2019-TIOL-2072-HC-DEL-GST

HCL Infosystems Ltd Vs UoI

GST - Refund - Petitioner states that though the amount claimed by the Petitioner was sanctioned, the same has subsequently been rejected by a one line communication dated 22.07.2019 without disclosing any reason for the rejection.

Held: Bench would, normally, not entertain a petition at this stage considering that the assessee has a statutory remedy, however, looking into the manner in which the rejection has taken place, the petition is entertained - rejection order has been passed without hearing the Petitioner and without recording any reasons for the rejection, that too in the face of the refund sanctioned by the Respondent (as is evident from the screenshot of the portal account of the Petitioner on Goods and Services Tax website) - Bench, therefore, considers it appropriate to direct respondents Principal Chief Commissioner and Special Commissioner, Delhi GST to remain personally present in Court with the complete record relating to Petitioner's case, to explain as to why the refund, which had earlier been sanctioned, has now been rejected - the Respondents to remain present with instructions for a time-bound refund of the Petitioner's claimed amount, in case, the said rejection is not justified - Matter to be listed on 06.09.2019: High Court [para 3, 4, 6]

- Matter listed : DELHI HIGH COURT

2019-TIOL-2068-HC-AHM-GST

GST - Writ applicant had sought issuance of a writ of mandamus to allow filing of declaration in form GST TRAN-1 and GST TRAN-2 to enable it to claim transitional credit of eligible duties in respect of inputs held in stock on the appointed day in terms of s.140(3) of the CGST Act; to issue a writ of declaration for declaration of the due date contemplated u/r 117 of the Rules to claim transitional credit as being procedural in nature and thus merely directory and not a mandatory provision; grant ad interim reliefs and award costs.

Held: Section 140(3) of the Act allows carry forward of the eligible duties in respect of inputs held in stock subject to fulfilment of conditions (i) to (v) as mentioned therein - Section 140(3) of the Act is a complete Code in itself and the substantive right conferred by the Act cannot be curtailed by way of rules - entitlement of credit of eligible duties on the purchases made in the pre-GST regime as per the then existing CENVAT Credit Rules is a vested right and, therefore, it cannot be taken away by virtue of Rule 117 of the CGST Rules with retrospective effect for failure to file form GST TRAN-1 within the due date i.e. 27.12.2017 - provision for facility of credit is as good as the tax paid till the tax is adjusted and, therefore, the right to credit had become absolute under the CEA and, therefore, the credit is indefeasible and the same cannot be taken away - right to carry forward credit is a right or privilege acquired and accrued under the repealed CEA, 1944 and it has been saved u/s 174(2)(c) of the CGST Act, 2017 and, therefore, it cannot be allowed to lapse u/r 117 of the Rules for failure to file declaration in form GST TRAN-1 within the due date i.e. 27.12.2017 - right to carry forward CENVAT credit for not being able to file the form GST TRAN-1 within the due date offends the policy of the Government to remove the cascading effect of tax by allowing the Input Tax Credit as mentioned in the Objects and Reasons of the Constitution 122 nd Amendment Bill, 2014, and which clearly sets out that it is intended to remove the cascading effect of taxes and bring out a nationwide taxation system - Denial of carry forward of tax paid on stock on the appointed day may lead to cascading effect of tax because the GST will again have to be paid on the Central Excise duty already suffered on the stock - It is an established principle of law that it is necessary to look into the mischief against which the statute is directed, other statutes in pari materia and the state of law at the time - It is arbitrary, irrational and unreasonable to discriminate in terms of the time-limit to allow the availment of the Input Tax Credit with respect to purchase of goods and services made in the pre-GST regime and post-GST regime and, therefore, it is violative of Article 14 of the Constitution of India - Section 16 of the Act allows the entitlement to take input tax credit in respect of post-GST purchase of goods or services within return to be filed u/s 39 for the month of September following the end of the financial year to such purchase or furnishing of the relevant annual return, whichever is earlier - whereas rule 117 allows time limit only up to 27th December 2017 to claim transitional credit on pre-GST purchases, therefore , it is arbitrary and unreasonable to discriminate in terms of the time limit to allow the availment of ITC with respect to the purchase of goods and services made in the pre-GST regime and post-GST regime - as this discrimination does not have any rationale, therefore, it is violative of Article 14 of the Constitution - It is legitimate for a going concern to expect that it will be allowed to carry forward and utilise the CENVAT credit after satisfying all the conditions as mentioned in the CEX law and, therefore, disallowing such vested right is offensive against Article 14 as it goes against the essence of doctrine of legitimate expectation - By not allowing the right to carry forward the CENVAT credit for not being able to file the form GST TRAN-1 within the due date may severely dent the writ-applicants working capital and may diminish their ability to continue with the business and such action violates the mandate of Article 19(1)(g) of the Constitution - liability to pay GST on sale of stock carried forward from the previous tax regime without corresponding input tax credit would lead to double taxation on the same subject matter and is, therefore, arbitrary and irrational; CBEC GST Flyer no. 20 dated 01.01.2018 refers - CENVAT credit earned under the erstwhile Central Excise law is the property of the writ-applicants and it cannot be appropriated for merely failing to file declaration in the absence of law in this respect (Article 300A refers) - It could have been appropriated by the government by providing for the same in the CGST Act but it cannot be taken away by virtue of merely framing Rules in this regard - All four writ-applications succeed and are allowed - respondents are directed to permit the writ-applicants to allow filing of declaration in form GST TRAN-1 and GST TRAN-2 so as to enable them to claim transitional credit of the eligible duties in respect of inputs held in stock on the appointed day in terms of s.140(3) of the Act - Furthermore, it is declared that the due date contemplated u/r 117 of the CGST Rules, 2017 is procedural in nature and thus should not be construed as a mandatory provision: High Court     [para 21, 23, 27, 28, 29, 34, 36, 38, 40, 41, 42, 43]

- Applications allowed: GUJARAT HIGH COURT

2019-TIOL-2067-HC-KERALA-GST

CST/GST - Petitioner challenges the assessment orders passed under the CST Act as being illegal and without jurisdiction - Case of the petitioner is that in the absence of notification issued by the Central Government in exercise of powers u/s 9(2) of the CST Act, the notices issued by referring to rule 6(5) of CST Rules by second respondent are without jurisdiction.

Held: Interim stay of recovery for eight weeks - Matter to be posted on 01.10.2019: High Court 

- Interim stay granted: KERALA HIGH COURT

SERVICE TAX

2019-TIOL-2551-CESTAT-HYD

ST - The assessee have opted for VCES Scheme according to which they declared having rendered services under Construction of Residential Complex Services and discharged service tax accordingly - The department was of the view that services are to be classified under Works Contract Service and not Construction of Residential Complex Service - Accordingly, SCNs were issued to assessee demanding service tax under Works Contract Services in respect of certain services rendered - There is no dispute as to the value of services declared by assessee - The allegation of mis-declaration is only with respect to classification of the services - This is only an issue of interpretation - The ratio of decision in Frontline Builders & Developers 2017-TIOL-4567-CESTAT-BANG is that merely classifying the services under a different head does not tantamount to mis-declaration and therefore it is not open for the department to reopen the assessment in case of VCES unless there is a substantialmis-declaration otherwise - No reason found to deviate from the decision already taken by Tribunal - It is conceivable for the assessee to hold a view that their services are classifiable under construction of residential complex services as opposed to works contract services as held by the department - Construction of residential complex services provides a more specific classification than works contract service and accordingly will prevail over the other classification - The Board Circular is binding upon the department as has been held by Apex Court in several cases including Paper Products Ltd 2002-TIOL-84-SC-CX - The appeals are rejected and the impugned orders are upheld: CESTAT

- Appeals rejected: HYDERABAD CESTAT

2019-TIOL-2550-CESTAT-ALL

ST - Service Tax demand stands confirmed against the assessee along with imposition of penalty under category of 'Business Auxiliary Service', on the finding that the certain services provided to them by Co-operative sugar factories fall under the said category - The issue stands covered by Tribunal's earlier decision in their own case vide Final Order dated 12 April, 2017 - By following the said order, the impugned order is set aside: CESTAT

- Appeal allowed: ALLAHABAD CESTAT

CENTRAL EXCISE

2019-TIOL-2549-CESTAT-MAD

CX - Appellants are engaged in the manufacture of MS angles, flat rolled products and are registered with the Central Excise Department - They filed claim for refund of Rs.3,67,953/- on the ground that they have opted for paying concessional rate of duty by availing exemption under Notification 9/2002-CE dated 1.3.2002, however, they had discharged duty @ 16% instead of 9.6% due to oversight for the period and, therefore, there was an excess payment of duty ofRs.3,67,953/- - observing that the appellant has passed on the duty burden to the customer, the claim was rejected and this order was upheld by the Commissioner(A), hence assessee is before CESTAT.

HELD: Undisputedly, the appellant had shown the duty amount in the invoice issued to the customers - thereafter, on realizing the mistake of excess payment of duty, they have issued credit notes to the customers so as to adjust the excess payment made by them - this adjustment is rebutted in the balance sheet in the form of receivables - thus, it is very much clear from the accounts as well as the documents that the appellant has rebutted the presumption envisaged under section 12B of Central Excise Act - the rejection of the refund claim on the ground that it is hit by unjust enrichment, therefore, cannot sustain - the impugned order is set aside and the appeal is allowed : CESTAT [para 6]

- Appeal allowed: CHENNAI CESTAT

2019-TIOL-2548-CESTAT-AHM

CX - The assessee, a 100% EOU had cleared certain consignment under ARE-3 against CT-3 certificate to another EOU - However, due to cancellation of order, said goods were diverted to DTA after obtaining permission from the Deputy Commissioner - In respect of clearances of goods to the DTA, the demand was raised which was confirmed by adjudicating authority - It is not the case of clandestine removal as assessee have cleared goods initially which was meant for another EOU and clearances was made ARE-3 against CT- 3 certificate - It is only due to the cancellation of order, assessee was compelled to divert the goods to DTA for which necessary permission was obtained from Deputy Commissioner, therefore, there is no malafide intention on the part of assessee - Accordingly, the Commissioner has imposed penalty of Rs. 60 Lakhs under Rule 25 after giving detail finding that why the penalty under section 11AC is not imposable - No infirmity found in findings given by Commissioner hence, the impugned order is upheld: CESTAT

- Appeal dismissed: AHMEDABAD CESTAT

2019-TIOL-2547-CESTAT-MUM

CX - Appellants are engaged in the manufacture of 'Pumps' - during the period May 2008 to March 2009, they received the services from overseas service providers and made payments for such services amounting to Rs.853.66 lakhs, but failed to discharge ST of Rs.104.54 lakhs - however, on being pointed out in July 2009, they paid the entire amount of ST and availed credit of the same - alleging that the appellant had contravened the provisions of rule 9(1)(b) of Cenvat Credit Rules, 2004 [CCR, 2004], demand notice was issued to them for recovery of the credit - demand confirmed along with interest, penalty imposed - appeal to CESTAT.

HELD: Rule 9(1)(b) of CCR, 2004 has been interpreted by the Madras High Court considering the Revenue's appeal in the case of JSW Steel Ltd. [ 2017-TIOL-1509-HC-MAD-CX ] - also, this Tribunal [ 2017-TIOL-3738-CESTAT-MUM ], analysing the circumstances under which the ST was paid by the appellant for the value of sales commission paid to the overseas buyers under reverse charge mechanism, have arrived at the conclusion that there was no suppression, mis-statement etc. on the part of the appellant in discharging the ST even though it was paid after being pointed by the department - thus, in these circumstances, no justification found in denying cenvat credit of Rs.104.54 lakhs to the appellant -consequently, the impugned order is set aside and the appeal is allowed : CESTAT [para 6, 7, 8]

- Appeal allowed: MUMBAI CESTAT

CUSTOMS

2019-TIOL-2546-CESTAT-MUM

Cus - The assessee has imported a consignment of HSS Drills at the rate of 2 pound/Kg - The assessing authority did not accept the value declared and have enhanced the value declared - It is seen that the value of the goods imported vide Bill of Entry has been increased and the assessee have cleared the goods by paying duty - However, it is not clear as to whether the assessee have contested the loading of value or whether duty has been paid under protest - The situation envisaged under Section 17(6) is not applicable to such circumstances - Understandably the Section provides for post clearance audit, whereas in the instant case reassessment appears to have been done by the department - The assessee has accepted the loading and cleared the goods on payment of duty - It is not forthcoming from the records whether the assessee have accepted the re-assessment or asked for a speaking order before the clearance of the goods - Therefore, the only re-course available for assessee under the circumstances was to prefer an appeal before Commissioner (A) which has been duly done - Under the circumstances Commissioner (A) should have decided the issue on merits instead of directing the Assessing Officer to take recourse to audit - As contended by department, such an action would have let to absurd situation of auditing a Bill of Entry which has been understandably re-assessed - Therefore, the Commissioner (A) has erred in giving such a direction - The impugned order is not sustainable to that extent: CESTAT

- Matter remanded: MUMBAI CESTAT