2019-TIOL-GST-299 Dated: Wednesday, August 07, 2019

TOP NEWS

GST - Fake invoices worth Rs 137 Cr - Two accused remanded in 14 days custody

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HIGH COURT CASES

2019-TIOL-1712-HC-MUM-GST

Ashish Jain Vs UoI

GST - The present writ petition challenges the summons issued by the Revenue under the CGST Act - The petitioner contends that the Revenue cannot commence investigation without following the procedure u/s 154 or 155 of the Code of Criminal Procedure - It is claimed that if the offence is cognizable, the Revenue authority concerned must first register an FIR and then investigate, whereas in case of a non-cognizable offence, the Revenue authority must first seek permission from the Magistrate.

Held - The affidavit filed by the Revenue reveals the involvement of the assessee - The Apex Court in Union of India Vs Sapna Jain refused to entertain the SLP and showed disinclination to interfere, observing that High Courts while entertaining request of pre-arrest bail would keep in mind such order of the Apex Court - It had also dismissed a judgment of the Telangana High Court, which had taken a view contrary to that taken by the Apex Court - Hence the this court is not inclined to grant any protection from arrest to the petitioner herein, in light of such decision of the Apex Court: HC

- Writ petition dismissed/In favor of Revenue: BOMBAY HIGH COURT

2019-TIOL-1692-HC-KERALA-GST

RS Development And Constructions India Pvt Ltd Vs Asst State Tax Officer

GST - Petitioner challenges the order of detention made u/s 129(1) of the Act and the notices issued u/s 129(3) of the Act.

Held: Issues raised are at preliminary stage and this Court is not convinced to entertain the writ petition and adjudicate upon merits at this stage - Petition disposed of by ordering thus - that the petitioner submits bank guarantee for the tax and penalty and applies for release of goods within two days; that the respondent shall release the goods detained within twelve hours from the date and time of receipt of bank guarantee; that the bank guarantee shall be kept valid for six weeks; that the respondent shall complete the enquiry, afford fair and reasonable opportunity to petitioner and pass and communicate the order within four weeks; that the respondent, if he fails to pass the order as directed, the petitioner is not under obligation to keep the bank guarantee alive beyond six weeks: High Court [para 5]

- Petition disposed of: KERALA HIGH COURT

2019-TIOL-1691-HC-DEL-GST

Vertiv Energy Pvt Ltd Vs UoI

GST - Petitioner is disabled from conducting its normal course of business and availing the Cenvat Credit/Input Tax Credit due to the prevalent glitch with the TRAN-1 form which is required to be filed online; that TRAN-1 could not be filed before the said date of 27th December, 2017 on account of glitches in the portal.

Held: Court has in several recent orders including order dated 13th May, 2019 Bhargava Motors - 2019-TIOL-1060-HC-DEL-GST and order dated 29th July, 2019 Uninav Developers Private Limited - 2019-TIOL-1661-HC-DEL-GST directed the Respondents in similar circumstances to either re-open the portal to enable the Petitioners therein to again file the TRAN-1 form electronically or to accept a manually filed TRAN- 1 form by noting that the GST system is still in the 'trial and error' phase - Therefore, Court directs the Respondents to either open the portal so as to enable the Petitioner to file the TRAN-1 electronically or to accept a manually filed TRAN-1 form on or before 13th September, 2019 - Petitioner's claims to be thereafter processed in accordance with law - Petition disposed of: High Court [para 5 to 7]

- Petition disposed of: HIGH COURT OF DELHI

2019-TIOL-1709-HC-MUM-GST

Bhattad Industries Pvt Ltd Vs UoI

GST - Petitioners challenge the action of respondent Assistant Commissioner of Central Goods And Services Tax in having directed the petitioner's bankers to freeze the petitioner's accounts with them - grievance of the Petitioner is that the action of freezing the two bank accounts is arbitrary and high handed for the reason that no show cause notice in respect of any alleged violation of the Act has been issued till date; that the impugned freezing of the accounts is in defiance of and contrary to Section 83 of the CGST Act, 2017, which allows the provisional attachment of bank accounts to protect the Revenue only by an order in writing by the Commissioner and in the present case, no such order has been passed; therefore, the action of freezing the Petitioner's bank accounts is without jurisdiction.

Held: Given the drastic nature of the power (in section 83), the Parliament has provided that such provisional attachment can only be done consequent to an order of the Commissioner - This ensures due application of mind by a senior officer to the facts of the case before an attachment of a bank account is ordered - Counsel for Revenue very fairly states that no order is available on file and this would indicate that there was no application of mind by the Commissioner before the Petitioner's bank accounts in Axis Bank, Tardeo Branch and Indusind Bank, Miraroad Branch were frozen/attached - held that the impugned action of attaching the Petitioner's bank accounts is without authority of law and is, therefore, set aside - Respondent is directed to immediately vacate the freezing/attachment of bank accounts and inform the two banks concerned to vacate the attachment/freezing of the bank accounts - Petitions allowed: High Court [para 4 to 7]

- Petitions allowed: BOMBAY HIGH COURT

2019-TIOL-1708-HC-MUM-GST

Magma Fincorp Ltd Vs State Of Maharashtra

GST/VAT - Petition impugns the investigation initiated and steps taken by Assistant Commissioner of Sales Tax against petitioner u/s 64 of the Maharashtra Value Added Tax Act, 2002 - challenge is essentially on the basis that by reason of the Constitution (One Hundred and First Amendment) Act, 2016 r/w the Maharashtra SGST Act, 2017, the State of Maharashtra could not have continued the application and effect of the provisions of the VAT Act and in particular, section 64 thereof, beyond one year after the appointed day or taken steps thereunder; that Section 78 of the Maharashtra Goods and Service Tax Related Laws (Amendments, Validation and Savings) Act, 2017 by which such provisions are so continued is ultra vires the Constitution Amendment Act.

Held: Amendment made by the Constitution Amendment Act has inserted Article 246A as as is apparent from its opening words, overrides Articles 246 and 254 - Section 19 of the Constitution Amendment Act makes transitory provisions - Both Parliament and the legislature of the State of Maharashtra have made laws with respect to goods and services tax (GST), the Parliament by exercising the Central GST Acts and the State by enacting the State GST Act - State legislature has also enacted the State GST Savings Act, section 78 whereof contains validation and savings provisions in various laws and rules, regulations, notifications, etc. made thereunder which were in force immediately before coming into force of the State GST Act - By virtue of section 78 of the State GST Savings Act read with Section 19 of the Constitution Amendment Act, the VAT Act and the rules, regulations, notifications etc. issued thereunder, which were in force on the appointed day under the State GST Act, continue to have effect for various purposes, which inter alia include assessment, re-assessment, production and inspection of accounts and documents and search of premises, and payment and recovery of any tax under the VAT Act or any other connected or incidental purpose, relating to any period before the appointed day of the State GST Act - There is no inconsistency between the provisions of Section 78 of the State GST Savings Act and the Constitution as amended - Constitution Amendment Act provides for concurrent power of the State legislature to make laws with respect to goods and services tax - State GST Act has been enacted by the State legislature under this power - Just as it could enact any law relating to tax on supply of goods or services or both, it could amend or repeal or save any such law - VAT Act is one such law which it had the power to amend or repeal or save - Section 78 of the State GST Savings Act saves the provisions of the VAT Act insofar as they relate to any payment or recovery of tax under the VAT Act and any purpose connected or incidental thereto relating to any period prior to the commencement of the State GST Act - There is no inconsistency or repugnancy here with the Constitution as amended - No such law made or repealed or saved by the State legislature can be said to be inconsistent with Article 246A of the Constitution brought in by the Amendment Act - at any rate, section 19 of the Constitution Amendment Act cannot be said to have taken away the power of the State legislature to amend or repeal or save any law relating to tax on goods or services or on both in force in any State immediately before the Constitution Act, so long, of course, as such amendment, repeal or saving is not inconsistent with the Constitution as amended - Any amendment or saving made in that respect shall continue to be in force even beyond one year of the coming into force of the Constitution Amendment Act - Sections 64 and 14 of the Act are connected with or incidental to collection or recovery of tax under the VAT Act - It cannot possibly be suggested that the subordinate legislation under the VAT Act such as rules, regulations, notifications etc. issued thereunder has not been expressly saved by section 78 of the State GST Savings Act - wordings of the section leave no manner of doubt that all these are expressly referred to and saved - saving provision is both explicit and expansive and it saves “all rules, regulations, orders, notifications, form, certificate and notices, appointments and delegation of powers issued under” the VAT Act - challenge to the vires of section 78, therefore, has no merit - Writ petition is accordingly disposed of by rejecting petitioner's challenge to the constitutionality of section 78 of the Maharashtra Goods and Services Tax related Laws (Amendments, Validation and Savings) Act, 2017: High Court [para 4, 5, 6, 8, 10, 11, 12, 13]

- Petition disposed of: BOMBAY HIGH COURT

2019-TIOL-1668-HC-MUM-GST

Bramhacorp Ltd Vs State Of Maharashtra

Luxury Tax - Petitioner had sought a direction to the Respondent State of Maharashtra to honour its commitment to grant luxury tax exemption under the Act of 1987 for the period 5 April 2017 to 31 March 2027 - Petitioner had contended that this waiver was an incentive for the petitioner to establish hotel within the State of Maharashtra, however, upon introduction of GST Act, 2017, the luxury tax was subsumed in GST and thus the benefit granted to the petitioner under the eligibility/entitlement certificate dated 5 April 2017 and 22 June 2016 could not be given effect to - High Court noted that a similar issue had come up before the Bench in the case of Adlabs Entertainment Ltd. which dealt with entertainment tax waiver under the erstwhile regime before the introduction of GST and the High Court had vide its order dated 21st December 2018 - 2018-TIOL-2933-HC-MUM-GST directed the State government to constitute a high level committee to consider the said petitioner's representation as has been done by some other States and consequently the high level Committee had by its report dated 6th March 2019 recommended to refund the quantum of SGST paid by the petitioner during the period of incentive as per the Entitlement Certificate issued to them - For the purpose of taking instructions, AGP for the State, had sought time and accordingly the Bench had adjourned the petition by a period of two weeks to be listed along with Original Side Writ Petition No.3027 of 2018 - 2018-TIOL-2933-HC-MUM-GST and to be heard on 30 July 2019 - matter heard.

Held: Counsel for the State sought twelve weeks time to enable the State government to take a view on the recommendations of the High Power Committee - Bench noted that it expected the State Government would take a decision within twelve weeks on the recommendations of the High Power Committee and if accepted also decide whether to extend the benefit as suggested by the High Power Committee across the board to all similarly situated parties and which would bring about certainty and help in equal application of the decision on all similarly situated parties - Matter adjourned to 22nd November 2019: High Court [para 3, 4]

- Matter adjourned: BOMBAY HIGH COURT

2019-TIOL-1666-HC-KAR-GST

Raj Enterprises Vs ACCT

GST - Petitioner has sought for setting aside/quashing of order of detention on the ground that the same is passed without jurisdiction and has sought release of detained goods and conveyance.

Held: Writ petitions are premature without giving breathing time for respondent - petitioner has submitted explanation to the summons on 8.7.2019 - The respondents have issued an endorsement asking certain information and documents relating to ownership of goods - The petitioner is stated to have submitted its explanation along with documents - In this regard, matter is pending consideration before the authority - Petitioner is permitted to file additional explanation, if any, within a period of ten days - on receipt of additional explanation of the petitioner concerned, authority is hereby directed to pass speaking order and communicate the same at the earliest since seized materials are stated to be perishable goods - exercise is to be completed within a period of four weeks from today - writ petitions disposed of: High Court [para 2, 3]

- Petitions disposed of: KARNATAKA HIGH COURT

2019-TIOL-1663-HC-DEL-GST

Vass Impex Vs UoI

GST - Petitioner is disabled from availing the Cenvat Credit/Input Tax Credit due to the prevalent glitches in the GST system and in particular with the filing of the TRAN-1 form online - Respondent in its affidavit is silent on whether the Petitioner's case has been considered by the IT Grievance Redressal Committee constituted by the Respondents to look into the complaints regarding the difficulties with the online filing system - however, Respondent on instructions states that the Petitioner's grievance is still under consideration before the GSTN.

Held: Court has in several recent orders including order dated 13th May, 2019 (Bhargava Motors v. Union of India) - 2019-TIOL-1060-HC-DEL-GST and order dated 29th July, 2019 (Uninav Developers Private Limited v. Union of India) - 2019-TIOL-1661-HC-DEL-GST directed the Respondents in similar circumstances to either re-open the portal to enable the Petitioners therein to again file the TRAN-1 form electronically or to accept a manually filed TRAN-1 form - Court, therefore, directs the Respondents to either open the portal so as to enable the Petitioner to file the TRAN-1 electronically or to accept a manually filed TRAN-1 form on or before 31st August, 2019 and Petitioner's claims thereafter be processed in accordance with law - Petition disposed of: High Court [para 6 to 8]

- Petition disposed of: DELHI HIGH COURT

2019-TIOL-1662-HC-DEL-GST

Bharti Airtel Ltd Vs UoI

GST - Petitioner points out that on account of the glitches in the system, the Petitioner ended up paying in excess of its tax liabilities leading to an excessive cash outflow of a huge amount which works out to nearly Rs.923 crores - further, this was the reason why the Court asked the Respondents to consider whether there could be any mechanism devised under which the Petitioner could claim the refund of the said amount - Court directs the Respondents to file an affidavit specific to the above issue not later two weeks with an advance copy to the petitioner, who may file a response thereto – Matter to be listed on 7 th November 2019: High Court [para 4 to 6]

- Matter listed: DELHI HIGH COURT

2019-TIOL-1661-HC-DEL-GST

Uninav Developers Pvt Ltd Vs UoI

GST - On account of technical glitches, petitioner, a registered dealer is unable to claim CENVAT credit of Rs.36,28,099/- in Form TRAN-1 - Petitioner submits that in the present case the eligibility of the petitioner to claim the CENVAT credit has not been doubted by respondents; that the amount was a service tax refund which was appearing in the petitioner's returns even for the earlier period i.e prior to coming into force of new GST regime; that for no fault of the petitioner, despite repeated requests, it could not file the form GST TRAN-1 claiming the tax credit; that in the present case the petitioner could not connect to the portal to submit the return in the first place and the portal reflected the message 'error occurred in submit'.

Held: Court in its earlier orders has pointed out that there appears to be technical errors or technical glitches of various kinds in the GST system which is still in the 'trial and error' phase - there is merit in the contention of the petitioner that in it's case it was not able to even connect with the server and, therefore, at the end of the respondents, the fact of a failed attempt at filing a return may not even be registered on the system - added to this fact, the petitioner's eligibility to claim CENVAT of the sum of Rs.36,38,099/- has not been disputed by the respondent in their reply - the entire GST system is still in a trial and error phase and it will be too much of a burden to place on the assessees to expect them to comply with the requirement of law where they are unable to even connect with the system on account of network failures or other failures - Court urges the IT Grievance Redressal Committee (ITGRC) to review the policy it has adopted in such cases and acknowledge instances like the present one where the petitioners are not able to link with the portal and, therefore, the fact of technical glitch is not able to be accounted for in the system - Court, therefore, directs the respondents to either open the portal to enable the petitioner to again file the TRAN-1 form electronically, failing which they will accept the manually typed TRAN-1 form on or before 31st August 2019 - petitioner's claim shall thereafter be processed in accordance with law - Writ petition is disposed of: High Court [para 5 to 8]

- Petition disposed of : DELHI HIGH COURT

2019-TIOL-1660-HC-KAR-GST

LC Infra Projects Pvt Ltd Vs UoI

GST - Petitioner, a dealer, was entitled to claim the Input Tax Credit for the GST paid by the sub-contractors while filing its GST returns - Since some of the sub-contractors had not uploaded the invoices and filed their returns, ITC to which the petitioner was entitled to was not being tallied - The third respondent, Superintendent, addressed an e-mail seeking clarification of availments of ITC and it was alleged that there was an excess availment of ITC to the tune of Rs.2,62,48,383/- - The petitioner pointed out that the ITC differential credit is not pertaining to the petitioner, relating to the tax period in question - The petitioner has been levied tax on the unpaid tax without issuing Show Cause Notice and thereafter, the Demand Notice has been issued claiming the tax amount of Rs.13,63,864/- and interest amount of Rs.81,29,684/- payable by the petitioner - The third respondent vide its letter dated 07.05.2019 has sought for attachment of the bank account of the petitioner - In the said background, the petitioner is before the Karnataka High Court challenging the action of the respondents in quantifying the interest and attaching the bank account without issuing Show Cause Notice as contemplated under Section 73 of the Act.

Held: Issuance of Show Cause notice u/s 73 of the Act is sine qua non to proceed with the recovery of interest payable thereon under Section 50 of the Act and penalty leviable under the provisions of the Act or the Rules - Undisputedly, the interest payable under Section 50 of the Act has been determined by the third respondent without issuing Show Cause Notice, which is in breach of principles of natural justice - It is trite law that any order passed by the quasi-judicial authorities in contravention of the principles of natural justice, cannot be sustained - Similarly, after determination of the interest liable to be paid by the petitioner, no notice has been issued before attaching the bank account of the petitioner - There is a lapse on the part of the third respondent - The notion of the third respondent that Section 75(12) of the Act empowers the authorities to proceed with recovery without issuing Show Cause Notice is only misconceived - The said Section is applicable only to the self-assessment made by the assessee and not to quantification or determination made by the Authority - it is ex-facie apparent that action of the third respondent is perverse and illegal and the same deserves to be set aside - Orders dated dated 04.03.2019 as well as dated 07.05.2019 are quashed with liberty to the third respondent to proceed in accordance with law - Petition alowed: High Court [para 5 to 7]

- Petition allowed : KARNATAKA HIGH COURT

2019-TIOL-1659-HC-DEL-GST

Sales Tax Bar Association Vs UoI

GST - Resolution of issues raised by Petitioners - Respondents shall also place on record on the next date the data/logs which would show what is the broad nature of the complaints about the functioning of the GST system over the past three months and how they have been sought to be resolved - This would also give an idea whether the solutions suggested by the Respondent have been successful - Matter to be listed on 18.09.2019: High Court [para 3, 4]

- Matter listed : DELHI HIGH COURT

2019-TIOL-1658-HC-DEL-GST

Satya Enterprises Vs UoI

GST - National Anti-Profiteering Authority ('NAA') has directed the Petitioner to pay Rs. 6,06,752/- - The case of the Petitioner is that it is a mere distributor of the products of M/s Patanjali Ayurveda Limited ('PAL') and it is PAL which has increased its base price over which Petitioner has no control - Court is of the view that the Petitioner has made out a prima facie case for grant of interim relief - Subject to the Petitioner paying Rs. 3 lacs i.e. Rs. 1.5 lakhs to the CGST fund and Rs. 1.5 lakhs to SGST fund within four weeks on or before 31st August, 2019, the impugned order shall remain stayed – Penalty proceedings may continue but the outcome would be subject to the result of this petition – Matter to be listed before Court on 3 rd February 2020: High Court [para 4, 5]

- Interim relief granted : DELHI HIGH COURT

2019-TIOL-1656-HC-AHM-GST

Shabnam Petrofils Pvt Ltd Vs UoI

GST - The petitioner-company manufactures Polyester Texturized Yarn as well as Polyester Woven Fabrics and Polyester Knitted Fabrics - The other petitioner is a society whose members are mostly MMF fabric weavers - The petitioners challenge the validity of Notfn No 20/2018-CT(R), which mandates that the accumulated ITC lying unutilized in balance in respect of certain specified goods, after payment of tax for and upto July 31, 2018 on inward supplies received upto such date, would lapse - The petitioners claim that impact of such Notfn resulted in huge losses for them - They also claimed that registered persons were entitled u/s 16 of the CGST Act to claim ITC and that the CGST Act did not enable issuing of Notfns which provided for lapse of ITC - They further claimed that powers u/s 54(3)(ii) of the CGST Act were limited to notifying the supplies not entitled to refund of ITC accumulated on account of the inverted rate structure & that the Notfns exceeded the provisions of Section 54(3)(ii).

Held - The CGST Act itself provides for lapse of ITC u/s 17(4) & 18(4) of the Act - Where the legislature wanted ITC to lapse, it would have been expressly provided - No such express provision is made u/s 54(3) - This section does not inherently empower the Govt to provide for the lapsing of the unutilised ITC accumulated on account of the rate of tax on inputs being higher than the rate of tax on output supplies - It is trite law that delegated legislation must be in conformity with provisions of parent statute - By prescribing for lapse of ITC, the Notfn No 05/2017-CT(R) dated 28.06.2017 as amended by Notfn No 20/2018-CT(R) dated 26.07.2018, exceeded the power delegated u/s 54(3)(ii) of the CGST Act - Therefore, proviso (ii) of the opening paragraph of the Notfn No.05/2017-C.T. (Rate) inserted vide Notfn No.20/2018- C.T. (Rate) is ex-facie invalid and liable to be struck down: HC

- Writ petitions allowed: GUJARAT HIGH COURT

AAAR CASES

2019-TIOL-60-AAAR-GST

Eskag Pharma Pvt Ltd

GST - AAR held that 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 - Appellant is in appeal before the AAAR contending that the AAR had erred in law by accepting the applicant's application partially inasmuch as the classification of products Biogut Capsule, Zinc Ascorbate Syrup and Lactoin Drop have not been answered; that the other products are rightly classifiable under HSN 3004 and not under HSN 2106 as held by AAR.

Held: Being prescribed by medical practitioners for a limited period use or sold by pharmacists are not sufficient parameters for the products in question to be classified as medicaments as per HSN classification in the light of the regulations laid down by FSSAI - products under the Drugs and Cosmetics Act, 1940 will not all under those categories regulated by FSSAI and vice versa - inasmuch as these two categories namely the products falling under the Drugs and Cosmetics Act, 1940 and those regulated by FSSAI are mutually exclusive - in fact the products in question are not eligible for drug licence under the Drugs and Cosmetics Act, 1940 as these are mainly pre-biotic and probiotic supplements, oral rehydration formula and tonic - Further, Chapter 30 of the Customs Tariff Act on which the classification under the GST Act is based excludes food and beverages like fortified food, food supplements, tonics etc. even if they have therapeutic and prophylactic properties - there is, therefore, no infirmity in the order of the AAR - Appeal fails: AAAR

- Appeal dismissed: AAAR

2019-TIOL-61-AAAR-GST

MRF Ltd

GST - Appellant had sought a ruling on the question as to whether they can avail the ITC of the full GST charged on the supply or a proportionate reversal of the same is required in case of post purchase discount given by the supplier of the goods or services - AAR had held that in view of s.16 of the CGST Act the Applicant can avail ITC only to the extent of invoice value, raised by the suppliers less the discounts as per C2FO software, which is paid by him to the suppliers and that if the applicant had availed ITC on the full amount, he should reverse the difference amount equal to the discount to avoid adding to his output liability - Appeal to AAAR.

Held: A conjoint reading of Sections 15 and 16 of the CGST Act, 2017 leads to the conclusion that a registered person is entitled to take full credit of the input tax charged on the supply of goods or services or both - The provisions of the second proviso to section 16(2) would come into play only where the buyer/ recipient fails to pay the supplier of goods the amount towards the value of the supply and which is not the situation in the present case - The buyer has discharged the GST charged on the undiscounted transaction value at the time of supply - In the circumstances, if the GST charged and paid is not reversed/refunded in whole or part subsequently in any manner or circumstances, the credit availed on the same need not be reversed - from the minuted discussion of the 5th GST Council meeting, which discussed the Act and approved the same for presenting to the Parliament, it is stated that the provision of Section 16(2) is an anti-evasion measure introduced in the law - Further discussions in the 29th GST Council meeting also establishes the intention of the provision as an anti-evasion measure and a provision to facilitate the prompt payment to suppliers, especially from MSME Sector - The said provision does not appear to find any application in the situations like the one at hand wherein, the appellant is in receipt of goods/ services and has declared that the commercially agreed price along with GST charged as recorded in the tax invoice is paid in full to the supplier - Circular No. 122/3/2010 dated 30.04.2010 and Circular No. 877/15/2008-Cx dated 17th November 2008 regarding reversal of CENVAT Credit in case of trade discount have persuasive value - Like in the case of rule 3 of Cenvat Credit Rules, 2004 which refers to credit of duty "paid" by the inputs manufacturer and not duty "payable", section 16 of the Act refers to the credit of input tax 'charged' and not "chargeable" - The circulars thus supports the view that taxes paid and not subsequently reduced would be fully available as credit to the recipient - appellant M/s MRF Ltd can avail the Input Tax Credit of the full GST charged on the undiscounted supply invoice of goods/ services by their suppliers. A proportionate reversal of the credit is not required to be done by them in case of a post purchase discount given by the supplier to them through the C2FO platform, in the circumstances mentioned: AAAR

- Appeal allowed: AAAR

AAR CASES

2019-TIOL-245-AAR-GST

Specsmakers Opticians Pvt Ltd

GST - Applicant imports as well as locally procures Lenses, Frames, Sun Glasses, Contact Lenses as well as Reading Glasses, Complete spectacles and are engaged in re-selling them - They have their office in Tamil Nadu at Chennai and also have branches outside the state of Tamil Nadu and the goods imported and re-sold by the applicant are also transferred to their branches located outside the State for subsequent supply to ultimate customers - as the branches are distinct persons, they are required to discharge the CGST/SGST/IGST as applicable while supplying the goods to their branches outside the State - Applicant seeks a ruling as to the value to be adopted in respect of such transfer to branches located outside the State.

Held: Under GST, branches which are situated outside the state are treated as distinct person - In the case at hand, the applicant has branches outside the state of Tamil Nadu, hence, both are said to be related as per the explanation to Section 15 - The supply is also to distinct person and, therefore, the value to be adopted is governed by rules prescribed as per Section 15(4) of CGST Act - As per Rule 28(a), it is clear that for supply between distinct persons, the value shall be the 'open market value' of such supply - Once Rule 28(a) is applicable, Rule 28(b) or (c) cannot be used by the applicant for determining the value of the supply of goods between distinct persons - In the instant case, the applicant has the option to adopt a value which is 90% of supplies made by the branch outside Tamil Nadu to an unrelated customer which are made under similar circumstances in respect of the characteristics, quality, quantity, functional components, materials, and the reputation of the goods supplied to the branch recipient by the applicant - If the applicant does not use this option for supplies to the recipient who further supplies to their customers as such, he has to supply at 'open market value' which is available as per Rule 28(a) - applicant contends that he can skip Rule (a) and also not exercise the option at the proviso to Rule 28 and go directly to the further proviso - if a taxpayer can skip all the provisions under Rule 28(a) to (c), in spite of them being specifically mentioned as the value which "shall" be adopted, then in no scenario will any taxpayer ever use Rule 28(a) to (c) - Both provisos are to be read together and not independently, i.e. the applicant cannot choose whichever proviso is favourable to them: AAR

- Application disposed of: AAR

2019-TIOL-244-AAR-GST

K Suresh

GST - Applicant has sought advance ruling on the applicable rate of tax on the sales (supply) of Wet Wipes ["Anti-Bacterial wipes", "Bath wipes" and Chlorhexidine wipes" ] which is made up of non-woven cellulose material and is an anti-bacterial product and used as a sanitary towel to wipe the private parts of male/female who are bedridden or old age people and which would prevent bed sores - further submitted that this product is available only in medical shops and is different from general wet wipes which are available in all departmental stores; that they came to understand that the dealers who are dealing in "Wet Wipes" are charging 6% CGST + 6% SGST under Entry 235 (HSN Code 9619) of Schedule II of the Central Goods and Services Act, 2017, however, it is their contention that the product would be rightly classifiable under CTH 3004.

Held: From the Section note and the chapter note to chapter 30 of the Customs Tariff Act, it is evident that Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses and put up in measured doses or in form of tablets, ampoules, transdermal applications are classifiable under this CTH 3004; that they are meant to be taken into or absorbed by the body through any of the above defined means - however, in the case at hand, from the submissions of the applicant and the proforma invoice submitted by them it is seen that the product manufactured by them, "Wet Wipes" is a non-woven fabric impregnated with antibacterial (Chlorhexidine glutamate), moisturizing, cooling ingredients to help patients prophylactically and therapeutically; that the major ingredient used in the manufacture of wet wipes is Chlorhexidine Gluconate which is basically a disinfectant consists of about 2% and these ingredients are not meant to be absorbed to taken into the body but for wiping the skin - therefore, the ingredients are not 'medicaments under CTH 3004 or are the 'Wet Wipes' which are non woven textiles impregnated with these ingredients - in view of the clarification given by CBIC vide Circular No. 52/26/2018-GST dated 09/08/2018 the product manufactured by the applicant is to be classified under Chapter Heading 3307 90 90 - Rate of tax applicable is 14% CGST and 14% SGST as per Sl No 29 of Schedule IV of Notification no. 01/2017- C.T. (Rate) dated 28.06.2017: AAR

- Application disposed of: AAR

KERALA FLOOD CESS

NOTIFICATION

G.O.(P) No.116/2019/TAXES

Kerala Flood Cess (Third Amendment) Rules, 2019

FAQ

FAQ on Kerala Flood Cess

GST STATUS

GST An Update - The Journey to GST (01-08-2019)

GST CONCEPT & STATUS as on 1st August, 2019