressed the issue of provisional attachment orders under the Maharashtra Goods and Services Tax Act, 2017 (MGST Act) and the Central Goods and Services Tax Act, 2017 (CGST Act). This article examines the court’s decision in the case of Patil Construction and Infrastructure Ltd. Vs The Commissioner of State Tax and its implications for taxpayers and tax authorities.

Facts of the Case

The case centered around the issuance of attachment orders under Section 83 of the MGST Act and CGST Act, in conjunction with Rule 159 of the CGST Rules. The Joint Commissioner of State Tax-II, Pune Division, Pune, provisionally determined the petitioner’s liability following an investigation. It was suggested that the petitioner might default in paying the ultimate tax, interest, and penalty, prompting the exercise of powers under Section 83 to safeguard government revenue.

Issue

The primary issue before the court was the legality and justification of the provisional attachment of the petitioner’s bank accounts under Section 83 of the GST laws.

Held

The Bombay High Court found that the order lacked sufficient material to demonstrate the necessity of attaching the petitioner’s bank accounts to protect government revenue. The court emphasized that before exercising powers under Section 83, the Commissioner must be satisfied that such action is necessary to safeguard government revenue. The court cited the Supreme Court’s judgment in M/s Radha Krishan Industries Vs. State of Himachal Pradesh & Ors., highlighting that the power to order provisional attachment, including bank accounts, is draconian and must be preceded by the formation of an opinion by the Commissioner.

The court’s decision reinforces the principle that the power of provisional attachment under GST laws should be exercised judiciously and not arbitrarily. It serves as a reminder to tax authorities to ensure that the interests of government revenue are balanced with the rights of taxpayers.

Conclusion

The judgment in Patil Construction and Infrastructure Ltd. Vs The Commissioner of State Tax marks a significant development in GST jurisprudence. It underscores the importance of a balanced approach in exercising powers under the GST laws and emphasizes the need to protect taxpayers’ rights while safeguarding government revenue.

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Gifted Shares May Escape Capital Gains Tax if HC Ruling Sets Precedent

editor — Fri, 10 May 2024 05:22:37 +0000

Introduction

The recent Bombay High Court ruling regarding the taxation of gifted shares has sparked discussions and potential implications for investors and tax authorities alike.

Understanding the Ruling

Consideration-less Transactions

The ruling establishes that transferring shares as a gift constitutes a consideration-less transaction, thus exempting it from capital gains tax.

Case Background

Jai Trust versus Union Government

The case between Mumbai-based Jai Trust and the Union government served as the platform for this significant ruling.

Court’s Decision

Quashing Reassessment Notices

The High Court’s decision involved quashing the reassessment notice issued by tax authorities concerning alleged income escape due to shares gifted by the trust.

Definition of Gift

The court clarified that a gift is a voluntary transfer devoid of consideration, hence not subject to capital gains tax.

Legal Interpretations

Conditions for Capital Gains Tax

The court reiterated that capital gains tax applies when three conditions—capital asset, transfer, and profit/gains—are met.

Importance of Consideration

Highlighting the significance of consideration, the court emphasized that capital gains taxation necessitates consideration received.

Assessing Officer’s Argument

Trust’s Intentions

The assessing officer’s argument presumed a consideration due to the trust’s beneficiary-oriented actions, a notion dismissed by the court.

Rejecting Presumptuous Arguments

The court emphasized the necessity of concrete evidence over presumptions, dismissing the assessing officer’s speculative stance.

Implications and Precedent

Potential Ramifications

This ruling sets a precedent that could influence future taxation cases involving gifted shares and consideration-less transactions.

Clarity for Investors

Investors and trusts may find clarity in understanding the tax implications of gifting shares, based on this judicial interpretation.

Source: https://www.business-standard.com/india-news/gifted-shares-may-escape-capital-gains-tax-if-hc-ruling-sets-precedent-124050800953_1.html

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Patna High Court Ruling: Proper Officer Must Issue Notice Within 7 Days

editor — Thu, 02 May 2024 12:41:56 +0000

Introduction:

In a recent case before the Patna High Court, the timeline for the proper officer to pass an order regarding the detention or seizure of goods or conveyance under the Central Goods and Services Tax Act, 2017 (CGST Act) came under scrutiny. This article delves into the specifics of the case, analyzing the facts presented, the issue at hand, and the court’s decision regarding the proper timeline for such orders.

Background of the Case:

M/s. Pawan Carrying Corporation, herein referred to as “the Petitioner,” was involved in the transportation of tobacco through the State of Bihar. The Tax Authorities intercepted their vehicle on December 22, 2023, leading to subsequent actions by the authorities.

Facts of the Case:

Upon interception, the authorities issued statements and forms for physical verification. However, the formal detention order was issued only after the driver submitted an application for physical verification, which occurred on December 28, 2023. The Petitioner submitted relevant documents on January 02, 2024.

Subsequently, a notice under Section 129(3) of the CGST Act was issued on January 05, 2024, which exceeded the seven-day timeline from both the date of interception and detention.

Issue:

The core issue in this case revolves around whether the proper officer is obligated to pass an order within seven days of serving notice of detention or seizure of goods or conveyance, as per the provisions of the CGST Act.

Court’s Analysis and Decision:

The Patna High Court meticulously analyzed the timeline of events and the provisions of the CGST Act. It observed that there was no justification for delaying the verification of goods pending the driver’s application. Section 129 of the CGST Act empowers authorities to detain or seize goods in transit, disregarding any waiting period for application submissions.

Furthermore, the Court noted that even if the detention occurred on December 28, 2023, the notice issued on January 05, 2024, exceeded the statutory seven-day period. The Court emphasized the clarity and definitiveness of the limitation imposed by the statute.

Ultimately, the Court held that the Respondents failed to adhere to the provisions of the CGST Act, leading to the invalidity of the detention order. The Impugned Order was set aside, and the authorities were directed to release the vehicle and its goods immediately.

Conclusion:

This case underscores the importance of adhering to statutory timelines and procedures in matters of taxation and regulatory enforcement. The Court’s decision reaffirms the necessity for proper officers to act promptly within the stipulated timelines, ensuring fairness and compliance within the legal framework.

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Blocked Input Tax Credit (ITC) under GST: Key Points You Need to Know

editor — Thu, 25 Apr 2024 05:48:46 +0000

In the realm of Goods and Services Tax (GST) in India, understanding Input Tax Credit (ITC) is crucial for businesses to ensure compliance and optimize their tax liabilities. However, not all GST paid on purchases can be claimed as ITC. There are certain scenarios where the Input Tax Credit is blocked, preventing businesses from claiming it against their output tax liability. In this comprehensive guide, we delve into the concept of Blocked Input Tax Credit under GST, highlighting key points and recent rulings.

What is Blocked Input Tax Credit (ITC)?

Blocked Input Tax Credit, as per GST laws, refers to specific goods and services on which GST is paid but businesses are ineligible to claim them as Input Tax Credit. These items are deemed ineligible because they are not considered as inputs directly utilized in the production or provision of taxable goods or services.

Recent Rulings and Clarifications:

Introduction:

In the complex landscape of Goods and Services Tax (GST) in India, the eligibility of Input Tax Credit (ITC) plays a significant role for businesses. The recent ruling by the Maharashtra Appellate Authority for Advance Ruling regarding Las Palmas Co-Op. Housing Society sheds light on crucial aspects of ITC denial. Let’s delve into the details to understand the implications of this ruling.

Facts of the Case:

Las Palmas Co-Op. Housing Society sought to avail Input Tax Credit for lift installation charges paid to the lift contractor. However, the Maharashtra Appellate Authority upheld the ruling of the Maharastra Advance Ruling Authority, denying the society’s eligibility for ITC. Citing sections 16(2)(b), 17(5)(c), and 17(5)(d) of the CGST Act, 2017, the authority emphasized that ITC would only be available for tax paid on works contract services when such services are utilized as input for further supply of works contract service.

Issue:

The central issue revolves around the eligibility criteria for Input Tax Credit under the CGST Act. The appellant, Las Palmas Co-Op. Housing Society, failed to fulfill the conditions outlined for availing ITC on works contract services. The authority highlighted that the society, not being a works contract service provider, did not provide any works contract service to its members, thereby rendering it ineligible for ITC.

Held:

The Maharashtra Appellate Authority for Advance Ruling affirmed the decision of the Maharastra Advance Ruling Authority, ruling that Las Palmas Co-Op. Housing Society is not eligible to avail Input Tax Credit in respect of the GST paid on lift installation charges. The authority emphasized that the appellant did not meet the criteria outlined in sections 16(2)(b), 17(5)(c), and 17(5)(d) of the CGST Act, 2017. Consequently, the appeal filed by the appellant was deemed not maintainable and liable to be rejected.

Introduction

The case of Malabar Cements Limited, brought before the Authority for Advance Ruling in Kerala, sheds light on the complexities surrounding input tax credit under the Goods and Services Tax (GST) regime in India. This case revolves around the eligibility of Malabar Cements Limited to claim input tax credit on the GST charged by a service provider for hiring buses or motor vehicles with a seating capacity of more than 13 persons for employee transportation. Understanding the outcome of this case is crucial for businesses navigating the nuances of GST regulations.

Facts of the Case

Malabar Cements Limited, a government-owned Public Sector Company in Kerala, sought an advance ruling regarding the admissibility of input tax credit on GST charged by a service provider for providing transportation facilities to its employees. The company operates its factory round-the-clock in remote areas where public transportation is limited. To ensure the commuting needs of its employees are met, Malabar Cements Limited engages a service provider to provide non-air-conditioned buses with a seating capacity exceeding 13 persons. The service provider levies a GST of 5% on the hiring charges, leading to the question of whether Malabar Cements Limited can avail input tax credit on this GST.

Issue

The central issue in this case is twofold. Firstly, it concerns the eligibility of Malabar Cements Limited to claim input tax credit on the GST charged by the service provider for hiring buses or motor vehicles with a seating capacity exceeding 13 persons for employee transportation. Secondly, it delves into the extent to which the input tax credit can be availed by Malabar Cements Limited, particularly considering the portion of the transportation cost borne by the company itself.

Held

Upon thorough examination of the relevant legal provisions and the arguments presented by Malabar Cements Limited, the Authority for Advance Ruling concluded that the company is indeed eligible to avail input tax credit on the GST charged by the service provider. However, the extent of this credit is restricted to the cost of transportation borne by Malabar Cements Limited. This ruling provides clarity on an important aspect of GST compliance for businesses engaged in employee transportation services and underscores the need for meticulous adherence to statutory provisions.

Introduction

The recent ruling by the Authority for Advance Ruling (AAR) in Madhya Pradesh has significant implications for businesses in the amusement park industry, particularly regarding Input Tax Credit (ITC) under the Goods and Services Tax (GST) regime. The case of Atriwal Amusement Park sheds light on the eligibility criteria for claiming ITC on various components and services utilized in the construction of water parks, offering crucial guidance to businesses operating in this sector

Facts of the Case

Atriwal Amusement Park, a company specializing in the construction of water parks, sought clarification from the AAR regarding the eligibility of Input Tax Credit (ITC) on several aspects of its construction activities. The key components and services under scrutiny included the purchase of water slides, site development services, and the construction of swimming pools or wave pools, all of which are subject to taxation under GST regulations.

Issue

The central issue in this case pertains to the eligibility of Atriwal Amusement Park to claim Input Tax Credit (ITC) on specific components and services utilized in the construction of water parks. The inquiry seeks clarification on whether these elements qualify as ‘Plant and Equipment’ under GST provisions, thus enabling the applicant to avail of ITC benefits.

Held

Upon careful consideration of the facts and legal provisions, the Authority for Advance Ruling (AAR) in Madhya Pradesh arrived at the following decisions:

Water Slides: The AAR ruled in favor of Atriwal Amusement Park, affirming its eligibility to claim Input Tax Credit (ITC) on the purchase of water slides made from durable PVC material. This decision is based on the classification of water slides as ‘apparatus, equipment, and machinery,’ thereby meeting the criteria for ITC under GST regulations.

Site Development Services: However, the AAR denied ITC claims on goods and services related to site development and preparation where water slides are installed. The rationale behind this decision lies in the exclusion of land-related services from the definition of ‘Plant and Equipment’ eligible for ITC benefits.

Swimming Pools or Wave Pools: Similarly, the AAR ruled against the eligibility of ITC on the construction of swimming pools or wave pools. Despite being integral components of amusement parks, these structures were deemed civil in nature and not considered part of the supportive framework or foundation of the plant, thus falling outside the scope of ‘Plant and Equipment’ for ITC purposes.

Introduction

The integration of solar power systems has become increasingly common as businesses seek to adopt sustainable and eco-friendly energy solutions. This article examines a specific case, the ruling in the matter of Unique Welding Products Pvt. Ltd. vs. GST AAR Gujarat, to explore the eligibility of Input Tax Credit (ITC) for the installation and commissioning of a roof-top solar system.

Facts of the Case

Unique Welding Products Pvt. Ltd., a welding wires manufacturing and sales company based in Anand, Gujarat, installed a roof-top solar system with a capacity of 440 KW on its factory roof for captive power generation. The company sought clarification on its eligibility for ITC under the Central Goods and Services Tax (CGST) Act, 2017.

Issue

The main issues raised in the case were whether Unique Welding Products Pvt. Ltd. is eligible for ITC on the purchased roof-top solar system with installation & commissioning and whether the roof-top solar system, along with its installation and commissioning, constitutes plant and machinery, making it eligible for ITC under section 17(5) of the CGST Act.

Held

The ruling authority concluded that unique Welding Products Pvt. Ltd. is eligible to avail ITC on the roof-top solar system with installation & commissioning under the CGST/GGST Act and the roof-top solar system, with installation and commissioning, qualifies as plant and machinery for the company, making it eligible for ITC under section 17(5) of the CGST/GGST Act.

Introduction

The West Bengal Appellate Authority for Advance Ruling recently tackled the question of Input Tax Credit (ITC) eligibility concerning the construction of immovable property subsequently leased out for commercial purposes. This article provides an overview of the ruling, its implications, and the legal context surrounding it.

Facts of the Case

M/s. Mindrill Systems and Solutions Private Limited, hereinafter referred to as “the Respondent,” constructed a warehouse and leased it to a commercial entity. GST was duly paid on this supply of service. Subsequently, the Respondent sought an Advance Ruling from the West Bengal Authority for Advance Ruling (WBAAR) regarding the availability of Input Tax Credit (ITC) for capital expenses incurred during the warehouse’s construction. The question pertained to whether these expenses could offset tax liabilities arising from renting out the warehouse.

Issue

The central issue at hand revolved around whether Input Tax Credit (ITC) could be claimed in relation to the construction of immovable property subsequently let out for commercial purposes.

Held

The West Bengal Appellate Authority for Advance Ruling, in Appeal No. 04/WBAAAR/Appeal/2023, deliberated on the matter. It observed that clauses (c) and (d) of sub-section (5) of Section 17 of the Central Goods and Services Act, 2017 (“the CGST Act”), dictate that ITC is not available for works contract services or goods or services received for the construction of immovable property. Therefore, such transactions fall within the purview of blocked credit.

Furthermore, the Authority noted that the explanation provided in clause (d) of Section 17 specifies that credit is also blocked for reconstruction, renovation, additions, alterations, or repairs capitalized in the books of accounts. However, it clarified that the condition of capitalization in the books of accounts applies solely to the mentioned activities related to immovable property.

In conclusion, the West Bengal Appellate Authority for Advance Ruling held that no Input Tax Credit (ITC) is available concerning the construction of the warehouse subsequently leased out by the Applicant.

Introduction

The recent ruling by the GST AAAR Tamilnadu has shed light on a crucial aspect of Input Tax Credit (ITC) concerning structural support for overhead cranes within an ‘Integrated Factory’ building. Coral Manufacturing Works India Private Limited brought forth an appeal challenging the existing orders of the Advance Ruling Authority, Tamil Nadu, seeking clarification on the applicability of ITC in this scenario.

Facts of the Case

Coral Manufacturing Works India Private Limited constructed a warehouse and let it out for commercial purposes, paying GST on the service provided. The company filed an application for Advance Ruling, questioning whether ITC could be availed for the capital expenses incurred on the construction of the warehouse. The West Bengal Authority for Advance Ruling held that ITC was not admissible for expenses capitalized in the books of account. Dissatisfied with this ruling, the Revenue Department appealed against it.

Issue

The primary issue revolved around the eligibility of Input Tax Credit (ITC) concerning structural support erected for overhead cranes within an ‘Integrated Factory’ building. Coral Manufacturing Works India Private Limited sought clarification on whether the Integrated Factory Building itself could be considered as plant and machinery under the CGST Act.

Held

The GST AAAR Tamilnadu held that while the overhead crane and its structural support qualified as plant and machinery, the Integrated Factory Building itself did not. Consequently, Coral Manufacturing Works India Private Limited was only eligible for an ITC proportional to the structural support for the overhead crane, but not for the construction of other civil structures like the building’s side walls and roof.

Introduction

In the case of Raminfo Limited, the GST AAR Telangana has made a significant determination regarding the eligibility of Input Tax Credit (ITC) on the purchase of a 7-seater vehicle, which will be converted into an ambulance for onward supply. This article explores the details of the ruling, its implications, and the broader context of GST regulations.

Facts of the Case

Raminfo Limited has secured a work order from the Government of Tripura to supply ambulances, specifically Mobile Common Service Centres. To fulfill this order, they are procuring Maruti Suzuki Eeco (7 seater) vehicles and modifying them in their workshop located in Hyderabad, Telangana State. Seeking clarity on GST rates and ITC admissibility, Raminfo Limited filed an advance ruling before the AAR Telangana.

Issue

The primary issue at hand is whether Raminfo Limited is eligible to claim Input Tax Credit (ITC) on the purchase of Maruti Suzuki Eeco (7 seater) vehicles, which will be transformed into ambulances for onward supply to the Government of Tripura.

Held

The AAR Telangana, in its order TSAAR Order No.02/2023, concluded that Raminfo Limited is indeed eligible to avail ITC on the purchase of vehicles used for further supply. Citing Section 17(5)(a) of the CGST Act, the AAR noted that ITC on such purchases is not blocked. Therefore, Raminfo Limited can claim ITC on the tax paid for the purchased vehicles. Additionally, the AAR clarified that GST at the rate of 28% will be applicable on the supply of ambulances to the Government of Tripura.

Understanding Blocked Input Tax Credit under GST is paramount for businesses to avoid unnecessary tax liabilities and ensure compliance. By staying updated with recent rulings and clarifications, businesses can make informed decisions regarding their tax planning strategies. It’s imperative to consult with tax experts to navigate the complexities of GST laws effectively.

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Income Tax Alert: 5 High-Value Transactions That May Come Under Scrutiny

editor — Sat, 20 Apr 2024 10:59:44 +0000

In recent times, a misconception has been prevalent among the people regarding the traceability of cashless transactions by the Income Tax Department (ITD). However, contrary to popular belief, the ITD utilises advanced tools to scrutinise transactions, leaving no room for evasion. Transactions exceeding specified thresholds, whether through card payments, UPI transactions, or cash deposits and withdrawals, are promptly reported to the tax offices by banks and financial institutions.

Leveraging sophisticated data analytics, the income tax department verifies this information with various sources, constructing a detailed financial profile to detect any disparities between declared income and expenses. The ITD’s proactive measures in scrutinising financial transactions underscore the government’s commitment to combating tax evasion and promoting transparency.

Triggering Scrutiny: Common Transactions Flagged by ITD

Large Cash Deposits: Any cash deposit exceeding Rs 10 lakh in a financial year across savings accounts draws the attention of the income tax department. Even if deposits are spread across multiple accounts, the cumulative amount beyond the threshold triggers scrutiny.

Fixed Deposits: Surpassing the Rs 10-lakh limit in fixed deposits within a financial year prompts inquiries regarding the source of funds, aligning with efforts to prevent tax evasion. If you deposits over Rs 10 lakh in FDs, the tax department may inquire about the source of the money, if needed.

Investments in Securities: Cash investments in shares, mutual funds, and bonds exceeding Rs 10 lakh may lead to tax notices, highlighting the importance of transparency in financial dealings.

Credit Card Bill Payments: Cash payments towards credit card bills exceeding Rs 1 lakh are subject to scrutiny, highlighting the need for clarity on the source of funds.

Property Transactions: Property acquisitions above Rs 30 lakhs mandate disclosure of the fund’s origin, with stricter thresholds in certain regions, aiming to curb tax evasion and money laundering.

Compliance Measures and Consequences

Ensuring compliance with tax regulations is paramount to avoid penalties and investigations. Proper documentation substantiating the source of funds, including bank statements and investment records, is crucial when addressing ITD inquiries.

Expert Recommendations

Tax experts states the importance of aligning tax returns with income and expenses to prevent unwarranted scrutiny. Transparent disclosure of financial activities ensures compliance with tax laws, fostering a culture of accountability and integrity in financial dealings.

Source: https://news.abplive.com/business/personal-finance/income-tax-alert-i-t-notice-5-high-value-transactions-that-may-come-under-i-t-scrutiny-1680700

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Supreme Court issues notices on challenge to anti-profiteering rules

editor — Sat, 20 Apr 2024 10:25:32 +0000

The Supreme Court has issued notices to the central government, the Central Board of Indirect Taxes and Customs (CBIC), the Goods and Services (GST) Council, and the National Anti-Profiteering Authority (NAA), which is now under the purview of the Competition Commission of India. These notices come in response to a petition filed by Swati Realty, challenging a Delhi High Court decision that upheld the constitutional validity of anti-profiteering provisions related to the GST system. Swati Realty argues that the High Court failed to recognize that these provisions are unconstitutional.

Earlier in February, the Supreme Court had also issued a notice to the Union government on a similar matter. The advocate representing the real estate player in the Supreme Court highlighted that the Delhi High Court agreed with the real estate companies’ assertion that the methodology employed by the NAA is flawed, especially in the real estate sector where there is no direct link between turnover and input tax credit (ITC) for a specific period.

The NAA was established in November 2017 to ensure that companies pass on the benefits of ITC and GST reductions to consumers by reducing prices. Since December 2022, the Competition Commission of India has been addressing complaints of profiteering by companies.

In January, the Delhi High Court upheld the constitutional validity of anti-profiteering provisions, stating that they aim to ensure a proportional reduction in prices when GST rates are lowered or due to ITC. The court ruled that these provisions are in the public interest and are consistent with the legislative authority granted under the Constitution.

Over 100 companies, including Hindustan Unilever, Patanjali, Jubilant Foodworks, and Phillips, had filed petitions against the anti-profiteering provisions in the High Court.

Source: https://www.business-standard.com/india-news/sc-issues-notice-to-centre-others-on-anti-profiteering-provisions-124041900719_1.html

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Understanding the Mechanisms of Tax Relief: Remission and Extinguishment

editor — Wed, 10 Apr 2024 08:33:34 +0000

Introduction:

The concepts of remission and extinguishment of tax demand involve the cancellation or forgiveness of a taxpayer’s outstanding tax liabilities. These legal mechanisms offer relief to taxpayers facing difficulties in settling their tax obligations fully. In this article, we will delve into the provisions of remission and extinguishment of tax demand, exploring their definitions, legal frameworks, and implications.

Government Initiatives:

Recent Example in India (as of March 2024):

In the 2024 Interim Budget, the Indian government announced a remission and extinguishment program for specific direct tax demands, waiving outstanding tax demands up to a certain limit depending on the tax year.

Key Points to Remember:

Remission of Tax Demand:

Legal Framework:

Grounds for Remission:

Procedure for Remission:

Extinguishment of Tax Demand:

Legal Basis:

Key Considerations:

It's not a refund; the forgiven amount is not returned to the taxpayer.
There may be limitations on the amount of tax that can be remitted or extinguished, as well as the reasons for doing so.
This concept typically applies to direct taxes like income tax and may not apply to indirect taxes like sales tax.

Conclusion:

Remission and extinguishment of tax demand are crucial legal mechanisms that provide relief to taxpayers facing financial difficulties. While remission offers relief through forgiveness of outstanding tax liabilities, extinguishment permanently terminates the taxpayer’s tax liability. Understanding the legal framework and procedures associated with these concepts is essential for taxpayers and professionals navigating the complexities of tax law. By comprehending the intricacies of remission and extinguishment, taxpayers can seek relief when appropriate, ensuring compliance and mitigating potential financial hardships. Additionally, tax authorities must administer these mechanisms judiciously, balancing relief for deserving taxpayers with revenue collection for the benefit of society as a whole.

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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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GSTN Issues Advisory on Automatic HSN-wise Summary Population in GSTR-1 Table 12 from e-Invoices

editor — Wed, 10 Apr 2024 05:22:53 +0000

The GSTN has released an important Advisory No. 630 dated April 09, 2024, regarding the automatic population of HSN-wise summaries from e-Invoices into Table 12 of GSTR-1.

GSTN is pleased to announce the introduction of a new feature that enables the automatic population of HSN-wise summaries from e-Invoices into Table 12 of GSTR-1 on the GST portal. This feature facilitates the direct drafting of HSN data into Table 12 based on e-Invoice data.

It is important to note that the HSN-wise summary data automatically populated into Table 12 is provided for your convenience. However, it is advised to reconcile this data with your records before final submission.

Any discrepancies or errors identified should be manually corrected or added to Table 12 before the final submission.

For further details, please refer to the Advisory accessible at: Link to Advisory

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Reinstatement of GST Numbers Contingent on Clearing Dues Highlights Tax Adherence and Procedural Flexibility

editor — Tue, 09 Apr 2024 12:22:39 +0000

Introduction:

This case law concerns a judgment from the High Court of Jammu & Kashmir and Ladakh, which offers a lifeline for GST compliance by restoring GST registration upon the settlement of dues.

Facts of the Case:

The petitioner’s GST registration was canceled following their failure to respond to a show cause notice issued by tax authorities on November 16, 2021. Subsequently, the petitioner’s appeal was dismissed due to their absence before the Appellate Authority.

Issue:

The main issue was whether the petitioner’s GST registration, canceled due to non-compliance with the show cause notice and absence during the appeal, could be reinstated upon their commitment to clear outstanding taxes, penalties, and interest as per GST laws.

Petitioner’s Argument:

The petitioner advocated for the restoration of their GST number, pledging to settle all dues, including taxes, penalties, and interest, in accordance with the GST Act, 2017, upon reinstatement.

Respondent’s Argument:

The Respondent, represented by the Advocate General, did not oppose the petitioner’s proposal to settle dues and reinstate the GST number.

Held:

Considering the unique circumstances and lack of objection from the Respondent, the High Court of Jammu & Kashmir and Ladakh disposed of the case by instructing the petitioner to approach the concerned Officer for GST number restoration within seven days. Upon restoration, the petitioner must settle taxes, penalties, and interest within another seven days, as mandated by the GST Act, 2017.

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