2019-TIOL-GST-285 Dated: Wednesday, June 12, 2019

TOP NEWS

GST CASES

HIGH COURT

2019-TIOL-1205-HC-RAJ-GST

Bikaner Digitech Vs ACCGST

GST - Difficulties in filing declaration/returns on the GSTN portal - Respondents are directed to provisionally entertain the GST TRAN-2 and other returns of the petitioner either by way of opening the portal or manually - To issue notice of writ petition as well as stay petition to respondents: HC [para 3]

- Notice issued: RAJASTHAN HIGH COURT

2019-TIOL-1204-HC-DEL-GST

Hindustan Construction Company Ltd Vs UoI

GST - Representation made by the Construction Federation of India to the GST Council on 6th November, 2018 is to be considered by the GST Council and a decision be taken thereon - points 5 and 6 of the said representation form the subject matter of the present petition - List matter on 13 November 2019 - decision of the GST Council is to be placed before the Court on the said date: High Court [para 3, 5]

- Matter listed: DELHI HIGH COURT

2019-TIOL-1203-HC-AHM-GST

Patran Steel Rolling Mill Vs ACST

GST - Petitioner placing on record before the High Court a communication addressed by the respondent to the Bank Managers, where the bank accounts of the petitioners were attached, that the attachment are ordered to be withdrawn - grievance voiced in the petition, therefore, no longer survives - Court had called upon the respondent to show cause as to why he should not be made personally liable to pay the costs of the petition and for initiating contempt proceedings - respondent has tendered an unconditional apology and an undertaking that he shall be circumspect in discharging his duties as a State Tax Officer in future.

Held: In the light of the unconditional apology tendered, Court is of the view that no further action is required to be taken against the respondent no. 1 - petition stands disposed of accordingly: HC [para 5]

- Petition disposed of: GUJARAT HIGH COURT

2019-TIOL-1199-HC-DEL-GST

Bamboo Hotel And Global Centre (Delhi) Pvt Ltd Vs UoI

GST - Stay petition - Counsels for the parties accept notices - Matter be listed before Registrar on July 10 for completion of pleadings - List before this court on Aug 29: HC

- Case deferred: DELHI HIGH COURT

2019-TIOL-1185-HC-KAR-GST

Shree Enterprises Vs CTO

GST - Petitioners have challenged the order of confiscation as illegal, seeking all consequential reliefs - petitioners are claiming to be the consignee and transporter of the goods in question - It is their contention that the respondent has detained the goods and vehicle illegally for more than a month in violation of the procedure prescribed by the Government of India through Circulars and confiscated the goods and vehicle without there being any order of confiscation or there being arrears of tax and penalty.

Held: it is not in dispute that the notice under Section 129(1)(b) of CGST/KGST Act, 2017 was issued by the respondent on 2.01.2019, to which objections were filed by the petitioners - In such circumstances, it was incumbent on the part of the respondent to consider the said objections and pass a speaking order quantifying the tax and penalty and thereafter to release the goods subject to payment of tax and penalty or to confiscate the goods - However, the respondent considering the objections filed by the petitioners proceeded to pass the impugned order of confiscation of goods and conveyance under Section 130(1)(ii) r/w 122(1)(ii) and (iv) of the CGST Act, whereby penalty and fine payable by the petitioner is quantified - reference made by the Revenue counsel to Section 160 of the CGST Act to treat the said impugned order as an order of penalty cannot be countenanced for the reason that it is not mere wrong quotation of provisions of law in passing the order impugned but the procedure prescribed is disturbed - It is well settled law that unless the tax and penalty are quantified, no confiscation order could be passed - It is necessary to provide an opportunity to the owner of the goods or person incharge of the goods vehicle to make payment of tax and penalty subsequent to the objections filed, if any - Without providing such an opportunity, proceeding to pass confiscation order directly would not be construed as any mistake, defect or omission to come within the ambit of Section 160 of the CGST Act - It is a fundamental flaw which goes to the root of the matter and the said lacuna cannot be cured by referring to Section 160 of the CGST Act when the Circular/instructions issued by Government of India clarifies the procedure to be followed by the proper officer while dealing with these matters - Passing of the penalty order being sine qua non in the proceedings initiated by the respondent under Section 129(1)(b) of the Act and the same being missing, the impugned confiscation order cannot be held to be justifiable - GST regime being in the initial stages, Court deems it appropriate to quash the order impugned and restore the notice issued by the respondent under Section 129(1)(b) of the Act – Respondent shall consider the objections/reply filed by the petitioners and pass appropriate orders in accordance with law in an expedite manner (preferably within seven days) after quantifying the tax and penalty for the purpose of Section 129 of the Act - On quantification of penalty, goods and conveyance shall be released to the petitioners subject to payment of the penalty quantified: High Court [para 11, 12]

- Matter remanded: KARNATAKA HIGH COURT

2019-TIOL-1184-HC-KERALA-GST

Josco Jewellers Pvt Ltd Vs State Of Kerala

GST - Petitioner challenges the judgment dismissing their Writ Petition wherein they had challenged the penalty imposed contending that the appellant company is in no way liable to be imposed with penalty because the irregularities pointed out is with respect to the transactions conducted by another concern, which is functioning in another name and style; they had also raised contentions regarding the constitutional validity of s.174 of the Kerala SGST Act - Contention of the appellant is that the issue covered under the judgment relied upon 2019-TIOL-441-HC-KERALA-GST while dismissing their petition pertains only with respect to validity of Section 174 of the KSGST Act and the Single Judge had failed to advert to other contentions taken by the appellant and decide the petition on merit.

Held: The fact that the Single Judge has not considered any grounds other than the validity of Section 174 of the KSGST Act, is conceded by the learned Government Pleader - It is also conceded that the decision in W.P (C) No.11335/2018 = 2019-TIOL-441-HC-KERALA-GST and connected cases is now pending consideration in various writ appeals filed before the High court of Kerala, therefore, Bench is of the considered opinion that a remittance of the writ petition for fresh consideration and disposal on the basis of the grounds mentioned as above, will suffice to meet the ends of justice - Writ appeal is allowed by setting aside the impugned judgment - Registry to post the Writ Petition before the Single Judge dealing with the subject matter - Interim order of stay which existed as on the date of dismissal of the writ petition stands revived and would continue to be in force: High Court [para 3 to 6]

- Writ Appeal allowed: KERALA HIGH COURT

2019-TIOL-1170-HC-ALL-GST

Govind Enterprises Vs State of UP

GST - Petitioner seeks quashing of first information report (FIR) dated 30.11.2018 lodged by Assistant Commissioner, Commercial Tax at police station Kosi Kalan, District Mathura, under Sections 420, 467, 468, 471, 34, 120-B IPC - thrust of the allegations made in the impugned FIR is that the dealer fraudulently, with a dishonest intention, by submitting false documents, with an intention to evade taxes, obtained registration, thereafter, took inward supply and passed on the goods to end users, without generating outward supply bills, received money in cash and deposited the same in bank account which was not declared at the time of seeking registration - according to the allegations, a bogus firm was got registered by showing false and bogus addresses of business; and, by taking advantage of such registration, inward e-way bills were generated to make purchase of goods worth Rs.35 odd crores and, thereafter, without generating outward supply bills, huge amount of money was deposited in cash in undisclosed bank account, suggesting that goods were sold without proper documentation, with a view to evade taxes - Petitioner submitted that till date no case had been registered under the provisions of the U.P. Act or under the CGST Act and no recovery demand has been raised and, therefore, lodging of the first information report under the provisions of the Indian Penal Code is not legally sustainable; that the Goods and Services Tax Act is a complete code in itself as it contemplates and deals with all kinds of situations and offences relating to registration of firms, tax evasion etc and it prescribes a specific procedure for arrest and prosecution, therefore, lodging of the first information for offences punishable under the Indian Penal Code by taking recourse to the provisions of the Code of Criminal Procedure, 1973 is not legally justified; that the power to arrest is to be exercised only where the Commissioner has reasons to believe that a person has committed any offence specified in clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) of Section 132 of the U.P. Act, and, by order, has authorized any officer of Sales tax to arrest such person; that, under the circumstances, first a proceeding has to be drawn under the provisions of the U.P. Act and, only, thereafter there could be arrest, that too, after recording satisfaction and hence, lodging of the first information report straightaway is not legally permissible; that even assuming that a first information report can be registered, as no demand for recovery has yet been issued, there is no justification to effect arrest of the petitioner pending investigation.

Held: Sections 69, 134, and 135 of the U.P. Act are applicable in respect of offences punishable under the U.P. Act - They have no application on offences punishable under the Penal Code - Further, there is no provision in the U.P. Act which may suggest that the provisions of the U.P. Act overrides or expressly or impliedly repeals the provisions of the Penal Code - There is also no bar in the U.P. Act on lodging an FIR under the Code for offences punishable under the Penal Code even though, for the same act/ conduct, prosecution can be launched under the U.P. Act - Rather, section 131 of the U.P. Act impliedly saves the provisions of the Penal Code by providing that no confiscation made or penalty imposed under the provisions of the Act or the rules made thereunder shall prevent the infliction of any other punishment to which the person affected thereby is liable under the provisions of the U.P. Act or under any other law for the time being in force - argument of petitioner that except for offences specified in sub-section (5) of section 132, sub-section (4) of section 132 of the U.P. Act renders all offences under the U.P. Act non cognizable, therefore no FIR can be lodged, is not acceptable, because sub-section (4) speaks of offences under the U.P. Act and not in respect of offences under the Penal Code - offences punishable under the Penal Code are qualitatively different from an offence punishable under the U.P. Act - Bench is of the considered view that the contention of the petitioner that no first information report can be lodged against the petitioner under the provisions of the Code of Criminal Procedure for offences punishable under the Indian Penal Code, as proceeding could only be drawn against him under the U.P. Goods and Services Tax Act, 2017, is liable to be rejected and is, accordingly, rejected - Prima facie, necessary ingredients of an offence of cheating, by submitting false information and documents, are clearly spelt out in the FIR - It cannot, therefore, be said that a bare reading of the impugned FIR does not disclose commission of cognizable offences punishable under the Penal Code - impugned FIR is, therefore, not liable to be quashed - to ensure that a person's liberty is not jeopardized, on account of false implication, protection from arrest, pending investigation, may be granted by superior courts but that power is not ordinarily to be exercised in matters relating to economic fraud - As, in such matters, stay on arrest may become a hurdle in thorough investigation of the matter, particularly in tracing out the money trail - this is not a fit case where any relief should be granted to the petitioner in the writ jurisdiction - Petition is dismissed: High Court

-Petition dismissed : ALLAHABAD HIGH COURT

2019-TIOL-1168-HC-ALL-GST

Oudh Bar Association Vs UoI

CGST/UP GST Act, 2017 - Section 109 - Constitution of Goods and Services Tax Appellate Tribunal - It has been stated in the said proposal dated 21.02.2019 that the earlier VAT Tribunal was also functioning with its Head Quarter at Lucknow and, therefore considering all the relevant factors, the State Government had requested the GST Council that the State Bench for the State of Uttar Pradesh should be constituted at Lucknow and further recommended constitution of 20 Area Benches in 16 Cities as mentioned therein - It has also been vehemently urged by the petitioner that the revised proposal dated 15.03.2019, sent by the State of U.P. to the GST Council is illegal, arbitrary and on the face of it is erroneous and, therefore, it is liable to be set aside and suitable direction be issued for constitution of the Tribunal at Lucknow.

Held: It is admitted that initially the State Government had proposed to set up the State Bench at Lucknow with area Benches elsewhere including at Allahabad but after the order of the High Court dated 28.02.2019, a fresh proposal was sent for constitution of State Bench of the GST Tribunal at Praygraj (Allahabad) - Bench is required to judge the validity of the revised proposal dated 15.03.2019, and examine as to whether there is any such proposition or direction by the Supreme Court in the case of Madras Bar Association - 2014-TIOL-82-SC-MISC-CB or in S.P. Sampath Kumar - 2002-TIOL-406-SC-SERVICE-CB that Tribunals should always be established at the 'principal Seat' of the jurisdictional High Court - On a bare reading of the aforesaid two decisions, Bench does not find the use of the word "Principal Seat" for establishing a permanent Bench of a Tribunal in either of the two decisions referred above, one of which i.e. Madras Bar Association (supra) was referred in the earlier order of this Court dated 28.02.2019 - The words used are "Seat of the High Court" - next question to be considered is where is the Seat of the High Court of Judicature at Allahabad, is there one or more than one Seat - In the case of Nasiruddin Vs. State Transport Appellate Tribunal, 1975 SCC (2) 671, the Apex Court, tracing out the history of the High Court of Judicature at Allahabad, had concluded that there is no permanent seat of the High Court at Allahabad; that there are two Seats of the High Court, one at Allahabad and another at Lucknow, none of which are permanent, and may be changed in accordance with provisions of the Amalgamation Order, 1948 i.e. at the discretion of the Chief Justice with the approval of the Governor - It is not out of place to mention that prior to the Amalgamation Order, 1948, there was a Chief Court of Oudh at Lucknow which was a deemed High Court, made under Section 219 of the Government of India Act, 1935, therefore the Order of 1948 brought about an amalgamation of the two High Courts into a new High Court i.e. High Court of Judicature at Allahabad - The Amalgamation Order, 1948 in Article 3 provides that the High Court in Allahabad and the Chief Court in Oudh shall constitute one High Court by the name of the High Court of Judicature at Allahabad - Article 14 of the Amalgamation Order, 1948, makes it clear that the Judges of the High Court shall sit at Allahabad or such other places as the Chief Justice may appoint with the approval of the Governor - It further provides that not less than two judges be nominated, by the Chief Justice to sit at Lucknow in order to exercise jurisdiction and power in respect of cases arising in the area of Oudh territory - Thus there are two Seats of the High Court of Judicature at Allahabad, one at Lucknow and the other at Allahabad, none of which is permanent: High Court [para 39 to 44]

GST Appellate Tribunal - Insofar as observations made in the interim order dated 28.02.2019 that the proposal dated 21.02.2019 was not in accordance with the order passed by the Supreme Court in the case of Madras Bar Association (supra) according to which the Tribunal should be set up at the Principal Bench of the High Court, which acted as the catalyst for revision of the earlier proposal by the impugned order, as already stated and as is evident from the provisions of the Amalgamation Order, 1948 and decisions of the Supreme Court in the case of Nasiruddin (supra), which is a decision relating to this very High Court, there are two Seats of the High Court of Judicature at Allahabad, therefore, even as per the decision of Apex Court in the case of Madras Bar Association (supra) and S.P. Sampath Kumar (supra), the permanent or State Bench of GST Tribunal could be set up at Lucknow as well as Allahabad or at both the places, as the case may be - Lucknow also happens to be the Capital of the State with good infrastructure, transport facilities and is also geographically accessible from various parts of the State and the recital contained in the order of this Court dated 28.02.2019 are at best obiter and not binding: High Court [para 45]

GST Appellate Tribunal - Seat where the Tribunal is to be established is an issue which is within the domain of the Executive in terms of Section 109 of CGST Act ordinarily and is not justiciable in view of the decision of the Supreme Court in the case of Lalit Kumar, wherein it was held that "that the issue with regard to setting up of permanent Bench and Circuit Benches of the Tribunal is not to be the subject matter of consideration by the judicial forum unless facts of the case are so appalling that judicial interference would be called for" - we are not concerned with the issue on merits as to where the Benches should be established but we are only concerned with the issue whether the earlier proposal could have been reviewed on account of certain observations made in an interim order and whether on which count the revised proposal is sustainable as a valid exercise of power - The impugned proposal, which has been passed only on account of the order of this Court dated 28.02.2019, the purport and import of which has already been elaborately dealt with hereinabove, cannot be sustained: High Court [para 49]

Conclusion:

++ Amended proposal dated 15.03.2019 sent by the Commissioner, Commercial Tax is quashed - Consequently the earlier proposal dated 21.02.2019, which was a reasoned and considered one, shall be acted upon and GST Benches shall be constituted accordingly, expeditiously, say within three months': High Court [para 51]

++ Tribunals are Expert Bodies and apart from being experts, it consists of technical members along with judicial members. Therefore, on account of nonfunctioning of these Tribunals, the litigants are rushing to this Court adding additional pendency. Furthermore, the litigants are deprived of their right to appeal. It may be added that delay in disposal of cases, not only creates disillusionment amongst the litigants, but also undermines the capability of the system to impart justice in an efficient and effective manner. Therefore, the Chief Secretary of the State is directed to look into the matter and make an earnest endeavour and ensure that the unfilled posts in the Tribunals and other Forums are filled up within a maximum period of twelve weeks: High Court [para 53]

++ A copy of this order to be sent to the Chief Secretary, Government of U.P., Lucknow, forthwith. [para 54]

- Writ petition is allowed: ALLAHABAD CESTAT

AAR CASES

2019-TIOL-161-AAR-GST

Arihant Dredging Developers Pvt Ltd

GST - Irrigation and Waterways Directorate, Govt. of West Bengal has awarded the applicant a contract for re-sectioning of river Jamuna from the upstream of Charghat Bridge to the downstream Ghonja Haspur Bridge in Block and P.S. Swarupnagar, Habra-1 and Gaighata in North 24 Parganas - applicant seeks a ruling on whether exemption under Sl. No. 3 or 3A of Notification 9/2017-IT (Rate) applies to the above supply.

Held: Recipient is the State Government - Contract is meant for re-sectioning of river Jamuna - It involves the earthwork in the excavation of the drainage channels and deposit of the excavated materials to locations outside the government land - total contract value includes the cost of services like loading and unloading, transportation, the arrangement of land etc. - It is evident from the description of the work that it is a composite supply of various services, where excavation and re-excavation of the drainage channel is the principal supply - Supply of goods, if any, is purely incidental and is not accounted for separately in the price schedule - Recipient is engaged in the development of irrigation and waterways which includes activities in relation to the function listed under Sl. No. 5 of the Eleventh Schedule and, therefore, entrusted to a panchayat under Article 243G of the Constitution - recipient certifies that the work awarded to the applicant involving drainage of channels and riverbeds is an activity undertaken in relation to the function referred to above - applicant's service to the recipient is, therefore, exempt under Sl. No. 3A of the exemption notification 9/2017-IT(Rate): AAR

- Application disposed of: AAR

2019-TIOL-160-AAR-GST

Mohana Ghosh

GST - Applicant supplies cabs on rental basis and seeks a ruling as to whether credit is admissible of the Input Tax paid on purchase of motor vehicles for the supply of the above service.

Held: Rent-a-cab is not defined in the GST Act - Applicant provides cab rental service inter alia to institutions like West Bengal Postal Service and the recipient has to pay the applicant a certain amount per month as consideration irrespective of the distance the cab travels in a particular month - nature of service the applicant provides is classifiable under SAC 9966 as renting of a motor vehicle - Credit of GST paid on purchase of motor vehicles or other inputs for the supply of the applicant's service is, therefore, not admissible in terms of s.17(5)(b)(i) of the GST Act: AAR

- Application disposed of: AAR

2019-TIOL-159-AAR-GST

Neo Built Corporation

GST - Irrigation and Waterways Directorate, Govt. of West Bengal has awarded the applicant a contract for resuscitation by re-excavation of river Palaspai from Banskhal to Mahisghata along with raising and strengthening of embankment on both sides of the river - applicant seeks a ruling on whether exemption under Sl. No. 3 or 3A of Notification 9/2017-IT (Rate) applies to the above supply.

Held: Recipient is the State Government - Cost of supplying materials is included in the compacting cost - supply of goods, however, does not constitute any significant portion in terms of value - as such, compacting in the course of which goods are to be supplied constitutes only 2% of the value of the contract and, therefore, it is a composite supply primarily of various services, principal supply being the service of resuscitation of the river, where the supply of goods constitutes well below the threshold mentioned in Sl. No. 3A of the exemption notification -Recipient being engaged in the development of irrigation and waterways which includes activities in relation to the function listed under Sl. No. 5 of the Eleventh Schedule - Resuscitation of river means reviving the water flow and it is, therefore, related to the function listed under Sl. No. 5 of the Eleventh Schedule, especially when undertaken by the State department, which is primarily entrusted to execute such functions - applicant's service to the recipient is, therefore, exempt under Sl. No. 3A of the exemption notification 9/2017-IT(Rate): AAR

- Application disposed of: AAR

2019-TIOL-158-AAR-GST

Dredging And Desiltation Company Pvt Ltd

GST - WB Fisheries Corporation awarded the applicant a contract for up-gradation of Jalda Khoti Landing Centre by protection to Mandarmani River and up-gradation of navigability by dredging of Mandarmani river - applicant seeks a ruling as to whether the said service is exempted under Sl. No. 3A of Notification 9/2017-IT(Rate).

Held: Recipient is a government entity - Applicant's supply involves construction of spurs for providing protection against land erosion and improving navigability by dredging the channel - it is a works contract and further involves supply of services like dredging, loading/unloading and transportation of the excavated material etc. and is, therefore, a composite supply of goods and service - it is also apparent from the price schedule that supply of goods constitutes about 11% of the value of the composite supply - recipient is engaged in the development of fisheries and up-gradation of Jalda Khoti Landing Centre and the related work that has been awarded to the applicant has a direct nexus with fisheries development - activity is in relation to the development of fisheries, a function listed under Sl. No. 4 of the Eleventh Schedule - exemption under Sl. No. 3A of the exemption notification 9/2017-IT(Rate) is applicable to the applicant's supply: AAR

- Application disposed of: AAR

2019-TIOL-157-AAR-GST

Maruti Enterprise

GST - Applicant is providing conservancy/solid waste management service to Conservancy Department of the Howrah Municipal Corporation (HMC) - HMC is deducting TDS while paying consideration for the said supply in terms of notification 50/2018-CT - applicant seeks a ruling as to whether the above supply is exempted in terms of Sl. No. 3 or 3A of Notification 12/2017-CTR and if so, whether TDS notification is applicable.

Held: Recipient is a municipal corporation which is a local authority as defined under s.2(69) of the Act - Consideration to be paid measures the work only in terms of the quantity of the garbage lifted and removed and, therefore, it may be concluded that the applicant's supply to HMC is a pure service - Article 243W of the Constitution mentioning the responsibilities of a Municipality refers to functions listed in the Twelfth Schedule and Sl. No. 6 refers to public health, sanitation, conservancy and solid waste management and applicant's supply gets covered therein - therefore, applicant's service to Howrah Municipal Corporation is exempt under Sl. No. 3 of notification 12/2017-CTR - as the applicant is making an exempt supply to HMC, the provisions of s.51 of the Act or for that matter TDS notification do not apply to his supply: AAR

- Application disposed of: AAR

NAA CASE

2019-TIOL-36-NAA-GST

Director General Anti-Profiteering Vs Bestech India Ltd

GST - Anti-Profiteering - s.171 of the CGST Act, 2017 - Applicant has alleged that the respondent had charged extra VAT, EDC (External Development Charges) and IDC (Internal Development charges) - DGAP in its report stated that in the application there was no allegation by the applicant that the benefit of reduction in the tax rate or additional input tax credit had not been passed by the respondent and the only allegation was that the respondent had charged extra VAT, EDC and IDC during the pre-GST period i.e. in the period before 01.07.2017; DGAP has also reported that the website of the respondent showed that the housing project was completed in August 2015 well before the implementation of GST.

Held: It is clear from the case records that the complaint of the applicant was related to the pre-GST period and that the specific charges on the basis of which the said complaint arose pertained to VAT, EDC and IDC - moreover, since the project has been completed before coming into force of GST w.e.f 01.07.2017, anti-profiteering provisions contained in s.171(1) of the Act are not attracted - no merit in the application, hence dismissed: NAA

- Application dismissed: NAA

NOTIFICATION

F.No. A.22011/14/2017-Ad.II

GST Council invites applications for posts of JS & Director / DS

JEST GST by Vijay Kumar

The New GST Return

The lady Finance Minister - New Chairperson of GST Council

ARTICLES

Credit on construction services : A building 'block' of jurisprudence

The road to success for the realty sector - under construction?

Composition Schemes under GST

Of inverted edifices and ineligible refunds

IGST on Exports - Anomaly in Valuation

GST - Agenda for the second year - Part 40 - Refund - Interference in exercise of quasi-judicial powers

Royalty payments -A question of enduring interest

ST 2.0 - Time to align certain provisions with Direct Tax Code-in-making