S.No

Subejct

Held

1

Petitioner’s contention

Packing material, consumables etc. used as raw material qualified as input in terms of statutory provisions. For refund under inverted duty, there need not be one-to-one correlation between inputs or outputs but a rationale principle of comparing average rate of duty of inputs with the rate of duty of outputs. Other grounds of rejection that refund was due to high input purchases and they were in stock during the claim period is not referable to statutory scheme as it does not talk of stock, but only refers to output turnover

2

Facts

Description
Output
Inputs utilised
GST
Cotton
5%
Cotton
5%
Packing Material
12%
Other Inputs
28%
Cotton Blended Yarn
5%
Cotton
5%
Manmade Fibre
18%
Packing Material
12%
Other Inputs
28%
Store/Spare Consumable
18%
Polyester/
Viscose blended yarn
12%
Cotton
5%
Manmade Fibre
18%
Packing Material
12%
Other Inputs
28%
Store/Spares Consumable
18%
Polyester/
Viscose Yarn
12%
Manmade Fibre
18%
Packing Material
12%
Other Inputs
28%
Store/Spares Consumable
18%
Other Outward supply
0.1%
Cotton
5%
Manmade Fibre
18%
Packing Material
12%
Other Inputs
28%
The Court observed that while two output supplies namely cotton yarn and cotton blended yarn were taxable @ 5%, the rate of GST on inputs, except cotton, was more than the rate of tax on output supplies. One of the inputs (raw material) namely cotton attracted 5% GST, but all other inputs namely packing material, store consumables and spares, manmade fibre and other inputs carried higher rate of tax, i.e., 12%, 18% and 28%. As far as other two output supplies namely polyester/viscose blended yarn and polyester/viscose yarn were concerned, rate of GST on output supplies was 12%. For manufacturing of polyester/viscose blended yarn, as many as five inputs (raw materials) were utilised, namely cotton, manmade fibre, packing material, store consumables and spares and other inputs. Cotton alone was taxable @ 5% which was lower than GST on output supply. Other input, namely, packing material carried 12% rate of GST which was equal to the rate of GST on such output supply. However, three other inputs, namely, manmade fiber, store consumables and spares and other inputs attract higher rate of GST which was 18% and 28%. Similarly, polyester/viscose yarn was also taxable @ 12% and out of four inputs, the rate of GST on packing material alone being 12% was equal to the rate of tax on such output supply. However, remaining inputs, namely, manmade fibre, store consumables and spares as also other inputs carry rate of tax higher than the rate of tax on such output supply. Under the heading “other outward supply”, the rate of GST is only 0.1% whereas all the inputs (raw materials) used to manufacture carry higher rate of GST, i.e. 5%, 12%, 18% and 28%.
The Court observed that above comparative analysis clearly revealed that all the inputs taken together and utilised through the process of manufacturing, the output supplies would carry higher rate of GST as compared to the rate of GST on such inputs, either taken individually or collectively both. The rate of tax on output is ranging from 0.1% to 5% or 12% whereas rate of tax applicable on some inputs may be 5% or 12%, but on remaining inputs, rate of GST is certainly higher than 5% or 12%.

3

Observed

Plural Use of words “inputs” and “output supplies”- Proviso (ii) to Section 54(3) provides “where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies”. The language of the provision signifies plurality of both inputs and output supplies. Use of the word, “inputs” signifies that there may be more than one input and it was not possible to read “inputs” as “input” alone. Thus, refund of unutilised ITC due to inverted rate cannot be restricted to those cases of single input and single output supply.
Rate of Tax on inputs should exceed Rate of tax on output - Scheme of refund is applicable where accumulation of unutilised ITC is a result of tax rate on inputs being higher than tax rate on output supplies. As inputs were taxed @ 5%, 12%, 18% & 28% and output taxed @ 0.1%, 5% & 12%, thus, tax rate on inputs was held to be higher than tax rate on output supplies.
Rejection because 80% output was of 5% and input majority was of 5%- Refund was rejected as output sales to the extent of 80% was having 5% duty and input too was majorly of 5% rate and thus, rate was held to be more or less the same. The approach that “rate is more of less the same” was held to be running contrary to statutory scheme and once all inputs and output supplies on comparative basis lead to a situation where tax rate on inputs is higher than tax rate on output supplies, scheme of refund was to be given full effect.
Overall rate of all inputs should be marginally higher than rate of output supplies - While rate of tax on certain inputs was 18% and 28%, no output supplies attracted tax rate beyond 12%. Therefore, if overall rate of all inputs is marginally higher than rate of output supplies, accumulation of unutilised ITC will bring it within the net of inverted duty structure.
Rejection on the claim that refund is mainly on account of accumulation of high input purchase and they were in stock during the period- Refund was rejected that claim of refund was mainly due to high input purchases and they were in stock during the claim period. It was stated by the Court that Statutory scheme does not talk of the stock, but refers to output turnover (adjusted turnover) during the claim period. Rule 89(5) envisages that total ITC claimed on inputs during the claim period gets consumed in respect of the turnover of the claim period. Obviously, once refund is sanctioned, ITC claimed for relevant tax period cannot be carried forward to the subsequent claim periods. Thus, determining factor is rate of tax and quantum of ITC and not the value/quantum of individual inputs (going into an output) and the outputs. Stock based approach, thus was held to violate the statutory scheme of refund.
Circular No. 79 dated 31.12.2018 and Circular No. 125 dated 18.11.2019 do not provide guidelines for claims for refund involving multiple outputs- The Court observed that competent authority issued guidelines for refund wherein there were multiple inputs but situation of multiple output supplies was not dealt by aforesaid circulars.
Affirmation of rejection of the claim of petitioner by Appellate Authority cannot be on a ground other than the ground for rejection of claim by the Adjudicating Authority

Held

Where tax rate on some inputs is higher than tax rate on output supplies, and where outputs are more than one, statutory scheme of refund based on inverted duty structure shall be applicable and, refund claim would be determined based on computation prescribed in Rule 89(5) and not based on any other mode of computation.

S.No

Subject

Case

Held

1

Authorisation U/Sec 67 would be in respect of business premises of an assessee and cannot be in respect of each and every person and each and every article, goods, books, and documents which may be discovered during search operation.

Velayudhan Gold LLP v. Intelligence Officer [2023] 156 taxmann.com 21 (Kerala) (20-10-2023)

Search was conducted at the business premises of M/s Sobhana Jewellery. During the search, it was seen that some gold ornaments were kept in a bag of employees of petitioner (i.e. Velayudhan Gold LLP) who were present during the search at the business premises of M/s Sobhana Jewellery. The gold ornaments were found to be accompanied by a delivery challan issued by the petitioner (i.e. Velayudhan Gold LLP) endorsing 22kt gold ornaments with net weight of 1332.590 gms in the name of M/s Sobhana Jewellery. It was issued for transportation of ornaments from the petitioner (i.e. Velayudhan Gold LLP) to M/s Sobhana Jewellery. The net weight of the gold ornaments on verification was found to be 1647.97 grams. Discrepancies were found between documents and actual stock in bag. As a result, gold ornaments found in bag were seized, and seizure memo was prepared. Petitioner contended there was no authorisation in respect of jewellery items of petitioner (i.e. Velayudhan Gold LLP), which were seized from premises of M/s Sobhana Jewellery.
The court observed from perusal of Section 67(2), when search and seizure operations are authorised, at that time, it would not be known which are the items or documents or books which might be recovered or which would have been kept at a secreted place. What is relevant is that while granting authorisation for search and seizure operations, the authority granting such permission, i.e., Joint Commissioner or Officer above the rank of Joint Commissioner, should have reasons to believe that the goods, documents or things hold relevance and are useful in any legal proceedings and the same are secreted at a particular place. The petitioner's (i.e. Velayudhan Gold LLP) gold jewellery items were also found stored in a bag at the premises of M/s Sobhana Jewellery. The contention of the petitioner that there was no authorisation for the seizure of 1647.970 grams of gold, the property of the petitioner, does not merit consideration as there was authorisation for the search of the premises of M/s Sobhana Jewellery and these gold items, which the petitioner had later on claimed ownership, was found in a bag in the premises of M/s Sobhana Jewellery. There cannot be authorisation in respect of each and every person and each and every article, goods, books, and documents which may be discovered during the search operation. The authorisation has to be done in respect of the business premises of an assessee, and if things, items, books or documents are found that the authorised officer has reasons to believe that they would be relevant for the purpose of proceeding under the SGST/CGST Act 2017, they are liable to be seized. (Section 67 of CGST Act, 2017)

2

Tax collected but paid after notice U/Sec 73(1), although within 30 days of the notice will attract 10% penalty by virtue of Section 73(11)

Global Plasto Wares v. Assistant State Tax Officer [2023] 156 taxmann.com 7 (Kerala) (17-10-2023)

Petition was filed against the penalty in the impugned order to the extent of Rs. 40,000/- . Petitioner contended that he had paid all tax before thirty days from the date of the notice. The notice was dated 28-2-2022 and petitioner had paid the tax on 10-3-2022. Petitioner relied upon Section 73(8). Department contended that Section 73(8) comes into play when an assessee has not paid the tax on the transactions. But where assessee had collected tax from the others and not credited it to the Government then Section 73(11) will come into play as Section 73(11) of the GST Act, 2017 begins with a non-obstante clause i.e. ; "notwithstanding anything contained in sub-section (6) or sub-section (8), penalty under sub-section (9) shall be payable where any amount of self-assessed tax or any amount collected as tax has not been paid within a period of thirty days from the due date of payment of such tax".
The Court held that considering provisions of Sub-sections 6, 8 and 9 of Section 73, if a person fails to deposit tax collected by him within a period of thirty days from due date of payment of tax, Sub-section 8 will not be applicable and such person would be liable to penalty. (Section 73(11) of CGST Act, 2017)

3

Taxability of Coaching Fees collected from students by an educational Institution to be examined considering Circular dated 3-8-2022 which states that all services supplied by "educational institution" to its students were exempt from GST in first sentence of paragraph 4.3

Alva’s Education Foundation v. State of Karnataka [2023] 156 taxmann.com 6 (Karnataka) (05-10-2023)

Petitioner had charged its students the following amounts as 'coaching fees' i.e. Tuition fees towards II PUC CET Crash & Coaching and CA-CPT Coaching, Training fees for providing certification courses & placement and training fee for JV-A IET, Penal fee/fine, Various Misc. Fees viz., towards Alva's Nudisiri event, abacus, students welfare fund, internet, damages to hostel mess property, library fee and college fees. The authority while observing that amounts/fees charged to the prospective students for entrance or admission or eligibility certificate were exempted but not coaching fees. The conclusion was based on definition of "educational institution" contained in clause 2(y) of Notification dated 28-6-2017 and Circular dt 3-8-2022 in No. 177/09/22-TRU.
The Court observed that authority while examining expression educational services under Notification dated 28-6-2017 in light of Circular dated 3-8-2022, had to necessarily consider the same in the light of paragraph 4.2 and first sentence in paragraph 4.3 of the Circular which was as follows-
4.2 In this regard, it is stated that educational service supplied by educational institutions to its students are exempt from GST vide Entry 66 of the Notification No. 12/2017 Central Tax(Rate), dated 28-6-2017 relevant portion of which read as under:-
"Services provided -
(a)
by an educational institution to its students, faculty and staff;
[aa] by an educational institution by way of conduct of entrance examination against consideration in the form of entrance fee:]"
4.3 Therefore, it can be seen that all services supplied by an 'educational institution' to its students are exempt from GST...”
The authority was persuaded not to hold against petitioner relying upon later part of paragraph 4.3 and 4.4 overlooking first part of paragraph 4.3. The Court stated that there was an obvious error in the order as question was not about entrance fee but about coaching fee which would have to be examined considering Circular dated 3-8-2022 which states that all services supplied by "educational institution" to its students were exempt from GST in first sentence of paragraph 4.3. Objection was raised that re-consideration may not include, whether abacus course extended by the petitioner to its students with the assistance of an external agency as abacus course is not recognized in any law as a qualification. Petitioner relied upon the judgement of Educational Initiatives Pvt. Ltd. v. Union of India reported in 12. 2022 (63) G.S.T.L. 45 (Guj.) The Court remanded the matter back to the authority and directed that every aspect should be examined including this aspect in light of judgement of High Court of Gujarat. (Section 9 and 11 of CGST Act, 2017)

S.No

Case

Held

1

National Textile Corpn. Ltd. v. Naresh kumar Badrikumar Jagad, (2011) 12 SCC 695

19. There is no quarrel to the settled legal proposition that a new plea cannot be taken in respect of any factual controversy whatsoever, however, a new ground raising a pure legal issue for which no inquiry/proof is required can be permitted to be raised by the court at any stage of the proceedings.

2

Band Box (P) Ltd. v. Punjab & Sind Bank, (2014) 16 SCC 321

6. On the other hand, it was submitted by Mr Vikas Singh, learned Senior Counsel appearing for the respondent Bank that the appellant had raised at an intermediate stage the plea of not being covered under the Public Premises Act, and had subsequently dropped that plea. They had then relied upon the guidelines and, therefore, the plea, which is sought to be raised at a second stage, cannot be allowed to be raised now on the ground of res judicata, as well as constructive res judicata. As far as this objection of Mr Vikas Singh is concerned, inasmuch as the plea raised by Mr Raval is based on a legal submission, we would not like the appellant to be denied the opportunity of raising the legal plea and, therefore, we do not accept this submission

3

K. Lubna v. Beevi, (2020) 2 SCC 524

“10. On the legal principle, it is trite to say that a pure question of law can be examined at any stage, including before this Court. If the factual foundation for a case has been laid and the legal consequences of the same have not been examined, the examination of such legal consequences would be a pure question of law [Yeswant Deorao Deshmukh v. Walchand Ramchand Kothari, 1950 SCR 852 : AIR 1951 SC 16].
11. No doubt the legal foundation to raise a case by including it in the grounds of appeal is mandated. Such mandate was fulfilled by moving a separate application for permission to urge additional grounds, a course of action, which has already been examined by, and received the imprimatur of this Court in ChittooriSubbanna v. Kudappa Subbanna [(1965) 2 SCR 661 : AIR 1965 SC 1325].
12. We may also usefully refer to what has been observed by Lord Watson in Connecticut Fire Insurance Co. v. Kavanagh [1892 AC 473] in the following words: (AC p. 480) “… When a question of law is raised for the first time in a court of last resort, upon the construction of a document, or upon facts either admitted or proved beyond controversy, it is not only competent but expedient, in the interests of justice, to entertain the plea. The expediency of adopting that course may be doubted, when the plea cannot be disposed of without deciding nice questions of fact, in considering which the court of ultimate review is placed in a much less advantageous position than the courts below.”
13. In our view, the aforesaid succinctly sets forth the parameters of scrutiny, where the question of law is sought to be raised at the final court stage. There are no “nice questions of fact” required to be decided in the present case which would dissuade us from examining this plea at this stage. We have set forth the undisputed facts aforesaid. Thus, the only question is whether this is a question of law which deserves to be examined, and has ramifications in the present case.”

4

Sanghvi Reconditioners (P) Ltd. v. Union of India [(2010) 2 SCC 733 : AIR 2010 SC 1089

Though it is true that there is no bar in the High court and for that matter this Court entertaining an additional ground, involving a pure question of law, but on facts at hand, in the light of the findings of the Settlement Commission, based on documentary evidence that the goods in question imported by the appellant were actually sold by them to M/s Elektronik Lab, before these were used for repair of ocean going ships, it cannot be held that the additional ground did not involve any investigation into facts.
It was thus held that
All these factors go to show that the additional ground sought to be raised before the High Court was not only an after thought, adjudication thereon did involve investigation into facts and, therefore, the decision of the High court in not entertaining the additional ground did not suffer from any infirmity.

5

Greater Mohali Area Development Authority v. Manju Jain [(2010) 9 SCC 157

The respondent No.1 raised the plea of non-receipt of the letter of allotment first time before the High Court. Even if it is assumed that it is correct, the question does arise as to whether such a new plea on facts could be agitated before the Writ Court. It is settled legal proposition that pure question of law can be raised at any time of the proceedings but a question of fact which requires investigation and inquiry, and for which no factual foundation has been laid by a party before the Court or Tribunal below, cannot be allowed to be agitated in the Writ Petition. If the Writ court for some compelling circumstances desires to entertain a new factual plea the court must give due opportunity to the opposite party to controvert the same and adduce the evidence to substantiate its pleadings. Thus, it is not permissible for the High Court to consider a new case on facts or mixed question of fact and law which was not the case of the parties before the Court or Tribunal below. (Vide State of U.P. Vs. Dr. Anupam Gupta, AIR 1992 SC 932; Ram Kumar Agrawal & Anr. Vs. Thawar Das (D) through Lrs., (1999) 7 SCC 303; Vasantha Viswanathan & Ors. Vs. V.K. Elayalwar & Ors. (2001) 8 SCC 133; Anup Kumar Kundu Vs. Sudip Charan Chakraborty, (2006) 6 SC 666; Tirupati Jute Industries (P) Ltd. Vs. State of West Bengal, (2009) 14 SCC 406; and Sanghvi Reconditioners (P) Ltd. Vs. Union of India & Ors. (2010) 2 SCC 733.In the instant case, as the new plea on fact has been raised first time before the High Court it could not have been entertained, particularly in the manner the High Court has dealt with as no opportunity of controverting the same had been given to the appellants.

S.NO

Subject

Case

Held

1

Incorrect Mentioning of Distance due to inadvertent and clearical error to be covered under Circular Dated 14th September 2018

Tirthamoyee Aluminium Products v. State of Tripura [2021] 127 taxmann.com 680 (TRIPURA)

The error in generating e-way bill was on account of incorrect distance being shown while generating the E-way bill. Based on calculation that Eway bill was generated for a validity period at the rate of one day per 100 Kms., E-way bill was generated with validity of 5 days instead of 15 days' validity which should have been provided had correct distance been mentioned.
The Court observed that the authority did not have the power to demand GST with penalty in the given case. CBIC has issued a circular dated 14th September, 2018 to clarify the manner in which such clerical errors would be dealt with. Referring to the Circular Dated 14th September 2018, the Court observed that in the e-way bill it is categorically stated that the goods were being dispatched from Howrah, West Bengal and being delivered to Tirthamoyee Aluminium Products at Agartala, Tripura - 799003. The distance between Howrah to Agartala is approximately 1500 Kms and due to clerical error the distance was reflected as 470 Kms instead of 1470 Kms because of which the validity of the e-way bill expired on 30-10-2018. The Court in view of such facts, found it a fit case where they should not relegate the petitioner to appeal remedy and more importantly when order passed by the Inspector of State Tax suffered from gross irregularity of no hearing been granted to the petitioner

2

Minor Discrepancy in Vehicle Number not to result in Penalty is Intent to Evade absent

Varun Beverages Ltd. v. State of U.P [2023] 147 taxmann.com 341 (Allahabad)

The issue before the Court was whether wrong mention of number of Vehicle No. HR-73/6755 through which the goods were in transit and detained by the taxing authorities would be considered as a human error and will be covered under the circular No. 41/15/2018-GST dated 13-4-2018 and 49/23/2018-GST dated 21-6-2018, as the number mentioned in the e-way bill was UP-13T/6755 and the mistake is of only of HR-73 in place of U.P.-13T.
The Department did not place any other material so as to bring on record that there was any intention on the part of the dealer to evade tax except the wrong mention of part of registration number of the vehicle in the e-way bill. The vehicle through which the goods were transported and the bilty showed the one and the same number while only there was a minor discrepancy in Part-B of the e-way bill where the description of the vehicle is entered by the dealer. The Court observed that the present case was of a case of stock transfer and since there was no intention on the part of dealer to evade any tax, the minor discrepancy as to the registration of vehicle in State in the e-way bill would not attract proceedings for penalty under section 129 and the order passed by the detaining authority as well as first appellate authority cannot be sustained

3

Intent to evade to be proved for levy of penalty U/Sec 129 wherein incorrect address mentioned inadvertently

Amara Raja Batteries Ltd. v. State of Madhya Pradesh [2022] 142 taxmann.com 192 (Madhya Pradesh)

In the instant case, the sole ground raised was that due to inadvertence during generation of the e-way bill, a clerical error took place due to which the registered address of the petitioner at Indore was mentioned in the e-way bill instead of the address at Jabalpur.
The Court observed that in penal provision such as section 129 of the GST Act, the element of intention to evade tax must be present to sustain an order of penalty. To gather the intention of the petitioner an inquiry has to be undertaken to ascertain whether the mistake was inadvertent with no element of malice or intention to evade tax. It does not appear that either the Taxing Authority or the appellate authority has undertaken the said exercise of conducting an inquiry to ascertain the real intent behind the act of petitioner to mention wrong address. The Court thus held that an inquiry needs to be conducted at the level of appellate authority to ascertain whether there was any malicious intention to evade tax on the part of the petitioner or not

4

Mere incorrect mentioning of address of one branch instead of another as recipient of goods in case of Stock Transfer does not entail levy of penalty

Same Deutzfahr India (P.) Ltd. v. State of Telangana* [2022] 143 taxmann.com 123 (TELANGANA)

The goods were detained because as per invoice they were being transported from Ranipet, Tamil Nadu to Bongulur village, Ibrahimpatnam Mandal, Hyderabad, but as per e-way bill, the goods have to be transported from Ranipet, State of Tamil Nadu to Hayathnagar in the State of Telangana and so there is mismatch with the invoice and e-way bill.
The Court observed that petitioner's registration certificate in the State of Telangana itself disclosed that its principal place of business was Hayathnagar and its additional place of business was at Bongulur village, Ibrahimpatnam Mandal. Once it is clear that petitioner has additional place of business in the State of Telangana in Bongulur village, Ibrahimpatnam Mandal and the goods were being transported to that address from its Corporate office at Ranipet, Tamil Nadu State, it cannot be said that petitioner was indulging in any illegal activity when the tax invoice shows that the supplier is the petitioner's Corporate office in Ranipet, Tamil Nadu State and that it was shipped to its Depot in Bongulur village in Ibrahimpatnam Mandal. Thus, it was held that there was no occasion for the respondent to collect tax and penalty from the petitioner on the pretext that there is illegality in the transport of goods as it would merely amount to stock transfer and there is no element of sale of goods or services in it.

5

CGST/SGST being charged instead of IGST leviable with Minor Penalty as error corrected by credit/debit note

S.P. Traders v. Assistant State Tax Office [2023] 147 taxmann.com 139 (Kerala)

In the given matter, invoice accompanying the goods, tax paid was shown to be under CGST & SGST, whereas it should have been shown as tax paid towards IGST. However, in the E-way bill accompanying the goods the tax paid was correctly shown as paid towards IGST.
The Court observed that it cannot be lost sight of that in E-way bill accompanying the goods, the tax paid was correctly shown as IGST. The learned counsel appearing for the petitioner states that the mistake has been corrected while issuing credit note/debit note and in the monthly return filed for the month of July 2022, the amount paid has been correctly shown as IGST. The Court held, that there will be an interim order directing the 1st respondent to verify monthly returns filed by the petitioner for the month of July 2022 and determine whether the amount in question was correctly shown as IGST instead of CGST/SGST. If the officer finds that the amount has been correctly shown as IGST in the monthly returns filed for the month of July 2022, notwithstanding the issuance of order, the officer shall consider whether the mistake committed by the petitioner can be penalized by imposing a minor penalty.

S.No

Subject

Case

Held

1

Difference In Quantity

Raghav Metals v. State of Haryana [2022] 141 taxmann.com 179 (Punjab & Haryana)

Authority had pointed out that on physical verification that the actual quantity and the quantity shown in Invoice and e-way bill were different. Actual quantity was found to be 90 kgs. 700 gms. more than what has been found as per Invoice. It was observed by the High Court that from perusal of the e-Invoice, quantity of consigned goods was shown to be 10430.7 kilograms. An amount of Rs. 1276717.68/- has been paid as tax on the consignment whereas as per the State, it was 10520 kilograms. The said difference in weight was less than 1%. As per State, the alleged evasion shall not be more than Rs. 11000/-.
The Court held that it cannot be said that petitioner had any intent to evade tax or mismatch in the quantities is of such nature which shall entail proceedings under section 129 of the Act. A person, who has already paid a tax of Rs. 1276717.68/- on a consignment cannot be said to have an intent to evade tax amounting to Rs. 11000/-. Thus, petition was allowed treating that the mismatch cannot be termed as contravention of the provisions of the Act.

2

Difference in Name of Recipient

State of Madhya Pradesh v. Robbins Tunnelling and Trenchless Technology (India) (P.) Ltd. [2021] 133 taxmann.com 165 (SC)

SLP filed against the order of the High Court was dismissed wherein assessee imported goods from USA and its clearing agent, while sending goods from Customs Station to assessee’s place of business, entered erroneous name and address of recipient in e-way bill. High Court in its decision in Robbins Tunnelling and Trenchless Technology (India) (P.) Ltd. v. State of M.P [2021] 133 taxmann.com 164 (Madhya Pradesh) held that in the instant case, department was not justified in rejecting the appeal of the petitioner on the ground that the mistake committed while generating the E-way bill, was not a clerical error or a small mistake. High Court had directed the department to consider the case of the petitioner for imposition of a minor penalty, treating it to be a clerical mistake, as per Circular, dated 14-9-2018 No. CBEC/20/16/03/2017-GST issued by the Ministry of Finance-

3

Name of the Recipient and Supplier Swapped

Satguru Impex v. State of Tripura [2022] 141 taxmann.com 116 (TRIPURA)

The Court observed that there was an apparent mistake in the original E-way bill, i.e. the name of the seller and the buyer had been erroneously swapped and, therefore, the Revenue was justified in not allowing the vehicle to enter into the State. However, once the corrected E-way bill was produced and the apparent error having been corrected and there was no dispute that the parties were genuine and nor was there any dispute that the original E-way bill contained an error, it was held that there was no justification in either initiating the present proceedings against the petitioner or in continuing with the seizure of the vehicle along with goods.

4

Entering the name of the recipient as the name of the supplier is a minor mistake covered by Circular Dated 14-09-2018

Create Consults v. State of Madhya Pradesh [2022] 141 taxmann.com 526 (Madhya Pradesh)

The description of generator of e-way bill was wrongly mentioned and it was generated in the name of petitioner and, resultantly, all the orders impugned were passed while treating the present petitioner to be dispatcher of the goods and the statutory liability was fastened upon the petitioner by way of the order of imposition of tax as well as penalty.
The Court was in fully agreement with the order passed by the co-ordinate bench and thus, since the facts of the present case were identical to the cases decided by the co-ordinate bench, as the courier receipt/invoice and e-way bill, pertains to same transaction but the generation of e-way bill is in incorrect name. The Court held that the mistake appeared to be a bonafide mistake in asmuch as the detail of vehicle, dispatch date is same and in the case in hand, e-way bill was generated wrongly in the name of petitioner on account of some clerical or typographical error, therefore, in the light of order passed by the co-ordinate bench. It was further directed that respondents will be at liberty to consider the case of petitioner for imposition of a minor penalty while treating the mistake in question to be a clerical mistake as per circular dated 14-9-2018 bearing no. CBEC/20/16/03/2017-GST

5

Error in mentioning consignee as unregistered person in E-way Bill

ABCO Trades (P.) Ltd. v. Assistant State Tax Officer [2020] 120 taxmann.com 180 (Kerala)

Although e-way bill showed the consignee as an unregistered person, the invoice that accompanied the transportation clearly referred to the GSTIN of the consignee and hence, the mere mention of the consignee as an unregistered person in the e-way bill cannot be of any significance. Secondly, it is stated that the mention of the tax applicable in the delivery challan was by mistake for it is evident that when the goods are stock transferred and not sold, there need not be a payment of tax at all.
The Court observed that the reasons for detaining the consignment were not sufficient to attract the provisions of section 129 of the GST Act. The detention in the instant case cannot, therefore, be seen as justified.

6

Error in mentioning date although not specifically covered by Circular Dated 14-09-2018 but held to be insignificant as no intent to evade

Greenlights Power Solutions v. State Tax Officer [2022] 140 taxmann.com 295 (Kerala)

In the instant case, it was only on the date of invoice which is shown as 3-2-2021 while that shown in the e-way bill was 2-3-2021.
The Court observed that a reading of the Circular Dated 14th September 2018 revealed that purpose of issuing such a Circular was to mitigate the hardships being caused to taxpayers for minor discrepancies, which had no bearing on the liability to tax or on the nature of goods being transported. The circular is statutory in nature and is binding on the Tax Officers. Thus, minor discrepancies cannot be penalized contrary to the mode and procedure contemplated under the Circular. However, Circular referred to only six instances of minor discrepancies. Strictly speaking, the present situation is not covered by the six instances mentioned in the Circular. However, the analysis of the six instances reveals those discrepancies which have no bearing on tax liability and are caused on account of bona fide mistakes like typographical errors, or otherwise are regarded as minor discrepancies. In fact, the situation in the present case can be even brought under the broader umbrage of clause (d) of para 5 of the Circular. Thus, error noticed was held to be insignificant and not of any consequence for invoking the power conferred under section 129 of the Act to impose tax and penalty.
Cases Referred-R.K. Motors v. State Tax Officer [2019] 102 taxmann.com 337/72 GST 501 (Mad.)

S.No

Subject

Case

Held

1

Since the period and subject of investigation of State and Central Authorities were different therefore no violation of Section 6 of CGST/SGST Act, 2017

Yash Alloys India v. Union of India [2023] 155 taxmann.com 594 (Bombay) (23-10-2023)

Primary grievance of the petitioner was that both State Authorities have undertaken investigation, on the subject matter, which is already under the investigation by the Central Authorities and thus there is violation of Section 6(2)(b).
The Court observed that proceedings were initiated by Central Authorities against the petitioner, however, subject matter of such investigation was in respect of the period from 1 July 2017 till 31 March 2021and relating to fraudulent ITC. Insofar as the investigation being resorted under the State Authorities, it was in respect of the period from 1 April 2021 to 4 October 2023. This was clarified by the Assistant Commissioner of State Tax as addressed to the petitioners. It appeared that although the petitioners were asked to furnish documents for the period from 1 July 2017 till 31 March 2021, the investigation, as informed to the petitioners, by the State Authorities would be for the period from 1 April 2021 to 4 October 2023. In such context, the court observed that the petitioners themselves had taken a fair stand by requesting State Authorities to investigate from 1 April 2021 till the date of such letter to avoid duplication of proceedings. Also the scope of investigation as has been undertaken by State Authorities was in respect of illegal refunds and thus, court did not accept that provisions of Section 6(2)(b) of the MGST Act, in any manner, were attracted in the facts of the present case.(Section 6 of CGST Act, 2017)

2

Period involved in filling and decision of revocation application to be excluded for computing limitation for filing of appeal against cancellation order

Sakthi Fashions v. Appellate Authority/Additional Commissioner of GST (Appeals-II) [2023] 155 taxmann.com 314 (Madras) (12-09-2023)

Petitioner was issued with SCN dated 27-1-2023 to show cause as to why registration obtained by the petitioner should not be cancelled. The order dated 6-2-2023 in Form GST REG-19 came to be passed cancelling the registration. Aggrieved by the same, the petitioner earlier filed application for revocation of cancellation of the registration in Form GST REG-19 vide order dated 6-2-2023. A SCN was issued on 27-2-2023. However, petitioner failed to reply to the same. Therefore, application filed for revocation of cancellation of registration was rejected on 14-3-2023. In view of the above, petitioner filed a Statutory Appeal on 14-7-2023 with a delay of 39 days against the order dated 6-3-2023.
The Court observed that the petitioner was prosecuting application filed for revocation of cancellation of the registration by filing an application on 16-2-2023 under section 30 of the GST Act which was rejected on 14-3-2023. The time taken in filing the said application shall be excluded while calculating the limitation period for filing of appeal. The Court disposed of the writ petition by directing the respondents to consider petitioner's appeal and pass appropriate orders on merits and in accordance with law without reference to the limitation on its turn. (Section 30 and 107 of CGST Act, 2017)

3

Amount deposited in cash ledger allowed to be treated as Pre-Deposit of filing of appeal

Batra Brothers (P.) Ltd. v. Union Territory of Ladakh [2023] 155 taxmann.com 266 (Jammu & Kashmir and Ladakh) (15-09-2023)

The appeal filed by the petitioner was dismissed for non-payment of 25% pre-deposit of the penalty as mandated under proviso (1) to sub-Section (6) of Section 107 of CGST Act 2017, read with Section 21 of the UTGST Act, 2017. The petitioner had instead of depositing the said pre-deposit amount with the revenue deposited the same in the electronic cash ledger.
The Court observed that from reading of Section 49(3) it was evident that amount available in the electronic cash ledger can be used by the petitioner for making any payment towards tax, interest, penalty, fees or any other amount payable under the provisions of this Act or the rules made there-under in such manner and subject to such conditions and within such time as may be prescribed. Since, the requisite amount is already deposited in the electronic cash ledger by the petitioner it was considered appropriate and in the interest of justice to permit the revenue to take out and utilize the amount of pre-deposit in the manner, the pre-deposit is utilized. On doing so, the appeal was directed to be taken up for consideration on merits. (Section 107 of CGST Act, 2017

4

No interest payable as GSTR-3B filed with zero amount due to technical glitches without any fault of the Taxpayer

Vishnu Aroma Pouching (P.) Ltd. v. Union of India [2021] 129 taxmann.com 16 (Gujarat) (14-11-2019)

Petitioner had uploaded the return for August, 2017 within the period provided therefore and situation was that though petitioner had discharged tax liability aggregating Rs. 128.63 crores (rounded off), such liability was not shown as discharged in the electronic liability register only on account of glitches and crashing of the system on 20th and 21st September. Consequently, even though the petitioner had discharged the tax liability in time, it was still treated as a defaulter because all the figures in GSTR- 3B for August 2017 are zeros owing to system failure.
The Court observed that the petitioner had duly discharged tax liability of August, 2017 within the period prescribed therefore; however, it was only on account of technical glitches in the System that the amount of tax paid by the petitioner for August 2017 had not been credited to the Government account. Hence, the court held that the interests of justice would best be served if the declaration submitted by the petitioner in October, 2019 along with the return of September, 2019 was to treated as discharge of petitioner's tax liability of August, 2017 within the period stipulated under the GST laws. Consequently, petitioner would not be liable to pay any interest on such tax amount for the period 21-9-2017 to October, 2019. (Section 39 and 50 of CGST Act, 2017)

5

Cancellation order passed without reason invalid but at the same time petitioner also levied with cost as he did not appear despite multiple opportunities

[2023] 155 taxmann.com 317 (Allahabad)
Purna Trading Company
v. State of U.P. (10-10-2023

The Court observed that the order of cancellation was passed without assigning any reason and revocation application was also been rejected without assigning any cogent reason and thereafter appeal was also dismissed by the impugned order. Reason are the heartbeat of every conclusion. In the absence of reasons order becomes lifeless. Non recording of reasons renders the order to be violative of principles of natural justice. Reasons ensures transparency and fairness in decision making. It enables litigant to know reasons for acceptance or rejection of his prayer. It is statutory requirement of natural justice. Reasons are really linchpin to administration of justice. It is link between the mind of the decision taker and the controversy in question. Thus, failure to give reasons amounts to denial of justice. Thus, it was held that the impugned order cannot be sustained in the eyes of law. However, petitioner also neither submitted reply in pursuance of notice nor appeared before the respondent authority in spite of various dates fixed before the first appellate authority, therefore, some cost was thought fit to be imposed upon the petitioner. Thus, in the result, the writ petition was allowed and impugned orders dated 20-11-2020/7-12-2020, 21-1-2021 and 17-11-2021 are set aside subject to cost of Rs. 20,000/- (twenty thousand), which shall be deposited by the petitioner before the first appellate authority. (Section 29, 30 and 107 of CGST Act, 2017)