Bharti Airtel Ltd Vs UoI

GST - Paragraph 4 of CBIC Circular 26/26/2017-GST dated 29.12.2017 is not in consonance with the provisions of the CGST Act, 2017 - No cogent reasoning behind the logic for restricting rectification only in the period in which the error is noticed and corrected and not in the period to which it relates - There is no provision in the Act which would restrict such rectification - restriction, if any, that can be introduced by way of a Circular has to be in conformity with the scheme of the Act and the provisions contained therein - constraint introduced by paragraph 4 of the impugned Circular dated 29.12.2017 is arbitrary and contrary to the provisions of the Act - It is trite proposition of law that Circular issued by the Board cannot be contrary to the Act and the Government cannot impose conditions which go against the scheme of the statutory provisions contained in the Act - subordinate legislation must conform to the statute under which it is made and they cannot whittle down the benefits granted under statutory provisions - Respondents have failed to fully enforce the scheme of the Act and cannot take benefit of its own wrong of suspension of the statutory forms and deprive the rectification/amendment of the returns to reflect the ITC pertaining to a tax period to which the return relates to - Petitioner has a substantive right to rectify/adjust the ITC for the period to which it relates - rectification/adjustment mechanism for the months subsequent to when the errors are noticed is contrary to the scheme of the Act - Respondents cannot defeat the statutory right of the petitioner by putting in a fetter by way of the impugned Circular - Since the respondents could not operationalise the statutory forms envisaged under the Act resulting in depriving the petitioner to accurately reconcile its input tax credit, the respondent cannot today deprive the petitioner of the benefits that would have accrued in favour of the petitioner if, such forms would have been enforced - Petitioners cannot be denied the benefit due to the fault of the respondents - Respondents have also not been able to expressly indicate the rationale for not allowing the rectification in the same month to which the form GSTR-3B relates - respondents have admitted that the facility of form GSTR-2A was not available prior to 2018 and, as such, for the months July 2017 to September 2017 the scheme was envisaged under the Act was not implemented - refund of excess cash balance in terms of s.49(6) r/w s.54 does not effectively redress petitioner's grievance - only remedy that can enable the petitioner to enjoy the benefit of seamless utilisation of the input tax credit is by way of rectification of its return GSTR-3B - correction mechanism is critical to sustaining successful implementation of GST - Petitioner permitted to rectify form GSTR-3B for the period to which the error relates i.e. the relevant period from July 2017 to September 2017 - On filing of the rectified form GSTR-3B, Respondents are directed to verify the claim made therein, within a period of two weeks, and give effect to the same once verified - Petition allowed: High Court [para 20, 23, 24]

- Petition allowed: DELHI HIGH COURT

2020-TIOL-900-HC-DEL-GST

Brand Equity Treaties Ltd Vs UoI

GST - Rule 117 of the CGST Rules, 2017 whereby the mechanism for availing the credits has been prescribed is procedural and directory and cannot affect the substantive right of the registered tax payer to avail of the existing/accrued and vested CENVAT credit - procedure could not run contrary to the substantive right vested under sub-section (1) of section 140 of the Act - There is no consequence provided in Rule 117 of CGST Rules on account of failure to file GST TRAN-1 - Under the garb of framing Rules - which are subordinate legislation, the width of those limitations could not have been expanded as is sought to be done by introduction of Rule (1A) - in the absence of any consequence being provided under section 140 to the delayed filing of TRAN-1 form, Rule 117 has to be read and understood as directory and not mandatory - purport of the transitory provisions is to allow a smooth migration from erstwhile service tax regime to the new GST regime and the interpretation must be in consonance with the said purpose - Bench has, therefore, no hesitation in reading down the provision viz. Rule 117 as being directory in nature insofar as it prescribes the time-limit for transitioning the credit and, therefore, the same would not result in the forfeiture of the rights in case the credit is not availed within the period prescribed - This, however, does not mean that that the availing of CENVAT credit can be in perpetuity - Transitory provision, as the word indicates, have to be given its due meaning - Transition from pre-GST regime to GST regime has not been smooth and, therefore, what was reasonable in ideal circumstances is not in the current situation - in absence of any specific provisions under the Act, Bench would have to hold that in terms of the residuary provisions of the Limitation Act, the period of three years should be the guiding principle and thus a period of three years from the appointed date would be the maximum period for availing of such credit - Accordingly, since all the petitioners have filed or attempted to file form TRAN-1 within the aforesaid period of three years they shall be entitled to avail the Input Tax Credit accruing to them - They are thus, permitted to file relevant TRAN-1 form on or before 30.06.2020 - respondents are directed to either open the online portal so as to enable the petitioners to file the declaration TRAN-1 electronically or accept the same manually - Respondents shall thereafter process the claims in accordance with law - Bench is also of the opinion that other taxpayers who are similarly situated should also be entitled to avail the benefit of this judgment - Respondents are directed to publicise this judgment widely including by way of publishing the same on their website so that others who may not have been able to file TRAN-1 till date are permitted to do so on or before 30.06.2020 - All the petitions are allowed: High Court [para 21 to 24]

GST - The introduction of Sub rule (1A) in Rule 117 is a patchwork solution that does not recognise the entirety of the situation - It sneaks in an exception, without addressing situations taken note by the Bench - This exception, as worded, is an artificial construction of technical difficulties, limiting it to those existing on the common portal - It is unfair to create this distinction and restrict it to technical snags alone - It would be an erroneous approach to attach undue importance to the concept of “technical glitch” only to that which occurs on the GST Common portal, as a pre-condition, for an assessee/tax payer to be granted the benefit of Sub- Rule (1A) of Rule 117 - The purpose for which Sub-Rule (1A) to Rule 117 has been introduced has to be understood in the right perspective by focusing on the purpose which it is intended to serve - The purpose was to save and protect the rights of taxpayers to avail of the CENVAT credit lying in their account - That objective should also serve other taxpayers, such as the petitioners - The approach of the Government should be fair and reasonable - It cannot be arbitrary or discriminatory, if it has to pass the muster of Article 14 of the Constitution - The government cannot turn a blind eye, as if there were no errors on the GSTN portal - It cannot adopt different yardsticks while evaluating the conduct of the taxpayers, and its own conduct, acts and omissions - The extremely narrow interpretation that the respondents seek to advance, of the concept of “technical difficulties”, in order to avail the benefit of Sub Rule (1A), is contrary to the statutory mechanism built in the transitory provisions of the CGST Act - In order to avail the benefit, no restriction has been put under any provisions of the Act in terms of the time period for transition - The time limit prescribed for availing the input tax credit with respect to the purchase of goods and services made in the pre-GST regime, cannot be discriminatory and unreasonable - There has to be a rationale forthcoming and, in absence thereof, it would be violative of Article 14 of the Constitution - CENVAT credit which stood accrued and vested is the property of the assessee and is a constitutional right under Article 300A of the Constitution - same cannot be taken away merely by way of a delegated legislation by framing rules without there being any overarching provision in the GST Act: High Court [para 19]

- Petitions allowed: DELHI HIGH COURT

SERVICE TAX

2020-TIOL-688-CESTAT-DEL

Transcorp International Ltd Vs CCGST & CE

ST - The assessee provides services to Western Union as its agent in India - The Revenue opined that the assessee provided money transfer services, inward remittance on behalf of the Western Union as an Associate and that the money is remitted by the customer located outside India to the payee in India - The assessee is disbursing the money to the payee and for which the assessee earns commission - Hence it was opined that such service is of the nature of export as the service is received by Western Union located outside India and the commission is received by the assessee in convertible foreign exchange - Hence the activities of the assessee were found to be taxable as per Circular dated 1.7.2012 read with Section 65(19)Clause-(vi) read with Section 65 (105)(zzb) of the Finance Act and after 1.7.2012 the said service is taxable under Section 65B (44) - The Revenue opined that as the assessee was not paying service tax on its outward services, due to it being export of service, the assessee was not entitled to Cenvat credit with respect to the advertisement service and audit service received - SCNs were issued proposing to deny the credit taken, along with interest and penalties - Hence the present appeals.

Held - The basic requirement for taking CENVAT credit is that the assessee should be engaged in providing some output service which is taxable under the Finance Act 1994 - Admittedly, the services provided by the assessee is taxable as Business Auxiliary Services under the provisions of Finance Act, both before 1.7.2012 and after 1.7.2012 - The input service credit is not deniable for the reasons that the assessee is exporting the whole of their output services and thus, is not paying any tax - Hence the SCNs are mis-conceived and not maintainable: CESTAT

- Assessee's appeals allowed: DELHI CESTAT

Chopra Bros India Pvt Ltd Vs CCE & ST

ST - The assessee is engaged in providing services falling under the category Commercial or Industrial Construction Service as per Section 65(5)(b) of the Finance Act 1994 - On allegation that the assessee failed to discharge service tax correctly and that benefit of Notfn No 01/2006-ST was wrongly availed, SCN was issued for recovery of duty short paid - On adjudication, duty demand was confirmed with interest and penalty - Hence the present appeal.

Held - The assessee claimed that the Commissioner has not examined the individual contracts under which they provided taxable services under the category of 'Commercial or Industrial Construction Service' during the relevant period and discharged service tax by availing abatement of 67% of the gross taxable value in accordance with Notification No. 1/2006-ST dated 01.03.2006 - It is seen that the Commissioner has not discussed the individual contracts, the copies of which now submitted by the assessee, when confirming the demand against the assessee - Therefore, in the interest of justice, it is prudent to remand the matter to the adjudicating authority to analyse each and every contract under which Commercial or Industrial Construction Service has been rendered during the relevant period and the admissibility of the quantum of abatement under Notification No. 1/2006-ST dated 01.03.2006: CESTAT

- Case remanded: CHANDIGARH CESTAT

CENTRAL EXCISE

2020-TIOL-686-CESTAT-MAD

SAIL Vs CCE

CX - Appellants are engaged in the manufacture of Hot Rolled and Cold Rolled Stainless Steel products etc. - It is for the department to prove the allegations raised in the SCN - Even from the SCN or the documents, there is no evidence to show that the appellants have written off the full value of capital goods - There is only partial writing off to the extent of 50%, 70%, 90% - On such score, the amendment brought forth w.e.f. 1.3.2011 to reverse the credit on partial written off value would only apply - However, the provision for recovery of the credit availed wrongly has been introduced only w.e.f. 1.3.2013 and this being the case, the demand raised in the year 2015 for the credit availed from 1994 - 2010 and written off during this period cannot sustain - impugned order is set aside and appeal is allowed with consequential relief: CESTAT [para 7, 8]

- Appeal allowed: CHENNAI CESTAT

Ramco Industries Ltd Vs CCE

CX - Audit observed that the Appellant was selling goods through their four depots situated at Makshi, Silvassa, Bhuj and Arakonam; that they have discharged the Central Excise duty on the transaction value, as was determined at the factory gate - However, there was a price difference between the assessable value determined at factory gate and the assessable value determined at their four depots (as observed from the depots' invoices) - Alleging that had the Central Excise duty been paid on the value at the time of clearances from depot, the Central Excise duty would have been more, SCN was issued proposing recovery of CE duty of Rs.5,99,610/- along with imposition of interest and penalty - demand confirmed by original authority and upheld by Commissioner(A), hence appeal to CESTAT.

Held: Rule 7 cannot be applied in isolation but has to be read in reference to the context of Section 4 of Central Excise Act, 1944 - It is not denied that the value of depots' invoices had the element of excise duty as was paid at the time of clearance from the factory gate - The transaction value has to be the basic price not including the said excise duty - Document of details of prices at factory gate, the amount of excise duty paid and the prices at the depot have been provided by the Appellant to the Tribunal - these documents need verification at the end of the adjudicating authority - matter remanded: CESTAT [para 8, 9]

- Matter remanded: DELHI CESTAT

I-T - Benchmarking of transaction involving extending corporate guarantee to lenders of assessee's AEs, is to be conducted @ 0.25% instead of 1.15%, where former rate was adopted in assessee's own case for previous AY involving similar circumstances: ITAT

TP - It is legally justifiable to exclude, functionally different comparables having huge turnover & substantial intangibles, while conducting TP study: ITAT

TIOL CORPLAWS

Arbitration and Conciliation - Partial final award sub-sumed in expression 'arbitral award' u/s 2(1)(c) so as to attract bar of limitation contained u/s 34(3): HC

SEBI: Penalty is rightly imposed if appellant without any valid explanation fails to follow direction given by SEBI to make public announcement of shares of target company acquired by it: SAT