SUPREME COURT OF INDIA
The Commercial Tax Officer & Anr
Mohan Brewaries And Distrilleries Limited
[A.M. Khanwilkar & Dinesh Maheshwari, JJ]
Civil Appeal No. 7164 of 2013
Date of Decision: June 29, 2020
Purchase tax – Applicability of section 7-A of Tamil Nadu VAT Act – Empty bottles bought under bought note used in the course of business of manufacturing and sale of Beer/IMFL – Applicability of purchase tax on empty bottles challenged – Held : Even if bottles are not consumed or used “in” or “for” manufacturing, said bottles are ‘used otherwise’ and the activity is thus covered under sub-clause (iv) of clause (a) of Section 7(1) – Clauses (1) to (5) and (6)(a) of section 7-A are cumulatively satisfied to attract purchase tax on the purchase turnover.
Circulars – High Court quashing demand extending the benefit of circulars clarifying that no purchase tax is leviable – Held the circulars were not in conformity with the statutory provisions of law – No benefit of circulars to be given.
Cash discount – Taxability of – Held cash discount offered by assessee not exigible to tax
The question came up before the Hon’ble supreme Court to determine Whether purchase tax u/s 7-A is leviable on the purchase turnover of empty bottles purchased by the assessee in the course of business of manufacture and sale of Beer and IMFL – Held – Applying the relevant tests concerning the expressions ‘consumes’, ‘uses’ and ‘in the manufacture’ to the present case, it is clear that the bottles are neither consumed at all nor been used ‘in the manufacture’ of Beer/IMFL. Hence, elements (i) and (ii) pertaining to clause (a) of subsection (1) of Section 7-A of the Act do not exist in this case. However, the bottles have been ‘used otherwise’ and thus the activity of assessee in relation to the bottles in question is clearly covered by element (iv) of clause (a) of subsection (1) of section 7-A of the Act. The elements (1) to (5) and (6)(a) for applicability of section 7-A are cumulatively satisfied to attract purchase tax on the purchase turnover.
The benefit of clarification dated 9/11/1989 and 27/12/2000 given to assessee by the Hon’ble High court is contested by the revenue and it is held by Supreme court that this benefit could not have been given since the said circulars were not in conformity with the statutory provision and its interpretation y the courts.
Regarding the taxability of cash discount offered by assessee, the Order of High court has been upheld thereby giving partial relief to the assessee in appeal before it.
RAJASTHAN HIGH COURT
Uma Shankar Aggarwal
Union of India
[Pankaj Bhandari, J]
S.B. Criminal Misc Bail Application No 3092/2020
Date of Decision; June 5, 2020
Bail – Fraudulent claim of Input tax Credit – Case registered for claim of ITC to the tune of ₹ 11.6 Crore without there being any transaction – Bail application rejected as claim of ITC without any transaction affects economy of country – Section 132 of CGST Act.
The petitioner has filed an application for bail u/s 439 of Cr.P.C. against the registration of case for alleged offence u/s 132 of CGST Act, 2017. Allegedly, the petitioner has claimed ITC to the tune of ₹ 11.6 Crores without there being any transaction. The petitioner has already been in custody for five months. The authority has contended that the vehicles in which the products have been stated to be sent to the petitioner are scooty, motorcycle etc which clearly shows that fake bill entries were manipulated to claim ITC.
The Hon’ble Court has rejected the bail application there being claim of ITC without any transaction which affects the economy of the country.
BOMBAY HIGH COURT
Eureka Fabricators Pvt Ltd
Union of India
[K.K. Tated & Milind N. Jadhav, JJ]
W.P. No. 3510 of 2019
Date of Decision: June 30, 2020
Central Excise Duty – Quantum of – SVLDRS 3 filed declaring tax dues by petitioner– Estimated amount enhanced by respondent– Writ filed- Held not appropriate to determine the quantum of liability towards central excise duty by court since petitioner’s contention is about being unheard – Petitioner to deposit the balance amount demanded following which the authorities would hear it on its estimated liability – writ disposed of.
The Sabka Vishwas Form No. SVLDRS-3 filed by petitioner with respect to the central excise duty payable was rejected and a writ is thus filed in this regard against the enhanced quantum specified by the authorities under the scheme.
A demand was raised on account of alleged clearing of goods without paying central excise duty which was deposited by the petitioner. An appeal was filed before Commissioner alongwith payments of ₹ 50 lacs, ₹ 5,17,877 and ₹ 18,00,000/- towards central excise duty to show its bonafides. The appeal was rejected confirming the payment of central excise duty as decided earlier.
In 2019, the petitioner filed online application in Form No SVLDRS 1 declaring its tax dues under the scheme after deduction of the amount already paid as ₹ 9,95,606/- The respondent quantified the estimated amount to be ₹ 55 lacs approx in Form SVLDRS-3 on 18/11/2019. The petitioner filed a writ in this regard.
The Hon’ble Courts have held that it isn’t appropriate for them to confirm the quantification of balance estimated at ₹ 55 lacs approx when the petitioner contends that the respondent has failed to consider its case in light of the interpretation and application of the provisions and has not heard the petitioner before confirming the balance final demand.
The petitioner shall deposit the sum as quantified by the respondent within one week following which the petitioner shall be heard on the estimation of the liability under SLVDRS 3 and its excise duty payable is determined. If the liability is less, the excess amount shall be refunded within a period of two weeks. The writ is disposed of.
GUJARAT HIGH COURT
Assistant Commissioner of State Tax
[Vikram Nath, CJ & J.B. Pardiwala, J.]
Special Civil Application No. 7613 of 2020
Date of Decision: June 22, 2020
Writ – Show Cause Notice – Validity of Rule 142(1)(a) of CGST Rules, 2017- show cause notice issued – Rule challenged on grounds of being beyond provisions of the Act – contended to be framed under excessive delegation of powers – Held interference at the show cause notice is beyond scope of judicial review in the instant case as interference of courts is limited to certain defined parameters which the said case does not fulfill – Validity of the Rule is upheld as it is nowhere repugnant to the provisions of the Act – Central Government is empowered to make rules under section 164 of the Act, 2017 – Rule 142(1)(a) is intra vires – writ dismissed.
A writ is filed before the Hon’ble High Court challenging the show cause notice issued to the petitioner and also praying to declare Rule 142(1)(a) of CGST Rules as being ultra vires. There is a challenge to the said rule on the ground that the same travels beyond the provisions of the Act and is a result of excessive delegation of powers. It is contended petitioner that the said notice is invalid as Sec. 122 of the Act does not contemplate issue of any show cause notice, Rule 142 travels beyond the provisions of the Act.
Considering the scope of judicial review it is held that ordinarily the courts should not interfere with the show cause notice. But the High Court can interfere under Article 226 of the Constitution against a show cause notice where the same is issued in exercise of the power which is absent; the facts do not lead to commission of any offence; the show cause notice is without jurisdiction; its suffers from incurable infirmity; against the settled judicial decision.
A rule under delegated legislation can be held as ultra vires if it is (i) beyond the scope of ruling making power of the delegate conferred under the Act or (ii) that it is in conflict with any enactment in the Act. Under Section 164 of the Act the Central Govt. has the power to make rules for the purposes of the Act.
Therefore, Rule 142(1)(a) of the Rules 2017 is no manner conflicting with any provision of the Act. Therefore, challenge to the validity of Rule 142(1)(a) fails.
With respect to scope of judicial review of the said notice also, challenge to the validity of the said rule fails.
The writ application is rejected.
HIGH COURT OF GUJARAT
State of Gujrat
[R.M. Chhaya, J]
Special civil Application no. 7307 of 2020
Date of decision: June 8, 2020
Opportunity of hearing – Impugned Order challenged being passed in absence of petitioner – Absence attributed to safety reasons on account of corona pandemic- Impugned order set aside – Direction given to hear afresh-
The petitioner has challenged the order dated 14/5/2020 passed u/s 130 of GST Act in Form MOV-11 on the ground that no opportunity of actual hearing was given to it and the order was passed in its absence. The petitioner remained absent due to pandemic corona virus covid 19 and preferred to stay safe.
Hence, the impugned order is quashed and a fresh order shall be passed on merits by the authorities after giving an opportunity of hearing to the petitioner.
HIGH COURT OF KERELA
Pazhayidom Food Ventures Pvt Ltd
Superintendent Commercial Taxes, Kerela
[Amit Rawal, J]
WP No. 5665 of 2020
Date of decision : June 8, 2020
Registration – Cancellation of – Notice for cancelling registration issued without proper format as required under Rule 22(1) of GST Rules, 2017 – Impugned notice and consequent orders of cancellation quashed as being without jurisdiction –
As the return was not filed, the Registration was cancelled after serving a show cause notice to the petitioner. The petitioner has approached the Hon’ble High court in this regard. The petitioner has contended that the notice in question lacks the date, month and year of appearance.
The Court has held that the impugned notice is not in order due to want of date, month and year as it ought to have been as per the actual format i.e. GST REG – 17 contained in Rule 22(1). On this account the Court has invoked its extraordinary jurisdiction as the order under challenge is without jurisdiction. The notice lacks compliance of audi alteram partem. Hence, the notice and consequent order of cancellation are quashed. The 2nd respondent is directed to comply with the observation derived from the Form GST REG 17.
PUNJAB AND HARYANA HIGH COURT
State of Punjab and Haryana
[Girish Agnihotri, J]
Date of Decision: June 1st, 2020
Bail – show cause notice served u/s 74 of Punjab GST Act, 2017 – Bail granted on account of expected long duration of trial and situation of Covid 19-
The petitioner has filed a petition praying for grant of regular bail u/s 132 of Punjab Goods and Services Act, 2017. The petitioner has contended that it has been falsely implicated in the case and that out of 29 witnesses; only 1 has been examined till date. The present situation of Covid 19 and long duration of trial being expected, detention of petitioner in jail is dangerous to his life.
Considering the long duration of trial expected and situation of Covid 19, the petitioner is granted regular bail subject to his furnishing of security and bail bonds.
KERELA HIGH COURT
Goods and Services Tax Network
[K. Vinod Chandran & T.R. Ravi, JJ]
WA No. 511 of 2020
Date of decision : June 4, 2020
TRAN 1 – Mistake by assessee in filing of returns – department ordered to facilitate uploading of – Appeal filed against the order as error occurred at hands of assessee not department – Held to be a transitional problem – Mistake occurred with no ulterior motive but due to inadvertence prompted by inexperience – Appeal rejected
In this case, an appeal is filed by the department against the order directing the authorities to facilitate filing of GST TRAN 1 forms electronically by making arrangements or accept manual filing of returns. It is contended that the assessee (respondent here) could not upload the prescribed form for reason that details were filled in the wrong column. Hence the main argument is that the error occurred at the hands of the assessee and not the department.
It is noticed that there are a rising number of teething problems in the initial stages of a new regime and the assessees too are not well versed in the ways and means provided in the new enactment and those prescribed by rules: both substantive and procedural aspects. The transition from old regime to the new one poses unprecedented problems in successful migration either due to failure of system or inexperience of assessee. The return is rejected due to the mistake in column which is not with an ulterior motive but for reason of inadvertence prompted by inexperience. The appeal is thus rejected and the impugned order is also upheld.
GUJRAT HIGH COURT
Om Sai Traders
The State Tax Officer
[CJ Vikramnath & JB Pardiwala, J]
R/Special Civil Application No.7395 of 2020
Date of Decision: June 15, 2020
Show cause notice u/s 130 of GST Act, 2017 – Quashing of – Refusal by court to interfere with the notice – Authority to adjudicate as per law – Likeliness of goods being damaged in monsoon, goods ordered to be released on furnishing of bank guarantee and payment of tax and penalty – writ disposed of –
The Petitioner engaged in the trading of Tobacco had purchased goods to be delivered at its premises from Kalol. The vehicle was only little away from destination when it broke down and the goods were shifted to another vehicle. The vehicle was intercepted before reaching and the goods were seized for discrepancy in E-Way bill. A writ is filed praying for quashing of the notice.
The court has held that it should not interfere with the impugned show cause notice. The authority should be permitted to adjudicate the same as per law. However considering that the onset of Monsoon may damage the goods, the goods are ordered to be released on furnishing of bank guarantee and the amount determined as tax and penalty. The writ is disposed of.
PUNJAB AND HARYANA HIGH COURT
Haryana Petro Oils
Union of India & Ors.
[Jaswant Singh & Sant Parkash, JJ]
CWP No.8361 of 2020
Date of Decision June 9, 2020
TRAN-1 – Vires of Rule 117(1A) of HGST Rules – Technical glitch in uploading TRAN 1 Form – Writ filed – Repeated Extensions observed to be given where technical glitch existed – Rule held to be intra vires as repeated extensions to claim credit vindicate the claim of petitioner that if he is denied the claim to file TRAN-1 would render it ultravires Article 300A of the Constitution of India – Petitioner permitted to upload GST Form till 30th June, 2020.
The petitioner failed to upload TRAN-1 by last date i.e. 31.12.2017 due to technical glitch on GST portal for claiming CENVAT Credit as per the erstwhile Act. A writ is filed challenging vires of rule 117(1A) of HGST Rule 2017 and seeking direction to respondent to permit it to electronically upload the said form.
It isn’t appropriate to declare the said Rule as invalid as the petitioner is entitled to claim CENVAT credit accrued under the Central Excise Act. The court observed that the respondents have repeatedly extended the date to file TRAN-1 where there was a technical glitch. Such repeated extensions vindicate claim of petitioner that denial of unutilized credit who are unable to furnish evidence of attempt to upload TRAN-1 would amount to violation of Article 14 and Article 300A of Constitution of India.
The petitioner is permitted to upload TRAN-1 on or before 30.6.2020 failing which it would be at liberty to avail ITC in GSTR-3B after satisfaction of the authorities
MADRAS HIGH COURT
Visteon Automotive Systems Pvt. Ltd.
Deputy Commissioner (CT)-IV (FAC)
[C. SARAVANAN, J]
W.P. No. 32655 of 2015
Date of Decision: January 13, 2020
Input Tax Credit – Tax charged @ 12.5% on capital goods by dealer instead of 4% – Petitioner ordered to reverse excess ITC @8.5% – Held Petitioner entitled to claim ITC on strength of invoice on tax paid by registered dealer (seller) – Even if tax was paid in excess by dealer to liquidate excess ITC, thereby passing it on to petitioner, claim of petitioner justified
The petitioner had purchased ‘capital goods’ on which VAT @12.5% was charged by the dealer. The petitioner availed the tax paid. The respondent contended that the ‘capital goods’ were liable to VAT only @4% and hence the petitioner was required to reverse credit availed equivalent to 8.5% VAT.
The Court held that Input tax credit can be availed on the strength of the invoice on the tax paid by the registered dealer who sells such capital goods.
Even if the registered dealer deliberately paid tax in excess and passed on the incident of such tax to the petitioner with a view to liquidate excess ITC accumulated, the petitioner cannot be denied of the ITC of tax paid and reflected in invoice. In such a case the department can recover the tax passed on in excess from the registered dealer who sold such goods to the petitioner.
There is no reason why credit availed by the petitioner should be disallowed, when the intention of legislature is to reduce the cascading effect of the tax. Therefore, the impugned order passed by the respondent is quashed.
MADHYA PRADESH HIGH COURT
Director General of GST Intelligence and (ORS)
[Prakash Shrivastava & Vandana Kasrekar, JJ.]
W.P. No. 9184 OF 2020
Date of Decision: July 3,.2020
Search and seizure – Presence of Advocate during Enquiry – premises sealed – apprehension about fairness in the process of search and seizure and manner of confession to be taken, writ filed for direction for presence of advocate during the process – No case for interference made out – No provision to support the request – writ dismissed.
A notice for sealing the factory premises of petitioner was issued. Being apprehensive about the manner in which search and seizure would be conducted and his statement be taken, the petitioner seeks a direction for carrying out the search in presence of an Advocate as to his mind the respondents want to carry out search by keeping their own pocket witnesses.
The respondents have assured the Court that the provisions of Sub-section 4 of Section 100 of Cr.PC and Sub-section 10 of Section 67 of CGST Act, 2017 will be duly complied with. Hence, no direction is required. Also the petitioner has failed to point out any statutory provisions or legal right to buttress its contention for presence of Advocate. No case for interference is made out. Petition is dismissed.
DELHI HIGH COURT
SKH Sheet Metals Components
Union of India & Ors.
[Manmohan & Sanjeev Narula, JJ]
Date of Decision: June 16, 2020
TRAN 1 – Human error/ Non technical error in filing – TRAN 1 filed well within time- Clerical error by petitioner-Partial credit displayed on GST Portal – Case rejected by ITGRC without giving reasons – writ filed – Held vested right not to be taken away on mere clerical mistake – Proviso of Rule 117 of CGST Act silent as to which class of cases it applies to – Considering time limit given in Rule 117 (1A) as mandatory is arbitrary – Rule 117 silent about any consequence in case of non compliance, therefore directory in nature – GST council extended relief to taxpayers against both technical and non technical difficulties – TRAN 1 stood filed within time and revision thereof would relate to the date of filing – Language of Section 140 of CGST Act, 2017 envisages the intention to save the accrued right – Writ allowed with a direction to respondents to accept revised return electronically or manually.
The petitioner asserts its entitlement to transitional credit under GST Laws by filing of form GST TRAN-1. However, only a small portion of the available credit was reflected on the GST Portal .The petitioner filed a revised declaration on. But the short amount was still shown as blocked Credit. The Hon’ble Bombay High Court directed it to file a representation before the Jurisdictional Commissioner in terms of 32nd GST Council Meeting. The said Council had resolved that ITGRC would consider cases relating to technical glitches as well as involving human errors. However, the case of the petitioner was rejected by ITGRC without giving any reasons for rejection. The petitioner thus filed a writ before this Hon’ble Court invoking Article 226 of the Constitution of India.
Held—It is clear that it was for the clerical mistake on part of the petitioner that there has been short transitioning of the credit which vested in his favour under the VAT regime. Since GST Law is a major tax reform, human errors in filing statutory forms cannot be ruled out.
The petitioner’s case has been rejected on the ground of being, ‘non technical’ human error and the benefit of Rule 117(1A) has not been given. It is observed that the Rule suffered from vagueness and concept of ‘Technical difficulty on common portal’ and its applicability has not been adequately defined anywhere. Therefore, the application of this rule cannot be predicted as to which class of cases is would apply. The GST Council in its 32nd meeting has mandated to include those cases where tax payers have suffered due to system failure whether technical or otherwise. Therefore, there is blurring thin line between technical and non-technical difficulty faced by tax payers due to which the courts finds the restrictive applicability of Rule 117(1A) as arbitrary.
For cases covered under Sec.140 (1) of the CGST Act, the ITC under the existing laws is a vested right. The language of Sec.140 of the Act manifests the intention behind the provision is to save the accrued and vested ITC under the existing law. This vested right is protected under Article 300A of the Constitution of India and cannot be taken.
The purpose of time lines prescribed is just to hasten the migration of taxes from erstwhile regime to the new GST laws. The time limit given by Section 117 of the CGST Act is purely procedural. It cannot be deciphered that there is any intend to deny extension of time to deserving cases where delay in filing was on account of human error.
Rule 117 of the CGST Rules doesn’t indicate any consequence for non compliance of the condition given. Since the consequences are not indicated the provision is seem as directory.
Lastly, TRAN-1 was filed within the stipulated period and revision thereof to correct an error will relate back to the said date of filing. There is no reason to hold that the revision of the said return is time barred and to be treated as fresh return.
The petitioner has made countless complaints and representations and the respondents have consistently denying it and opportunity to revise the return without disclosing the reasons for arriving at this decision. The petitioner is permitted to revise TRAN-1 Form on or before 30th June, 2020 and transition the entire ITC subject to verification. The respondents are directed to open the on line portal to enable the petitioner to file revised declaration TRAN-1 electronically or accept the same manually.
KARNATAKA HIGH COURT
Sri Hanumanthappa Pathrera Lakshmana
[K. Natarajan, J]
Criminal Petition No. 2419 of 2020
Date of Decision: June 11, 2020
Anticipatory bail – Preliminary investigation completed – Fake ITC taken by petitioner – Summon issued u/s 70 of 2017 Act for appearance – Anticipatory granted as no prejudice would be caused to respondent by doing so – Petition u/s 438 of CrPC is maintainable for an offence u/s 132 of the CGST Act – No statutory bar for invoking power u/s 438 of CrPC-
An anticipatory bail is sought by petitioner against an alleged offence punishable u/s 132 of CGST Act. Summons u/s 70 of CGST Act, 2017 are issued for him to appear before the officer. The respondent contends that an anticipatory bail is not maintainable and only a writ can be filed in this regard.
As per Section 69(1) of CGST Act, if the Commissioner feels there is a reason to believe that a person has committed an offence u/s 132 of the Act, he may order arrest of such person. In such an eventuality a petition u/s 438 of CrPC is maintainable for offence committed under the CGST Act and there is no statutory bar for invoking power u/s 438 of CrpC for the offence committed under CGST Act.
Also, on merits of the case, it is observed that the preliminary investigation is complete and they found that fake ITC taken by the petitioner is said to be taken by creating fake invoices. Hence the petitioner suspects that on appearing before officer, he might be taken to judicial custody. There is no bar in CGST Act for granting anticipatory bail and no prejudice would be cause to respondent by granting him anticipatory bail. Therefore, anticipatory bail is granted subject to furnishing of surety and executing a personal bond.
DELHI HIGH COURT
Zones Corporate Solutions Pvt. Ltd.
Commissioner of Central Goods & Services Tax Delhi East & Anr.
[Manmohan & Sanjeev Narula, JJ]
W.P.(C) No 3620/2020
Date of Decision: July 10, 2020
Refund – GST Appeal filed by petitioner was accepted before Commissioner – Refund not given – Delay attributed to impossibility in filing appeal by respondents against the said order due to non working of GST Tribunal – Held respondents to refund the amount as petitioner cannot be asked to wait endlessly.
There was an indication on part of the respondents for not disbursing the refund amount as the GST Appellate Tribunal weren’t working. The court has observed that the petitioner has succeeded in appeal before Commissioner vide order dated 23rd July, 2019. The petitioner cannot be asked to wait endlessly for the respondents to challenge the order dated 23rd July, 2019. Consequently, the present writ petition is disposed of with a direction to the respondents to refund the amount as directed by the within four weeks. During this period, it shall be open to the respondents to file appropriate proceedings in accordance with law. All rights and contentions of the parties including objection, if any, to the maintainability of such proceedings are left open.