2019-TIOL-GST-269 Dated: Thursday, March 28, 2019

CGST CIRCULARS

96/2019

Seeks to clarify issues in respect of transfer of input tax credit in case of death of sole proprietor.

95/2019

Seeks to clarify verification for grant of new registration.

94/2019

Seeks to clarify certain refund related issues under GST.

RULES NOTIFICATION

15/2019

Notification to extend the due date for furnishing of FORM GST ITC-04 for theperiod July 2017 to March 2019 till 30th June 2019 issued.

HIGH COURT CASES

2019-TIOL-690-HC-ALL-GST

Ghaziabad Enterprises Pvt Ltd Vs STATE OF UP

GST - Assessee has placed the written instructions and the only reason which has come up is that there was a delay of one day - Admittedly, the vehicle was coming from Haridwar and it was intercepted at the Lucknow, there is a distance of 600 Kms. and the delay could have been bonafide - Notice was given to the driver and not to the owner, more over the tax has already been paid - The purchaser and the buyer both are registered with the GST, prima facie it cannot be a case of tax evasion - There is no cogent material before the opposite to seize the vehicle - So far the vehicle and goods is concerned, the petitioner shall move an application for release of goods before the authority concerned: HC

- Writ petition disposed of: ALLAHABAD HIGH COURT

2019-TIOL-689-HC-P&H-GST

Ikram Hameed Vs State Of Punjab

GST - The services of petitioner's vehicle for transporting the goods were availed by M/s Durga Logistic and the goods were being supplied by M/s R.R. Enterprises - While inspecting the goods, various discrepancies were found and the said vehicle along with the goods were detained - M/s R.R. Enterprise have deposited 10% of the amount of tax demand - Thereafter, he made a request to respondent No.3 for releasing the goods alongwith vehicle in question whereas the same was rejected and direction was issued to deposit the entire amount of tax and penalty for release of same - Thereafter, petitioner moved a representation, being registered owner of vehicle in question, for its release after unloading the goods but no response has been received till date - Without expressing any opinion on merits of the case, petition is disposed of by directing respondent No.3 to take a decision on the representation in accordance with law: HC

- Writ petition disposed of: PUNJAB AND HARYANA HIGH COURT

2019-TIOL-688-HC-ALL-GST

Avtar Trading Co Vs State Of UP

GST - The vehicle cannot be detained by opposite parties as the driver of the vehicle was carrying the genuine documents which are not controverted - The opposite parties as such shall release the vehicle on furnishing personal bond: HC

- Appeal disposed of: ALLAHABAD HIGH COURT

2019-TIOL-679-HC-ALL-GST

Ashok Kumar Bhatia Vs State Of UP

GST - Petitioners are truck owners and challenge the individual notices issued to them u/s 130 of the UPGST Act on the ground that they are only vehicle owners and are not doing any business in respect of sale and purchase of the goods.

Held:

++ Though the petitioner has taken the plea that he is not doing any "business" as contemplated in Section 2 sub section (17) and is not a "supplier" as defined in Section 2 sub section (105) and is not a "registered person" as defined in Section 2 sub section (94) of the Act, 2017 or that he is not a "taxable person" as defined in Section 2 sub section (107) of the Act, 2017 but so far as the provisions of Section 122 relating to penalty for certain offences are concerned he would fall within the definition of 'any person' who "in any way concerns himself" in transporting, removing, ... and he would be liable for payment of penalty to the extent of Rs.25,000/-, if he is found guilty of the offence.

++ If 'any person' transports any goods or stores any goods while they are "in transit" in contravention of the provisions of the Act or Rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure shall be released on conditions as laid down in sub clauses (a), (b) and (c) of Sub Section (1) of Section 129 of Act, 2017.

++ For the application of Sections 129 and 130 of the Act, 2017 it is immaterial that the person proceeded against is not a registered person or a supplier or a taxable person or is not doing any business as provided in any of the sub sections of Section 2 of the Act, 2017. It is enough that he is a 'transporter' of goods and that the goods are being transported and have been seized in transit and if the charge is made out against the transporter, the respondents can proceed to seize such goods including the conveyance.

++ In the present case, a show cause notice has been issued to the petitioner on 17.12.2018 and it is always open for the petitioner to file a reply to the same.

++ The contention of the petitioner that he is not doing any business in respect of sale or purchase of the goods or is not concerned with the goods as he is a mere transporter and is only providing vehicles for transporting and, therefore, the impugned notice is bad, is without any substance and is rejected.

++ Petitioner has submitted that under section 129 of the Act, on payment of penalty of Rs.25,000/- the conveyance is liable to be released. Since the vehicle along with goods have been seized and an F.I.R. has also been lodged in this regard, it is always open for the petitioner to apply to the trial court for release of the conveyance and beyond this, no further observations are required.

- Petition dismissed: ALLAHABAD HIGH COURT

2019-TIOL-678-HC-RAJ-GST

Bharat Raj Punj Vs CCGST

GST - Petitioners seek quashing and setting aside of summons issued and a further prayer that the authorities be directed not to take any coercive action against the Petitioners - Case of the department is that the company had fraudulently availed ITC of Rs.40.53 crores by issuance of fictitious sale invoices and sister concerns had availed such fraudulent ITC of Rs.328 crores - Senior officials of the company were arrested on 19.01.2019 - Petitioner submits that he was residing in USA and was appointed as Managing Director of the Company on 30.05.2018 after the demise of his father; that he apprehends that if he appears in response to the summons, he too would be arrested; that they have already deposited GST of Rs.7.15 crores from 18 January 2019 to 02 February 2019 evidencing that they are law abiding citizen and that if any coercive action is taken, the same would seriously hamper his reputation. Reliance placed inter alia on the decisions in Makemytrip- 2016-TIOL-1957-HC-DEL-ST as affirmed by the apex court - 2019-TIOL-65-SC-ST and also the decision in Meghraj Moolchand Burad vs. Directorate General of GST (Intelligence), Pune and Anr. that procedure cannot be bypassed before going ahead with the arrest; that as the tax has not been determined in accordance with sections 73 & 74 of the Act, the department does not have the right to arrest the petitioner u/s 69 of the Act .

Held: Petitioner in the present case has not disputed the factum of fraudulent availment of input tax on basis of fake invoices - It is clear case of the Department that the Petitioner and its sisters concerns have availed input tax credit to the tune of Rs.328,36,73,701/- on the basis of fake invoices, out of which Rs.40,53,58,772/- is the fraudulent input tax credit claimed by Petitioner No.2 of which Petitioner No.1 is the Managing Director. This fact is not controverted by the Petitioner, nor there is any pleading or counter pleadings on behalf of the Petitioner in the Writ Petition that a wrong allegation has been levelled by the Goods and Services Tax Department - Petitioners' Writ Petition is confined to technicalities as also to the fact that the Petitioner No.1 was residing abroad and was not involved in day to day affairs of the company - Court is not convinced by the arguments advanced by the counsel for the Petitioner for the very reason that Petitioner No.1 is the Director of the company since 08.08.2012 and has been receiving managerial remuneration from the company to the tune of about Rs.60 lakh per annum - Petitioner No.1 became the Managing Director of Petitioner No.2 on 30.05.2018, hence contention of counsel for the Petitioner that he was not involved in day to day affairs of the company, cannot be accepted - since the case of the department that the Petitioner has claimed input tax credit on fake invoices is not controverted by the Petitioner, Department has all rights to take any action permissible by law - contention that the tax is to be first determined under Section 73 & 74 of the Act does not have any force for the very reason that in an offence committed under Section 132 of the Act, determination of tax is not required and the Department can proceed straight away by issuing summons or if reasonable grounds are available, by arresting the offender - it is revealed that from July, 2017, company has not done any business and that fake sale purchase bills were prepared and only trading activities were shown - All the trading activities were conducted without any banking transaction or movement of goods - It was also revealed from the statements that input tax credit was wrongly claimed to the tune of more than Rs.40 crores and 53 lakhs by the Petitioner No.2 - Investigation also revealed that no manufacturing process was conducted at Bhiwadi and CR Sheet/Coils and Iron Sheets were not used in the manufacturing process at Bhiwadi - It was also revealed that M/s Fedders Electric and Engineering Ltd, M/s PSL Engineering Pvt. Ltd, M/s Air Serco Pvt. Ltd., M/s Perfect Radiators Pvt. Ltd. & M/s Punj Engineering are related companies to Petitioner No.2 and the total input credit wrongly claimed by the company and its sister concerns is to the tune of Rs.328 crores - judgment relied upon in the case of Make My Trip has no applicability to the facts of the present case as that case was of collection of the tax and its non-deposition with the Government, whereas in the present case, false input credit was claimed on fake invoices without conducting any trading activities - so also the decision in Meghraj Moolchand Burad is not applicable since it pertains to Anticipatory Bail and the facts are not relevant to present case - Since offence under Section 132 is made out and Senior Officials of Company are behind bars, Petitioner being Managing Director is responsible and Department has the right to proceed under Section 69 and 70 of the Act - no force in the Writ Petition, hence dismissed but with cost of Rs.1,00,000/- which is to be deposited with the Rajasthan High Court Legal Services Authority within four weeks - Stay application also stands disposed of: High Court

- Petition dismissed: RAJASTHAN HIGH COURT

2019-TIOL-647-HC-KAR-GST

Ravago Shah Polymers Pvt Ltd Vs UoI

GST - The petitioner company is engaged in trading of imported & domestically-procured plastic as well as raw material of plastic - During the relevant period, the petitioner attempted to file Form GST TRAN-1, on and after the last date prescribed - The petitioner initially filed an representation seeking to facilitate filing of this form - It was aggrieved by the endorsement issued by the GST Council, advising the petitioners to contact the officers concerned, for redressing this grievance.

Held - It is seen that the insertion of Rule 1(1)(A) to Rule 117 of the CGST Rules 2017 provides that the Commissioner can extend the date for submitting Form GST TRAN-1 by a period not beyond March 2019, in respect of registered persons who were unable to submit the declaration on the common portal - In this regard, a Notification had been issued by the Commissioner, extending the period for submitting Form GST TRAN-1 till 31.01.2019 for the class of registered persons - In light of the same, the present writ becomes infructuous: HC

- Writ petition dismissed : KARNATAKA HIGH COURT

2019-TIOL-646-HC-UKHAND-GST

Jaspreet Kalra Vs UoI

GST - The petitioner filed the present writ seeking release of a vehicle which had been seized by the Revenue - The petitioner claimed that the vehicle had been seized and penalty equivalent to IGST duty, had been imposed on a technical infraction, namely that the validity of the e-way bill had expired on 03.02.2019 - The petitioner claimed to have generated fresh e-way bill on 06.02.2019 which was valid upto 12.02.2019 in continuation of the previous e-way bill.

Held - The vehicle in question be released subject to the petitioner furnishing a security before the authority concerned as per provisions u/s 129(1)(c) of CGST Act 2017: HC

- Writ petition disposed of : UTTARAKHAND HIGH COURT

2019-TIOL-627-HC-ALL-GST

SA Products Vs State Of UP

GST - Petitioner submits that he has generated e-way bill for more amount and on physical verification, the same was found to be less and which as per the petitioner cannot be considered as contravention of GST Rules; that once GST is paid, the opposite parties have no reasonable apprehension of evasion of tax; that any intervention with their business will be violative of their rights.

Held: There is no inference drawn by the opposite parties that the e-way bills were not correct or they were fake - Standing counsel prays for a weeks' time to seek instructions - Officer well versed with the facts of the case to be present on 14.02.2019: HC

- Matter posted: ALLAHABAD HIGH COURT

AAR CASES

2019-TIOL-93-AAR-GST

Alok Bhanuka

GST - The applicant is engaged in the repair and servicing of transformers owned by the West Bengal State Electricity Distribution Company - The applicant sought to know whether such activity classifies as job work u/s 2(68) of the CGST Act - The applicant also seeks to know if such service classifies as mixed supply or composite supply - In case such service is a composite supply, then the applicant also seeks to know the principal supply and rate of tax - The applicant also sought to know whether the repaired transformers can be delivered to WBSEDCL against challans without raising tax invoices.

Held - The repairing and servicing of transformers owned by another person is not job work as defined u/s 2(68) of the CGST Act - It classifies as composite supply unless the contract specifies that the goods and services are to be separately charged - The principal supply is the service of repairing the transformers - The same is classifiable under SAC 998719 and taxable under Sl No. 25(ii) of Notification No. 11/2017 – CT(R) dt. 28/06/2017: AAR

- Application disposed of : AAR

2019-TIOL-92-AAR-GST

Eskag Pharma Pvt Ltd

GST - The applicant company manufactures pharmaceutical products, APIs and other medicaments - It approached the Authority, seeking to know the classification of 15 products, which were stated to be dietary/health supplements.

Held - The products of Folcovit capsule, Folcovit Distab, Myova/Myowin tablet, Candyflora Tablet, Carisma Tablet, Lactolite syrap, Lacolite Z Sachet, Biogut Dry Syrup, Enterobiotic Dry Syrup, Gutclausy Dry Syrup & Evaday Capsule, are classifiable under HSN 2106 and are taxable under Sr No 23 of Schedule III of Notfn No 1/2017-CT(R) dated 28.06.2017 as amended by Notfn No. 41/2017-CT(R) dated 14.11.2017: AAR

- Application disposed of : AAR

2019-TIOL-91-AAR-GST

Ecosan Services Foundation

GST - The applicant claims to be a non-profit organization and is engaged in providing services related to sanitation - It approached the Authority for Advance Ruling, seeking to know whether services provided to an NGO registered as a Trust u/s 12AA of the Income Tax Act, 1961, is tantamount to providing service - Also whether any grant or donation received received towards performance of specific services for preservation of the environment, as specified under Notfn No 12/2017, amounts to provision of service & thus attracts GST.

Held - The applicant's activities are broadly categorized into sanitation capacity building, disseminating knowledge in sustainable sanitation, providing sustainable solutions at community level and surveying & researching natural wastewater treatment technologies - One specific activity os constructing suction toilets & waterless UDDTs as an alternative to flush toilets, which consume & waste lot of water - The applicant claims that such activity leads to conservation of water resources & reduces ground water depletion - The applicant also claims that such conservation of water & prevention of pollution are essential for preservation of the environment - Thus, considering the nature of the applicant's activities, the same are covered by the activity specified under Para 2(r)(iv) of the Notfn relating to preservation of environment - Moreover, the applicant's activity of spreading awareness regarding sanitation is an essential ingredient of preventive healthcare - Hence the applicant's activities are also covered under Para 2(r)(B) of the Notification, even though the applicat does not raise any argument in this regard - Thus the services provided by the applicant to various entities amounts to provision of service - Moreover, grants & donations received towards provision of cases would be considered as received towards activities relating to preservation of environment as specified in definition at 2 (r) of Notification No. 12/2017-Central Tax (Rate) - Hence such grants are covered by exemption under Sr No 01 of such Notfn: AAR

- Application disposed of : AUTHORITY FOR ADVANCE RULING

NAA CASE

2019-TIOL-20-NAA-GST

Kerala State Screening Committee On Anti-Profiteering Vs Win Win Appliances

GST - Anti-profiteering - The rate of tax on Grinder had been reduced from 28% to 12% w.e.f. 15.11.2017 vide the Notfn No 41/2017-CT(R) dated 14.11.2017 - Information was received that the respondent had not passed on to the customers, the benefit of rate reduction - Thus it was alleged that the respondent had profiteered on the supply of 'Matchless Plus TTWG Grinder' - The Standing Committee forwarded the matter to the DGAP - Upon investigation, the DGAP held that the provisions of Section 171 of the CGST Act were attracted & the profiteered amount was calculated accordingly.

Held - Perusal of relevant portions of the DGAP's report clearly establishes that the respondent hiked the base price of the product, when the rate of tax was reduced from 28% to 12% - Such base price was increased further, which is evidenced from the invoices issued during the relevant period - The DGAP report also shows that the profiteered amount as calculated initially was incorrect and that the actual profiteered amount was considerably higher, on account of the subsequent raise in the base price of the product and denial of benefit of rate reduction to the consumers - This clearly establishes that the respondent acted in contravention of the provisions of Section 171 of the CGST Act - The respondent is directed to reduce the price of the product in question, as per Rule 133(3)(a) of the CGST Rules 2017, also keeping in view the reduction in rate of tax so as to ensure that benefit of the same is passed on to the consumers - The profiteered amount be deposited with interest calculated @ 18% from the date on which the amounts were collected & till the same is deposited - Moreover, the respondent has also been found guilty of issuing incorrect invoices when selling the products, having reflected the incorrect base prices, which compelled consumers to pay additional duty - The respondent deliberately contravened the provisions of the CGST Act by issuing fake invoices, which is an offence punishable u/s 122(1)(i) of the Act - Hence the respondent is liable to face penalty u/s 122(1)(i) r/w Rule 133(3)(d) of the CGST Rules 2017 - SCN be issued in this regard: NAA

- Application allowed: NAA