Snapshot-34-Snapshot of Latest GST Cases

-Action initiated by State authorities under Section 67 against SEZ unit is not ultra vires
-Amount illegally debited from Bank account directed to be credited
-No opportunity being heard given for Second Notice issued after withdrawal of First Notice
-Denial of Bail

S.No

Section

Case Subject

Case

Held

1

Section
67

Action initiated
by State
authorities
under Section
67 against SEZ
unit is not ultra
vires to SEZ Act
read with
provisions of
CGST/SGST
Act, 2017

RHC Global Exports
(P.) Ltd. v. Union of
India [2023] 151
taxmann.com 134
(Gujarat)

The petitioner in the instant case contended that since their business premises was situated in Special Economic Zone and as such, to be
treated as foreign territory and not subjected to provisions whereby State authorities have no jurisdiction to carry out any search proceedings
at the premises of the petitioners.
High Court on perusal of Section 22 of SEZ Act read with Section 6 of the CGST Act, 2017 observed that State authorities are empowered
to carry out proceedings in SEZ. Their jurisdiction was unquestionable as Central Government has already authorized officers by virtue of
notification dated 5.8.2016 and by virtue of provisions of Sub-section (2) of Section 6 of GGST Act, where any proper officer issues an order
under this Act, he also issues an order under CGST Act as authorized by Act or under intimation to jurisdictional officer of Central
Government and respondents were thus empowered to carry out search proceedings in SEZ. Further, by virtue of circular dated 5.7.2017,
functions of proper officers under CGST Act are also defined. Thus the High Court held that once Central Government has notified the
functions of proper officers, said functions shall also be applicable to be carried out by the officers under CGST Act and hence it cannot be
said that there was any lack of authority on the part of State Officers , as contended.
The high court further observed that SEZ units were not exempted from any investigation or inspection and if submission of petitioners was
accepted that they are SEZ units and as such not subjected to such rigors of investigation or inspection, same would defeat the very
purpose of the Act and apart from this, there appears to be no visible inconsistency in both the Acts i.e. SEZ Act 2005 or GST Act, 2017.
The High Court dismissed the petitions with costs of Rs.10,000/- (Rupees Ten Thousand only) for each petition and further observing that
the writ petition were an attempt on the part of petitioners by filing these kind of petitions to thwart and belay the legal proceedings which
were initiated by respondent authorities and as such this move of petitioners appeared to be an abuse of process of law looking to the
manner in which the irregularities alleged to have been committed.

2

Section
79

Amount illegally
debited from
Bank account
directed to be
credited

Pradeep Kumar
Siddha v. Union of
India [2023] 151
taxmann.com 142
(Bombay)

In the present case, authorities had proceeded to unilaterally deduct the amount from the Petitioner's bank account by giving instructions
to the Bank and transferring it to the Electronic Cash Ledger of the Petitioner. The department failed to demonstrate the legal basis for such
course of action and therefore, High Court asked the Officer to file an affidavit to that effect and within how much time the amount would
be credited to the account of the Petitioner.

3

Section
129

Nonconsideration of
reply and no
opportunity
being heard
given for second
Notice

Shido Pharma v.
Assistant
Commissioner (ST)
[2023] 151
taxmann.com 141
(Madras)

In the instant case, goods were detained under Section 129 and in response to the notice dated 18.03.2023, petitioner had filed a detailed
reply on 24.03.2023 stating that the provisions of the IGST Act are inapplicable to the transaction in question. On the same date, department
issued a revised notice, in Form GST MOV -07 proceeding to apply the applicable provisions of the CGST/SGST Act. It was thereafter
observed by the High Court that no opportunity was granted to the petitioner to respond to that notice and the petitioner was further never
heard as what had transpired on 24.03.2023 was a hearing only in respect of notice dated 18.03.2023 and not subsequent notice dated
24.03.2023. Therefore, the High Court held that since proceedings had been concluded contrary to the principles of natural justice, therefore
impugned orders were thus set aside

4

Section
69 and
Section
132

Denial of Bai

Kumar Rasiklal
Kanudawala v. State
of Gujarat [2023] 151
taxmann.com 140
(Gujarat)

In the instant case, it was contended by the department that although vehicle number was mentioned in the e-way bills, actually, as per the
statement of the vehicle owners, vehicle never travelled from Gandhidham to Deesa or Patan and no goods were unloaded. Therefore, it
prima facie, indicated that the e-way bills were bogus and as such there was no transaction and yet the e-way bills were generated.
Therefore, the High Court considering the above fact revealed in the preliminary investigation carried out by Investigating Officer and in
absence of there being any actual transaction, prima facie, it seemed that bogus e-way bills were generated. Therefore, considering the
fact that the amount involved was more than 1,84,00,000/-, the court did not found it appropriate to exercise the powers under section 438
of the Criminal Procedure Code and therefore, the applications were dismissed.

Snapshot-32-Snapshot of Latest GST Cases

-Interest payable on delay in grant of refund
-Grant of Bail
-Documents signed as provided in Rule 26 but not physically signed as required in circular may be an irregularity but not an illegality
-Availability of Alternative remedy

S.No

Section

Case Subject

Case

Held

1

Section
54

Interest payable
on refund in
case of
inordinate delay

Sesame Workshop
Initiatives (India) (P.)
Ltd. v. Union of India
[2023] 151
taxmann.com 52
(Delhi)

By an order dated 04.10.2021, a refund of Rs. 1,12,98,201/-was sanctioned. The refund of SGST of Rs. 44,60,713/- was processed and
disbursed on 09.03.2022. However, refund of CGST and IGST was not processed despite refund order dated 04.10.2021, sanctioning the
same. A letter informing the petitioner of disbursal of the said amount was issued on 23.04.2023 and the said amount was credited into the
petitioner's bank account on 27.04.2023. The issue involved in the present case is now confined to the interest payable on the said amount.
The High Court held that undisputedly, if a person is denied of the payment due to him, he is required to be compensated. In Sandvik Asia
Limited v. Commissioner of Income tax I, Pune: (2006) 2 SCC 508 the Supreme Court had endorsed the principle that interest would be
payable even in cases where there was no statutory provision for payment of interest. Therefore, it was held that petitioner was entitled to
interest from 01.11.2021 (considering an allowance of twenty-six days for the respondents to comply with the refund sanction order dated
04.10.2021) till the date of payment, that is, 27.04.2023 at 6% per annum.
Cases Referred- Union of India v. Tata Chemicals Ltd.: (2014) 6 SCC 335; Sandvik Asia Limited v. Commissioner of Income tax I,
Pune: (2006) 2 SCC 508

2

Section
69 and
Section
132

Grant of Bail

Amrinder Singh v.
State of Punjab
[2023] 151
taxmann.com 51
(Punjab & Haryana

The High Court observed that broadly speaking (subject to any statutory restrictions contained in Special Acts), in economic offences
involving the IPC or Special Acts or cases triable by Magistrates once the investigation is complete, final report/complaint filed and the triple
test is satisfied then denial of bail must be the exception rather than the rule. However, this would not prevent the Court from granting bail
even prior to the completion of investigation if the facts so warrant.
Therefore, in view of the above, bail was granted in view of the fact that the petitioner was arrested on 13.03.2021 and was is in custody
ever since in a case where the maximum sentence that could be awarded was 05 years, the further incarceration of the petitioner is not
required, more so when his co-accused have been granted the concession of regular bail vide order dated 31.08.2022.

3

Section
54

Documents
signed in the
manner
prescribed in
Rule 26 but not
physically
signed as
required in the
circular may be
an irregularity
but not an
illegality

Medicamen Biotech
Ltd.
v.
Union of India
[2023] 150
taxmann.com 408
(Rajasthan)

The appellate authority declared the sanction for refund as illegal as declarations were not signed in physical mode before it could be
scanned and uploaded through electronic mode. For this purpose, Appellate Authority relied upon Circular dated 18.11.2019.
The High Court observed that a conjoint reading of the provisions contained in Rule 26 and Rule 89 of the CGST Rules of 2017 does not
mandate that even after having authenticated a document in the manner prescribed under Rule 26 of the CGST Rules of 2017, insofar as
declarations (as sought in the present case) are concerned, they are also required to be signed in physical mode before being scanned
and uploaded through electronic submission along with the application for refund. However, by administrative instructions, i.e. Circular
dated 18.11.2019, such requirement was added. Though non-submission of refund application along with the declarations as required
under the law would certainly be illegal and that may, in appropriate case, entail rejection of the application, however, if declarations, as in
the present case, are digitally authenticated in the manner prescribed under Rule 26 of the CGST Rules of 2017, non-submission of
physically signed and scanned declarations may only be an irregularity, but not an illegality. Therefore, High Court held that impugned order
passed by the Appellate Authority upsetting the order of refund passed by the Adjudicating Authority was not sustainable in law

4

Section
107

Availability of
alternative
remedy

Kramski Stamping
and Molding Indis
(P.) Ltd. v. State Tax
Officer (Int.) [2023]
151 taxmann.com 85
(Madras)

In the instant case, detention was goods was made for failure to carry E-Invoice during the movement of the goods. The High court held
that they cannot entertain this writ petition as principles of natural justice have not been violated since the impugned order was only passed
after giving the petitioner time to submit the reply and after consideration of reply filed. The writ petition was disposed of with directions to
file statutory appeal, if aggrieved by the impugned order before the statutory Appellate Authority as per the provisions of Section 107 of
G.S.T. Act, 2017 and a direction was issued to the statutory Appellate Authority as and when an appeal was filed by the petitioner to
consider the petitioner's application seeking for provisional release under Section 129(1) of the G.S.T Act, 2017