Part-127-One Pager Snapshot to Latest Case- Vidya Coal Depot v. Additional Commissioner Grade (Appeal) [2023] 155 taxmann.com 526 (Allahabad)

The case although pertains to Cancellation of Registration but discusses four important principles relying upon past judicial principles on following issues-

-Can Court import provisions in the statutes to supply any assumed deficiency
-Can Officer be permitted to supplement fresh reasons by means of affidavit which were not part of the SCN
-Does Ex-Parte order need to be passed on the date of hearing itself or can be passed on a later date
-Concept of Vague SCN without any allegation or evidence

127.-Daily-Round-up-to-the-Latest-CasesDownload

Subject

Held

Facts

In the instant case, On 24-9-2022, a SCN was issued proposing to cancel the registration of the petitioner for the reason assigned therein with the direction of the TTZ authority
and written direction by JC (SIB) B Agra for cancellation of registration of all coal depot. Registration of the petitioner was cancelled vide impugned order dated 14-10-2022 with
effect from 18-8-2022. Feeling aggrieved by the aforesaid order, the petitioner preferred an appeal, but the same has also been rejected by order dated 1-12-2022.

Contention of
petitioner

The petitioner has not violated any provision of GST Act; more precisely, contained in Section 29 read with Rule 21 of UPGST Act and Rules framed therein. In absence of any
violation of provision in GST, registration cannot be cancelled. It was further submitted that on the date fixed, the authority ought not to have proceeded ex-parte, if petitioner did
not appear, and if the order was passed on the next date, the same cannot sustain in the eye of law

Observation by the
Court

Constitution of TTZ Authority-TTZ authorities have been constituted by Ministry of Environment and Forest, Government of India in exercise of power conferred by sub-clause
1 & 3 of Section 3 of Environment (Protection) Act, 1986, which is known as the Taj Trapaezium Zone Pollution (Prevention and Control) Authority. In exercise of power under
sections 5 & 24 of the said Act, the direction can be issued in the interest of protecting the environment

Observation by the
Court

The Court observed that petitioner was coal trader and from his business activities did not emanate any hazardous thing which is bad for the environment. The Court also further
observed that in the meeting dated 11-5-2022 of TTZ Authority, direction for tax authorities was for passing an appropriate order against 26 coal dealers only and not for all coal
dealers of Agra. It was a matter of common knowledge that under the GST Act, A/c book are to be maintained by every person. There was no finding at any stage to show that
A/c book were not maintained by the petitioner. In absence of such finding, no violation of UPGST Act can be made out. Once, there was no violation of Section 29 read with rule
21, any action taken for cancellation of registration cannot sustain. It was wrongly mentioned that no reply was submitted by petitioner, but the next line mentions the reply date

Observation by the
Court

Relevant Provisions of Environment (Protection) Act-On perusal of Section 5 of Environment (Protection) Act, for the protection of environment, a direction can be issued to
officer or any authority and they shall be bound by the said direction in respect of industry only. From bare perusal of the Section 24 of the Environment (Protection) Act, 1986, it
was evidently clear that if an offence is punishable under the act and the offender was also found guilty of said offence, offender shall be liable to punish under other act and not
under Environment (Protection), 1986 Act. In other word, if any other enactment was in operation, then environment act had overriding effect, but for punishment, it will be under
that Act. Any direction given by TTZ Authorities for cancellation of registration had to be under GST Act. GST authorities cannot blindly follow direction of TTZ Authorities

Court cannot import
provisions in the
statutes to supply any
assumed deficiency

UOI v. Ind- swift Laboratories Limited, (2011) 4 SCC 635- The Court in this case relied upon Commissioner of Sales Tax, U.P. v. Modi Sugar Mills Ltd. reported in (1961)
2 SCR 189 wherein it was stated that in interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions
or assumptions. The court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed: it cannot
imply anything which is not expressed; it cannot import provisions in the statutes so as to supply any assumed deficiency

State authority cannot
be permitted to
supplement fresh
reasons by means of
affidavit

Mohinder Singh Gill v. The Chief Election Commissioner, New Delhi AIR 1978 SC 851-Relying upon the said Judgement wherein it was held that State authority cannot be
permitted to supplement fresh reasons by means of affidavit, the court rejected that appendix annexed as Annexure-24 to the registration certificate as it was never been brought
on record before the first appellate authority or the same was never communicated to the petitioner, as he could not reply the same. Therefore, it appeared to the court that to
improve the case of revenue, such appendix was annexed for the first time in counter affidavit. Therefore, appendix along with the cancellation order cannot be any aid to
respondent authority

If Assessing Officer
proceeds ex-parte, he
either should fix another
date for hearing or pass
the order on that date
itsel

M/S Videocon D2h Ltd. v. State of U.P. and 3 Ors. (Writ Tax No. 243 of 2016), - The court also relied upon the said judgement wherein it was held that on the date when the
assessee did not appear, Assessing Authority had the option to proceed ex-parte or fix another date, which in the instant case did not happen. If the Assessing Officer
proceeded ex-parte, he could have fixed another date for ex-parte hearing or after recording the absence of the petitioner could have proceeded ex-parte and passed
an assessment order on that date itself, which in the instant case did not happen. Therefore, any assessment order made on the next date becomes erroneous, as no date was
fixed for making an assessment. Such assessment order passed without due notice is apparently in gross violation of the principles of natural justice. The principles engrafted
in Sangram Singh v. Election Tribunal, AIR 1955 SC 425 is squarely applicable. Thus, in the instant matter court was also of the opinion that, no order of cancellation was passed
on the date fixed for 29-4-2022, but thereafter on 14-10-2022 for which neither any notice nor any communication was made to the petitioner. Further, in the cancellation of
registration order.

vague SCN without any
allegation or evidence,
clearly is violative of
principles of
administrative justice.

Drs. Wood Products Lucknow v. State of U.P., 2022 NTN (Vol.80)-309- The Court also relied upon the decision wherein it was stated that the SCN only contains the ground
that ''tax payer found non-functioning/non-existing at the principal place of business' is at the first instance, clearly depicts the opaqueness of the allegations levelled against the
petitioner. The said SCN did not propose to rely upon any report or any inquiry conducted to form the opinion and on what basis was the allegation levelled that the tax payer was
found non-functioning; it did not indicate as to when the inspection was carried. A vague show-cause notice without any allegation or proposed evidence against the petitioner,
clearly is violative of principles of administrative justice.

Held

The Court thus held that, the impugned order by the assessing authority dated 14-10-2022 & appellate authority date 1-12-2022 could not sustain in the eye of law and thus
quashed the order and the writ petition was allowed

Part-126-One Pager Snapshot to Latest Cases on Section 29, 112 of CGST Act, 2017 and Rule 86A of CGST Rules, 2017

-Stay on Recovery subject to deposit of 20% of the amount as Tribunal not ye constituted
-Cancellation of Registration on an order passed without any reasoning
-Department not required to be told by the Court as to what would be the position in law as also the correct approach in law, the officers need to follow.
-There had to be a sense of responsibility and accountability, any mechanical approach in this regard, even to justify such action, could not be the stand of the department

126.-Daily-Round-up-to-the-Latest-CasesDownload

S.No

Subject

Case

Held

1

Stay on Recovery
subject to deposit
of 20% of the
amount as
Tribunal not ye
constituted

Gautam
Kumar v.
State of Bihar
[2023] 155
taxmann.com
586 (Patna)
(03-10-2023)

The Court observed that the petitioner was desirous of availing statutory remedy of appeal against the impugned order before the Appellate Tribunal under
Section 112. However, due to non-constitution of the Tribunal, the petitioner was deprived of his statutory remedy. Under the circumstances, petitioner was also
prevented from availing the benefit of stay of recovery of balance amount of tax upon deposit of the amount as contemplated under Section 112(8).
The Court thus disposed of instant writ petition to stay the demand subject to deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, if
not already deposited, in addition to the amount deposited earlier under Section 107(6). The petitioner cannot be deprived of the benefit, due to non- constitution
of Tribunal by respondents themselves. The recovery of balance amount, and any steps that may have been taken in this regard will thus be deemed to be stayed.
Case Referred-SAJ Food Products Pvt. Ltd. vs. The State of Bihar & Others in C.W.J.C. No. 15465 of 2022.

2

Credit Ledger
blocked by State
Tax Officer not
valid as CGST
Rules allow only
by Officer not
below Assistant
Commissioner

Guru Storage
Batteries v.
State of
Maharashtra
[2023] 155
taxmann.com
571 (Bombay)
(13-09-2023)

In the instant case, Electronic Credit Ledger was blocked under the provisions of Rule 86A of CGST Rules, 2017. The contention was that blocking of the
Electronic Credit Ledger (ECL) was done by State Tax Officer and it cannot be done by State Tax Officer being an Officer below the rank of Assistant Commissioner.
The court observed that a perusal of Rule 86A of the CGST Rule, 2017, indicate that such a blocking can be done by the Commissioner or an officer authorized
by him in this behalf, not below the rank of Assistant Commissioner. However, the authority exercising the power did not fall within that category and was an Officer
of the rank below that of the Assistant Commissioner. Though the Notification dated 24/1/2020 had been relied upon to contend that the power was delegated by
the Commissioner to the authority, the same was under the State GST Act, whereas Rule 86-A of the aforesaid Act would contemplate a delegation by way of
amendment to the Rule. Notification dated 24/01/2020, was held to be of no assistance and action on behalf of the revenue in blocking the ECL was quashed.
Distinguished in the matter of Ashapura Steel Metal v. Union of India [2023] 155 taxmann.com 440 (Bombay) (17-10- 2023)

3

-Cancellation of
Registration on an
order passed
without any
reasoning
-Department not
required to be told
by the Court as to
what would be the
position in law as
also the correct
approach in law,
the officers need
to follow.
-There had to be a
sense of
responsibility and
accountability,
any mechanical
approach in this
regard, even to
justify such action,
could not be the
stand of the
department

Makersburry
India (P.) Ltd.
v. State of
Maharashtra
[2023] 155
taxmann.com
542 (Bombay)
(03-10-2023)

In the instant case, the only reason set out in SCN to cancel registration, was: “In case, Registration has been obtained by means of fraud, willful misstatement
or suppression of facts.” SCN also suspended registration of the petitioner.
Contention of Petitioner against the SCN- It was contended that they had replied to the SCN inter alia contending that Directors of the Company had appeared
before the Officer and had given their respective statements as also submitted all the relevant documents. It was also contended that as initially the documents
submitted were not accepted by the department, they were forwarded by email. It was also pointed out that all documents were loaded on the portal while obtaining
the registration, details of which were also set out in the reply. Further, staff of the department had visited petitioner’s registered place of business, as also were
furnished documents. It was hence the petitioner’s case that the petitioner had cooperated with the department on all aspects.
Order by the Officer-The registration was cancelled stating that “You could not explain the reason for not being presented at the time of visit at P.O.B and A.P.O.B.
of MAKERSBURRY INDIA PRIVATE LIMITED, there were no any business activity found nor any stock found. Both the Directors or any Authorized Legal
Representative not represented the case or could furnish any statement satisfactorily. The reply submitted by the taxpayer dt. 25/08/2022 is not relevant to the
point raised in show-cause notice issued by this office. Hence, the same is not acceptable to this office. The effective date of cancellation of your registration is
10/04/2021.”
Observation by the Court on order by Appellate Authority- In the backdrop of voluminous material being placed for consideration before the appellate authority,
it appeared that the authority proceeded to pass impugned order without considering such materials, thereby rejecting the petitioner’s appeal. The appellate
authority merely referred to the documents which were submitted. There was no discussion whatsoever to come to such conclusion and more particularly after
discussing the materials as submitted by the petitioner. Thus, clearly there was patent non-application of mind on reaching such conclusion without recording any
reason whatsoever to reject the petitioner’s appeal and maintain cancellation of registration.
Observation by the Court on the impugned order- SCN itself was defective, as it did not set out any reasons/grounds which could be responded by the
petitioner. The reasons which were furnished, as noted, were undoubtedly vague. It was difficult to conceive as to how such contents of the notice could be
responded when no reasons to support such allegation were provided in the SCN. The order passed cancelling the petitioner’s registration was inherently defective,
as again no reasons were furnished dealing with the case as set out by the petitioner in the reply as filed to the SCN. There was no discussion whatsoever on any
of the documents. Things did not stop at this, as the appellate authority before whom all such materials were furnished again proceeded on total non-application
of mind of the materials before it. Several documents although were submitted for consideration of the appellate authority, there was not a semblance of
consideration of any of those documents, much less any discussion on the documents to consider the case of petitioner.
Held by the Court-The Court set aside the order and opined that that time and again the department was not required to be told by the Court as to what would be
the position in law as also the correct approach in law, the officers need to follow. The Courts are being repeatedly called upon to adjudicate similar issues. There
had to be a sense of responsibility and accountability, any mechanical approach in this regard, even to justify such action, could not be the stand of the department.
Cases Referred- C.P. Pandey & Co. vs. Commissioner of State Tax (2023) 10 Centax 11 (Bom.), Monit Trading Pvt. Ltd. vs.UOI (2023) 8 Centax 248 (Bom.),
Ramji Enterprises & Ors. vs. Commissioner of State Tax & Ors. WP No. 277 of 2023 dated 10.07.2023, Nirakar Ramchandra Pradhan vs. UOI & Ors, WP No.
2534 of 2023 dated 11.09.2023, Lakkad Brothers vs. State of Gujarat (2023) 4 Centax 364 (Guj.), Quality Traders vs. Yogesh Kumar (2023) 10 Centax 150 (Del.)
and DRS Wood Products vs. State of Uttar Pradesh 2022(64) G.S.T.L. 132 (All.)

Part-125-One Pager Snapshot to Latest Case-No Interest U/Sec 50 wherein wrong availment and utilisation of ITC in CGST but balance available in IGST Ledger

Circular No. 192/04/2023-GST Dated 17th July 2023-IGST wrongly utilised but no interest if aggregate balance in CGST, SGST and IGST is more than the amount wrongly utilised

Infac India (P.) Ltd. v. Deputy Commissioner [2023] 155 taxmann.com 436 (Madras) (14-09-2023)-CGST Wrongly utilised but no interest if aggregate balance in CGST and IGST is more than the amount wrongly utilised

125.-Daily-Round-up-to-the-Latest-CasesDownload

Circular No. 192/04/2023-GST Dated 17th July 2023 clarified charging of interest under section 50(3) of the CGST Act, 2017, in cases of wrong availment of IGST credit and reversal thereof. The situation
overed was in cases where though the available balance of IGST credit in the electronic credit ledger of the said registered person falls below the amount of such wrongly availed IGST credit, the total balance
of input tax credit in the electronic credit ledger of the registered person under the heads of IGST, CGST and SGST taken together remains more than such wrongly availed IGST credit, at all times, till the
time of reversal of the said wrongly availed IGST credit.
The Circular did not cover the situation wherein ITC was wrongly availed in CGST and was either partially or fully utilised but the aggregate balance in CGST and IGST was more than the ITC wrongly utilised
or a similar case for SGST. The judgement in the matter of Infac India (P.) Ltd. v. Deputy Commissioner [2023] 155 taxmann.com 436 (Madras) (14-09-2023) referred hereinunder covers this aspect and
provides relief in such cases. The Circular although principally laying down the same principle, for some reason or the other, covered only cases of IGST wrong utilisation and combined balance of CGST,
SGST and IGST but did not cover cases of wrong utilisation of CGST/SGST and combined balance of CGST/IGST and SGST/IGST respectively. The judgement now provides that-
-No Interest wherein there is Wrong availment and utilization of ITC in CGST but balance available in IGST
-Amount wrongly availed under CGST allowed to be paid from IGST post facto, therefore levy of Interest unnecessary as there was no loss to the revenue.

Held

Facts of the casea) Petitioner had excess balance in Personal Ledger Account of Rs 25,77,523/- in Central Excise Act, 1944 as on 30-6-2017 which he could have asked for refund under the provisions of the Central Excise
Act, 1944. However, by mistake, the petitioner transitioned the amount lying in its Personal Ledger Account on 23-8-2017 under CGST as if it was an ITC lying unutilized.
b) It was admitted that the petitioner should have claimed refund of the amount lying unutilized in its Personal Ledger Account under section 11B of the Central Excise Act, 1944, read with Section 142(3) of
the CGST Act, 2017 instead of transitioning the same as Transitional Credit under the Head CGST.
c) However, once the said amount was transitioned as CGST under the Credit Ledger, output liability in respective months was discharged out of the same although he had substantial balance in its IGST
Credit Ledger. The petitioner instead of utilizing the amount of Rs. 25,77,523/-, which was wrongly transitioned under section 140 of CGST Act, 2017 as transitional credit, could have utilized ITC lying
unutilized in its IGST Ledger between 1-11-2018 to 17-2-2019.
d) Thereafter, taxpayer repaid the amount wrongly transitioned as Transitional Credit out of IGST which was lying unutilized and applied for refund of amount of Rs 25,77,523/-. The said amount of Rs.
25,77,523/- was refunded, however, while refunding the amount, a sum of Rs. 9,25,366/- was deducted towards interest toward the balance utilised in CGST Ledger by the petitioner.
Contention by Petitioner-The petitioner contended that the issue was revenue neutral and there was no loss to the revenue. In terms of Section 49(5)(B) of the CGST Act, 2017, ITC availed on integrated
tax had to be first utilized towards integrated tax liability and remaining amount, if any, can be utilized towards Central Tax or State Tax liability and in terms of Section 49(5)(A) of the CGST Act, 2017, the
petitioner would have been entitled to utilize the proportionate IGST Credit towards tax liability and rightly claim refund under section 142(3) of the Central Goods and Services Tax Act, 2017.
Contention by Revenue-Revenue contended that that those tax payers who migrated from VAT and or Central Excise Act, 1944, or Finance Act, 1994 were entitled to carry forward the legacy credit. It was
submitted that the petitioner had an option to carry forward legacy credit in its Electronic credit ledger by filing TRAN-1. In the present case, the petitioner had carried forward the legacy credit along with PLA
balance of Rs. 25,77,523/- in contravention of provisions of CGST Act, 2017. It was therefore submitted that amount had been rightly credited back to the petitioner after adjusting Rs. 9,25,366/- towards
interest on amount of wrong transitioning & utilization of amount in Personal Ledger Account into ECL, which petitioner was not entitled to do.
Observation by the Court-The Court observed that petitioner had sufficient balance of ITC availed on Integrated Tax as borne by the petitioner on the supplies made to the petitioner as per Section 49(5)(B)
of CGST Act, 2017. The aforesaid amount had to be first utilized towards the Integrated Tax liability and thereafter towards Central Tax liability and the balance if any lying unutilized towards State Tax. Input
Tax Credit available during the period in dispute between 1-11-2018 to 17-2-2019 was ranging from Rs. 10,16,52,423/- to Rs. 5,19,08,095/- as detailed below:
Sl. No. Date Integrated Tax (in Rs. )
1. 20-11-2018 10,16,52,423.00
2. 19-1-2019 5,19,08,095.00
The Court observed that the petitioner could have paid the Central and State GST out of the Input Tax in IGST and amount of Rs. 25,77,523/- was wrongly transitioned under section 140 of the Central GST
Act, 2017 and was utilized towards Central and/or State GST. It has been allowed to be re-paid post facto out of Integrated Input Tax Credit which was lying unutilized. Thus, the tax liability stands squared
up. However, deduction of Rs. 9,25,366/- towards interest was unnecessary as there was really no loss to the revenue. It would have been different, if tax liability was adjusted earlier out of Input Tax credit
availed on State GST borne and was utilized for payment of Central GST by the petitioner under the provisions of the CGST Act, 2017.
Held by the Court-Therefore, the impugned order dated 31-1-2020 seeking to adjust a sum of Rs. 9,25,366/- towards interest was to that extent modified by directing to refund the aforesaid sum of Rs.
9,25,366/- to the petitioner

Part-124-One Pager Snapshot to Latest Cases on Section 5, 6, 29, 169 of CGST Act, 2017 and Rule 86A of CGST Rules, 2017

-Registration cannot be cancelled retrospectively when no such action was stated in the SCN
-State Tax Officer is competent to block ITC of CGST under Rule 86A of CGST Rules, 2017
-Rule 86A(2) provides a window to unblock the ITC on assessee making out a case against action of department to block ITC
-Cancellation of Registration not without giving Opportunity of being heard
-Notice sent on incorrect email not valid

124.-Daily-Round-up-to-the-Latest-CasesDownload

S.No

Subject

Case

Held

1

Registration
cannot be
cancelled
retrospectiv
ely when no
such action
was stated
in the SCN

Infinity Infomatic
(P.) Ltd. v.
Commissioner
[2023] 155
taxmann.com 464
(Delhi) (09-10-
2023)

In the instant case, the petitioner had no grievance regarding cancellation of his GST registration, the petitioner was aggrieved to the limited extent that the
cancellation was with retrospective effect. It was alleged in the SCN that petitioner had issued invoices without supply of goods which had resulted in wrongful
availment of ITC/refund of tax. However, no particulars as to the offending invoices, quantum of wrongful availment of ITC or any refund claimed on the said
account was mentioned in SCN.
The Court observed that impugned order cancelling the petitioner's GST registration did not mention any reason for cancellation of GST registration, except that
no reply to the SCN had been submitted. The court found contention in the submission that SCN was bereft of any particulars, and that the impugned order is
unreasoned. Thus, SCN as well as the impugned order was set aside to the extent it cancelled petitioner's GST registration retrospectively and since petitioner
had closed the business with effect from March, 2021, therefore, it was directed that the petitioner registration shall take effect from April, 2021. This was also
because the SCN did not mention that the petitioner's GST registration would be cancelled with retrospective effect. Thus, the petitioner had no opportunity to
object to the same

2

State Tax
Officer is
competent
to block ITC
of CGST
under Rule
86A of
CGST
Rules, 2017
Rule 86A(2)
provides a
window to
unblock the
ITC on
assessee
making out
a case
against
action of
department
to block ITC

Ashapura Steel
Metal v. Union of
India [2023] 155
taxmann.com 440
(Bombay) (17-10-
2023)

Petitioner contended that “State Tax Officer” who was an officer under the State machinery and appointed under MGST Act would not have jurisdiction to block
the credit under the CGST Act, as he would have jurisdiction only under the MGST Act.
The Court observed that provisions of Section 6 of the CGST / MGST Acts confers powers/authority on the officers of the Central Tax or of the State Tax or Union
Territory as Officer under the said enactments being Officers authorized to exercise appropriate powers. The legislature was clear in its intention, when provisions
of sub-section (1) of Section 6 of the CGST Act itself mandates that the officers appointed under SGST Act or UTGST Act are authorized to be proper officers for
the purpose of CGST Act. The latter part of sub-section (1) which provide that subject to such conditions as the Government shall, on the recommendations of the
Council, by notification specify, would not defeat the earlier part of the provision, which categorically authorizes the officers appointed under the SGST Act to be
the proper officers for the purposes of the CGST Act. The Court observed that it would bring about an incongruity if the State Tax Officer was not recognized to
exercise powers under Rule 86-A of the CGST Rules when he was permitted to do so under Rule 86 A of the MGST Rules. For the above reasons, court did not
accept the contention that State tax officer did not have the jurisdiction to pass impugned order invoking Rule 86-A of CGST Rules. The Court distinguished
Judgement in Writ Petition No. 5645 of 2022 (Guru Storage Batteries vs. State of Maharashtra) in which the Court held that Rule 86-A of CGST Rules would
not permit delegation of power to an officer who was below the rank of Assistant Commissioner as mandate of Section 5 of the MGST Act as also Section 6 of the
CGST Act were not brought to the notice of Court.
Also for the second issue State tax officer in the order, had recorded that if the petitioner had any grievance against such order, a reply may be submitted
electronically on common portal and electronically, through e-mail at any time and accordingly, on such reply, petitioner would be heard and after recording reasons
if the claim of the petition was found valid and appropriate, an action to unblock credit can be taken. The petitioner addressed a detailed e-mail to the State Tax
Officer raising objections regarding the blocking of the petitioner’s ITC. On a perusal of order passed by the officer, it appeared that none of the contentions of the
petitioner on merits were addressed by the State Tax Officer and on the contrary it was observed that petitioner had a remedy of appeal under section 107(1) of
the CGST/MGST Act. Thus, order as passed by the State Tax Officer was held neither in consonance with the observations as made by the very officer in the
impugned order providing for an opportunity to the petitioner to make out a case against such blocking of ITC, as also the same would be contrary to the provisions
of Rule 86-A (2) of the CGST / MGST Rules, which itself provided that the Commissioner or the Officer authorized by him under sub-rule (1) may, upon being
satisfied that conditions for disallowing debit of electronic credit ledger, no longer exist, allow such debit

3

Provisional
Registration
cannot be
cancelled
without
giving
Opportunity
of hearing

Bharat Pump
House
v. State of West
Bengal [2023] 155
taxmann.com 438
(Calcutta) (01-09-
2023)

SCN for cancellation of registration was issued for mismatch of address in trade license and that of address given in partnership deed and registration stood
cancelled by order dated 30th January, 2018.
The Court observed that since appellant did not file its response, thus registration stood cancelled by order and the authority could not have been faulted for
proceeding ex parte. Nevertheless, court also stated that while doing so, the authority ought to have informed the appellant and fixed the date for personal hearing
after which he could have acted. This being a mandate under Rule 24(3) of the said Rules, the same could not be bypassed. Therefore, matter was relegated back
to the authority to enable the appellant to file its response to the allegation in the SCN and the authority was asked to afford an opportunity of personal hearing.
Further it was also states that if appellant was able to reconcile mismatch pointed out in the SCN, if there were no other legal impediment, the order of cancellation
of the provisional registration could be set aside and registration can be restored to enable appellant to file its returns, pay taxes along with other statutory dues.

4

Notice sent
on incorrect
email not
valid

R. Soundararajan
& Co. v.Deputy Tax
Officer [2023] 155
taxmann.com 385
(Madras) (07-08-
2023)

The department contended that petitioner had not responded the notice which was sent to the e-Mail I.D of petitioner. On verifying the said fact it was seen that
the respondents had sent the notice to the some other e-Mail I.D., which was not the e-Mail I.D. of the petitioner. After receipt of the impugned order only, the
petitioner came to know that the notice was sent to e-Mail I.D. and the said e-Mail I.D. was not belonging to the petitioner. Therefore, the Court was of the
considered opinion that there it was clear violation of principles of natural justice. Accordingly, the impugned order, dated 27-4-2022, was quashed. The petitioner
was directed to submit his objections and the respondent was directed to consider the objections of the petitioner.

Part-123-One Pager Snapshot to Latest Cases on Section 16, 50, 73, 129, 140 of CGST Act, 2017


-Can Interest and penalty be levied on Transitional Credit claimed in GSTR-3B as Tran-1 could not be filed due to technical glitches
-ITC cannot be denied on difference between GSTR-3B and GSTR-2A
-No penalty in absence of mens rea, if time limit between expiry of Eway Bill & interception is 9 Hours
-One Liner Order without considering the submissions of Taxpayer is not a speaking Order

123.-Daily-Round-up-to-the-Latest-CasesDownload

S.No

Case Subject

Case

Held

1

If Transitional
credit could not
be transitioned
due to Technical
Glitches and
was claimed in
GSTR-3B, then
no Interest and
penalty would
be payable on
reversal of such
credit claimed in
GSTR-3B and
reavailment
through TRAN-1

PMA Controls
India Ltd. v. Joint
Commissioner of
Central Tax
(Appeals-II) [2023]
155 taxmann.com
502 (Madras) (20-
09-2023)

Petitioner was a Central Excise Assessee, who had a sum of Rs. 12,47,610/- as un-utilized ITC as on 30-6-2017. The credit was sought to be transitioned by
the petitioner and an attempt was made by the petitioner on 27-12-2017. However, petitioner was unable to transition the credit on account of technical glitches.
Meanwhile, the petitioner had wrongly availed ITC in GSTR-3B on 19-10-2018 for the aforesaid amount of Rs. 12,47,610/- in its Electronic Credit Ledger and
had utilized the same for discharging tax liability. Meanwhile, the petitioner was issued with a SCN dated 19-7-2021 to show cause as to why the aforesaid
amount of Rs. 12,47,610/-, which was wrongly claimed as Input Tax Credit in Form GSTR-3B on 19-10-2018 should not be denied. Thereafter, petitioner made
a further attempt on 17-8-2021 to transition the aforesaid Credit, which was allowed by the system. After the credit to an extent of Rs. 12.43 lakhs was
transitioned of Rs. 12,47,610/- on 17-8-2021, petitioner immediately debited the aforesaid amount of Rs. 12,47,610/- which was claimed and utilized earlier.
Petitioner challenged the levy interest as it was stated that no prejudice was caused to the revenue by availing of the ITC on 19-10-2018 as the aforesaid
amount could not be transitioned due to technical glitches as petitioner tried to file Form Tran-1 on 27-12-2017 but was unsuccessful due to technical glitches.
The Court observed that the issue was revenue neutral. Petitioner was entitled to transition the ITC lying unutilized in his CENVAT account as on 30-6-2017 of
GST under the new regime. However, on account of technical glitches, credit could not be transitioned. It was however later allowed to be transitioned after
the petitioner's Tran-1 application in Form Tran-1 was accepted by the respondents on 17-8-2021. The petitioner reversed proportionate amount of ITC, which
was wrongly availed and utilized. Thus, as the issue was revenue neutral, the imposition of penalty/interest either under section 73(9) or Section 50(3) of the
CGST Act, 2017, cannot be countenanced. Also, if petitioner had been allowed to successfully transition the credit, then and there, the amount would have
available for being utilization. By availing the amount as regular credit and utilizing the same, the petitioner has not caused any loss to the revenue.
Case Referred- W.P.No.22241 of 2019 vide order dated 20-6-2022 (Mad HC)

2

ITC cannot be
denied merely
on account of
mismatch in ITC
claimed in
GSTR-3B and
not reflecting in
GSTR-2A

Praveen
Bhaskaran v.
Union of India
[2023] 155
taxmann.com 466
(Kerala) (20-09-
2023

Petitioner claimed ITC to the extent of Rs. 1,04,342/- and the same was denied on the ground that ITC to such an extent claimed was not affected in Form
GSTR-2A and the supply dealer has not mentioned the supplies involved in the petitioner-dealer in form GSTR -1.
The Court observed that Section 155 of the GST Act, 2017, takes care of such a situation wherein the fact that the assessee/dealer has taken inward supply,
and the dealer has prepaid the admissible GST to the supplier-dealer and the supplier-dealer has not deposited the said tax amount to the Government. In
such a situation the burden is on the person who claims the ITC to prove his claim. The paid person in such a situation is required to furnish documentary
evidence to prove that such tax has been paid by him. The assessing authority denied the claim of the petitioner on the ground that the ITC claimed by the
petitioner was not reflected in GSTR-2A and he did not submit any proof of the payment of the GST to the Government. The court stated that the assessing
officer was required to give an opportunity to the assessee in respect of his claim for ITC, if there was difference between GSTR- 2A and GSTR-3B. If on
examination of the evidence, the assessing officer was satisfied that the claim was bonafide and genuine, the assessee should be given the ITC. Merely on
the ground that in Form GSTR-2A the tax to an extent of ITC being claimed by the petitioner was not reflected should not be sufficient to deny the claim. The
assessing authority was required to independently examine the evidence irrespective of the fact that tax was not reflected in Form GSTR-2A for which the
assessee claimed ITC.
Case Referred-Diya Agencies v. The State Tax Officer in its judgment dated 12-9-2023, Union of India (UOI) v. Bharti Airtel Ltd and Others [2022(4) SCC
328], Suncraft Energy Private Limited and Another v. The Assistant Commissioner, State Tax, Ballygunge Charge and others [MAT 1218 of 2023] (Cal), The
State of Karnataka v. M/s. Ecom Gill Coffee Trading Private Limited [2023 (3) TMI 533 SC

3

No penalty in
absence of
mens rea when
time gap
between expiry
of Eway Bill &
interception is 9
Hours

shaan Plastics
(P.) Ltd. v. Deputy
Commissioner of
State Tax [2023]
155 taxmann.com
463 (Calcutta) (20-
09-2023)

The adjudicating authority imposed penalty for transporting the vehicle in question after expiry of e-way bill which was expired on 27.12.2022 at 11.59 p.m.
and the vehicle in question was intercepted at 8.37 a.m. on 28.12.2022 that there was a time gap between the expiry of the bill and interception of the vehicle
in question is about 9 hrs., which was less than a day and writ petitioner submitted that there was no intention of any evasion of tax on the part of the petitioner.
The Court observed that the respondents could not make out any case against the petitioner that there was any deliberate or willful intention of the petitioner
to avoid and evade the tax. In view of the facts and circumstances of the case which appeared from record and considering the two earlier orders of the Court,
impugned order was set aside and a consequence, petitioner was held to be entitled to get refund of penalty deposited in question.
Case Referred- Ashok Kumar Sureka v. Assistant Commissioner, State Tax, Durgapur Range WPA No. 11085 of 2021, Order dated 12th May, 2022 in MAT
No. 470 of 2022.

4

One Liner Order
without
considering the
submissions of
Taxpayer is not
a speaking
Order

C.Siva Anand v.
Superintendent of
GST and Central
Excise [2023] 155
taxmann.com 439
(Madras) (29-09-
2023)

The petitioner stated that he had paid entire tax through ITC and if this fact was considered there would not be any tax liability. But authority had imposed
tax, penalty, and interest. Moreover, petitioner had already paid the entire tax even prior to the initiation of assessment proceedings. In the impugned order,
respondent did not discuss any ground raised by the petitioner and it was one-line order. The relevant portion of the impugned order was as follows:
“But they failed to pay the interest till date. Their reply dated 26.04.2023 is also not tenable. Hence, I hold that they are liable to pay an interest amount of Rs.
6,04,427/-.”
The Court quashed the impugned order as it was a non-speaking order and the matter was remitted back to consider the petitioner's case in light of M/s.
Refex Industries Limited, Vs. The Assistant Commissioner of CGST & Central Excise, reported in 2020(2) TMI 794 – Madras

Part-122-One Pager Snapshot to Latest Cases

Actual Physical Movement and Genuineness of Transactions to be proved for entitlement to claim ITC

-Mere common location of petitioner and parent company itself was not sufficient to hold that the petitioner has committed fraud in obtaining registration and involved in bill trading, without the scrutiny of the relevant records

-Cancellation of Registration cannot be made as place of business shown by the petitioner was held to be not suited for the present business activities

122.-Daily-Round-up-to-the-Latest-CasesDownload

S.No

Case Subject

Case

Held

1

Actual Physical
Movement and
Genuineness of
Transactions to
be proved for
entitlement to
claim ITC

Malik Traders
v. State of U.P.
[2023] 155
taxmann.com
517
(Allahabad)
(18-10-2023)

Show Cause Notice was issued to the Petitioner U/Sec 74 for wrong availment of Credit.
The Court observed that the petitioner has only brought on record the tax invoices, e-way bills, GR and payment through banking channel, but no such
details such as payment of freight charges, acknowledgement of taking delivery of goods, toll receipts and payment thereof has been provided. Thus, in
absence of these documents, actual physical movement of goods and genuineness of transportation as well as transaction could not be established and in such
circumstances, further no proof of filing of GSTR 2A has also been brought on record, thus proceedings were held to be rightly initiated.
Cases Referred- State of Karnataka Vs. M/s Ecom Gill Coffee Trading Private Limited (SC), M/s Aastha Enterprises Vs. State of Bihar (Patna HC), Commissioner
Commercial Tax Vs. M/s Ramway Foods Ltd (Sales / Trade Tax Revision No. 26 of 2023) (All HC) (23-08-2023)

2

Mere common
location of
petitioner and
parent company
itself was not
sufficient to hold
that the
petitioner has
committed fraud
in obtaining
registration and
involved in bill
trading, without
the scrutiny of
the relevant
records
-Cancellation of
Registration
cannot be made
as place of
business shown
by the petitioner
was held to be
not suited for the
present
business
activities

Sakthi Steel
Industries
India (P.) Ltd.
v. Appellate
Additional
Commissioner
[2023] 155
taxmann.com
504 (Andhra
Pradesh) (29-
09-2023)

Court observed that SCN, which was precursor for cancellation of registration, only revealed that registration of petitioner was liable to be cancelled for the
reason "In case, Registration has been obtained by means of fraud, wilful misstatement or suppression of facts".
Observation about SCN-The Court stated that SCN was as vague and dubious as it could be without mentioning requisite particulars constituting the alleged
fraud, wilful misstatement and suppression of facts. The elements of fraud, wilful misstatement and suppression of facts may be of varied types. Hence, the nature
of fraud, wilful misstatement and suppression of facts have to be sufficiently described so as to give an opportunity to the taxpayer as otherwise, it will be difficult
for him to submit an apt and appropriate reply/objections. The public authorities must know that the issuance of SCN has an avowed purpose of stating the
formal grounds of accusation so as to invite proper reply from the person who is accused of charges. This process was based on equitable principle of natural
justice that no man should be condemned of unheard. Mere issuance of SCN devoid of requisite particulars does not amount to proper compliance of the
requirement. In that context, it was mentioned that SCN had flagrantly violated principles of natural justice. Therefore, very foundation for invocation of cancelation
was feeble as it had no legal sanctity.
Reply by the Petitioner-The Court observed that petitioner although submitted reply with requisite particulars to the best of its ability. It clearly stated that to
maintain proper supply chain and to have better control and operational efficiency on cost as well as convenience of operations, it applied for GST registration in
Andhta Pradesh by obtaining lease of part of the property owned by its parent company in Kuppam, Andhra Pradesh. The petitioner mentioned that all the TMT
purchases of the petitioner are from its parent company and sales were spread over to different States. Further, most of the scrap iron which was procured by the
petitioner from different countries was sold to its parent company. Most importantly, the petitioner avouched that the complete details of the purchases and sales
could be verified at any point of time if the need arises. The petitioner further avouched that never ever, the petitioner committed any wilful fraud, bill trading or
movement of goods without proper invoices. On such submission, petitioner sought for revocation of suspension of its GST registration.
Order for Cancellation-Registration of the petitioner was cancelled as it was held that it was obtained by playing fraud and petitioner was involved in bill trading
without actual movement of goods and genuine invoices on following reasons
a) Parent and group company have obtained registration in respect of same premises,
b) Leasehold premises of the petitioner was not conducive for the type of business it has undertaken i.e., sale of TMT bars and billets, since it was the case of
the petitioner that all the goods supplied to its parent company were delivered as and when the goods were received from suppliers and the finished goods
which are purchased from parent company are immediately shipped to the buyers and such is the business activity of the petitioner, there was no need to take
huge land to an extent of Ac.2.71 cents when the same is not used for storing the goods,
c) Lease Deed dated 26-11-2022 was an unregistered document.
Observation about the Order- The main reason for cancellation of registration was that the petitioner and its parent company emanate from same premises.
The Officer without verifying the records to know whether the petitioner was involved in issuing and obtaining the fake invoices and doing fake business to avoid
tax, concluded that place of business shown by the petitioner was not suited for the present business activities and hence, recommended for cancelation. The
Court stated that they were unable to comprehend, even if the place of business of the petitioner for argument sake was not conducive for its business, how the
said fact can be treated as sufficient to conclude that petitioner obtained registration by committing fraud or wilful misstatement or suppression of facts. It should
not be forgotten that whether petitioner was involved in bill trading without proper receipt and supply of goods can be determined only after thorough examination
of relevant records such as account books, e waybills, transportation particulars, toll plaza particulars etc. However, in spite of petitioner's submission that complete
details of purchases and sales could be verified at any point of time, the authority without resorting to such logical and legal exercise, simply carried away by the
recommendations of the Inspecting Authority who on a conjuncture suspected that taxpayer may be engaged in bill trading without proper receipt and supply of
goods, for which there was no proper basis. Therefore, impugned registration cancellation order was held not to be sustainable.
Observation about appellate order-The appellate authority was also held to be committed the same mistake in confirming the order of without considering a
logical question as to how the mere commonality of the location of the petitioner and parent company itself is sufficient to hold that the petitioner has committed
fraud in obtaining registration and involved in bill trading, without the scrutiny of the relevant records.
Held- Original order and appellate order was set aside. Writ Petition was allowed with a direction to restore the GST registration of the petitioner.

Part-121-One Pager Snapshot to Cases- Principle of Estoppel cannot override the principle of law

Can objection be raised about an infirmity in the procedure followed which was inconsistent with the Principle of Law or Principle of Estoppel would override the Principle of Law and where Section 160 of CGST Act, 2017 plays its part

121.-Daily-Round-up-to-the-Latest-CasesDownload

S.No

Subject

Case

Held

1

Introduction

Cherukuri Mani v. Chief
Secretary, Government of
Andhra Pradesh & Ors
(2015) 13 SCC 722

“14. Where the law prescribes a thing to be done in a particular manner following a particular procedure, it shall be done in the same manner
following the provisions of law, without deviating from the prescribed procedure.............”

2

Where Law
prescribes of doing a
particular thing in a
particular manner, it
shall be done in that
way

Union Of India & Ors.
Versus Mahendra Singh
(SC) dated 25th July 2022

Where a power is given to do a certain thing in a certain way the thing must be done in that way or not at all. Other methods of performance are
necessarily forbidden.

Where Law
prescribes of doing a
particular thing in a
particular manner, it
shall be done in that
way

Cherukuri Mani v. Chief
Secretary, Government
of Andhra Pradesh & Ors

“14. Where the law prescribes a thing to be done in a particular manner following a particular procedure, it shall be done in the same manner
following the provisions of law, without deviating from the prescribed procedure.............”

Where Law
prescribes of doing a
particular thing in a
particular manner, it
shall be done in that
way

Chandra Kishore Jha v.
Mahavir Prasad & Ors
(21st September 1999)

“17....................It is a well-settled salutary principle that if a statute provides for a thing to be done in a particular manner, then it has to
be done in that manner and in no other manner. (See with advantage: Nazir Ahmad v. King Emperor [(1935-36) 63 IA 372 : AIR 1936 PC
253 (II)] , Rao Shiv Bahadur Singh v. State of V.P. [AIR 1954 SC 322 : 1954 SCR 1098] , State of U.P. v. Singhara Singh [AIR 1964 SC 358
: (1964) 1 SCWR 57] .) An election petition under the rules could only have been presented in the open court up to 16-5- 1995 till 4.15 p.m.
(working hours of the Court) in the manner prescribed by Rule 6 (supra) either to the Judge or the Bench as the case may be to save the period
of limitation. That, however, was not done................”

3

Principle of
estoppel cannot
override the law.

Krishna Rai (Dead)
Through LRS & Ors.
versus Banaras Hindu
University Through
Registrar & Ors. (SC) (16-
06-2022)

The Court held that the Division Bench fell in error in applying the principle of estoppel that the appellants having appeared in the interview and
being unsuccessful proceeded to challenge the same and on that ground alone, allowed the appeals, set-aside the judgment of the learned Single
Judge. The Division Bench having approved the reasoning of the learned Single Judge, ought not to have interfered in the judgment of the learned
Single Judge on a technical plea. The Division Bench ought to have considered that the appellants were Class-IV employees working from
1977 onwards and expecting from them to have raised serious objection or protest at the stage of interview and understanding the
principles of changing the Rules of the game, was too far-fetched, unreasonable and unwarranted. It was further held that the case laws
relied upon by the Division Bench would have no application in the facts of the present case as none of the judgments relied upon by the
Division Bench laid down that principle of estoppel would be above law. It is settled principle that principle of estoppel cannot override
the law. The manual duly approved by the Executive Council will prevail over any such principle of estoppel or acquiescence

Principle of
estoppel cannot
override the law.

Tata Chemicals Ltd. Vs.
Commissioner of
Customs (preventive),
Jamnagar 2015 (11) SCC
628

“In law equally the Tribunal ought to have realized that there can be no estoppel against law. If the law requires that something be done in a
particular manner, it must be done in that manner, and if not done in that manner has no existence in the eye of law at all. The Customs
Authorities are not absolved from following the law depending upon the acts of a particular assessee. Something that is illegal cannot convert itself
into something legal by the act of a third person.”

4

No consent by the
assessee or no
waiver on his part can
confer jurisdiction
upon the Income-tax
Officer

Commissioner Of IncomeTax vs Ramsukh Motilal
AIR 1955 Bom 227

If a notice under section 34 of the Income-tax Act, 1922, gave only six days to the assessee to make a return under that section, the notice was
clearly illegal and such illegality cannot be waived by the assessee and no consent can confer jurisdiction upon a court if court had no jurisdiction,
and if we take the view that the Income-tax Officer can have jurisdiction only provided he complies with the conditions laid down in section 34, then
no consent by the assessee or no waiver on his part can confer jurisdiction upon the Income-tax Officer. Thus, in that case assessee had actually
made a return pursuant to the invalid notice under section 34 and it was yet held that reassessment proceedings pursuant to the said notice were
invalid. (This decision was approved by Supreme Court in Y. Narayana Chetty & Another vs The Income-Tax Officer, Nellore Equivalent
citations: 1959 AIR 213).

5

Word of Caution as
Principle of Estoppel
incorporated in CGST

Section 160(2) of CGST
Act, 2017

The service of any notice, order or communication shall not be called in question, if the notice, order or communication, as the case may
be, has already been acted upon by the person to whom it is issued or where such service has not been called in question at or in the earlier
proceedings commenced, continued or finalised pursuant to such notice, order or communication

Part-120-One Pager Snapshot to Cases for Section -129 on Expired Eway Bill-Part IV

Snapshot contains decisions on the subject matter whether Intent to Evade is to be established for levy of penalty for movement with Expired E-way Bill and applicability of Section 126 for levy of penalty in such cases

120.-Daily-Round-up-to-the-Latest-CasesDownload

S.No

Case Subject

Case

Held

1

No Requirement
to check intent
to evade

Sterile India (P.) Ltd. v.
Union of India [2023]
149 taxmann.com 5
(Punjab & Haryana)

The Court observed that for the purpose of Section 129 of the CGST/SGST Act, 2017 there is no requirement that there should be intention to
evade tax. The authorities are not required to establish intention to evade payment of tax. It was stated that Section 129 has been enacted to check
evasion of tax. If the goods are intercepted during transit and the documents accompanying the goods are not in compliance with the provisions of the
Act, authorities are within their power to detain the goods and demand payment of tax and 100% penalty under the provisions. It was further observed by
the Court that the petitioner did not deny that payment under Section 129(3) of the CGST/SGST Act, 2017 had been made. Therefore, keeping in view
the bare provision of Section 129 (5) it was further observed that all proceedings in respect to the notice were deemed to have been concluded

2

Intent to Evade
to be
established for
levy of penalty
for movement
with Expired Eway Bill

Shree Govind Alloys
(P.) Ltd. v. State of
Gujarat [2023] 148
taxmann.com 382
(Gujarat)

The Court observed that e-Way Bill had expired 41 hours before and the detention was also on the ground that the goods are of expiration of the e-Way
bill number, which had expired during the transit. The Court relied upon the decision in Govind Tobacco Manufacturing Co. v. State of U.P., [2022] 140
taxmann.com 383 (Ahhahabad) wherein it was held that as there is expiry of e-Way bill on transit, the seizure of said vehicle and the goods is not
permissible under the law. It further relied upon the decision of High Court of Madhya Pradesh in M/s. Daya Shaker Singh v. State of Madhya
Pradesh passed in Writ Petition No.12324 of 2022 on 10-8-2022, where also the Court had intervened considering the fact that the respondent could not
establish any element of evasion of tax with fraudulent intent or negligence on the part of the petitioner. The Court thereafter allowed the petition while
observing that the delay appeared to be bona fide and without establishing any fraudulent intention and there was no fraudulent intention for
this to happen.

3

No Penalty for
movement with
Expired Eway
Bill if mens rea
not proved by
Revenue

Orson Holdings
Company Ltd. v. Union
of India [2023] 147
taxmann.com 71
(Gujarat)

In the instant case, goods which were to be delivered, could not be delivered in time and when inspected, some of the e-Way bill numbers had shown
expired. The company was situated at Howrah, West Bengal and the place of delivery was Jamnagar, Gujarat and in transit, this e-Way bill has expired.
The Court held that the case is squarely covered by the decision of this Court in Shree Govind Alloys (P.) Ltd. which has not been further
challenged and even otherwise, from the facts which are robust in nature, it can be gathered that there does not appear to be any ill-intent on
the part of the petitioner to use the expired e-Way bill

4

Mens Rea
needs to be
established by
the authority in
was of
movement of
goods with
Expired E-way
Bill

Sanskruthi Motors v.
Joint Commissioner
(Appeals) [2022] 145
taxmann.com 164
(Kerala)

The reason for invoking Section 129 of the CGST laws was that the e-way bill has expired. The Court distinguished the decision of Division Bench
of Kerala High Court in Renjilal Damodaran's case and took a different view as the Division Bench did not consider the question as to whether the
imposition of a major penalty along with a demand for IGST was justified for the reason that the e-way bill had expired. The Court relied upon the
judgement in the matter of Podaran Foods India (P.) Ltd.v. State of Kerala [2021] 123 taxmann.com 282 and also on the Judgement of Division Bench of
the Telangana High Court in Satyam Shivam Papers (P.) Ltd's case (supra) and stated that the officer was duty bound to consider the explanation
offered by the petitioner for the expiry of the e-way bill. There was no finding that there was any attempt to evade tax. Further it was also observed
by the Court that the judgment of Telangana High Court in Satyam Shivam Papers (P.) Ltd.'s case (supra) was challenged before the Supreme Court and
the Special Leave Petition was dismissed by a speaking order. In view of the aforesaid findings, the order was quashed and remanded back to
consider the amount of penalty to be imposed on the petitioner taking note of the findings in the Judgment

5

Intent to Evade
required to be
proved in case
of movement of
goods with
Expired Eway
Bill and
applicability of
Section 126 for
levy of penalty
commensurate
to the breach

Daya Shanker Singh v.
State of Madhya
Pradesh [2022] 142
taxmann.com 266
(Madhya Pradesh)

E-way Bill was valid upto 19-5-2022 and truck was intercepted on 20-5-2022 at 4.35 A.M. The petitioner contended that there was no element of tax
evasion, fraudulent intent and negligence on his part was not rebutted by learned counsel for the respondents. The petitioner relied upon the judgement
by Telangana High Court in the matter of Satyam Shivam Papers (P.) Ltd. v. Asstt. CST [2021] 127 taxmann.com 646/50 GSTL 459/5 GSTJ Online 174)
against which the revenue filed by SLP was dismissed with a speaking order in the matter of Asstt. CST v. Satyam Shivam Papers (P.) Ltd. [2022] 134
taxmann.com 241/57 GSTL 97/90 GST 479/[2022] 7 GSTJ Online 16 (SC). The reliance was also placed on the judgement of Calcutta High Court
in Ashok Kumar Sureka v. Asstt. Commissioner, State Tax Durgapur Range [2022] 7 GSTJ Online 78 (Cal.). The High Court observed that the revenue
could not establish that there exist any element of evasion of tax, fraudulent intent or negligence on the part of the petitioner and thus held
that in the above backdrop, the impugned notice/order could not have been passed. Further Court also observed that principles of natural justice
were statutorily recognized and ingrained alognwith doctrine of proportionality while bringing sub-section (1) of section 126 in the Statute Book and
punishment should be commensurate to the breach is the legislative mandate as per sub-section (1) of section 126. Thus, it was held that in the instant
case, the delay of almost 4:30 hours before which E-way Bill stood expired appeared to be bonafide and without establishing fraudulent intent
and negligence on the part of petitioner, the impugned notice/order could not have been passed

Part-119-One Pager Snapshot to Cases- Principle of Substantial Compliance detailed out in CCE v. Hari Chand Shri Gopal, (2011) 1 SCC 236

The distinction between the eligibility criteria and other conditions in the exemption notification and what conditions would be considered as mandatory in nature and what will be construed to directory in nature

119.-Daily-Round-up-to-the-Latest-CasesDownload

S.No

Case Subject

Held

1

Exemption only upon
establishing entitlement

The law is well settled that a person who claims exemption or concession has to establish that he is entitled to that exemption or concession. A provision providing for an
exemption, concession or exception, as the case may be, has to be construed strictly with certain exceptions depending upon the settings on which the provision has
been placed in the Statute and the object and purpose to be achieved.

2

Strict approach for deciding
Eligibility to claim Exemption
but may take liberal
approach for other conditions

Referring to Tata Iron & Steel Co. Ltd. v. State of Jharkhand and Ors. (2005) 4 SCC 272, it was held that that the principles as regard construction of an exemption
notification are no longer res integra; whereas the eligibility clause in relation to an exemption notification is given strict meaning wherefor the notification has to be
interpreted in terms of its language, once an assessee satisfies the eligibility clause, the exemption clause therein may be construed literally.

3

Mandatory and Directory
conditions

If exemption is available on complying with certain conditions, the conditions have to be complied with. Some of the provisions of an exemption notification may be
directory in nature and some are of mandatory in nature. The mandatory requirements of those conditions must be obeyed or fulfilled exactly, though at times, some
latitude can be shown, if there is a failure to comply with some requirements which are directory in nature, the non-compliance of which would not affect the essence or
substance of the notification granting exemption. A distinction between provisions of statute which are of substantive character and were built in with certain specific
objectives of policy, on the one hand, and those which are merely procedural and technical in their nature, on the other, must be kept clearly distinguished.

4

What is the Principle of
Substantial Compliance

What is Principle of Substantial Compliance-This doctrine is a judicial invention, equitable in nature, designed to avoid hardship in cases where a party does all that
can reasonably expected of it, but failed or faulted in some minor or inconsequent aspects which cannot be described as the "essence" or the "substance" of the
requirements. Like the concept of "reasonableness", the acceptance or otherwise of a plea of "substantial compliance" depends upon the facts and circumstances of
each case and the purpose and object to be achieved and the context of the prerequisites which are essential to achieve the object and purpose of the rule or the
regulation. Such a defence cannot be pleaded if a clear statutory prerequisite which effectuates the object and the purpose of the statute has not been met.
Need for “Substantial Compliance”-Substantial compliance of an enactment is insisted, where mandatory and directory requirements are lumped together, for in such
a case, if mandatory requirements are complied with, it will be proper to say that the enactment has been substantially complied with notwithstanding the non- compliance
of directory requirements. In cases where substantial compliance has been found, there has been actual compliance with the statute, albeit procedurally faulty.
What “Substantial Compliance” seeks to preserve-The doctrine of substantial compliance seeks to preserve the need to comply strictly with the conditions or
requirements that are important to invoke a tax or duty exemption and to forgive non-compliance for either unimportant and tangential requirements or requirements that
are so confusingly or incorrectly written that an earnest effort at compliance should be accepted.
Test for determining the applicability of Principle-The test for determining the applicability is whether the requirements relate to the "substance" or "essence" of the
statute, if so, strict adherence to those requirements is a precondition to give effect to that doctrine. On the other hand, if the requirements are procedural or directory in
that they are not of the "essence" of the thing to be done but are given with a view to the orderly conduct of business, they may be fulfilled by substantial, if not strict
compliance. In other words, a mere attempted compliance may not be sufficient, but actual compliance of those factors which are considered as essential.
Role of the Court-Certainly, it means that the Court should determine whether the statute has been followed sufficiently so as to carry out the intent for which the statute
was enacted and not a mirror image type of strict compliance. The court should determine whether the statute has been followed sufficiently so as to carry out the intent
of the statute and accomplish the reasonable objectives for which it was passed

5

What is the Principle of
Substantial Compliance

What was not condoned-Four conditions were imposed for grant of benefit of exemption in relation to the services provided for transport of certain goods from ICD to
Port of Export. One of the conditions so imposed was that the details of exporters invoice relating to the export goods should be specifically mentioned in the lorry receipt
and the corresponding shipping bill. Assessee did not fulfil the condition and refund was rejected. The court held that object of requiring the details of exporters invoice to
be mentioned in the lorry receipt and corresponding shipping bill was to ensure that what had reached port was the consignment of that exporter and that there was no
duplication of claim. Therefore, the relaxation of such a condition would tantamount to the removal of the very life breath of the notification.
What could have been condoned-What could at the most be done by Courts or even by the statutory authorities, is to condone certain insignificant requirements. For
instance, if an application for extension of the benefit of exemption has to be endorsed by someone, but was endorsed by some other person, the mistake can be
condoned as mere procedural in nature. But when the very availability of the benefit of exemption is made contingent upon the fulfilment of certain conditions, those
conditions cannot be dismissed as matters of procedure.

6

Commissioner of GST and
Central Excise v. Bharat
Electronics Ltd [2022] 136
taxmann.com 145 (Madras)

Relying upon the Judgement in Commissioner of Customs (Import) v. Dilip Kumar & Co. [2018] 95 taxmann.com 327/69 GST 239 which also referred CCE v. Hari
Chand Shri Gopal, (2011) 1 SCC 236 held that inadvertent mistake in filling in the wrong figures in Column 6 of Form TRAN-1 cannot prove fatal to the respondent's claim
of ITC, if Transitional Credit is denied even if they are otherwise entitled to, then it could frustrate the very objective of extending the benefit of transition of Input Tax
Credit from the erstwhile regime of GST

Part-118-One Pager Snapshot to Cases for Section -129 on Expired Eway Bill-Part III

Covers judgement on the issue whether mens-rea is required to be proved for levy of penalty in case of movement of goods with expired Eway bills U/Sec 129 of CGST Act, 2017

118.-Daily-Round-up-to-the-Latest-CasesDownload

S.No

Case Subject

Case

Held

1

Mens Rea
needs to be
established for
levying penalty
under Section
129

Medha Servo Drives (P.)
Ltd. v. Assistant
Commissioner of State
Tax [2023] 147
taxmann.com 151
(Calcutta) (17-11-2022)

A single invoice was raised by the appellants to M/s. Chittaranjan Locomotive Works, a public sector undertaking. The goods which were to be supplied
to the said Public Sector Undertaking was of very huge in size and, therefore, the appellants had raised multiple e-weigh bills and loaded the goods into
three trucks. One of the three trucks had already reached the consignee which was not disputed by the Revenue. The other two trucks could not reach
the destination within the validity of the e-weigh bills i.e. 23-8-2021. The vehicle along with the goods were intercepted by the authorities on 25-8-2021.The
Court observed that the short issue which the Appellate Authority was required to consider as to whether there is any mens rea on the part of
the appellants in attempting to evade payment of tax. It is well settled that by merely using the expression "mens rea", it would not amount to
concluding that there was a willful attempt on the part of the dealer to evade the payment of tax. Concerned authority or First Appellate Authority,
was required to record reasons in writing as to how and in what manner mens rea was established. Since this was lacking, the matter was remanded
back to the Appellate Authority for fresh consideration to decide this short issue as to whether there is any mens rea to evade payment of duty

2

Intent to Evade
required to be
proved for levy
of penalty for
Expired Eway
Bill

Ajay Shaw v. Assistant
Commissioner of State
Tax [2022] 145
taxmann.com 162
(Calcutta) (23-08-2022)

Goods were being transported after expiry of the e-way bill which was expired on 22-8-2021 at 11.59 p.m. and the vehicle in question was intercepted at
9.30 p.m. on 23-8-2021. There was a time gap between the expiry of the bill and interception of the vehicle in question of about 21 hrs., which
was less than a day and writ petitioner submitted that there was no intention of any evasion of tax on the part of the petitioner and there was
a genuine problem of break down of the vehicle in question. The Court observed that the revenue could not make out any case against the
petitioner that there was any deliberate or willful intention of the petitioner to avoid and evade the tax. The Court disposed off the writ petition by
setting aside the aforesaid impugned order of the appellate authority and adjudicating authority

3

Mens Rea is to
be established
for levying
penalty under
Section 129

KDG Projects (P.) Ltd. v.
Assistant
Commissioner of State
Tax [2022] 144
taxmann.com 189
(Calcutta) (21-09-2022)

The order was passed by the competent authority directing the appellants to pay 100% tax and 100% penalty on the goods, which were transported, on
the ground that e-way bill had expired and 48 hours had lapsed. The High Court was of the considered view that the learned appellate authority
should consider the question as to whether there was any intentional attempt made by the appellants to evade payment of tax. Since this
aspect has not been considered by the learned appellate authority, matter was remnded back to the appellate authority for fresh consideration.

4

Intent to Evade
to be present for
levy of penalty
under Section
129 for
movement of
goods with
Expired E-way
Bill

Hanuman Ganga
Hydroprojects (P.) Ltd.
v. Joint Commissioner,
State Tax Authority,
Siliguri [2022] 142
taxmann.com 348
(Calcutta) (06-07-2022)

The issue in this appeal is whether the authorities were justified in imposing tax and penalty on the ground that, at the time of interception, the validity
period of the E-Way bill stood expired. The High Court considered the reasoning of the petitioner for delay in transportation to be a bona fide one as the
petitioner cannot be said to benefitted in any way by the delay in transportation of the crane and moreover the delay in transportation was on account of
the heavy nature of the goods and the length of the vehicle. Further the period between expiry of the validity period of the E-Way bill dated September
25, 2021 and the time of interception and consequent detention of such vehicle was not a substantial one. The High Court was of the considered view
that the error cannot be said to be a grave one for the purpose of holding the assessee liable to penalty as directed by the orders passed by the authorities
under the said statute as it is not a case of tax evasion. The Court observed that authorities have not returned any finding that there was any
deliberate and wilful attempt on the part of the writ petitioner to evade payment of tax. Thus it was held that there was no lack of bona fide on
the part of the writ petitioner in the instant case for not extending the validity period of the E-Way bill within the aforesaid short period of time.
It was also not a case of wilful attempt on the part of the writ petitioner to evade payment of tax. High Court stated that order was being passed
on the peculiar facts and circumstances of this case as recorded hereinbefore and the same cannot be treated to be a precedent

5

Movement of
Goods with
Expired Eway
Bill not liable for
Penalty in
absence of
Intent to Evade
Tax

Assistant
Commissioner, State
Tax v. Ashok Kumar
Sureka [2022] 141
taxmann.com 378
(Calcutta) (12-05-2022)

The tax invoice was raised by Bhaskar Steel and Ferro Alloy Pvt. Ltd. dated 7th September, 2019 alongwith e-way bill dated 7th September, 2019 as the
goods were to be despatched from SRMB Srijan Pvt. Ltd. to the writ petitioner, who had its registered office at Kolkata. The said e-way bill was valid upto
9th September, 2019 since the approximate distance was about 168 kilometers. The writ petitioner had a supply order from Om Dayal Educational and
Research Society, which also has its registered office at Kolkata but, however the goods had to be shifted to a place in Durgapur. Therefore, the writ
petitioner raised a second e-way bill on 7th September, 2019 and since the distance from SRMB Srijan Pvt. Ltd., Durgapur to the Delhi Public School,
Durgapur was only 9 kilometers, the e-way bill was valid only for one day, i.e. 7th September, 2019 to 8th September, 2019 (midnight). The e-way bill,
which was being carried in the vehicle transporting the goods had expired on the midnight of 8th September, 2019 and the goods were being transported
on 9th September, 2019 and the vehicle was intercepted at 1.30 p.m.(noon). The High Court observed that admittedly, the first e-way bill dated 7th
September, 2019 was valid upto 9th September, 2019 and therefore, in the absence of second e-way bill, the tax authorities at Durgapur could
not have intercepted or detained the vehicle. Therefore, the explanation offered by the respondent/writ petitioner was held to be an acceptable
explanation and a case could not be made out that there was a deliberate and willful attempt on the part of the respondent/writ petitioner to
evade payment of tax so as to justify invocation of the power under section 129 of the Act. Therefore, the Court upheld the relief granted by the
writ Court and stated that they have examined the facts in hand, the bona fides of the respondent/writ petitioner and then arrived at a conclusion that it
was not a case of willful attempt to evade payment of tax and therefore, decision having been rendered on peculiar facts cannot be treated as a precedent