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IGST refund fraud - Two businessmen arrested

 

GST CASES

SUPREME COURT CASES

2019-TIOL-350-SC-GST

UOI Vs Palak Designer Diamond Jewellery

GST - Respondent is engaged in the manufacture of jewellery from gold, diamond and precious metals on its own account as well as on job work basis - consequent to search of factory premises, officers seized the excess stock of finished goods - respondent had challenged the validity of seizure orders and sought directions to the department to forthwith allow provisional release of the seized goods - Gujarat High Court noted that the petitioner had already deposited Rs.14,16,868/- by way of challan and had reversed credit of SGST to the tune of Rs.7,90,793/-, total approximately Rs.22 lakhs, and under the circumstances, if the petitioner/now respondent furnished bank guarantee of Rs.50 lakhs and a bond for the value of the goods in FORM GST INS-04, the interest of justice would be served - High Court had by its order dated 29.01.2019 =  2019-TIOL-430-HC-AHM-GST directed the department to forthwith provisionally release the seized goods under sub-section (6) of section 67 of the CGST Act - review application filed by Revenue against this order came to be dismissed on 26.04.2019 = 2019-TIOL-997-HC-AHM-GST - Special leave petition filed by Revenue before Supreme Court.

Held: Notice to be issued on application for condonation of delay as also on the special leave petition, returnable in four weeks - ad interim stay ordered of operation of the impugned judgments till the next date of hearing: Supreme Court

- Ad interim stay ordered: SUPREME COURT OF INDIA

2019-TIOL-349-SC-GST

UOI Vs Torrent Power Ltd

GST - Gujarat High Court had held that meaning of  "transmission and distribution of electricity"  does not change, either for the negative list regime or the GST regime; that Services (viz. application fee for releasing connection of electricity, rental charges against metering equipment, testing fee for meters/transformers etc., labour charges from customers for shifting meters or shifting of services lines, charges for duplicate bill) which stood included within the ambit of transmission and distribution of electricity during the pre-negative list regime cannot now be sought be excluded by merely issuing a clarificatory circular  34/8/2018-GST , that too, with retrospective effect; that services provided by the petitioner are in the nature of composite supply and, therefore, in view of the provisions of clause (a) of  section 8 of the CGST Act, the tax liability thereof has to be determined by treating such composite supply as a supply of the principal supply of transmission and distribution of electricity; that consequently, if the principal supply of transmission and distribution of electricity is exempt from levy of service tax, the tax liability of the related services shall be determined accordingly; that Paragraph 4(1) of the impugned Circular No.  34/8/2018-GST dated 1.3.2018  is struck down as being  ultra vires  the provisions of section 8 of the Act as well as sr. no. 25 of Notification No. 12/2017- CT (R) serial no. 25 - Revenue in appeal before the Supreme Court.

Held: After condoning the delay, leave is granted and matter is directed to be listed in the third week of November 2019: Supreme Court

- Appeal admitted: SUPREME COURT OF INDIA

 

HIGH COURT CASES

2019-TIOL-1850-HC-KERALA-GST

Virat Metals And Engineering Corporation Vs Assistant State Tax Officer

GST - Petitioner challenges the order of detention made under s.129(1) and the notice issued u/s 129(3) of the Act - Counsel for the Revenue objects to the maintainability of the petition; submits that the very admission of the petitioner that they were not in a position to demonstrate within the time given by the authorities that E-way bill was also generated indicates that there is an omission or illegality in transportation of goods; that admittedly at the time of inspection or detention of goods the transporter could not produce all the documents required for etablishing that the goods are under valid transit; that if the petitioner seeks release of goods they can be entertained upon furnishing bank guarantee for the tax and penalty amount - petitioner submits that they have already deposited Rs.12,555/- towards tax incidence and the penalty component would be deposited in cash.

Held: Issues raised are at preliminary stage and Court is not convinced to entertain the petition and adjudicate upon merits at this stage - As the petitioner submitted that he has already deposited Rs.12,555/- towards tax incidence, the other component namely penalty is permitted be deposited in cash of Rs.12,555/- and upon producing proof of deposit, the goods are to be released forthwith - Petition disposed of: High Court [para 6]

2019-TIOL-1838-HC-JHARKHAND-GST  

Balajee Udyog Vs GST Council

GST - Petition has been preferred for extending the date of submitting declaration electronically in Form GST-TRANS-1 to avail the benefit of Input Tax Credit - Petitioner is directed to prefer a representation before the Goods & Service Tax Council, New Delhi as also before the Commissioner of State Taxes, Jharkhand for extending the time for submitting Form GST-TRANS-1 electronically for the Input Tax Credit - decision to be taken by respondent as early as possible and practicable, preferably within four weeks - Writ Petition is disposed of: High Court [2, 3]

- Petition disposed of: JHARKHAND HIGH COURT

Sanjay Trading Company Vs State Of Gujarat

GST - Writ applicant is a proprietary concern engaged in the business of metal scrap - The writ-applicant is duly registered in the State of Gujarat under the provisions of the GST Act - Writ applicant had placed an order for metal scrap with one M/s Bhavya Steels based at Thane, State of Maharshtra and while the goods were in transit, the vehicle came to be intercepted - The vehicle, as well as the goods, came to be seized by the authorities concerned on the ground that the goods were not accompanied by E-way bill and some discrepancies were noticed in the nature of the goods mentioned in the invoice and the actual invoice in transit - respondent no.2 straightaway proceeded to issue notice for confiscation under Section 130 of the GST Act, 2017.

Held: Bench is examining a larger issue whether the authority concerned can straightaway invoke Section 130 of the Act, without taking recourse to Section 129 of the Act - However, during the pendency of this writ-application, the writ applicant is entitled to an interim order - It is noticed that the writ-applicant has deposited an amount of Rs 2,33,154/- towards the tax liability and penalty - In such circumstances, the respondent no.2 is directed to forthwith release the vehicle as well as the goods: High Court [para 5, 7]

- Interim relief granted: GUJARAT HIGH COURT

Vijaykumar Jayantibhai Panchal Vs CCGST

GST - Writ applicant has been able to make out a strong prima facie case to have some interim order in his favour - Till the next returnable date, no coercive action or any coercive steps shall be taken by the authorities against the writ applicant: High Court [para 2, 3]

- Interim relief granted: GUJARAT HIGH COURT

2019-TIOL-1824-HC-MAD-GST

Choi Yongsuk Vs Superintendent Of GST & CE

GST - Petitioners were arrested and remanded to judicial custody on 24.6.2019 for the offences under Section 69 (1) of the Act - they have sought bail from the High Court - first accused is the General Manager (finance) of the Company which is involved in the non-payment of GST collected from the customers but not paid to the government to the tune of Rs. 40 crores; second accused is responsible for the conduct of business of the company and they have filed their GSTR-1, electronically, of their outward supplies (Sales), which is self assessed/declared tax liability for the period from July 2017 to February 2019 and collected the consideration including GST from their customers but failed to pay the same to the Government by filing the mandatory GSTR-3B returns etc. - Petitioners submit that the company is not wilful defaulter of its tax liability and the company has been facing economic hardhips because of the acute liquidity crunch in the market, due to which several of their long-term customers have demonstrated their difficulty in making timely payments; that their purchasers/buyers are also providing a very thin margin of profits to the company thereby, rendering it difficult for the company to stay afloat; that since the CGST Act itself contemplates delayed payment of tax with penal interest in the form of installments, the respondent ought to have considered giving some additional time to the company before taking the drastic and extreme step of arresting the petitioners; that if the petitioners are released on bail, the petitioners would be able to sell the machineries and able to pay the taxes as demanded by the respondent - Counsel for Revenue vehemently opposed granting of bail to the petitioners.

Held: Court is inclined to grant interim Bail to the petitioners, till 11.9.2019 on certain conditions viz. each of them executing a separate bond for a sum of Rs. 50,000/- (rupees Fifty Thousand only) with two sureties; petitioners shall deposit a sum of Rs. 7,50,00,000/- on or before 09.09.2019; to report before the respondent Police daily at 10.30 a.m., till 11.09.2019; not abscond during investigation - Matter to be posted on 11.09.2019 for reporting compliance [para 6, 7]

- Interim bail granted: MADRAS HIGH COURT

2019-TIOL-1823-HC-DEL-GST

Chogori India Retail Ltd Vs UoI

GST - Petitioner has approached High Court for a direction to the Respondents to allow the Petitioner to file form GST TRAN-1 online or accept the form manually to enable the Petitioner to avail of the transitional credit (TC) of Rs.1,74,71,030.67 - Petitioner avers that it tried to file the TRAN-1 Form prior to the above deadline of 27th December, 2017 numerous times but the system displayed an error and it was unable to upload the form - They further state that apart from sending E-mail they visited the GST helpdesk several times to resolve the technical issues to enable it to claim the transitional credit - It is also stated that due to its inability to file TRAN-1 Form, the Petitioner faced difficulty in filing its monthly returns and that till the filing of this petition, the Petitioners had paid an amount of Rs.33,45,790/- solely because they were not allowed the transactional credit by the Respondents - Petitioner also states that they have screenshots of the web Portal at the relevant date and time to demonstrate that the system was in fact not permitting the online filing of the TRAN-1 Form when the Petitioner attempted to do so prior to 27th December, 2017.

Held: Court would not like to get into the issue whether in fact the Petitioner faced difficulty - The TC available in the account of the Petitioner is a substantial sum - It is not denied by the Respondent that the Petitioner is entitled to carry forward such TC and use it for payment of the taxes under the CGST Act - It is also not in dispute that there have been numerous glitches on the GST Portal in making it difficult for uploading of the TRAN-1 Forms - This Court has itself issued orders in numerous cases permitting Petitioners to be afforded one more opportunity to either file the TRAN-1 Form electronically or manually - Accordingly, a direction is issued to the Respondent to either re-open the Portal to enable the Petitioner to file its TRAN-1 Form electronically failing which to permit it to file manually on or before 13th September, 2019 - Thereafter, the Petitioner's claims are to be processed expeditiously in accordance with law - Petition disposed of: High Court [para 9 to 11]

- Petition disposed of: DELHI HIGH COURT

2019-TIOL-1803-HC-TELANGANA-GST

GST - Petitioner praying for stay of the proceedings of letter C.No. V/04/06/2019-Arrears dated 31.07.2019 issued by second respondent pending disposal of WP filed before the High Court.

Held: As to whether the amendment to Section 50 of the Central GST Act, 2017 would be retrospective and whether a notice was liable to be issued to the petitioner before attachment of his account requires examination - Interim stay of the proceedings ordered: High Court

- Interim stay ordered : TELANGANA HIGH COURT

 

AAR CASES

2019-TIOL-255-AAR-GST

Spacelance Office Solutions Pvt Ltd

GST - Traditional office culture is being overshadowed by the shared office space culture - co-working is a business services provision model that involves individuals working independently or collaboratively in shared office space - a virtual office is an access to the basic services that are generally provided in a traditional office such as permanent office address, meeting rooms or video conferencing rooms, a mail forwarding facility with minimum charge etc. without a room for real-life people and these offices are of greater benefits to the travelling freelancers, small businesses, start-ups and even to businesses that are operated from remote ares - There is no prohibition under GST law for obtaining GST registration to a shared office space or virtual office, if the landlord permits such sub-leasing as per agreement - each co-working space is demarcated with different suite number or desk number - as GST registration is based on PAN, identification of a taxpayer is not a difficult thing - Separate GST registration can be allowed to multiple companies functioning in a “co-working space” and which provide services alone - such companies shall upload rental agreement with the landlord and lessee - if there is any sub-lease, then rental agreement between lessee and sub-lessee should also be uploaded as proof of address of principal place of business of respective suite or desk number assigned to them - they can also upload a copy of ‘monthly utility bill' in connection with payment towards electricity charges, water charges or other common services availed by respective suite or desk number: AAR

- Application disposed of: AAR

2019-TIOL-254-AAR-GST

GST - Propeller, Shaft/SS rod, Gun metal bush/bearing, stuffing box, brass tube/SS tube, rudder shaft and blade, sea cork/water strainer, GM gate valve, MS pipe, propeller nut/GM nut, Coupling, SS Rods & Square, SS Flat, GM gland and ring and MS plate used as parts of fishing/floating vessels are classifiable under HSN code 8902 and are taxable @5% GST, Sr. 252 of First Schedule of 1/2017-CTR: AAR

- Application disposed of: AAR

2019-TIOL-253-AAR-GST

GST - Supply of frozen seafood in packed unit containers under brand name to retail customers is not eligible for exemption/Nil rate under notification 2/2017-CTR and are taxable @5% GST - insofar as supply of frozen seafood in packages to institutional customers is concerned, although not having the brand name or trade name inscribed thereon, the same contains name of the company and contact details and which is a statutory requirement - presence of company name is sufficient to ensure that the product procured belongs to the ‘brand guardian' and it cannot be considered as ‘not' bearing a brand name, hence exemption is not available: AAR

- Application disposed of: AAR

2019-TIOL-256-AAR-GST

GST - Narcotic Chewing Tablet namely, Nicotine Polacrilex Lozenge is rightly classifiable under heading 38.24 and is covered under Sl. no. 97 of Sch-III to 1/2017-CTR; attracts GST @18%: AAR

- Application disposed of: AAR

2019-TIOL-252-AAR-GST

Rotary Club Of Mumbai Nariman Point

GST - Applicant, a Rotary Club, seeks a ruling as to whether contributions from members in the administration account, recovered for expending the same for weekly and other meetings and other petty administrative expenses including expenses for location and light refreshments amounts to supply under the Act and whether the said "supply" would be classifiable as supply of goods or services and who would be the taxable person etc.

Held: From the definition of  "consideration" it can decisively be construed that the membership fee collected by the club from its members is not only meant for meeting administrative expenses but is also towards setting high ethical standards in business and profession etc. - thus any membership fee collected from its members will definitely be understood as  "consideration" as the same has been paid for supply of services - both the conditions of s.7 of the Act having been fulfilled, the same will attract GST - facts of the case are similar to that involved in M/s Rotary Club of Queens Necklace  2019-TIOL-203-AAR-GST which was decided by the Authority - GST is liable to be paid by the applicant Club and not the office bearers: AAR

- Application disposed of : AUTHORITY FOR ADVANCE RULING

 

ARTICLES

Sabka Vishwas - clarity needed

Vanishing Demand makes Recession for Real! Tax Regime also contributes!

GST - An agenda for Reforms - Part 50 - Lapsing of Credit - Pan - India Applicability of High Court Order

JEST GST by Vijay Kumar

GST Return Filing - Sub-optimal