Part-133-One Pager Snapshot to Cases-Can a new ground raising a factual controversy or a pure legal issue be permitted to be raised at any stage and distinction between the two

It is very often a case wherein question is raised that whether a new ground can be raised subsequently which was not raised earlier. The snapshot covers the aspect through various judgements given by the Courts on the given subject and the distinction made by the courts between “a factual controversy” and “a new ground raising a pure legal issue for which no inquiry/proof is required”.

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.

Part-132-One Pager Snapshot to Cases on Section 129 of CGST Act

Snapshot covers Judgement on levy of penalty wherein there is

-Incorrect Mentioning of Distance
-Minor Discrepancy in Vehicle Number
-Incorrect address mentioned
-Tax Charged in CGST/SGST instead of IGST

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.

Part-131-One Pager Snapshot to Cases on Section 129 of CGST Act, 2017

The snapshot covers Judgement on levy of penalty in case wherein there is

-Difference In Quantity,
-Difference in Name of Recipient,
-Incorrect Mentioning of date of Invoice.

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.)

Part-130-One Pager Snapshot to Cases on Section 6, 29, 30, 50, 107 of CGST Act, 2017

-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
-Period involved in filling and decision of revocation application to be excluded for computing limitation for filing of appeal against cancellation order
-Amount deposited in cash ledger allowed to be treated as Pre-Deposit of filing of appeal
-No interest payable as GSTR-3B filed with zero amount due to technical glitches without any fault of the Taxpayer
-Cancellation order passed without reason invalid but at the same time petitioner also levied with cost as he did not appear despite multiple opportunities

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)

Part-129-One Pager Snapshot to Latest Cases on Section 54, 112 of CGST Act, 2017 and Rule 89(5) and working of GST Portal going beyond the provisions of CGST Rules

-Interim Stay on order of recovery asking assessee whether an appeal has been filed before Tribunal against Appellate Orders

-Claim of Refund under “any other category” due to restriction by the Portal beyond the provisions of Rule 89(5) cannot be treated as filing of second refund application but a claim of balance amount which could not be claimed in First Refund application due to restriction of Portal

S.No

Subject

Case

Held

1

Interim Stay on recovery wherein it was asked whether appeal has been filed before Tribunal against Appellate Order

Rajkalp Mudranalya (P.) Ltd. v. Superintendent [2023] 155 taxmann.com 608 (Gujarat) (26-10-23)

Order was passed by the Appellate Authority on dated 31st July 2023 and since, no Tribunal was constituted, therefore order was challenged before High Court. Petitioner placed on record a communication 04.10.2023 by which, office of Superintendent initiated recovery of penalty pursuant to impugned order.
The Court pursuant to taking order on record observed that reading of order would indicate that author of the order had opined that petitioner should inform the authority if any appeal or stay application has been filed against the OIA dated 31.07.2023 and whether the Appellate Authority has granted stay of the order. The Court granted interim stay on the order dated 4th October 2023 till the next date of hearing and highlighted that contradistinction between authorities in question. that on one hand, though Tribunal is constituted but it is still not functioning and Competent Authorities thought it fit to issue orders of recovery asking assessee for information whether an appeal has been filed at all. (Section 112 of CGST Act, 2017)

2

Claim of Refund under “any other category” due to restriction by the Portal beyond the provisions of Rule 89(5) cannot be treated as filing of second refund application but a claim of balance amount which could not be claimed in First Refund application due to restriction of Portal

[2023] 155 taxmann.com 593 (Gujarat)
Pee Gee Fabrics (P.) Ltd.
v. Union of India (15-09-2023)

Facts-The petitioner company came to know about claiming wrong credit on capital goods in the Year 2017 and thus petitioners were required to reverse ITC of such capital goods. Due to non-availability of DRC03 on GST Portal, petitioner Company had reversed the ITC in Form GSTR-3B of August 2018.
Particulars
Amount
ITC available for the month of Aug 2018
57,68,728/-
Less: ITC reversed for FY 2017-18
10,12,188/-
Net ITC available
47,56,539/-
Less: Liability for the month of Aug 2018
(32,02,738/-)
Net ITC available for refund as per portal configuration
15,53,801/-
Thus, in view of the reversal, the amount of refund claimed by petitioners was proportionately reduced by Rs. 8,06,852/- in view of the calculation made by GST Portal. The petitioner, thereafter relying on clarification provided by circular no. 94/2019 dated 28.03.2019 claimed the balance amount of refund of Rs. 8,06,852/-i.e. [Rs. 22,78,798/- (-) Rs. 14,71,946/-) under "any other Specify" vide second refund application for the Month of August 2018 filed on 08.08.2019.
Rejection of Refund filed under “any other” category-The petitioner company received refund of Rs. 14,71,946/- as per first refund application but however processing refund application filed under the head " Any Other head)", respondent authority disallowed the refund of Rs. 8,06,852/-for following reasons
“(i) As per circular no. 94/13/2019-GST dated 28.03.2019, there is no provision that second refund application can be filled for the same particular month Le. August 2018 under which appellant filed refund claim under the category "Any Other Specify" in inverted rate of structure;
(ii) For the refund application filled, calculation should be as per Rule 89(5):
(iii) The department has never asked to reverse the ITC on capital goods. The appellant had reversed the same on his own.”
Observation of the Court-
a)
Restriction by the Portal beyond the Rules-The Court observed that respondent authorities failed to consider that petitioners were entitled to refund amounting to Rs.22,78,798/- as calculated under Rule 89. GST Portal did not allow petitioners to submit refund application for the said amount and restricted the same to Rs.14,71,946/ in view of reversal of the credit of Rs.10,12,188/- on account of wrongly claimed credit on capital goods.
b)
Filing of Application by the Applicant is not second refund application but for the balance amount which was not granted-The petitioners therefore, had no other option but to file second application for claiming balance amount of refund of Rs. 8,06,852/-. The authorities failed to consider that petitioners had not filed second refund application for the same month but it has filed application for claiming balance amount of refund which was not granted though eligible. The petitioners had no other option but to file refund application in view of Circular No.94/2019 dated 28.03.2019 under “any other category”.
c)
Aggregate amount of the refund applications is as per Rule 89(5)-As per the calculation made under Rule 89(5), petitioners were entitled to refund of Rs.22,78,798/- on the total turnover of inverted duty tax structure which was not in dispute and accordingly, petitioners were entitled to refund of Rs. 8,06,852/- which petitioners could not claim since GST Portal did not permit them to file refund application in view of reversal of wrongly claimed credit.
d)
Rejection on the Ground that Reversal of ITC on capital goods for previous period was correctly reduced was also not correct-Reasoning given for rejecting legitimate claim of the petitioner company that reversal of ITC on capital goods in Form GSTR-3B amounting to Rs.10,12,189/- is binding on the petitioner company and therefore, the petitioner company is not eligible for claim of refund as per Circular No.94/2019 cannot be accepted.
e)
Scope of Circular 94/2019 Explained-Circular No.94/2019 permitted a one-time measure for availing refund of ITC on account of inverted duty tax structure as per Notification No.20/2018 read with Circular No.56/2018 as the assessees were not able to claim refund of the accumulated ITC to the extent to which they were eligible. Therefore, it was clarified by Circular No. 94/2019 that when assessee was not eligible to claim the refund then ITC is required to be claimed under “any other” in FORM GST RFD-01A for same tax period in which said reversal has been made. The petitioners taking benefit of such circular preferred Second refund application dated 08.08.2019 for balance amount on account of accumulated inverted duty tax structure amounting to Rs. 8,06,852/
Held-Thus, respondent authorities have by adopting such a pedantic approach could not have rejected the legitimate claim of the petitioner company for balance amount of refund claim. (Section 54 of CGST Act, 2017 read with Rule 89(5) of CGST Rules, 2017)

Part-128-One Pager Snapshot to Latest Cases on Section 16, 54, 67, 73, 74, 130 of CGST Act, 2017 and Rule 36(4), 89(4), 86A of CGST Rules, 2017

-Proceedings not valid as SCN does not provide effective opportunity
-Allegations not in SCN cannot be submitted through affidavit
-No surviving jurisdiction to pass order U/Sec 74 as adjudication arose from proceeding U/Sec 67 which led to order passed U/Sec 130(2) but was set aside Appellate Authority
-Can ITC be denied merely on the ground of non-remittance of tax by the supplier as the same tax is not reflected in the Form GSTR-2A.
-Alleged incorrect classification of inward supplies which too was substantiated by certificate from supplier cannot result in denial of entire refund
-Refund filed for Oct-Dec’20 cannot be denied for ITC claimed in violation of Rule 36(4) for Oct-Nov ‘20, if supplier filed GSTR-1 on quarterly basis in Dec’20.

S.No

Subject

Case

Held

1

-Proceedings not valid as SCN does not provide effective opportunity
-Allegations not in SCN cannot be submitted through affidavit

Poonawalla Fincorp Ltd. v. Union of India [2023] 155 taxmann.com 529 (Delhi) (15-09-2023)

Impugned SCN did not disclose any reason for blocking the petitioner’s ITC or the shortfall in recovery of tax, penalty, and interest but tabular statement in the impugned SCN indicated proposed demand which was identical to the amount of ITC blocked. Reliance was placed upon Circular No. F.3(429)/GST/Policy/2022/1067-1072 dated 08.03.2022 for recovery of demand.
Impugned SCN issued did not effectively provide any reasons for raising a demand. The opening sentence of the impugned SCN appeared to be a mechanical reproduction of the statutory provision. In so far as reliance upon the Circular was concerned, the same was held not to be read as permitting the proper officer to mechanically create a demand. The proper officer must specifically reasons in the SCN. The Court also stated that since impugned SCN did not contain any allegations as stated in the counter affidavit filed by the respondents, the proceedings initiated pursuant to the impugned show cause notice cannot cover the said allegations. Impugned SCN was liable to be set aside as the same failed to disclose any reason for proposing recovery and was incapable of eliciting any meaningful response. (Rule 86A and Section 73 of CGST Act, 2017)

2

No surviving jurisdiction to pass order U/Sec 74 as adjudication arose from proceeding U/Sec 67 which led to order passed U/Sec 130(2) but was set aside Appellate Authority

Viabhav Edible (P.) Ltd. v. State of U.P. [2023] 155 taxmann.com 328 (Allahabad) (10-08-2023)

The contention of the petitioner was that there was no surviving jurisdiction to pass order U/Sec 74 in as much as, the adjudication proceedings arose from an earlier proceeding U/Sec 67 that led to an order dated 18.2.2019 being passed U/Sec 130(2) making same allegations as have arisen in the adjudication proceedings. The order passed under Section 130(2) was set aside by First Appellate Authority vide order dated 25.6.2020 and has attained finality.
The Court observed that the fact allegations giving rise to the adjudication proceedings impugned in the present petition, remained the same as had been considered by the First Appellate Authority in its order dated 25.6.2020. No other or fresh material came into existence as may have given rise to any situation in fact or in law to initiate an adjudication proceeding. The High Court held that the proceedings U/Sec 67 and 74 are distinct in scope and purpose, at the same time, essential facts found non-existent in the proceedings U/Sec 67 would have a material bearing on proceedings under Section 74 of the Act drawn up on the same basis. In the present case, since the substratum of charge in the proceedings U/Sec 74 stood wiped out in entirety, occasioned by First Appellate order dated 25.5.2020 passed with reference to proceedings U/Sec 130, there survived no jurisdictional fact as may have given rise to the adjudication proceedings, on the same facts. (Section 67, Section 74 and Section 130 of CGST Act, 2017)

3

Can ITC be denied merely on the ground of non-remittance of tax by the supplier as the same tax is not reflected in the Form GSTR-2A.

Goparaj Gopalakrishnan Pillai v. State Tax Officer-1 [2023] 155 taxmann.com 325 (Kerala) (05-10-2023)

Petitioner's claim for ITC to an extent of Rs.19,830/- was disallowed and Interest and penalty have been imposed to an extent of which Rs.12,742/-and Rs.20,000/- aggregating to Rs.52,572/-. In the present case, supplier had not remitted tax collected on the supply nor uploaded such supply details in his return. It was held by assessing officer that petitioner was not entitled to avail ITC for which the supplier/dealer had not remitted the tax collected on the supply.
Considering the judgment in Diya Agencies v State Tax Officer WPC No.29769 of 2023, Writ Petition was allowed and the impugned order for denial of ITC to the extent of 19,830/- was set aside and the matter remitted back to the Assessing Office to give one opportunity to the petitioner for giving evidence and documents in support of his claim for input tax credit which has been denied. If on examination of the evidence and documents submitted by the petitioner, the Assessing Officer is satisfied that the claim is bonafide and genuine, the petitioner should be given credit of input tax which has been denied by the order. (Section 16 of CGST Act, 2017)-Cases Referred- Diya Agencies v State Tax Officer WPC No.29769 of 2023

4

-Alleged incorrect classification of inward supplies which too was substantiated by certificate from supplier cannot result in denial of entire refund
-Refund filed for Oct-Dec’20 cannot be denied for ITC claimed in violation of Rule 36(4) for Oct-Nov ‘20, if supplier filed GSTR-1 on quarterly basis in Dec’20.

Simran Chandwani v. Principal Commissioner of CGST, Delhi [2023] 155 taxmann.com 318 (Delhi) (06-10-2023)

Issue-1-Supplier reflecting incorrect HSN- Petitioner was engaged in the business of selling footwear which was chargeable @ 5% or 12%, depending on whether price of footwear was below Rs. 1,000/- or above Rs. 1,000/-. One of the components used in manufacturing of footwear is PVC straps was chargeable @ of 18%. Refund application of inverted duty structure was rejected as in returns filed by one of the suppliers, one of the suppliers while issuing six invoices had classified PVC straps in the HSN Code for finished products (complete shoes). Petitioner's claim was questioned because if input was the same product as supplied by petitioner, goods supplied would not be chargeable to tax at a lower rate. Petitioner contended that supplier erroneously classified supplies as HSN 6404 instead of 6406 and also produced a certificate from the said supplier certifying that there was an error in classification of goods in invoices.
The Court observed that supplies made under six invoices in question, were below Rs. 1,000/-. Therefore, if the said supplier had supplied footwear, it would have charged GST @ 5%. Petitioner also produced certificate from supplier acknowledging that it had classified the goods in incorrect HSN. The fact that GST had been charged at correct rate was in the view of the court a material factor to be considered by Adjudicating Authority. Thus, Court accepted the explanation that classification of goods was in incorrect HSN. Further, Court did not to accept the approach to deny the entire claim basis six invoices OF one supplier as there was no dispute that other suppliers had correctly classified the products. Court rejected the approach of authorities that they accepted classification of the product of a singular supplier under six invoices, as correct but did not accept classification as far as other suppliers were concerned.
Issue-2 -Non-compliance of Rule 36(4)- Revenue stated that condition laid down in Rule 36(4) were violated for October and November, 2020 as excessive ITC was availed. Petitioner contended that although ITC availed in October and November, 2020 was more than ITC reflected in GSTR-2A, ITC reflected in the month of December, 2020 was more as some suppliers were filing returns on quarterly basis. Also if there was any excess ITC as per limit provided under Rule 36(4), petitioner may be liable to pay interest, but refund cannot be denied if there is no excess claim for "relevant period" as defined under Rule 89(4)(F).
For Rule 36(4)- The counsel appearing for the revenue did not dispute that if petitioner is correct that the mismatch was only on account of suppliers filing quarterly returns, petitioner would be entitled to refund. Thus, the matter was remanded on this point to be considered afresh, with liberty to petitioner to produce all documents to substantiate its claims. (Section 54 of CGST Act, 2017, Rule 89(4), 36(4) of CGST Rule, 2017)

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

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

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

Subject

Held

Facts

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

Contention of
petitioner

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

Observation by the
Court

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

Observation by the
Court

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

Observation by the
Court

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

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

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

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

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

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

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

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

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

Held

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

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

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

S.No

Subject

Case

Held

1

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

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

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

2

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

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

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

3

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

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

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

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

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

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

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

Held

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

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

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

S.No

Subject

Case

Held

1

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

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

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

2

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

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

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

3

Provisional
Registration
cannot be
cancelled
without
giving
Opportunity
of hearing

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

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

4

Notice sent
on incorrect
email not
valid

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

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