LANDMARK JUDGMENTS IN GST Raghavan Ramabadran Partner Copyright
LANDMARK JUDGMENTS IN GST Raghavan Ramabadran Partner Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
AGENDA § Transitional Credit § Constitutional powers in respect of pre-GST taxes § Input Tax Credit § Duty free shops § Seizure of Goods § Arrest § GST Appellate Authority 2 Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Transitional Credit Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Siddharth Enterprises vs The Nodal Officer 2019 -VIL-442 Guj Background and Issue. Ø The petitioners who were traders could not file Form GST TRAN-1 within the due date owing to technical glitches. Ø Writ petitions were filed seeking permission to file Form GST TRAN-1 and Form GST TRAN-2 Ø In the alternative, the petitioners prayed for a declaration that the due date contemplated under Rule 117 of the CGST Rules is procedural in nature, and thus, merely directory and not a mandatory provision. Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Siddharth Enterprises - Held Section 140 of CGST Act is a substantive right which cannot be curtailed by procedures of time limit The assessee has a right to carry forward credit Denial of credit will be violative of Article 14, 19(1)(g) and 300 A of the Indian Constitution. Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Siddharth Enterprises – Held � Current Status : - The judgment has been stayed Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Adfert Technologies Pvt Ltd vs Union of India 2019 -VIL-537 P&H � Background- The assessee had unutilized CENVAT credit of duty paid under CEA, 1944 and ITC under PVAT, 2005. � The credit could not be transitioned on account of non-filing or incorrect filing of TRAN-1 within the due date. � Issue- Whether the assessee can avail transition credit beyond time period prescribed in CGST Rules? � Held- Agreed with Siddharth Enterprises, denial of credit will be violative of petitioner’s vested right of credit. Petitioner allowed to file revised TRAN – 1 electronically or manually. Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Ingersoll-Rand Technologies vs Union of India 2019 -VIL-575 -ALH. - Held The assessee cannot revise or file TRAN-I beyond the stipulated period. � Every registered person can revise the form once and send it through the portal. � If the Commissioner wishes to extend he cannot go beyond the time-frame provided under Rule 117 of the UPGST Rules, 2017. � Only GST council will have the power to extend the period statutorily prescribed. � Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Jakap Metind vs Union of India [2019 -VIL-556 – GUJ] � Background and Issue The petitioner had wrongly uploaded data in TRAN-I. � Department had denied eligible credit of Rs. 83, 99, 136/� Petitioners tried communicating with Department - no response was received. � Further the portal did not provide for any facility for rectifying the errors and time limit had elapsed. Held � Department ought to have provided a system for rectification of errors - Department directed to re-open the online portal or allow manual filing of TRAN-I. � Article 265 of the Constitution of India -Department has no legal authority to retain the credit entitled to the petitioners. � Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Hans Raj Sons vs Union of India CWP 36393/2019 – P&H � Background- Petitioner had un-utilized ITC under PVAT Act. � Credit could not be transitioned due to difficulty in uploading details in TRAN-I. � Issue- Whether the assessee can carry forward credit beyond time period prescribed in CGST Rules. � Held: Issue is covered in Adfert Technologies. � The petitioner is allowed to modify TRAN-I. � Alternative benefit- credit can be claimed vide FORM GSTR-3 B which is to be filed for the month of January 2020. Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Issues � Can credit benefit be availed if an assessee has not filed TRAN – 1 at all ? � Once Credits validly availed are property, can refund be sought if not transitioned? (Article 265 read with Article 300 A) � Merits of the above cases before Supreme Court? Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Sutherland Global Limited vs Assistant Commissioner of CGST 2019 -VIL-536 -MAD Background and Issue � Assessee had transitioned CENVAT credit of EC, SHC and KKC into GST regime vide TRAN-1 Declaration form under Section 140(8). � The Department sought for reversal on the ground that only the credit of ‘eligible duties and taxes’ mentioned in Explanation 2 of Section 140 of CGST Act read with Rule 117 of CGST Rules could be transitioned and the provision does not cover Cesses. Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Sutherland Global Limited - Held Credit cannot be wiped out unless expressly provided. Eicher Motors vs Union of India- credit is a vested right. Credit eligible for transition both under Section 140(1) and Section 140(8) Delhi High Court decision in Cellular Operators case distinguished. Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Open issues on Cess Credit Pending SCNs demanding reversal of credit � Credit transitioned and reversed pursuant to Department audit � Credit transitioned and reversed suo motu � Credit not transitioned � Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Cases related to Constitutional Interpretation Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Sheen Golden Jewel Private Limited vs State Tax Officer 2019 -VIL-53 -Ker Background and Issue � W. P was filed in Kerala High Court challenging the State’s power to enact Section 174 of KGST Act, 2017 to save pre-GST laws based on the following grounds: - � � Entry 54 of List II has ceased to exist. State have been denuded of the power of pre-GST taxation vide Section 19 of Constitutional Amendment Act, 2016. Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Sheen Gold - Held � Article 246 A empowers both the Union and the State to have simultaneous and not concurrent powers to legislate � Concurrent powers yields Doctrine of repugnancy, but simultaneous power does not. � Article 246 -A empowers the State to enact Section 174(b) and (c) of KSGST Act, 2017. Currently the order has been stayed by the Division Bench of the Kerala High Court. Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Magma Corporation vs State of Maharashtra 2019 -VIL 372 -BOM Background � The petitioner’s premises was searched by the Assistant Commissioner of Sales Tax and his team. � The premises was sealed for number of days. � Following the above, summons was issued to the Petitioner’s M. D under Section 14 of the VAT Act. Issue � Whether Section 78 of the M. G. S. T (Amendments, Validation and Savings) Act is ultra vires to Section 19 of the Constitutional Amendment Act. � Whether State Authorities can issue summons under the provisions of VAT Act. Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Magma - Held Article 246 A overrides Article 246 and 254 to levy tax on goods and service. Section 78 has been enacted under Article 246 A Section 19 of Amendment Act cannot take away the power of the State legislature to amend, repeal or save any law relating to tax on sale or purchase of goods. Provisions of VAT will continue to apply to proceedings relating to any period before the appointed day of State GST. Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Input Tax Credit Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
AAP & Co. , Chartered Accountants vs Union of India [2019] 107 taxmann. com 125 Gujarat HC � Facts- W. P filed challenging the validity of press release which had clarified the last date for availing ITC relating to invoices issued during the period between July 2017 and March 2018. Issue-Whether FORM GSTR-3 B is in lieu FORM GSTR-3 Gujarat High Court : - Held in favour of the assessee � � FORM GSTR-3 B is a stop gap arrangement � Last date for availing ITC would be the last date of filing annual return or FORM GSTR-3 whichever is earlier. Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
AAP & Co. - Continued Current Status : - The judgment has been stayed by the Supreme Court Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Retrospective amendment to Rule 61 23 Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Return under Section 39 � Rule 61(5) - Where time limit for furnishing details in FORM GSTR-1 or in FORM GSTR-2 has been extended, the return specified in section 39(1) shall, … be furnished in FORM GSTR-3 B Provided that where a return in FORM GSTR-3 B is required to be furnished by a person, then such person shall not be required to furnish the return in FORM GSTR-3. Substituted vide Notification No. 49/2019–Central Tax dated 09 -10 -2019 w. r. e. f. 01 -07 -2017 Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Issues � Validity of the Hon’ble Gujarat High Court judgement in the case of AAP& CO. , Chartered Accountant Vs. Union of India [2019 (7) TMI 401] � Time limit for availing ITC in respect of invoices pertaining to FY 2017 -18 and FY 2018 -19? � Whether retrospective amendment can be challenged? Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Safari Retreats vs Chief Commr of CGST, 2019 -VIL-223 Orissa HC Facts Issue • The assessee had constructed a shopping mall on his own account for the purposes of letting it to various tenants at the mall premises. • Whether ITC can be availed on inputs, input services procured for construction of the shopping mall. • Held the assessee will be eligible for ITC. Decisio • Section 17(5)(d) shall cover only those inputs and input services consumed in the construction of an immovable property meant to be sold. n Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
DLF DEVELOPERS LIMITED v. UOI 2019 (12) TMI 413 - P&H Same issue as Safari Retreats. � Notice issued to respondents. � Interim order passed – “it is made clear that in case the petition is allowed, the petitioner would be entitled to claim the credit even if the time limit for the same has lapsed. ” � Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
GST on Duty free shops Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Sandeep Patil vs Union of India 2019 -VIL-495 -BOM Background DFS sells goods to customers who are either leaving or arriving India. � Goods sold to customers are either imported or procured from SEZ units. � Issues Whether GST is payable on sale of goods to passengers arriving India. � Whether zero rating benefit can be claimed on sale of goods to passengers leaving India. � Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Sandeep Patil - Held SALE OF GOODS TO PASSENGERS ARRIVING INDIA � Supply made in the course of import into India – GST not payable. Relied on Hotel Ashoka [2012 VIL 03 SC] � Benefit of Baggage Rules is available. SALE OF GOODS TO PASSENGERS LEAVING INDIA. � Supply of goods to passengers leaving India will constitute export. � Zero rating benefit can be claimed. The above ratio was followed by the Allahabad High Court in the case of Atin Krishna vs Union of India 2019 -VIL-231 -ALH. Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Seizure of goods Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
State of Uttar Pradesh & Ors vs Kay Pan Fragrance Pvt Ltd 2019 -VIL-39 -SC Facts Issue Held • Various High Courts had passed interim orders directing State Governments to release the seized goods to the Respondents without payment of applicable tax. • The said interim order was challenged. • Whether goods seized by the authorities can be ordered for release without payment of applicable rate of tax and interest. • HC orders are erroneous and contrary to Section 67 CGST Act r/w Rule 140 and 141 CGST Rules. Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Arrest Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Important Cases � Vimal Yashwantgiri Goswami [2019 -VIL-391 -GUJ] � Facts: - The Petitioner approached the Court to mandate that the Department should not exercise its power to arrest before adjudication. � � Held: - The powers of arrest under Section 69 of the Act, 2017 are to be exercised with lot of care and circumspection. Prosecution should normally be launched only after the adjudication is completed. There must be in the first place a determination in first place Till that point of time, the entire case proceeds on the basis that there must be an apprehended evasion of tax by the assessee. Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Important Cases � P. V. Ramana Reddy [2019 (25) G. S. T. L. 185 (Telangana)] � � � Arrest and prosecution for offences for which provisions have been made under CGST Act are not dependent on completion of assessment or determination of duty Appeal filed by Petitioner in Supreme Court– SLP Dismissed Ferrous Enterprises [2019 (6) TMI 102 - Telangana] � Followed PV Ramana and noticed that SLP has been dismissed Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Jayachandran Alloys (P) Ltd. [2019 -VIL-212 -Mad] Exceptions to the rule of assessment are only those cases where the assessee is a habitual offender, that/who has been visited consistently and often with penalties and fines for contraventions of statutory provisions. It is only in such cases that the authorities might be justified in proceedings to pre-empt the assessment and initiate criminal action against the assessee. Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Akhil Krishan Maggu [2019 -VIL-565 -P&H] � � � The opinion expressed by Telangana High Court cannot be made applicable to each and every case and cannot be treated an authority to conclude that officers have the power to arrest in every case during investigation. Persons against whom there is no concrete evidences to establish direct involvement in the evasion of huge amounts of tax, should not be arrested prior to determination of liability Arrest of Chartered Accountant or Advocates who had filed returns or otherwise assisted in business but are not beneficiary or part of fraud merely on the basis of statement without any corroborative evidence linking the professional with alleged offence should be avoided. Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Union of India vs Sapna Jain 2019 -VIL-24 SC Background and Issue Bombay High Court interim order – petitioner was granted pre-arrest bail and was directed cooperate with the Department � Department field an Appeal against the interim order was filed to S. C. � Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Supreme Court - Held SC declined to interfere in the Bombay High Court proceedings. In future, HCs are required to exercise caution in granting relief in light of P. V. Rama Reddy case (Telangana) in which SLP was dismissed by SC Observed that divergent views in various HCs. Thus matter has been referred to 3 judge bench Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
GSTAA Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
REVENUE BAR ASSOCIATION vs UNION OF INDIA W. P. NO. 24117 & 24118 OF 2018 � Background: A writ petition was filed in Madras High Court to declare the provisions relating to constitution and appointment of GSTAT members under the TNGST Act, 2017 as ultra vires to the Constitution. � Issues Whether exclusion of advocates from being appointed as judicial member in GSTAT violative of Art. 14 of the Indian Constitution. � Whether members of Indian legal services can be appointed as judicial member in GSTAT. � Whether GSTAT can consists of two technical members and one judicial member. � Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Madras High Court - Held � Lawyers as judicial members: Parliament should reconsider and amend section 109 & 110 of the CGST Act, 2017 to include lawyers to be eligible to be appointed as judicial members. � Member of Indian Legal Service: Cannot be appointed as judicial member. Reliance to be placed upon Union of India vs R. Gandhi 2010 (11) SCC 1. � Technical members shall not exceed judicial members: A bench should give a reasonable apprehension in the mind of the assessee that they are just, fair and reasonable to decide issues. Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Other issues which are pending challenge before High Courts � GST on Ocean Freight – Whether payable by importer in case of CIF imports? � Rule 89(5) – Whether refund on input services can be denied? � Payment of differential duty (CVD) or service tax under RCM after GST came into force, whether assesse entitled to credit or refund? � Demand of differential credit due to mismatch between 3 B v. 2 A � Whether credit of TDS eligible for transition? Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Questions Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
Thank You Copyright (c) 2019. Lakshmikumaran & Sridharan / Confidential.
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