2017-TIOL-GST-94 Dated: Friday, September 15, 2017

GST - Inter-state supplies - exemption from registration for below Rs 20 lakh supplies - Govt notifies job work and handicrafts items with HSN Code

GST - Exemption from registration in case of inter-state supply of handicraft goods - Benefit extended to Casual Person also

IGST - Grievance of the Petitioner is that it holds export orders placed on it prior to 1st July 2017 for the fulfilment of which it has to undertake imports of inputs - Petitioner seeks to explain that, with the change brought about by the GST regime, the Petitioner would have no option but to pay IGST out of its sources causing a working capital blockage; that they would have to rely upon borrowings as it has already exhausted its overdraft limits with the banks; that the prospect of the IGST being ultimately refunded some time in future is of little consolation to the Petitioner who seeks liquidity to discharge the additional levy of IGST failing which its imports will get blocked; limited relief that the Petitioner is seeking is in relation to the applicability of the additional levy of IGST to imports made by the Petitioner to fulfil export orders that were placed with it prior to 1st July 2017 - Petitioner prays that it should not be asked to pay the additional IGST on such imports as that would make the levy arbitrary and unreasonable.

Held: In the present case, the Petitioner-Exporter is not questioning the legislative competence to levy the additional IGST but is only questioning the applicability of such levy even to imports that are made for fulfilment of export orders that have been placed on and accepted by the Petitioner prior to 1st July, 2017; Petitioner is seeking to only avail the credit outstanding in respect of advance authorizations issued to the Petitioner prior to 1st July 2017 - Court is of the view that the Petitioner has made out a prima facie case for grant of Prayer (b) in the writ petition, i.e. a direction to the Respondents to allow the Petitioner to continue making the imports under the Advance Authorization licenses issued prior to 1st July, 2017 in terms of their quantity and value subject to terms - interim direction is further subject to the Petitioner furnishing an undertaking by way of an affidavit filed in this Court within one week to the effect that in the case of the Petitioner ultimately not succeeding in this writ petition, or failing to fulfil its export obligations, it is liable to pay the entire IGST as was leviable, together with whatever interest as the Court may determine at the time of final disposal of the writ petition - Writ petition is set for final hearing on 22nd February 2018: High Court [para 12, 13]

GST - Petitioner states that its attempt to make payment of the Integrated tax partially from the CGST credit and partially from the SGST credit was frustrated when the Electronic Credit Ledger available at the Portal www.gst.gov.in showed a pop-up error message which stated: " Offset the CGST Credit completely before cross utilization [of] SGST Credit against IGST tax liability" "Petitioner submitting that the system cannot be programmed so as to deny the utilization of CGST and SGST credit in a manner not envisaged either under Section 49 (5) of the Act or the Rules made under Section 49 (4) of the Act - Counsel appearing for GNCTD, states that some time may be granted for obtaining instructions. Held: Matter to be listed on 26 September 2017: High Court [para 4, 5]

2017-TIOL-13-HC-DEL-GST

GST - Issues raised in this petition, which involves a challenge to the validity of the Goods and Services Tax (Compensation to States) Act, 2017 are more or less similar to those raised in W.P. (C) No. 7459/2017 (Mohit Minerals Pvt. Ltd. v. Union of India) = 2017-TIOL-1678-HC-DEL-MISC - Petitioner submits that they have already paid the Clean Energy Cess under Chapter VII of the Finance Act, 2010 ('FA 2010') on the coal lying in stock on 30th June, 2017 on which the cess already paid is to an extent of Rs. 11.41 crore - In that view of the matter, with regards to the additional levy in terms of the impugned legislation on the aforementioned stock of coal on which the Petitioner has already paid the Clean Energy Cess, the Petitioner should not be required to make any further payment during the pendency of the present petition - However, as far as the stocks of coal on which no Clean Energy Cess was paid, any payment made in terms of the impugned legislation would be subject to the result of this petition - On the same lines, it is directed that the Petitioner will continue to pay the taxes as and when they fall due after availing and utilizing the credit for the cess already paid - This will, however, be subject to the final orders passed by this Court - As regards non-filing of returns by the Petitioner on the due dates, till such time an appropriate method/system is evolved by the Respondent which would facilitate utilization of the credit and provide for it in the returns filed electronically, the Respondents will not take any coercive steps against the Petitioner for the failure to file such electronic returns on time - Matter listed on 25 September 2017: High Court [para 11, 12]

GST - Petitioner submitting that despite the order dated 25th August 2017 = 2017-TIOL-1678-HC-DEL-MISC of this Court, they have not been able to take credit of the Clean Energy cess already paid (in the sum of around Rs. 7.86 crores on the stocks of coal as on 30th June, 2017) since the forms developed by the Respondents have no column for utilising such credit for making payment of tax; that directions are accordingly sought in this application, to the Respondents to amend the Form Tran-I and simultaneously GSTR -3B and GSTR-1, GSTR-2 and GSTR-3 where utility of Cess is to be shown and/ or carried forward as cess or any other appropriate directions to the Respondents so that the Applicant/Petitioner could use the credit of cess already paid on the stock held on 30th June 2017 in terms of the order dated 25th August 2017 of this Court - Counsel for Respondent Revenue producing a copy of the letter dated 7th September 2017 addressed to him by the Under Secretary in the Central Board of excise and Customs (CBEC) wherein after referring to the earlier order dated 25 August 2017 it is mentioned that after receipt of application, collection of details and due verification department will evolve appropriate method so as to allow the petitioner to avail the credit in light of the order of the High Court either on IT platform or manually - in this view of the matter, till such time an appropriate method/system is evolved by the Respondent which would facilitate utilization of the credit and provide for it in the returns filed electronically, the Respondents will not take any coercive steps against the Petitioner for the failure to file such electronic returns on time - Matter listed on 25 September 2017: High Court [para 7, 8]

CGST - Challenge to vires of Rule 44A of CGST Rules, 2017 - Prima facie case for interim relief - balance of convenience in favour of petitioner - no coercive action to be taken for reversal of credit: High Court [para 4]

GST - the petitioner provides export services - Under IGST Act, the export services provided by the petitioner were covered under ‘zero rated supply' u/s 16(1)(a) - Thereby, to avail input tax credit, the petitioner, having an export turnover of less than Rs. 1 crore had to mandatorily furnish a bond with a bank guarantee. However, petitioner claimed that such a condition did not apply to an exporter with an annual turnover exceeding Rs. 1 crore - Further, considering Para 4 of the CBEC Circular No. No. 4/4/2017-GST, the bond has to be for a sum equal to the export tax liability - Whether where there is zero rated supply, whether it is necessary to furnish a bond with a bank guarantee, and if so, for what amount - Held - Adjournment granted on request of respondent, for seeking clarification - Hearing listed for 13th September, 2017: High Court (Para 3,4,5,6,7)

Whether when the rectification has the effect of enhancing the assessment or any penalty, a notice to the dealer has to be issued and he should be allowed reasonable opportunity of being heard before invoking powers u/s 55 of TNGST Act - YES: HC

Whether the only remedy available to the Department in case they are of the opinion that revised assessment orders are prejudicial to their interest of Revenue, is to invoke Section 32 of TNGST Act - YES: HC

Whether Section 14 of the TNGST Act, would have any application to the facts of a case, where the revised return is not filed within the period of five years from the date of the original assessment - NO: HC

CGST - CENVAT - Petitioners challenge Notification 22/2017-CGST dated 17th August 2017 inserting Rule 44 A in the CGST Rules, 2017 requiring reversal of 5/6th of the CENVAT Credit which had already accrued to the Petitioner on account of payment of additional duty of customs levied under Section 3(1) of the Customs Tariff Act, 1975 paid at the time of importation of gold dore bar; that the said CVD was allowed to be carried forward in full as a transitional measure under Section 140 of the CGST Act, 2017 - Petitioner contends that the impugned notification issued in exercise of rule-making powers under Section 164 of the CGST Act, 2017 is grossly discriminatory and unreasonable and has imposed restrictions which are applicable only to imported gold dore bars; that the impugned Notification has singled out only imported gold dore bars resulting in imposition of a higher burden of tax on these goods as compared to other imported goods as well as compared to any similar domestic goods; that if the interim orders are not granted then the credit of CVD already availed and utilized for payment of tax on finished goods by the Petitioners would be electronically reversed and they would have to deposit cash. Held: Court is of the view that the Petitioners have made out a prima facie case for grant of interim relief in their favour; that the balance of convenience is in their favour for grant of interim relief - it is directed that till the next date of hearing, no coercive steps shall be taken by the Respondents to recover the credit already availed by the Petitioners - Matter to be listed on 25 September 2017: High Court [para 4, 6]

GST - Clean Energy Cess - Crux of the Petitioner's submission is that Section 18 of the COI 101st Amendment Act does not enable the Parliament to levy any cess which stood abolished in terms of the Third Schedule of the Taxation Laws (Amendment) Act, 2017. Held: Court sees prima facie merit in the contention of the Petitioner, based on the history of the abolition of the Clean Energy Cess and the introduction of the GST regime, that the power of Parliament to enact the impugned Act cannot be traced to Section 18 of the COI 101st Amendment Act, therefore, a prima facie case is made out as regards the legislative competence of the Parliament to enact the impugned Act - Court, is of the view that, the Petitioner has made out a prima facie case for partial ad interim relief subject to conditions - As far as the additional levy on the stocks of coal on which it has already paid the Clean Energy Cess in terms of FA Act, 2010, the Petitioner should not be required to make any further payment - However, on stocks of coal on which no Clean Energy Cess under the FA, 2010 was paid, any payment made in terms of the impugned Act would be subject to the result of this petition - It is made clear that, in the event of the Petitioner succeeding in the present petition, the Petitioner would be entitled to a refund of amounts of Clean Energy Cess paid under the Act and on such terms as the Court may determine in the final order - it is necessary for the officers of the Department concerned, charged with the responsibility of levying and collecting Clean Energy Cess on coal to depute a team to the Petitioner's business premises to verify on how much of the stock of coal Clean Energy Cess under the FA, 2010 already stands paid - Subject to the Petitioner furnishing to the satisfaction of the officers proof of such payment, the Petitioner will be given credit for such payment and will not be required to make any further payment under the impugned Act for effecting sales and clearances - Till such time the said exercise is completed, no coercive steps will be taken against the Petitioner to recover the levy under the impugned Act - It is also made clear that on those stocks for which the Petitioner is not able to produce a satisfactory proof of already having paid the Clean Energy Cess under the FA, 2010, the Petitioner will be required to pay the cess under the impugned Act - Matter to be listed on 26 October 2017: High Court [para 8, 13, 14, 15, 16]

CST - Foreign Trade Policy did not limit the benefit of CST reimbursement to a EOU on purchases made only from a DTA unit -purchases made by an EOU from another EOU would also qualify for CST reimbursement - Director General of Foreign Trade could not have framed or altered the Foreign Trade Policy - Circular of Government of India dated 11.4.2014 does not lay down the correct legal position and the same is quashed -Petition allowed: High Court Central Sales Tax [CST] - Petitioner, a 100% EOU, situated in Kandla Special Economic Zone [KASEZ] is engaged in manufacturing various chemicals for export -the petitioner purchased raw materials manufactured in India -as per the Foreign Trade Policy 2004-2009 [Policy], during 2006-2008, the petitioner claimed CST reimbursement on such purchases made including from the manufacturing units situated in EOU -respondent authorities reimbursed the CST component of Rs.55.75 lakhs -however, on 26/30.9.2013, the Accounts Officer of KASEZ, informed that the audit conducted by CRA, Ahmedabad have pointed out that CST amount has been granted incorrectly - Audit officer of the view that purchases made by an EOU from another EOU would not qualify for CST reimbursement -as per the Hand Book of Procedures, such reimbursement would be available only on purchases made from Domestic Tariff Area [DTA] for production of goods and services as per EOU scheme - SCN issued to petitioner - relying on the Appendix 14-I-I of Hand Book of Procedures of the Policy, and the circular issued by the Government of India dated 11.4.2014, the Development Commissioner passed O-i-O and demanded the CST reimbursement of Rs.55.75 lakhs and also imposed penalty of Rs.25 lakhs for delayed returning of the said amount - petitioner has challenged the said O-i-O along with the Government Circular dated 11.4.2014 and the procedure for claiming CST reimbursement. HELD -A minute scrutiny of the provisions contained in para. 6.11 of the Policy would reveal that the language used in clauses (a), (b) and (c), in general, was not made limited to the supplies from a DTA unit - clauses(a) and (b) both confined their application to the supplies made by the DTA unit -clause(c) itself contained two situations -in sub-clause(i) what was envisaged was reimbursement of CST on goods manufactured in India -sub-clause (ii) envisaged exemption from payment of CST on goods purchased from DTA on goods manufactured in India -thus the Policy wherever intended to limit the benefit of an EOU on procurement made from a DTA unit, it was so specifically provided -when, therefore, sub-clause (i) of clause (c) of para 6.11 of the Policy did not make any such reference to the procurement from a DTA unit but used the expression "goods manufactured in India", it must be understood that this clause would govern the goods purchased by EOU unit from any unit as long as the condition of goods being manufactured in India is satisfied - in plain terms, therefore, the Policy did not limit the benefit of CST reimbursement to a EOU on purchases made only from a DTA unit - in exercise of powers under section 6 of the Foreign Trade (Development & Regulation) Act, 1992, the Director General of Foreign Trade could not have framed or altered the Foreign Trade Policy-in the case of Hospira Health Care India Pvt. Ltd. [2016-TIOL-3237-HC-MAD-CUS], a similar issue had come up for consideration, and it was held that the demand for refund of the reimbursement benefits were in conflict with para 6.11 of the Foreign Trade Policy - the Hand Book of Procedures and in particular Appendix-14-I-I contained therein nowhere aims to lay down any policy but prescribes the procedure to be followed for reimbursement of CST - such procedure could not have restricted the benefit by excluding the purchases from certain source which exclusion did not flow from the Foreign Trade policy itself - the claim pertained to period between 2006 and 2008 -they were made at the relevant time and granted by the respondents without any dispute -such reimbursements are now sought to be recovered for which SCN came to be issued on 10.7.2015 -it is not the case of the respondents that the petitioner was responsible for any mis-representation or mis-statement of facts which resulted into such erroneous reimbursement being granted and which came to the notice later on -that being the position, it was not possible for the respondents to make recoveries after unduly long period of time which in the present case happens to be more than seven years, that too, without any explanation for such delayed action - the impugned O-i-O dated 22.8.2016 is set aside - the circular of Government of India dated 11.4.2014 does not lay down the correct legal position and the same is also quashed -in the result, the petition is allowed: HIGH COURT [para 18, 19, 20, 21, 24, 25]

GST - Petitioner firm is engaged in construction & development of multiplex theatres, in Saharanpur district - A scheme under the U.P. Entertainments & Betting Tax Act, 1979 permitted multiplex owners to collect & retain certain percentage of Entertainment tax upto 31.03.2020 - The petitioner firm was permitted by the Entertainment Tax Officer /Collector to retain such amount of tax so as to enable it to recover cost of construction of multiplex - With the coming of CGST & UP GST Act, 2017, the erstwhile Act was repealed vide s.174 of the Act, 2017 but with the saving clause that it will not effect any right, privilege, obligation or liability acquired, accrued or incurred under the repealed Act provided the tax exemption granted under the repealed Act by any notification has not been rescinded or revoked by a fresh notification on or after the enforcement of the G.S.T - Petitioner claimed right to collect entertainment tax as in the past upto 31st March, 2020 as no such Notfn. repealing or revoking the tax exemption was issued. Held - Counsels for the respondents directed to file counter affidavits informing if the scheme granting tax benefit to the petitioner was still in effect or stood revoked, either automatically or by any fresh notification - Petition to be listed for admission/final disposal on 18.09.2017: High Court

GST - All legal services provided by Advocates, law firms of Advocates, or LLPs of advocates will be continued to be governed by the reverse charge mechanism - No coercive action: HC

GST - No coercive action be taken against any lawyer or law firms for non-compliance with any legal requirement under the CGST/IGST/DGST Acttill a clarification is issued: High Court (Para 14)

GST - Petitioner through a PIL challenged the implementation of the new Goods & Service Tax regime on grounds of lack of preparedness of several states and the public at large - Petitioner expressed concern w.r.t. the smooth implementation of GST due to legal hurdles and other complications and sought a stay on the implementation of GST till such flaws were ironed out. Held: Since the levy and collection of taxes on goods and services has sanction of law and also considering that over 65 Lakhs tax-payers had migrated to GST network & obtained registrations, and the rates & taxes were notified and rules framed and notified and wide publicity is given in public domain and also that the entire machinery was geared up to ensure the effective implementation of GST, High Court not inclined to entertain PIL, hence same is dismissed: High Court (Para 5, 6)