Part-107-One Pager Snapshot to cases in Service Tax regime on invoking extended period-(Section 73 of Finance Act, 1994 which was similar to Section 73/74 of CGST Act, 2017)-Part-II

-No suppression as matter of pure interpretation and represented before audit & investigation by assessee
-No suppression or will misstatement when the information already communicated to the department
-No suppression as activity as well as the payment were in knowledge of the department
-No penalty when the amount paid before SCN and order only reflected non-payment with no finding about the wilful misstatement or suppression.
-Extended period not invokable as Department conducted audit of previous period & facts in the knowledge of department, -Regular Returns filed, Specific provision not invoked in operative part, Demand being revenue neutral, Balance Sheet being a public document, No Positive evidence adduced for malafide intention

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

S.No

Case Subject

Case

Held

1

No suppression as
matter of pure
interpretation and
represented before
audit & investigation
by assessee

Adani Enterprise Ltd. v.
Commissioner of Service Tax
[2022] 141 taxmann.com 463
(Ahmedabad - CESTAT) (15-03-
2022)

The issue involved was regarding classification and applicable rate on services.
Tribunal held that firstly issue involved was of pure interpretation of legal provisions therefore, it cannot be said that Appellant had any mala
fide intentions and had suppressed any fact with intention to evade. It was also on record that Appellant had represented the matter before
Audit team and also before department during the investigation of case. This clearly reflected that there was no suppression or willful
misstatement. The Appellant also provided all the details related to disputed activity before department. In this circumstances charge of
suppression or wilful misstatement did not survive. Thus, extended period of limitation was also not invokable and no penalty was payable.

2

No suppression or will
misstatement when
the information
already
communicated to the
department

Ranjit Singh & Co. Ltd. v.
Principal Commissioner,
Central Excise And Service
Tax Commissionerate [2022]
141 taxmann.com 122
(Allahabad-CESTAT)(28-03-22)

The question before the Tribunal was whether SCN dated 18-10-2016 for the period April 2011 to March 2015 was barred by limitation or
not.
The Tribunal took note of the fact that the appellant had informed the department that they will discharge their service tax liability under
Composite Scheme under Works Contract Services and the said activity was known to the respondent during the period of execution of work.
In these circumstances, SCN issued by invoking extended period of limitation was not sustainable. Accordingly, the whole of demand was
barred by limitation.

3

No suppression as
activity as well as the
payment were in
knowledge of the
department

R D Contractors and
Consultants v. Commissioner
of Central Excise & Service
Tax, Panchkula [2022] 137
taxmann.com 288 (Chandigarh -
CESTAT) (26-08-2021)

Tribunal observed that in this case, extended period of limitation was not invokable as it was a case of availment of benefit of Notification
No. 30/2012-ST dt. 20.06.2012 and computation of taxable turnover and no fact were suppressed by the appellant from the department. The
activity as well as payment of service tax were in the knowledge of the department, therefore, in the absence of any malafides on the part of
the appellant, extended period of limitation was not invokable. Therefore, any demand pertaining to extended period of limitation was set
aside.

4

No penalty when the
amount paid before
SCN and order only
reflected nonpayment with no
finding about the wilful
misstatement or
suppression

Five Vision Promoters v.
Commissioner, Central Excise
& Service Tax, Ghaziabad
[2022] 137 taxmann.com 13
(Allahabad - CESTAT) (28-02-
2022)

The period involved in the case was 1-4-2010 to 31-12-2014 and SCN was issued on 13-1-2015. When the audit was conducted, the
appellant had paid service tax on the rent received as on 24-1-2012 in respect of shops in the mall. The amount already stood appropriated.
The Tribunal thus, was in agreement with the appellant that section 73(3) was applicable to the case and no SCN should have been issued.
There was no finding of the Commissioner in the impugned order with respect to the demand which established any element of fraud or
collusion or willful mis- statement or suppression of facts or violation of provisions of act or rules with an intent to evade payment of service
tax. Therefore, section 73(4) did not apply to the part of the demand. All that the impugned order reflected was that the appellant had not
paid service tax and when pointed out by the audit, it paid it forthwith. For the same reason, it was held that no case was made out by the
Revenue to justify the imposition of penalty upon the appellant under section 78 in so far as this part of the demand was concerned.

5

Extended period not
invokable as
-Department
conducted audit of
previous period &
facts in the knowledge
of department
-Regular Returns filed
-Specific provision not
invoked in operative
part
-Demand being
revenue neutral
-Balance Sheet being
a public document
-No Positive evidence
for malafide intention

Luit Developers (P.) Ltd. v.
Commissioner of Central
Goods and Services Tax &
Central Excise, Dibrugarh
[2022] 136 taxmann.com 109
(Kolkata - CESTAT) (23-02-
2022)

Tribunal observed that the Service tax demand for April-September 2014 was beyond extended period of 5 years. Reasons were as follows-
-Department had done audit of the appellant for February, 2014-15 as per Detailed Manual Scrutiny Report dated 15.12.2017, which included
checking of Form 26AS as clearly mentioned in Para 5.2 of CBEC Circular No 185/4/2015-ST dated 30.6.2015 vide F.No 137/314/2012 and
therefore no suppression can be alleged for this period.
-Tribunal referred to Judgement in Gannon Dunkerley & Co. Ltd. v. CST (Adjudication) 2021 (47) GSTL 35 (Trib. - Delhi) wherein it was held
that since appellant was filing all ST-3 Returns regularly, Department's stand that it could examine the factual position only on receiving
details of Form 26AS cannot be sustained because CBEC Circular No. 113/7/2009-S.T., dated 23-4-2009 vide F.No. 137/158/2008-CX. 4
and CBEC Circular No 185/4/2015-ST dated 30.6.2015 vide F.No 137/314/2012 categorically puts duty on Assessing Officer to effectively
scrutinize the returns at the preliminary stage.
-Proviso to Section 73(1) was not invoked in the operative part of SCN and therefore extended period could not be invoked as held in Satish
Kumar & Co. v. CCE 2019 (22) GSTL 269 (Mum. - CESTAT).
-Extended period cannot be sustained for part of tax demand raised on RCM basis by virtue of it being a revenue neutral situation since the
appellant was eligible for credit if it had done tax payment as also held in Universal Dredging & Reclamation Corpn. Ltd. v. Commissioner of
CGST & CE 2021 (44) GSTL 401 (Chennai - CESTAT).
-Appellant was Pvt Ltd Company and figures in Form 26AS were already included in Revenue from Operations in the Profit/Loss Account,
which was a public document, therefore no suppression can be alleged as held in Hindalco Industries Ltd. v. CCE 2003 (161) ELT 346 (Trib.
- Delhi).
-Department had not adduced any positive evidence to show malafide intention for evasion of service tax and therefore extended period
cannot be invoked as held in Pushpam Pharmaceuticals Co. v. Collector of Central Excise 1995 (78) ELT 401 (SC)

Part-106-One Pager Snapshot to cases in Service Tax regime on invoking extended period-(Section 73 of Finance Act, 1994 which was similar to Section 73/74 of CGST Act, 2017)-Part-I

Since, Notices have started to be issued in GST Regime under Section 73/74. In this series will be sharing Judgements on invoking extended period for levy of Penalty under the erstwhile regime of Service Tax under Section 73 of Finance Act, 1994 which was similar to Section 73 and 74 of CGST Act, 2017.

The snapshot covers Judgements on following Issues-
-Extended period cannot be invoked in matters involving Interpretation of Statute
-No penalty wherein tax paid before the issue of the SCN
-Extended period cannot be invoked since department had conducted audit of the taxpayer in 2012 and had knowledge about the activities of taxpayer since then.
-Mere non-payment of duties is not equivalent to collusion or willful misstatement or suppression of facts
-Extended period cannot be invoked since taxpayer sought clarification and instead of clarifying, investigation commenced for suppression of facts
-Extended Period cannot be invoked as no suppression of facts when proper Books maintained and returns filed regularly.

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

S.No

Case Subject

Case

Held

1

Extended period
cannot be invoked in
matters involving
Interpretation of
Statute

International Merchandising
Company v. Commissioner,
Service Tax [2022] 145
taxmann.com 247 (SC) (01-
11-2022)

The appellant placed reliance on the decision in Padmini Products v. CCE 1989 taxmann.com 629 (SC) to submit that the extended period
of limitation would not be attracted as the appellant has not acted with dishonest or fraudulent intent.
The Court observed that the Tribunal had specifically observed that the present case involved interpretation of statutory provisions. Therefore,
Tribunal having concluded that the issue turned upon an interpretation of the provisions of Section 65(68) and Section 65(86b) of the Finance
Act 1994, there was no warrant to allow invocation of extended period of limitation and to direct determination of the penalty following the requantification of demand. The extended period of limitation would clearly not stand attracted in respect of the first SCN dated 20 October 2009.
Thus, the demand was confined to the normal period of limitation excluding the extended period

2

No penalty wherein
tax paid before the
issue of the SCN

Cades Digitech (P.) Ltd. v.
Commissioner of Central
Tax [2022] 140 taxmann.com
189 (Bangalore-CESTAT) (04-
01-2022)

Appellant submitted that the demand and duty has been paid before the issue of SCN and as such no penalty can be imposed. However,
AR for the Revenue disputed the payment of interest thereof.
The Tribunal was of the considered opinion that in order to verify the competing claims of the appellant and the Revenue, the matter was to
go back to the original authority for verifying the records and arrive at the actual duty and interest payable. However, no penalties can be
imposed at this count.

3

Extended period
cannot be invoked
since department had
conducted audit of the
taxpayer in 2012 and
had knowledge about
the activities of
taxpayer since then.

Abhishek Alcobev (P.) Ltd. v.
Central Excise
Commissionerate, Noida
[2022] 139 taxmann.com 1
(Allahabad - CESTAT) (23-02-
2022)

On the aspect of invoking extended period of 5 years by the department instead of normal period of 18 months while issuing the SCN, Tribunal
held that extended period can be invoked by the department only when there was element of fraud or collusion or there was wilful intention for
evading the payment of service tax or there was suppression of relevant facts resulting into the evasion of duty. In the present case, it was
observed that department had conducted the appellants audit in August 2012 also. Hence, department had the knowledge about the activities
of the appellant. There was no denial that the appellant had been filing its Service Tax returns regularly. Appellant had been registered with
Service Tax department. Department had the option to and had assessability to entire information about receiving disputed amount of interest
by appellant since 2009.
Tribunal held that suppression of facts cannot be alleged. The fact being in the knowledge of the department since august 2012, no question
of invoking the extended period at all arise. With respect to the taxable service being provided by the appellant there was no denial for discharge
of liability of service tax. Hence there was never any intentional evasion on part of the appellant. It became crystal clear that there was neither
a wilful mis-declaration nor wilful suppression. The extended period therefore was wrongly invoked and SCN was held to be barred by time.
Cases Referred- Padmini Products v. Collector of Central Excise followed in Anand Nishikawa Co Ltd. v. CCE [2005] 2 STT 226 (SC)

4

Mere non-payment of
duties is not
equivalent to collusion
or willful misstatement
or suppression of
facts

C.C.,C.E. & S.T. Bangalore v.
Northern Operating Systems
(P.) Ltd. [2022] 138
taxmann.com 359 (SC) (19-
05-2022)

The Court observed that CESTAT relied upon two of its previous orders in giving the order in favour of the assessee and in the present case,
the revenue itself discharged the later two SCN. Thus, it evidenced that view held by assessee about its liability was neither untenable, nor mala
fide. This was sufficient to turn down revenue's contention about existence of "wilful suppression" of facts, or deliberate misstatement.
The Court held that SCN was unjustified and unreasonable on the aspect of invocation of extended period of limitation and although the
assessee was held liable to discharge its service tax liability but only for the normal period or periods, covered by the four SCNs issued to it.
Cases Referred- Cosmic Dye Chemical v. CCE 1995 taxmann.com 926 (SC), Uniworth Textiles v. CCE [2013] 31 taxmann.com 67, Escorts
Ltd. v. CCE [2015] 58 taxmann.com 125, Commissioner of Customs v. Magus Metals [2017] 16 SCC 491

5

Extended period
cannot be invoked
since taxpayer sought
clarification and
instead of clarifying,
investigation
commenced for
suppression of facts

Karnataka Co-operative Milk
Producers Federation Ltd. v.
Commissioner of Central
Excise [2022] 138
taxmann.com 486 (BangaloreCESTAT) (22-02-2022

The appellant argued that the SCN was time barred.
The Tribunal observed that the appellants had proactively informed the department in 2004 itself about their activities and sought clarification
on the excisability to service tax. The department instead of giving clarification have decided to investigate the matter after two years and
issued show-cause notice after further two years. In place of invoking extended period in cases of suppression of fact with an intent to evade
payment of duty or tax, tribunal observed that department chose to invoke extended period in a case where the appellant has proactively
informed the department about their activities and sought clarification. The Tribunal thus held that Revenue had no case to invoke the
extended period to issue show-cause notice. Therefore, the impugned order was held not to survive on limitation

6

Extended Period
cannot be invoked as
no suppression of
facts when proper
Books maintained and
returns filed regularly.

State Bank of Patiala v.
Commissioner, Central
Excise & Central Goods &
Services Tax [2021] 129
taxmann.com 167 (New Delhi -
CESTAT) (09-08-2021)

It was argued that proper books of accounts and statutory registers were maintained, and returns were filed with Department regularly. There
was no allegation in SCN that the appellant had not filed return properly and/or there is any suppression of facts or mis-statement in the returns.
Tribunal held that the SCN had been issued after more than 32 months from the last date when the return was due from the financial year
ending 31-3-2010. Accordingly, SCN was bad for invoking the extended period of limitation. There was no suppression of facts or contumacious
conduct on the part of the appellant

Part-105-One Pager Snapshot to the Latest Cases on Section 16, Section 29, Section 30, Rule 142 and Section 62

-Registration cancelled after 31-12-2022 but within the period of amnesty scheme eligible for amnesty scheme of revocation of cancelled registration
-Cancellation cannot be retrospective when the same was applied by assessee from the date of closure of business.
-ITC of the assessee under the GST regime cannot be denied merely on the difference of GSTR 2A and 3B
-As the Order visible to the petitioner on GSTN portal is not complete copy of the order, thus it must be accepted in law that the impugned order does not contain reasons.
-Notice U/Sec 46 to be issued before passing order U/Sec 62.

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

S.No

Section

Case Subject

Case

Held

1

Section
29 and
Section
30

Registration cancelled
after 31-12-2022 but
within the period of
amnesty scheme
eligible for amnesty
scheme of revocation
of cancelled
registration

Rajeev Kumar v.
Principal
Commissioner of
Central Goods and
Services Tax,
Ranchi [2023] 155
taxmann.com 54
(Jharkhand) (12-09-
2023)

The Court stated that Government of India had issued Notification No. 03/2023~Central Tax dated 31-3-2023 and extended the time up
to 30-6-2023, but the extension is granted to taxpayers granting time whose registration was cancelled on or before 31-12-2022. The
petitioner's cancellation was on 11-5-2023, hence the benefits of the said notification could not be availed by the petitioner. If the cancellation
was set aside and the GST is revoked the petitioner is willing to pay the GST along with late fee.
The Court gave anxious consideration and observed that had the cancellation of registration been prior to 31-12-2022, then petitioner
would have come within the time prescribed under the said notification. But the consideration for extension was pending during that period,
hence the Court was of the considered view that the petitioner was entitled to the benefit. Therefore, the Court allowed the writ petition and
the directed to restore the petitioner's GST registration number.
Case Referred- Tvl. Suguna Cut piece v. Appellate Deputy Commissioner (ST) (GST) (Mad)

2

Section
29 and
Section
30

Cancellation cannot
be retrospective when
the same was applied
by assessee from the
date of closure of
business

Krishna Traders v.
Commissioner of
Central Goods and
Service Tax [2023]
155 taxmann.com 52
(Delhi) (20-09-2023)

Petitioner had closed business with effect from 31-3-2022 and had, applied for cancellation of GST registration. Petitioner after closure of
business, shifted from New Delhi to Dehradun. SCN was issued calling upon the petitioner to furnish additional information in connection
with his application. Petitioner claimed that he did not receive the said notice as he had shifted to Dehradun. Since said SCN was not
responded, Proper Officer rejected application for cancellation. Thereafter, Proper Officer issued a fresh SCN proposing to cancel
petitioner's registration on account of failure to file tax returns for a continuous period of six months and cancelled registration with
retrospective effect. The impugned order included a tabular statement indicating that no tax was found due and payable by the petitioner.
The Court observed that cancellation of the GST registration was not an issue but the issue was related to cancellation of the GST
registration with retrospective effect. The Court directed that cancellation of petitioner's GST registration shall take effect from 31-3-2022

3

Section
16

ITC of the assessee
under the GST regime
cannot be denied
merely on the
difference of GSTR
2A and 3B

Henna Medicals v.
State Tax Officer
[2023] 155
taxmann.com 29
(Kerala) (19-09-2023

Impugned order was passed against the petitioner on the ground that there was a difference between GSTR 2A and GSTR 3B.
The Court took into consideration earlier judgement passed in the matter of Diya Agencies v. The State Tax Officer and reference made
in the said judgement to the judgement of Supreme Court in the case of The State of Karnataka v. M/s Ecom Gill Coffee Trading Private
Limited 2023 (3) TMI 533 SC as well as Calcutta High Court judgment in Suncraft Energy Private Limited v. The Assistant Commissioner,
State Tax, Ballygunge Charge [Judgment dated 2-8-2023 in MAT No. 1218/2023]. The Court relied upon the principle that ITC of the
assessee under the GST regime cannot be denied merely on the difference of GSTR 2A and 3B and thus petition was allowed and matter
was remitted back to Assessing Authority to examine evidence of petitioner irrespective of Form GSTR 2A and after examination of evidence
placed by the petitioner, order to be passed in accordance with the law.
Case Referred- Diya Agencies v. The State Tax Officer [Judgment dated 12-9-2023 in WPC 29769/2023]

4

Rule 142

As the Order visible to
the petitioner on
GSTN portal is not
complete copy of the
order, thus it must be
accepted in law that
the impugned order
does not contain
reasons.

[2022] 142
taxmann.com 470
(Allahabad)
Dauji Ispat (P.) Ltd.
v. State of U.P (10-
11-2021

Contention of the petitioner that the copy of the order uploaded on the GSTN portal and as is visible to the petitioner does not
mention/disclose the reasons therefor. The revenue admitted that due to some error copy of the impugned order visible to the petitioner on
the GSTN portal is not the complete copy of the order.
The Cour observed that it must be accepted in law that the impugned order does not contain reasons. This conclusion was drawn as
unless the complete copy of the order containing the reasons was served on the petitioner, he may never have any right to challenge the
same before any forum including the appellate forum. The fact that the Assessing Officer may have available to it another copy of the same
order which may contain reasons therefor, may be of no help to the Revenue Authority as such copy of the order was not served on the
petitioner. Therefore, it cannot be relied upon to any extent. The Court thus held that order served on petitioner was wholly defective and
lacking in vital aspect namely reasons for the conclusions drawn therein. Accordingly order DRC-07 dated 20-7-2021 was set aside and
the matter remitted to the Assessing Officer for fresh consideration

5

Section
62

Notice U/Sec 46 to be
issued before passing
order U/Sec 62.

[2022] 140
taxmann.com 405
(Jharkhand)
Vinman
Constructions Ltd.
v. State of
Jharkhand (22-02-
2022

Petitioner amongst other contentions contended that no notice to file return under Section 46 was served before passing order U/Sec 62.
The Court observed that requirement of notice before proceeding to pass order under section 62 has been laid down by Legislature so
that defaulter may have an opportunity to file return in case return has not been filed. It was also observed that there is a salutary purpose
for service of notice under section 46 before the proper officer proceeds to pass assessment order under section 62. The court also referred
to CBIC Circular dated 24-12-2019 which provides for service of notice under section 46 before the proper officer proceeds to assess the
tax liability of a return defaulter under section 62 of the Act. Moreover, sub-section (2) of section 62 further provides that if within thirty days
valid return has been filed, assessment order shall be deemed to have been withdrawn, the reason being that in case the return has not
been filed even after proper service of notice under section 46 of the Act, the penal consequences flows out of such an order passed under
section 62. The Court thus, set aside the order passed U/Sec 62 as no notice was served U/Sec 46 for filing of returns

Part-104-One Pager Snapshot to the Latest Cases on Section Section 29, Section 30, Section 112, Section 73 and Section 74 and Rule 142

-Refund in pursuance of Appellate Authority order cannot be withheld because revenue intends to file an appeal but Tribunal has not been formed

-Purpose of SCN is to enable the noticee to respond to the allegations. Since SCN was incapable of eliciting any meaningful response, any order passed pursuant to such a SCN would fall foul of principles of natural justice

-Summary in electronic form is required to be furnished along with the SCN

-No Penalty in the matter of Classification Disputes

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

S.No

Section

CAse Subject

Case

Held

1

Section
112

Refund in pursuance
of Appellate Authority
order cannot be
withheld because
revenue intends to file
an appeal but Tribunal
has not been formed

Zones Corporate
Solutions (P.) Ltd. v.
Commissioner of
Central Goods and
Service Tax [2023]
155 taxmann.com 8
(Delhi)

The order of the Appellate Authority was in favour of the Petitioner wherein it was directed to grant the refund to the petitioner. Revenue
contended refund has not been granted since the competent authority in pursuance to the opinion of review branch has directed filing of an
appeal before Appellate Tribunal challenging order in appeal passed by Commissioner (Appeals) and owing to non-functioning of the GST
Appellate Tribunal which was beyond the control, such appeal could not be filed.
The Court observed that though nearly a year has passed, yet no proceeding has been filed challenging the said order till date. The
petitioner cannot be asked to wait endlessly for the revenue to challenge the order dated 23rd July, 2019. Department was directed to
refund the amount as directed by the Commissioner (Appeals)

2

Section
29 and
Section
30

Purpose of SCN is to
enable the noticee to
respond to the
allegations. Since
SCN was incapable of
eliciting any
meaningful response,
any order passed
pursuant to such a
SCN would fall foul of
principles of natural
justice

Sachin Upadhyay v.
Addl.
Commissioner,
Central Goods and
Services Tax,
Appeal-I [2023] 155
taxmann.com 5
(Delhi)

SCN was issued by the proper officer proposing to cancel the petitioner's GST registration on accountof “Non compliance of any specified
provisions in the GST Act or the Rules made thereunder as may be prescribed." The Proper Officer proceeded to cancel the petitioner's
GST registration from retrospective date on the ground that petitioner had not uploaded the bank details. The tabular statement set out in
the said order dated 3-1-2022 indicates that no tax or penalty is due from the petitioner. The petitioner thereafter, filed an application for
revocation of the cancellation order. The petitioner asserted that bank details were uploaded on GST portal prior to issuance of SCN.
Pursuant to application for revocation of cancellation, Proper Officer issued a SCN proposing to reject the petitioner's application for “Reason
for revocation of cancellation - Reason for revocation of cancellation-." The court thereafter observed that “To add insult to injury, the
petitioner's application for revocation of cancellation of the GST registration was rejected on the ground that the petitioner had not replied
to the show cause notice within the time specified therein.”. The petitioner preferred an appeal under section 107 and the same was also
rejected. Court observed that “impugned order dated 23-5-2023 is equally cryptic and vague. It is evident from the reasons for rejection of
the petitioner's appeal as stated in the impugned order dated 23-5-2023, that the said order has been passed without application of mind.”
The Court observed that SCN did not provide any clue as to the reason for proposing cancellation of the petitioner's GST registration.
SCN which do not specifically state reason for proposing adverse actions cannot be sustained. The purpose of SCN is to enable the noticee
to respond to the allegations. Since the said SCN was incapable of eliciting any meaningful response, it did not meet the standards required
for a SCN. Any order passed pursuant to such a show cause notice would fall foul of the principles of natural justice. The Court further
observed that the reasons for proposing to reject the petitioner's application for revocation of cancelled registration were also vague and
unintelligible. This Court was at loss to understand the reason for proposing to reject the petitioner's application as articulated by the Proper
Officer. As stated above, the impugned SCN failed to disclose the reason for proposing cancellation of the petitioner's GST registration and
therefore, the impugned order cancelling the petitioner's registration falls foul of the principles of natural justice. It was thus set aside and
petition was allowed with costs, quantified at Rs. 5,000/-

3

Rule 142

Summary in electronic
form is required to be
furnished along with
the SCN

Shubham Gupta v.
Additional
Commissioner/
Joint Commissioner
CGST [2023] 155
taxmann.com 4
(Delhi)

Petitioner’s grievance was that although it has received the SCN dated 2-8-2023 proposing imposition of penalty, the summary of
proposed demand has not been communicated electronically in FORM GST DRC-01 & FORM GST DRC-02 as required under Rule 142(1).
TheCourt observed that any notice issued under the relevant sections including Section 74 is required to be accompanied by a summary
thereof, electronically in FORM GST DRC-01 & FORM GST DRC-02. The learned counsel appearing for the revenue submitted that a
summary has not been issued in the requisite form and that the proper officer shall issue the same in compliance with the said provisions.
The Court held that although summary in the electronic form is required to be furnished along with the show cause notice, furnishing of the
said summary at this stage would be substantial compliance with the said provisions

4

Section
73 and
Section
74

No Penalty in the
matter of
Classification
Disputes

Atlantic Care
Chemicals (P.) Ltd.
v. Superintendent
Central Tax &
Central Excise
[2023] 155
taxmann.com 3
(Kerala)

During assessment period from April 2020 to June 2021, the petitioner manufactured hand sanitizers and classified under the Tariff
heading 30049088 of HSN and declared tax liability @ 12% applicable to medicament and paid tax as per the returns filed. The return filed
by the petitioner got accepted by the jurisdictional CGST authority. However, later on 5-7-2022 action was initiated under section 74(1) by
issuing a SCN that the classification was under Hand Sanitizers (alcohol based) under HSN 3808 exigible to GST @ 18%. In pursuant to
the said notice, order in original was passed and petitioner paid the assessed amount along with the interest in pursuant to the said order.
The petitioner was not disputing the said liability, he was only aggrieved by the initiation of the penalty proceedings.
The court referred to the judgement in Chakkiath Brothers v. Assistant Commissioner [2014 (3) KLT 222], wherein it was held that for a
mere dispute in classification, no penalty proceedings can be initiated and Court observed that since in the present case also there was a
dispute of classification and the authority had not considered the said judgment.Thus, the matter was remanded back for a fresh order in
accordance with law, after taking into consideration the Judgment in the case Chakkiath Brothers v. Assistant Commissioner (supra)

Part-103-One Pager Snapshot to the Latest Cases on Section 70, Section 107, Section 129, Section 122 read with Section 73, Section 62 read with Section 122 and Section 127

-Presence of Advocate during statement at visible but not at audible distance
-Manual Filing of Appeal in case of order served manually acceptable and Payment of Pre-Deposit through challan on manual filing of appeal acceptable
-Non-mentioning of Vehicle Number in case of no intent to evade, is a procedural error
-For Levying Penalty U/Sec 122(2)(a), procedure U/Sec 73 to be followed
-Having reference to provision of Section 127, penalty can be levied U/Sec 122 for cases wherein order passed U/Sec 62.

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

S.No

Section

Case Subject

case

Held

1

Section
70

Presence of
Advocate during
statement at
visible but not at
audible distance

Mayur Chavda v.
State of Maharashtra
[2023] 154
taxmann.com 641
(Bombay) (10-04-23)

Petitioner contended that the Court, has time and again permitted presence of an Advocate at a visible, but not at an audible distance and has
also permitted the petitioner therein to videograph the recording of his statement.
The Court allowed petition and permitted the petitioner's Advocate to remain present at the time of recording of the petitioner's statement at a
visible, but not at an audible distance. They also permitted videography of the said petitioner's statement, at the cost of the petitioner. A copy of
the said videography was to be handed over to the petitioner after show cause notice is issued to the petitioner

2

Section
107

Manual Filing of
Appeal in case
of order served
manually
acceptable
Payment of PreDeposit through
challan on
manual filing of
appeal
acceptable

Kotla Kanakeswara
Rao v. Additional
Commissioner
[2023] 154
taxmann.com 640
(Andhra Pradesh)
(22-09-23

The appeal was rejected by the Appellate Authority as the original Assessment Order dated 2-1-2022 was duly served on the same date, but the
appeal was filed in manual form on 28-2-2022 and later e-appeal was filed on 1-9-2022 with a delay of six months and the pre-requisite deposit
of 10% of the disputed tax has not been paid. Petitioner contended that the Assessment Order dated 2-1-2022 was not uploaded on the
website and therefore, he was constrained to file appeal in manual form on 28-2-2022. In the interregnum period the Order was uploaded on the
official website and thus appeal in electronic form was filed on 1-9-2022.
The Court observed that the factum of non-uploading of the Assessment Order dated 2-1-2022 on official website was not disputed and thus,
reason given by petitioner for filing the appeal in manual form can be accepted. The explanation also was plausible as subsequently the copy of
the Assessment Order was uploaded and thereby the petitioner filed e-appeal. The Court also relied upon the decision of Division Bench in
W.P.No.3308/2021 wherein it was observed that manual form of filing appeal is permissible in terms of Rule 108(1). Thus, explanation offered
by the petitioner were held to be plausible and tenable. Further, on a perusal of copy of challan filed along with material papers reflect that
petitioner made a pre-deposit of 10% of the demanded tax on 25-2-2022 i.e., at the time of manual filing of the appeal. Therefore, it was held
that the said requirement was also complied. Thus, appellate authority ought to have admitted the appeal filed in electronic form.

3

Section
129

Non-mentioning
of Vehicle
Number in case
of no intent to
evade, is a
procedural error

Novateur Electrical
and Digital Systems
(P.) Ltd. v. Additional
Commissioner of
State Tax [2023] 154
taxmann.com 637
(Punjab & Haryana)
(11-09-23)

In the instant case, vehicle number was not mentioned in Part-B of the Eway Bill however, All other documents were shown by the driver.
Revenue contended that E-Way Bill was generated without completely filling Part B and thus there was violation of the provisions of law.
The Court referred to Circular dated 14-9-2018 wherein Para (f) refers to error in one or two digits/characters of the vehicle no. while generating
E-Way Bill. The Court observed that case of petitioner falls under clause (f) as he did not mention vehicle no in part B and thus proceedings
under section 129 should not have been initiated. Further, at the time of search of vehicle, Part B was not filled up but the time driver filled up
Part B in the presence of the Officer and hence there was no malafide intention on the part of petitioner. Thus, it was held that proceedings under
section 129 should not have been initiated, as per circular dated 14-9-2018). It was held that the object of circular dated 14-9-2018 was that in
case of circumstances as detailed in the circular, which were procedural in nature and there no intention of misleading the transfer of goods, the
proceedings should not be initiated under Section 129.

4

Section
62 and
Section
122

For Levying
Penalty U/Sec
122(2)(a),
procedure U/Sec
73 has to be
followed

Nandi PVC (P.) Ltd.
v. Union of India
[2022] 145
taxmann.com 4
(Andhra Pradesh)
(14-09-2022

An Assessment Order was passed under Section 62 in Form GSTR ASMT - 13, dated 05.02.2019, demanding the Petitioner to pay tax with
interest and penalty. The penalty was levied under Section 122(2)(a) of the CGST Act, 2017. It was contended that, to impose penalty under
Section 122 of CGST Act, procedure under Sections 73 or 74 is required to be followed, for which a SCN has to be issued.
The Court observed that in order to impose penalty in terms of Section 122(2)(a) of the Act, the demand for recovery should be made following
the procedure under Section 73, in which case, the proper Officer shall issue a notice under Section 73 within three months prior to the time
specified in Section 73(10). It appeared from the record that such a notice was not issued prior to passing of impugned order. Thus, order
imposing penalty was set-aside and matter was remanded back to the authority concerned

5

Section
62,
Section
122 and
Section
127

Having
reference to
provision of
Section 127,
penalty can be
levied U/Sec 122
for cases
wherein order
passed U/Sec
62

Spy Agro Industries
Ltd. v. Union of India
[2022] 139
taxmann.com 69
(Andhra Pradesh)
(05-05-2022)

An order U/Sec 62 was passed and thereafter, the very same authority enlarged the order with certain additional liabilities by styling the order
as Corrigendum-cum-Addendum and inserting para No.4.8 and consequently, directed the petitioner to pay penalty U/Sec 122(2)(a) Thereafter,
the very same authority issued another communication titling it as rectification order under section 161 of CGST Act in order to ratify the
Corrigendum-cum-Addendum. The petitioner contended that entire procedure followed by authorities in imposing penalty without hearing the
petitioner was illegal and incorrect. Department stated that there is no bar for imposing penalty under sections 62 and 122.
The Court observed that as per Section 161 where any rectification adversely affects any person, principles of natural justice shall be followed.
Section 127 of the Act which in view of the Court had some importance deals with power to impose penalty in certain cases. In the instan case,
penalties were imposed creating additional liability, which was not reflected in the earlier notice and No opportunity of hearing was given to the
petitioner. Further, section 62 does not anywhere speak about imposing penalty. It only speaks about liability for payment of interest or for
payment of late fee. Therefore, as per section 127, if penalty is to be imposed in cases, which are not covered under section 62 or section 63 or
section 64 or section 73 or section 74 or section 129 or section 130, the authority can impose penalty after giving reasonable opportunity of
hearing such person. Thus, the orders under challenge were set aside with permission to proceed further by issuing a fresh notice

Part-102-One Pager Snapshot to the Cases on use of Scope of Definition Clause in a Statute and Meaning of a word

-Use of Definition Clause
-Definitions in statutes when beginning with, “unless there is anything repugnant in subject”
-Meaning of the Word not defined in the Statue
-Perils of Importing definition from other statute
-Perils of Dictionary Meaning
-Definition of word from other statue no to be imported if not pari materia

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

S.No

Subject

Case

Held

1

Use of Definition
Claus

Nahalchand
Laloochand P.Ltd
vs Panchali CoOp.Hng.Sty.Ltd on
31 August, 2010
(SC)

“Justice G.P. Singh in the `Principles of Statutory Interpretation' (12th edition, 2010) says that the object of a definition of a term is to avoid the
necessity of frequent repetitions in describing all the subject matter to which that word or expression so defined is intended to apply. In other
words, the definition clause is inserted for the purpose of defining particular subject-matter dealt with and it helps in revealing the legislative meaning.
However, the definitive clause may itself require interpretation because of ambiguity or lack of clarity in its language. In the `Construction of Statutes' by
Earl T. Crawford (1989 reprint) at page 362, the following statement is made: ".......the interpretation clause will control in the absence of anything else in
the act opposing the interpretation fixed by the clause. Nor should the interpretation clause be given any wider meaning than is absolutely necessary. In
other words, it should be subjected to a strict construction."

2

Definitions in
statutes when
begining with,
“unless there is
anything
repugnant in
subject”

Nahalchand
Laloochand P.Ltd
vs Panchali CoOp.Hng.Sty.Ltd on
31 August, 2010
(SC)

But s. 2 begins with the words " in this Act, unless there is anything repugnant in the subject or context " and then come the various definition
clauses of which (9) is one. It is well settled that all statutory definitions or abbreviations must be read subject to the qualification variously
expressed in the definition clauses which created them and it may be that even where the definition is exhaustive inasmuch as the word defined
is said to mean a certain thing, it is possible for the word to have a somewhat different meaning in different sections of the Act depending upon
the subject or the context. That is why all definitions in statutes generally begin with the qualifying words similar to the words used in the present case,
namely, unless there is anything repugnant in the subject or context.

3

Meaning of the
Word not defined
in the Statue

Maheshwari Fish
Seed Farm vs T.
Nadu Electricity
Board And Anr on
16 April, 2004 (SC)

It is settled rule of interpretation that the words not defined in a statute are to be understood in their natural, ordinary or popular sense. According
to Justice Frankfurter, "After all, legislation, when not expressed in technical terms, is addressed to common run of men, and is, therefore, to be understood
according to sense of the thing, as the ordinary man has a right to rely on ordinary words addressed." (Wilma E. Addison v. Holly Hill Fruit Products, 322
US 607, at p.618). In determining, therefore, whether a particular import is included within the ordinary meaning of a given word, one may have regard to
the answer which everyone conversant with the word and the subject-matter of statute and to whom the legislation is addressed, will give if the problem
were put to him. (Principles of Statutory Interpretation by Justice G.P. Singh, Ninth Edition, 2004, p.95

4

Perils of
Importing
definition from
statute

Maheshwari Fish
Seed Farm vs T.
Nadu Electricity
Board And Anr on
16 April, 2004 (SC)

Suffice it to observe that the common parlance meaning of the term 'agriculture', in the context in which it has been used and is arising for
determination before us, cannot be determined by reference to definition given in other statutes. This we say for more reasons than one. Firstly,
none of the statutes reffered to by Shri Iyer, the learned senior counsel, can be called statutes in pari materia. Secondly, it is common knowledge that the
definition coined by the Legislature for the purpose of a particular enactment is often an extended or artificial meaning so assigned as to fulfill the object of
that enactment. Such definitions given in other enactments cannot be freely used for finding out meaning to be assigned to a term of common parlance
used in an altogether different setting. And lastly, as Justice G.P. Singh points out in "Principles of Statutory Interpretation" (Ninth Edition, 2004,
at page 163) "......it is hazardous to interpret a statute in accordance with a definition in another statute and more so when such statute is not
dealing with any cognate subject or the statutes are not in pari materia." The same view has been taken in the decision of this court in CIT, W.B.
v. Benoy Kumar (supra) which we have extensively referred to earlier in this judgment

5

Perils of
Dictionary
Meaning

CGT vs. Getti
Chettiar [1971] 82
ITR 599(SC)

A reading of this section clearly goes to show that the words "disposition", "conveyance", "assignment", "settlement", "delivery" and "payment" are used
as some of the modes of transfer of property. The dictionary gives various meanings for those words but those meanings do not help us. We have
to understand the meaning of those words in the context in which they are used. Words in a section of a statute are not to be interpreted by
having those words in one hand and the dictionary in the other. In spelling out the meaning of the words in a section, one must take into
consideration the setting in which those terms are used and the purpose that they are intended to serve

6

Definition of word
from other statue
no to be imported
if not pari materia

Sri Jagatram Ahuja
vs The
Commissioner Of
Gift Tax on 17
October, 2000 (SC)

We may state here itself that the words and expressions defined in one statute as judicially interpreted do not afford a guide to construction of
the same words or expressions in another statute unless both the statutes are para-materia legislations or it is specifically so provided in one
statute to give the same meaning to the words as defined in other statute. The aim and object of the two legislations, namely, the Gift-tax Act and the
Estate Duty Act are not similar

Part-101-One Pager Snapshot to the Latest Cases on Section 73, Rule 86A, Section 129 and SCN issued on same subject by two authorities

SCN issued on same subject matter issued by two authorities to be decided by one of the authorities
-An earlier order passed under Rule 86A(2) lifting blocking of ITC Ledger, will not preclude assessing officer in passing an order under Section 73/74 to hold that ITC was wrongly availed.
-Conduct of the assessee to be considered in case of expired Eway Bill and having found that the conduct was not with the intention to evade tax, relief to be granted to the assessee

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

S.No

Section

Case Subject

Case

Held

1

Section
73

SCN on same
subject matter
issued by two
authorities to be
decided by one
of the authorities

LGW Industries Ltd. v.
Assistant
Commissioner, Salt
Lake Charge [2023]
154 taxmann.com 611
(Calcutta) (15-03-
2023

SCN was issued by Assistant Commissioner, Salt Lake Charge on dated 29th Dec 2022 and on the very same issue, Assistant Commissioner,
State Tax, Bureau of Investigation, South Bengal (HQ) had issued notice dated 7th Nov, 2022.
The Court was of the view that if the subject issue is one and the same or if the subject is inter-related, it is always better that one authority
adjudicates the matter. By directing the assessee to face multiple authorities may result in conflicting decisions. Therefore, not only in the
interest of the assessee but in the interest of the revenue also, one authority should take the decision. Admittedly, Bureau of Investigation,
South Bengal was centralised agency and if that agency has already taken up the matter for consideration and the concerned Assistant
Commissioner has issued notice dated 7th Nov, 2022, it was held to be appropriate that issues be considered by the said authority including
the issue, which was raised by the respondent in the SCN dated 29th Dec 2022

2

Section
73/74 and
Rule 86A

An earlier order
passed under
Rule 86A(2)
lifting the
blocking of ITC
Ledger, will not
preclude the
assessing officer
in passing an
order under
Section 73/74 to
hold that ITC was
wrongly availed

D. Ranganathan &
Co. v. Assistant
Commissioner (RAL)
(FAC) [2023] 154
taxmann.com 606
(Madras) (11-04-
2023

For the period 2017-18, petitioner's ITC had been blocked under Rule 86A on the basis that ITC had been availed allegedly, fraudulently.
The petitioner was called upon to file objections and was also heard. Pursuant thereto, an order was passed on 16-7-2021, considering the
request of the petitioner for unblocking of credit under Rule 86A in its favour. Thereafter, notices came to be issued to the petitioner on the
basis of information received by the assessing officer (hereinafter referred as “R 3”) to the effect that suppliers were non-existed or were not
conducting business from the place in which registration had been obtained. The petitioner responded to the SCN by relying on proceedings
dated 16-7-2021. The submissions made before R1 were reiterated before R3, the assessing officer, and, infact response dated 15-11-2022
relies, lock, stock and barrel, on proceedings dated 16-7-2021 only. After considering the explanation and hearing the petitioner in detail, R3
proceeded to pass the impugned order on 5-1-2023.
The Court observed that while passing an order lifting the blocking of credit, the assessing authority was undoubtedly required to examine
whether such block has been validly made. It was thus incumbent upon the officer concerned to examine every aspect of the matter prior to
arriving at a proper decision. However, at the same time, it was also incumbent upon the dealer to establish receipt of the goods or services.
R3, in the impugned order of assessment had proceeded on the basis that the petitioner did not establish movement of goods. In fact, he
referred to various particulars called for by him, such as weighment slips, vehicle receipts for goods transportation, freight for inward and
outward related documents, fuel expenses, stating that such documents were not produced. He thus concluded, that petitioner did not
discharge burden placed upon him to establish movement of goods and, based on such failure as well as the departmental enquiries,
concluded that the transactions were fictitious as the suppliers did not exist. As regards the bank statements, there was an explanation put
forth in the order to the effect that cash has been credited and debited the same day and hence the transactions constituted classic circular
transactions. The High Court, thus concluded that true, R3 ought to have made reference to order of R1 dated 16-7-2021 and undoubtedly,
this was a flaw in the assessment order but not a fatal flaw. The power of an assessing officer under section 73/74 is wide and proceedings
for assessment may be initiated in any circumstance where it appears to the proper officer that the claim of ITC by an assessee is incorrect.
The mere fact that an order has been passed under Rule 86A(2) will not stand in the way of the assessing officer making an assessment or
curtailing his powers in any way, in such an exercise.

3

Section
129

Conduct of the
assessee to be
considered in
case of expired
Eway Bill and
having found
that the conduct
was not with the
intention to
evade tax, relief
to be granted to
the assessee

Usha Martin Ltd. v.
Deputy Commissioner
of State Tax [2023]
154 taxmann.com 610
(Calcutta) (16-06-
2023)

The goods in question were meant for export and the appellants had generated an e-Way Bill which was valid till 12th September, 2019. The
appellants' case was that the goods while being loaded into the vessel had got damaged and as a result, the goods had to be taken back to
the appellants factory at Ranchi for repairs. For such purpose the e-Way Bill was generated based on a challan on 7th September, 2019 which
was valid till 12th September, 2019. In terms of Rule 138(10), an option is given to extend period of e-Way Bill and such extension should be
done before eight hours. Admittedly, eight hour period expired about 8.10 a.m. on 13-9-2019 and at about 8.20 a.m., goods were detained.
The Court observed that on perusal of e-Way Bill, it was seen that no tax was payable since the goods which were owned by the appellants
were taken back to their factory at Ranchi for repairs. The identical issue was considered in various matters earlier by the Court and in all
those matters, conduct of the assessee was considered and having found that the conduct was not with the intention to evade tax, relief was
granted to those assessee’s. The Court thus concluded that case on hand would also fall under the said category since there was no
allegation of any evasion of tax rather it was not disputed that goods were being transported under a cover of challan to the factory of
appellants for carrying out repairs and thus, it was not a fit case where tax and penalty should have been levied on the appellants.
Cases Referred- Progressive Metals Pvt. Ltd. v. The Deputy Commissioner, State Tax, Bureau of Investigation, South Bengal, Durgapur
Zone & Ors. in MAT 562 of 2023 dated 28-4-2023; KDG Projects Pvt. Ltd. v. Assistant Commissioner of State Tax, Bureau of Investigation
(North Bengal) reported in 2022(66) G.S.T.L. 262 (Cal.); Medha Servo Drives Private Limited & Anr. v. The Assistant Commissioner of, State
Tax, Bureau of Investigation (South Bengal), Durgapur Zone & Ors. in MAT 1751 of 2022 dated 17-11-2022

Part-100-One Pager Snapshot to the Latest Cases on entitlement of ITC as per the provisions of Section 16-Part-III

-Before directing the recipient to reverse ITC, the authority ought to take action against the supplier and unless and until authority was able to bring out exceptional case as clarified in the press release issued by CBIC, straight away, authority was not justified in directing the recipient to reverse the ITC
-ITC not allowed as tax cannot be paid on invoices issued post cancellation of registration of supplier
-Time limit prescribed for claiming ITC u/s 16(4) is not violative of articles 14, 19(1)(g) and 300-A of the Constitution of India.

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

S.No

Case Subject

Case

Held

1

Before directing
the recipient to
reverse ITC, the
authority ought to
take action
against the
supplier and
unless and until
authority was able
to bring out
exceptional case
as clarified in the
press release
issued by CBIC,
straight away,
authority was not
justified in
directing the
appellant to
reverse the ITC

Suncraft Energy
(P.) Ltd. v.
Assistant
Commissioner,
State Tax [2023]
153
taxmann.com 81
(Calcutta

The allegation against the appellant was that the supplier has not shown the Bill in GSTR 1 and hence the appellant is not eligible to avail ITC as per section
16(2). SCN did not allege that appellant was not in possession of tax invoice and that the appellant has not received the goods or services or both.
The court referred to decision of Appex Court in the matter of Union of India (UOI) v. Bharti Airtel Ltd. [2022] 4 SCC 328 wherein effect and purport of Form
GSTR-2A was explained that it is only a facilitator for taking a confirm decision while doing such self-assessment. Non-performance or non-operability of Form
GSTR-2A will be of no avail because dispensation stipulated at the relevant time obliged registered persons to submit return on the basis of such selfassessment in Form GSTR-3B manually on electronic platform. The Court relied upon Arise India Ltd. v. Commissioner of Trade and Taxes, Delhi.
The Court referring to press release dated 18-10-2018 observed that the authority had not conducted any enquiry on supplier more particularly when
clarification has been issued where furnishing of outward details in Form GSTR 1 by a corresponding supplier and the facility to view the same in Form GSTR
2A by the recipient is in the nature of tax payer facilitation and does not impact the ability of the tax payers to avail ITC on self-assessment basis in consonance
with the provisions of section 16 of the Act. Furthermore, Press release dated 4
th May 2018 was also referred wherein it was clarified that there shall not be
any automatic reversal of ITC from buyer on non-payment of tax by seller and in case of default in payment of tax by seller, recovery shall be made from seller
however, reversal of credit from buyer shall also be an option available with the revenue authorities to address exceptional situations like missing dealer,
closure of business by supplier or supplier not having adequate assets etc.
Thus, it was held that the action of the proper officer was branded as arbitrarily as it carried without resorting to any action against the supplier and ignoring
the tax invoices produced by the appellant as well as the bank statement to substantiate that they have paid the price for the goods and services rendered as
well as the tax payable there on. Therefore, before directing the appellant to reverse ITC, the authority ought to have taken action against the supplier and
unless and until authority was able to bring out exceptional case where there was collusion between appellant and supplier or where supplier was missing or
supplier had closed down its business or the supplier did not have any assets and such other contingencies, straight away the authority was not justified in
directing the appellant to reverse the ITC. Therefore, demand raised on the appellant was held not to be sustainable. The order was set aside with a direction
to first proceed against supplier and only under exceptional circumstance as clarified in press release by CBIC, proceedings be initiated against appellant.

2

ITC not allowed
as tax cannot be
paid on invoices
issued post
cancellation of
registration of
supplier

Jai Balaji Paper
Cones v.
Assistant
Commissioner
Sales Tax [2023]
152taxmann.com
690 (Madras)

The case of the petitioner is that the petitioner has paid an amount of Rs.4,14,000/- to the supplier by including the GST payable of Rs.4,14,000/- on three
invoices. It was submitted that since the petitioner has paid the tax due to the supplier on invoice dated 23.11.2018, thus they cannot be asked to pay IGST.
The court by referring to Section 16(2) (c) of CGST Act, 2017 stated that a registered person is not entitled to credit of input tax in respect of any supply of
goods or services of both, if tax is not paid to the Government. The registration of the supplier was cancelled on 31.10.2018 before three invoices dated
23.11.2018 were raised. Thus, it was clear that supplier could not have paid the tax to the ex-chequer. Therefore, it was held that there cannot be a mandamus
to the authority contrary to the provisions of the respective GST Act of 2017 and the Rules made thereunder and the petition as dismissed. It was further stated
that the petitioner was however entitled to recover the amount from the suppliers in the manner known to law.

3

Time limit
prescribed for
claiming ITC u/s
16(4) is not
violative of
articles 14,
19(1)(g) and 300-
A of the
Constitution of
India.

[2023] 152
taxmann.com
640 (Andhra
Pradesh)
Thirumalakonda
Plywoods v.
Assistant
Commissioner -
State Tax

The Court observed that Section 16(2) does not appear to be a provision which allows input tax credit, rather ITC enabling provision is section 16(1). On the
other hand, section 16(2) restricts the credit which was otherwise allowed to only such cases where conditions prescribed in it were satisfied. Therefore, section
16(2) in terms only override the provision which enabled the ITC i.e., section 16(1). This is evident from the manner in which Section 16(2) is couched. The non
obstante clause in section 16(2) is followed by a negative sentence "no registered person shall be entitled to the credit of any input tax in respect of any supply
of goods or services or both to him unless". This negative sentence pellucidly tells that unless the conditions mentioned in section 16(2) are satisfied, no credit
will be eligible. This stipulation manifests that section 16(2) is not an enabling provision but a restricting provision. What it restricts is the eligibility which was
otherwise given U/s 16(1). Hence unless such clear inconsistency is established, overriding effect cannot be given over other provisions. In the present case
both Section 16(2) and (4) are two different restricting provisions, the former providing eligibility conditions and the later imposing time limit. Further, influence
of a non obstante clause has to be considered on the basis of the context also in which it is used. Therefore, section 16(4) being a non-contradictory provision
and capable of clear interpretation, will not be overridden by non obstante provision u/s 16(2). Thus, in substance it was held that section 16(1) is an enabling
clause for ITC; 16(2) subjects such entitlement to certain conditions; section 16(3) and (4) further restrict the entitlement given u/s 16(1). That being the scheme
of the provision, it is out of context to contend that one of the restricting provisions overrides other two restrictions. Another way of looking it was that if really
legislature had no intention to impose time limit, there was no necessity to insert Section16(4) and to further intend to override it through section 16(2).
The Court further observed that mere filing of the return with a delay fee will not act as a springboard for claiming ITC and referred to the argument by learned
Advocate General wherein it was stated that collection of late fee is only for the purpose of admitting the returns for verification of taxable turnover of the
petitioner but not for consideration of ITC. Such a statutory limitation cannot be stifled by collecting late fee.
The Court observed that ITC being a concession, the legislature is within its competency to impose certain conditions, including time prescription for availing
such right. Thus, time limit prescribed for claiming ITC u/s 16(4) is not violative of articles 14, 19(1)(g) and 300-A of the Constitution of India


Part-99-One Pager Snapshot to the Latest Cases on entitlement of ITC as per the provisions of Section 16-Part-II

-Merely on the ground that in Form GSTR-2A the tax is not reflected, should not be a sufficient ground to deny the claim of ITC.

-Section 16(4) is constitutionally valid and is not violative of Articles 19(1)(g) and Article 300-A of the Constitution of India and is not inconsistent with or in derogation of any of the fundamental right guaranteed under the Constitution of India.

-Claim of Input Tax Credit raised by the petitioner cannot be sustained when the supplying/selling dealer has not paid up the amounts to the Government; despite collection of tax from the purchasing dealer.

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

S.No

Case Subject

Case

Held

1

Merely on the ground
that in Form GSTR-2A
the tax is not reflected,
should not be a
sufficient ground to
deny the claim of ITC.

Diya Agencies v.
State Tax Officer
[2023] 154
taxmann.com 421
(Kerala)

The Court had observed that if supplier has not remitted the amount paid by the petitioner to him, the petitioner cannot be held responsible. Whether
the petitioner has paid the tax amount and the transactions between the petitioner and seller dealer are genuine are the matter on facts and evidence.
The petitioner must discharge the burden of proof regarding the remittance of tax to the seller dealer by giving evidence as mentioned in the Judgment
of the Supreme Court in 2023 (3) TMI 533 SC (The State of Karnataka v. M/s. Ecom Gill Coffee Trading Private Limited). If on examination of the
evidence submitted by petitioner, assessing officer is satisfied that claim is bonafide and genuine, petitioner should be given input tax credit. Merely
on the ground that in Form GSTR-2A the said tax is not reflected should not be a sufficient ground to deny the assessee the claim of input tax credit

2

Section 16(4) is
constitutionally valid
and is not violative of
Articles 19(1)(g) and
Article 300-A of the
Constitution of India
and is not inconsistent
with or in derogation of
any of the fundamental
right guaranteed under
the Constitution of
India.

Gobinda
Construction v.
Union of India [2023]
154 taxmann.com
311 (Patna)

-The Court observed that ITC is not unconditional and a registered person becomes entitled to ITC only if the requisite conditions are fulfilled and
the restrictions contemplated Section 16(2) do not apply. One of the conditions to make a registered person entitled to take ITC is prescribed Section
16(4). The right of a registered person to take ITC under Section 16(1) becomes a vested right only if the conditions to take it are fulfilled, free of
restrictions prescribed under Section 16(2).
-The Court was of the view that provision under Section 16(4) is one of the conditions which make a registered person entitled to take ITC and by no
means it can be said to be violative of Article 300-A.
-It was argued that there is absence of any rationale behind fixation of a cut-off-date for filing of return. The Court did not find any merit in the
submissions so advanced, and outrightly rejected the submission.
-It was further observed that Fiscal legislation having uniform application to all registered persons and cannot be said to be violative of Article 19(1)(g)
of the Constitution and the question of such statutory provision being violative of Article 302 of the Constitution and in teeth of Article 13 of the
Constitution of India does not arise at all. The Court further stated that the submission that the requirement of Section 16(4) being directory and not
mandatory is not at all tenable in view of the clear language used in Section 16 of the Act. The concession of ITC under Section 16(1) is dependent
upon the fulfillment of requisite conditions laid down under various provisions including sub-section (4) thereof.
-Thus, Court held that Section 16(4) is constitutionally valid and is not violative of Articles 19(1)(g) and Article 300-A of the Constitution of India. The
said provision is not inconsistent with or in derogation of any of the fundamental right guaranteed under the Constitution of India

3

Claim of Input Tax
Credit raised by the
petitioner cannot be
sustained when the
supplying/selling dealer
has not paid up the
amounts to the
Government; despite
collection of tax from
the purchasing dealer.

Aastha Enterprises
v. State of Bihar
[2023] 153
taxmann.com 491
(Patna

-The Court by observing the decision of Apex Court in the matter of The State of Karnataka v. M/s. Ecom Gill Coffee Trading Private Limited stated
that the said decision can be distinguished especially looking at section 70 of the KVAT Act and also petitioner having to produce not only the invoices
but also the account details and the documents evidencing transportation of goods. However, this did not absolve the assessee from the rigor provided
under Section 16(2)(c). This provision in effect casts a burden of proof on the purchasing dealer who claims ITC, which is a right created under statute;
sustained only under the specific terms of the statute.
-The benefit to claim ITC is one conferred by the statute and if the conditions prescribed in the statute are not complied; no benefit flows to the
claimant.
-The contention of double taxation was negated by the Court since the claim was denied only when the supplier who collected tax from the purchaser
failed to pay it to the Government.
-Further contention raised was regarding measures provided to recover the collected tax, which selling dealer failed to pay to the Government. The
mere fact that there is a mode of recovery provided under the statute would not absolve the liability of the tax payer to satisfy the entire liability to the
Government. The purchasing dealer being the person who claims ITC could only claim the benefit if the supplier who collected the tax from the
purchaser has paid it to the Government and not otherwise.
-The Government definitely could use its machinery to recover the amounts from the selling dealer and if such amounts are recovered at a later
point of time, the purchasing dealer who paid the tax to its supplier could possibly seek for refund. However, as long as tax paid by the purchaser to
the supplier, is not paid up to the Government by the supplier; the purchaser cannot raise a claim of ITC under the statute.
-When supplier fails to comply with the statutory requirement, the purchasing dealer cannot, without credit in his account claim ITC and the remedy
available to the purchasing dealer is only to proceed for recovery against the seller. Even if such recovery from the supplier is affected by the purchasing
dealer; the State would be able to recover the tax amount collected and not paid to the exchequer, from the selling dealer since the rigor of provisions
for recovery on failure to pay up, after collecting tax, enables the Government so to do.
-Therefore, there should be credit available in the credit ledger of the purchaser to claim Input Tax and otherwise the claim would be frustrated. On
the above reasoning, it was held that the claim of ITC raised cannot be sustained when selling dealer has not paid up the amounts to the Government;
despite collection of tax from the purchasing dealer

Part-98-One Pager Snapshot to the Latest Cases on entitlement of ITC as per the provisions of Section 16 of CGST Act, 2017-Part-I

-Seller to be examined in case wherein supply of goods challenged
-Recovery to be first affected from the seller
-ITC to be given for transactions entered by the recipient before cancellation of registration of the supplier
-In absence of documents, mere reflection of credit in GST Records electronically is not sufficient.
-Section 16 to be followed strictly, substantive liability on supplier & protective liability on recipient. Mechanism to brought in place to address the same.
-SCN can be treated as a communication under Section 42(3) intimating mismatch between the ITC claimed by recipient and tax paid by the supplier
-Supporting document can be furnished in reply to the SCN that tax has been paid

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

S.No

Case Subject

Case

Held

1

Seller to be examined
in case wherein supply
of goods challenged
Recovery to be first
affected from the seller

D.Y. Beathel
Enterprises v. State
Tax Officer (Data
Cell), Tirunelveli
[2021] 127
taxmann.com 80
(Madras)

The Court observed that if the tax had not reached the kitty of the Government, then the liability may have to be eventually borne by one party, either
the seller or the buyer. In the case on hand, Court observed that it did not appear that any recovery action has been taken against the seller. Also,
assessment of the seller was completed by excluding the subject transactions alone The Court was unable to appreciate the approach of the authorities
as when it has come out that the seller has collected tax from the purchasing dealers, the omission on the part of the seller to remit the tax in question
must have been viewed very seriously and strict action ought to have been initiated against him. Also further, apart in enquiry in question, seller ought
to have been examined and confronted, because respondent had taken a stand that the petitioners have not even received the goods and had availed
input tax credits on the strength of generated invoices. Thus, impugned orders were quashed and remitted back on account of non-examination of
seller and non-initiation of recovery action against the seller the first place.

2

ITC to be given for
transactions entered by
the recipient before
cancellation of
registration of the
supplier

LGW Industries Ltd.
v. Union of India
[2022] 134
taxmann.com 42
(Calcutta)

The writ petition was disposed of by remanding the matters to be considered afresh on the issue of their entitlement of benefit of input tax credit in
question. The authorities were directed to consider the documents which petitioners wanted to rely in support of their claim of genuineness of the
transactions in question and to consider as to whether payments on purchases in question along with GST were actually paid or not to the suppliers
(RTP) and also to consider as to whether the transactions and purchases were made before or after the cancellation of registration of the suppliers
and also consider as to compliance of statutory obligation by the petitioners in verification of identity of the suppliers (RTP). It was further directed
that if it is found upon consideing the relevant documents that all the purchases and transactions in question were genuine and supported by valid
documents and transactions in question were made before the cancellation of registration of those suppliers and after taking into consideration the
judgments of the Supreme Court and various High Courts which have been referred in this order and in that event the petitioners shall be given the
benefit of input tax credit.
Similar ratio also followed in Sanchita Kundu v. Assistant Commissioner of State Tax [2022] 142 taxmann.com 576 (Calcutta) and Gargo
Traders v. Joint Commissioner, Commercial Taxes (State Tax) [2023] 151 taxmann.com 270 (Calcutta).

3

In absence of
documents, mere
reflection of credit in
GST Records
electronically is not
sufficient.

Tvl. Ashok Trading
Co. v. State Tax
Officer, Inspection
Cell-III, Trichy [2022]
141 taxmann.com
227 (Madras)

The Court observed that the petitioner had no documents to substantiate a valid availing of input tax credit and mere reflection of the amounts in the
Goods and Service Tax records electronically is not sufficient. If credit is to be allowed and adjusted on such transactions, it would lead to unintended
benefits being conferred

4

Section 16 to be
followed strictly,
substantive liability on
supplier & protective
liability on recipient.
Mechanism to brought
in place to address the
same

Pinstar Automotive
India (P.) Ltd. v.
Additional
Commissioner
[2023] 149
taxmann.com 13
(Madras

The Court observed that the provisions of section 16 are to be observed strictly, such that, there is no jeopardy to the interests of the revenue. The
provisions of the statute has, assimilating wisdom of experience from the erstwhile tax regimes, gone one step further to ensure that the interests of
the revenue are protected by providing for a mandate that the tax liability is defrayed/met either at the hands of the supplier or the purchaser, the
petitioner in this case. Thus, no fault can be attributed to the revenue in this regard. An additional factor is that where the tax liability has been met by
way of reversal of ITC and similarly recovery is effected from the supplier as well, this would amount to a double benefit to the revenue. Thus, while
the Department may reverse credit in the hands of the purchaser, this has to be a protective move, to be reversed and credit restored if the liability is
made good by the supplier. Thus, the substantive liability falls on the supplier and the protective liability upon the purchaser. A mechanism must be
put in place to address this situation.

5

SCN can be treated as
a communication under
Section 42(3) intimating
mismatch between the
ITC claimed by
recipient and tax paid
by the supplier
Supporting document
can be furnished in
reply to the SCN that
tax has been paid

Mahendra Feeds
and Foods (Trading
Division) v. Deputy
Commissioner of
GST and Central
Excise [2022] 143
taxmann.com 248
(Madras)

It was contended by the revenue that ITC claimed by petitioner was a wrong claim because, there was a complete mismatch between the supplier
and the petitioner, as the supplier, in support of its outward tax has not paid the tax or not shown the same in their accounts, as if that they paid the
tax. It was contended on behalf of petitioner that under section 42(3) of GST Act there was an obligation on the part of Revenue to communicate to
both the supplier and recipient about mismatch of ITC. Once such a communication is issued under the rule in consonance with section 42(3), there
must be a procedure to be followed. However, since no such communication was issued and SCN was issued, which has also been responded by
the petitioner saying that the supplying dealer has paid the tax, it is a procedural violation.
The Court observed that the rectification would be possible at the hands of the petitioner who was the dealer who received the goods by way of input
supply, at least at the time of receipt of SCN issued in this regard by the Revenue. After receipt of the SCN, if at all the petitioner wanted to rectify the
mismatch, supporting documents to substantiate that output tax had been paid by the supplying dealer should have been procured and filed along
with the reply, which they failed to do. Therefore, technical reason that under section 42(3) it should have been communicated at the earliest point of
time and therefore SCN cannot be treated as communication intimating mismatch between the supplier and petitioner, cannot be countenanced