2021-TIOL-108-SC-GST-LB
Asstt CST Vs Commercial Steel Company
GST - The petitioner-company was moving a consignment of goods during the relevant period - The vehicle and the goods were detained and SCN was issued u/s 129(3) of the Act alleging wrong destination - The SCN directed payment of 9% Central Tax and 9% State Tax along with equivalent amount of penalty, the quantum of which far exceeded the actual tax invoice value - Later, the High Court held that it was mentioned in the order of detention of the vehicle and the consignment carried thereon from Karnataka to Hyderabad issued under Section 129(1) of the CGST Act, 2017 that the reason for such detention is ‘wrong destination'. Under the Act, this is not a ground to detain the vehicle carrying the goods or levy tax or penalty - Though it is stated that tax and penalty were levied and collected because it was presumed that at Jeedimetla, there was possibility of a local sale, a mere possibility cannot clothe the Revenue to take action - There is no material placed on record by the Revenue to show that any attempt was made by the petitioner to deliver the goods at a different place and sell in the local market evading CGST and SGST, because it was found at Jeedimetla - It is not as if the detention was affected by the 1st respondent after noticing any such attempt to sell the goods in the local market by the petitioner - When the vehicle is being driven from Karnataka by a local driver of Karnataka it is perfectly possible for the driver to lose his way on account of being unfamiliar with the roads in the city of Hyderabad and bypassing Balanagar and going to Jeedimetla - So the fact that the vehicle was found at Jeedimetla does not automatically lead to any presumption that there was an intention on the part of the petitioner to sell the goods at the local market evading the CGST and SGST - The invoice in the custody of the driver of the vehicle indicated that IGST @ 18% was already collected and the goods were coming from Karnataka to Balanagar in Hyderabad. When the IGST was already paid, the goods cannot be treated as having escaped tax and fresh tax and penalty cannot be imposed on petitioner - Hence there was no warrant to detain the vehicle and the goods & to demand payment of tax and penalty - Besides the tax was paid by the petitioner due to inability to contest the same at that time & upon insistence of the driver to obtain release of the goods - Hence it must be presumed to have been paid under duress - There were no reasons for the Revenue to detain goods in course of inter-State sale & where the provisions of the SGST Act were not violated - No penalty was leviable as there was no willfulness in the conduct of the dealer - It is settled law that no tax shall be levied or collected except by authority of Law as per Article 226 of the Constitution of India - The Revenue authority concerned is directed to refund the amount paid by the assessee & also pay interest to the assessee @ 6% p.a. - Disciplinary action also be taken against the particular officer - Costs of Rs 25000/- are imposed, payable by the officer concerned. Held - The counsel for the Revenue canvassed that there was no need for the High Court to entertain the assessee's writ petition, when alternate remedy was also available - It was also claimed that the entire judgment of the High Court was based on presumptions and there was no reason for disciplinary action to be taken against the Asst Commr. concerned - Notice be issued to the parties, returnable in 12 weeks' time - In the meanwhile, the judgment of the High Court is stayed: SC
- Notice issued: SUPREME COURT OF INDIA
2021-TIOL-390-HC-MUM-GST
Daulat Samirmal Mehta Vs UoI
GST - The petitioner is an individualm who is the director of two companies - In the relevant period, the Revenue initiated investigation based on intelligence inputs regarding alleged fraudulent availment and utilisation of ITC by a certain company - Statements were recorded from various persons, including the officials of this company - Summons were also served to the petitioner u/s 70 of the CGST Act & in response thereto, the petitioner appeared before the IO and had his statements recorded - After recording of last statement from the petitioner, he was arrested by Revenue officials - Remand application disclosed that petitioner is accused of committing offence under section 132(1)(c) of the CGST Act as his companies had fraudulently availed and utilized ineligible input tax credit (ITC) amounting to Rs.122.59 crores approximately on the strength of bogus invoices without actual receipt of goods or services as mentioned in the respective invoices - It was also alleged that the petitioner had fraudulently issued bogus invoices and passed on ineligible ITC to various companies without actual supply of goods or services mentioned in the respective invoices thereby leading to wrongful passing on of ITC amounting to approximately Rs.191.66 crores to the recipient companies - Hence the present petition was filed seeking a declaration that the power under section 69 of the CGST Act can only be exercised upon determination of the liability.
Held - Petitioner be released on bail, conditional upon furnishing of surety: HC (Para 25, 27, 31, 32, 38, 39, 40)
+ the Revenue have relied upon the statements of the petitioner as alluded to hereinabove to contend that there is clear admission on the part of the petitioner to the wrong doing and thus committing offences under section 132(1)(c) and (b) of the CGST Act and, therefore, his arrest has been justified. Though section 25 of the Indian Evidence Act, 1872 is not attracted to recording of statements by revenue officers under the CGST Act, nonetheless we find that section 136 of the CGST Act may have a bearing on this aspect. Section 136 of the CGST Act deals with relevancy of statements under certain circumstances. It says that a statement made and signed by a person on appearance in response to any summons issued under section 70 during the course of any inquiry or proceedings under the CGST Act shall be relevant for the purpose of proving in any prosecution for an offence under the CGST Act, the truth of the facts which it contains when a person who made the statement is examined as a witness in the case before the court and the court is of the opinion that having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice; (Para 25)
+ we may now revert back to what we had discussed about the sine qua non for exercising the power of arrest under section 69 of the CGST Act. We had noticed that the Commissioner may authorize arrest of a person only if he has reasons to believe that such a person has committed any offence under the clauses mentioned therein. The expression ‘reasons to believe' is an expression of considerable import and in the context of the CGST Act, confers jurisdiction upon the Commissioner to authorize any officer to arrest a person. This expression finds place in a number of statutes including fiscal and penal. Without dilating much, it can safely be said that the expression ‘reasons to belief' postulates belief and the existence of reasons for that belief. The belief must be held in good faith: it cannot be merely a pretence. Reasons to believe does not mean a purely subjective satisfaction. It contemplates existence of reasons on which the belief is founded and not merely a belief in the existence of reasons inducing the belief. The belief must not be based on mere suspicion; it must be founded upon information. Such reasons to believe can be formed on the basis of direct or circumstantial evidence but not on mere suspicion, gossip or rumour. It is open for a court to examine whether the reasons for the formation of the belief have a rational connection with or a relevant bearing on the formation of the belief. A rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the officer and the formation of his belief. Courts have also held that recording of reasons distinguishes an objective from a subjective exercise of power and is a check against arbitrary exercise of power; (Para 27)
+ the requirement under sub-section (1) of section 69 is reasons to believe that not only a person has committed any offence as specified but also as to why such person needs to be arrested. From a perusal of the reasons recorded by the Principal Additional Director General, we find that other than paraphrasing the requirement of section 41 Cr.P.C., no concrete incident has been mentioned therein recording any act of tampering of evidence by the petitioner or threatening / inducing any witness besides not co-operating with the investigation, not to speak of fleeing from investigation. In such circumstances, we are of the view that the Principal Additional Director General could not have formed a reason to believe that the petitioner should be arrested; (Para 31)
+ Before dilating on the decision of the Telangana High Court and the observations of the Supreme Court in Sapna Jain , we may also mention that under section 138(1) of the CGST Act, any offence under the said act either before or after institution of prosecution, may be compounded by the commissioner on payment by the person accused of the offence to the central government or to the state government, as the case may be, of such compounding amount in such manner as may be prescribed. This provision only highlights the fact that CGST Act is primarily an enactment for collection of revenue which is the primary objective of the said legislation. Arrest is only incidental to achieve the above objective. Therefore, we find in sub-section (3) of section 138 that on payment of the compounding amount, no further proceeding shall be initiated against the accused person in respect of the same offence under the CGST Act and any criminal proceedings if already initiated shall stand abated. Use of the word "shall" is quite instructive as it conveys the legislative intent that once compounding takes place, no further proceeding shall be initiated against the accused person in respect of the same offence and if any criminal proceeding has been initiated, the same would stand abated; (Para 32)
+ Bail jurisprudence which has evolved over the years stands on a different footing altogether. This is more so in the present case when admittedly respondents have not lodged any first information before the police under section 154 Cr.P.C. Respondents have also not filed any complaint before the competent magistrate under section 200 Cr.P.C. In fact there was no formal accusation against the petitioner prior to arrest. The first time such accusation has been placed on record was after arrest that too in the form of remand application. A remand application by its very nature cannot be construed to be a first information or a complaint as is understood in law. If the remand application is excluded, then till today after 26 days of custody of the petitioner, there is still no formal accusation against the petitioner; (Para 38)
+ In so far the present case is concerned, notwithstanding the allegation of serious financial impropriety against the petitioner, the case against him is not even at the under-trial stage; it is at the pre-trial stage i.e., at a stage where even formal accusation in the form of a first information or a complaint has not been made. In such circumstances, we feel that continuing the detention of the petitioner may not at all be justified. In a case of this nature, it is the duty of the constitutional court to strike a fine balance between the need for custodial interrogation and the right of an accused to personal liberty. (Para 39, 40)
- Writ petition disposed of :BOMBAY HIGH COURT
2021-TIOL-389-HC-MUM-GST
JSK Marketing Ltd Vs UoI
GST - Petitioners have, inter alia, sought stay of proceedings and consequential penal action, initiated against the petitioners pursuant to issuance of summons dated 03.04.2019 by the Intelligence Officer in the office of the Directorate of GST Intelligence u/s 83 of the FA, 1994 r/w s. 14 of the CEA, 1944 r/w s. 174 of the CGST, 2017 to tender oral evidence and further summons dated 15.04.2019, 31.10.2019, 04.08.2020 and 12.10.2020 to tender oral / documentary evidence in respect of evasion of goods and services tax (GST) - Counsel for Revenue submits that petitioner No.1 and its associates namely; (a) M/s KBS Industries Private Limited; (b) M/s RAL Consumer Products Limited; (c) M/s Zercon Electricals and Appliances Private Limited; (d) M/s Aastik Trading Private Limited; (e) M/s Harshika Trading Private Limited; (f) M/s Artheon Electronics Private Limited; and (g) M/s Servicare Labs Private Limited have indulged in circular trading activity by raising invoices without supply / movement of goods amongst themselves; that during the course of investigation carried out by the office of respondent No.2, statement of various persons were recorded in which they admitted that purchase and sale invoices of petitioner No.1 company were issued without physical inspection, receiving and dispatch of the subjects goods; thereby devolving financial benefit to petitioner No.1 by taking the difference in the value of the sale and purchase of goods; that statement of petitioner No.2 was recorded 03.04.2019 wherein he admitted his involvement in circular trading; further statement of petitioner No.2 recorded on 04.03.2020 also admitted similar transactions so as to improve the balance sheet of petitioner No.1; that this modus operandi clearly showed that petitioners were involved in circular trading of the goods time and again amongst themselves by preparing purchase and sale invoices without actual movement / supply of goods; statements recorded admitting such trading activity namely for financial gain to petitioner No.1 in lieu of commissions by way of value additions in the products on the directions of the petitioner No.1 proved the involvement of petitioners; that such circular trading involved wrongful eligibility of Input Tax Credit to the parties on the basis of purchase and sale invoices as well as reversal of wrongfully availed ITC; that petitioners have availed loan from 24 banks and financial institutions aggregating to Rs.330.78 crores and have not disclosed the same as per details received from the IRP; petitioner No.1 has availed ineligible ITC on the strength of invoices issued fraudulently without receipt of goods and services; petitioners have paid only Rs. 5.25 crore as service tax in respect of such ineligible ITC availed by them and, therefore, petitioners have committed an offence under the provisions of the CGST Act read with the Finance Act and as such it is necessary to interrogate and investigate the petitioner No.2 in order to complete the investigation for safeguarding government revenue; that it in this context summons have been issued to petitioner No.2 being a Director of petitioner No.1 to complete the investigation; and therefore to that extent the information and material required from the petitioners has been stated in the summons dated 12.10.2020 and reiterated in the summons dated 13.11.2020; that cooperation of petitioner No.2 is necessary for the purpose of completing the evasion of GST inquiry.
Held:
+ On a thorough reading of the summons dated 12.10.2020 and 13.11.2020 it is clear that the summons have been issued to petitioner No.2 calling upon him to tender oral evidence and produce documents or things which have been specified in the summons. The summons clearly state that an inquiry in connection with GST under the CGST Act, 2017 is being undertaken by the Superintendent / Appraiser / Senior Intelligence Officer and that the attendance of petitioner No.2 is considered necessary to give evidence and produce documents. Perusal of the summons signify that there is no threat of arrest as perceived and argued by the petitioners / petitioner No.2. This is buttressed by the fact that under section 70 of the CGST Act tendering of evidence or production of document is to be done in the same manner as done by a civil court under the provisions of the Civil Procedure Code, 1908. The summons specifically call upon the petitioner to tender evidence and produce documents and clarification as stated in the summons dated 12.10.2020.
+ Sub-section (2) of section 14 of the Central Excise Act mandates that any person so summoned shall be bound to attend and state the truth upon any subject in respect of which he is examined or make statements and produce such documents and other things as may be required. Under this provision there is a clear mandate on the petitioner No.2 to honour the summons and present himself in the inquiry undertaken in connection with evasion of GST under the CGST A ct by the investigating officer.
+ The summons do not state that the petitioner No.2 shall be liable for arrest or will be arrested as the statutory provisions under which the summons have been issued pertain to investigation undertaken by the statutory officer. Hence there is no reason for the petitioners to assume that the petitioner No.2 on presenting himself before the investigating officer will be arrested or apprehended.
+ The inquiry which is undertaken by respondent No.2 is a statutory inquiry pertaining to evasion of GST under the CGST Act wherein the petitioner No.2 has been called upon to tender his oral evidence as also to produce the documents that may be required for the purpose of completing the inquiry by the investigating officer.
+ Petitioners' apprehension that petitioner No.2 will be apprehended / arrested / incriminated since the inquiry pertains to evasion of service tax / GST is not well founded. The summons dated 12.10.2020 makes it succinctly clear that the petitioners are required to tender oral evidence and produce certain documents.
+ Investigation is under way pursuant to the raid which was carried out at the premises of the petitioners on 03.04.2019 and seizure of the material and documents by the authority. It is, therefore, incumbent upon the petitioners to cooperate in the investigation / GST inquiry. The summons issued to the petitioners / petitioner No.2, does not authorize the investigating officer to arrest petitioner No.2, but have been issued only for the purpose of completing the investigation into evasion of GST undertaken by respondent No.2.
+ In this view of the matter, Bench does not see any reason for the petitioners / petitioner No.2 to apprehend arrest on presenting himself before the investigating officer in response to the summons which have been issued to the petitioners.
+ Held that the summons issued to the petitioners / petitioner No.2 on 12.10.2020 and 13.11.2020 are valid and no interference is called upon.
+ Bench, therefore, directs that petitioner No.2 shall remain present before the investigating officer / authority concerned in the office of the Directorate General of GST Intelligence, Mumbai Zonal Unit on 1 st March 2021 at 11:00 a.m. for the purpose of inquiry and thereafter as and when required. If the petitioners cooperate in the investigation, respondents shall not take any coercive steps against the petitioners.
+ Writ petition is accordingly disposed of: High Court [para 10.3, 10.4, 11, 12]
- Petition disposed of :BOMBAY HIGH COURT
2021-TIOL-387-HC-P&H-GST
Kaushal Kumar Mishra Vs Additional Director General
GST - Petitioner is seeking quashing of summons dated 8.12.2020 and further to restrain Respondent No.1-Additional Director General, Ludhiana Zonal Unit, Directorate General of GST Intelligence from carrying out further investigation against him; that investigations being carried out by Respondent No.1 and DGGI Bhopal being overlapping, the initial investigation conducted by respondent No.2, are unwarranted and in violation of the provisions of Section 6 of CGST Act, 2017. Held: Facts makes it quite clear that different Officers appointed under Sections 3 & 6 of CGST Act, 2017 are independently investigating altogether different matters, in accordance with law, without any overlapping - Moreover, the alleged contraventions are prima facie cognizable and punitive in nature under CGST Act, 2017 - In the light of the above, Bench is of the view that the investigations being conducted by competent Officers against the petitioner are not hit by provisions of Section 6(2)(b) of CGST Act, 2017 - No reason to interfere with the aforesaid investigations undertaken by the competent authorities against the petitioner under CGST Act, 2017 - Writ petition is dismissed since having no merits: High Court
-Petition dismissed : PUNJAB AND HARYANA HIGH COURT
2021-TIOL-386-HC-AHM-GST
S R Enterprise Vs Commissioner, Central GST & Excise
GST - Grievance of the writ-applicant is twofold - First, with respect to the attachment of his bank account in exercise of powers under Section-83 of the Central Goods and Services Tax Act, 2017 and secondly, with respect to withholding of the refund of IGST paid in regard to the goods exported i.e. 'Zero Rated Supplies' made vide shipping bills. Held: Bench takes notice of the fact that on 25/02/2021 the statutory time period for keeping the bank account attached would come to an end - In such circumstances, the bank account attached as on date would get defreezed by efflux of time - Insofar as the second issue is concerned, a preliminary inquiry as regard the dealings of the writ-applicant has revealed that he is one of the 'risky exporters'; that the inquiry is still in progress; that at the end of the inquiry, the department concerned shall take an appropriate call as regards the claim of the writ-applicant with respect to the refund – Bench disposes of writ-application by observing that the inquiry may continue but at the same time, it should not continue for an indefinite period of time; should be completed within a period of eight weeks: High Court [para 4, 5]
-Application disposed of :GUJARAT HIGH COURT
2021-TIOL-384-HC-DEL-GST
JK Helene Curtis Ltd Vs UoI
GST - The challenge in this writ petition is to the vires of Section 171 of the CGST Act, 2017 and Rules 122, 126, 127 and 133 of the CGST Rules, 2017. Held - Other writ petitions entailing similar challenges are listed on 15th February, 2021 - Notice be issued to the parties - Considering the verdict rendered in many similar matters, subject to the Petitioner depositing the entire principal profiteered amount as levied, excluding the GST amount already deposited, within six months, in equal monthly instalments, there shall be a stay, as far as the direction of recovery is concerned - Matter listed for hearing on 15th February, 2021: HC
- Case deferred: DELHI HIGH COURT 2021-TIOL-383-HC-KAR-GST
Aryan Tradelink Vs UoI
GST - The petitioner filed the present petition, claiming that its credit ledger is blocked with effect from 21.1.2020, without assigning any reasons - The petitioner also claimed to have been unaware of its credit ledger being blocked - Repeated correspondence with the Revenue led to the petitioner being informed that on the basis of request received by the commissionerate concerned, the petitioner's credit ledger was blocked, because one of the vendors of the petitioner was being investigated for issuing invoice without actual supply of goods or services. Held - In the facts and circumstances of the case, it would be just and reasonable to dispose of the writ petition calling upon the Assistant Commissioner concerned to pass a detailed reasoned order as required under Rule 86A of the Rules while observing that for the purposes of Rule 86A(3) which stipulates that the blockage shall cease to have effect after the expiry of a period of one year from the date of blocking, the effective date shall continue to be 21.01.2020: HC
- Writ petition disposed of: KARNATAKA HIGH COURT
2021-TIOL-75-AAR-GST
Nepra Resources Management Pvt Ltd
GST - Waste management services provided by the applicant to Notified Area Authority, Vapi – Applicant seeks a ruling as to whether the services are exempted under Notification No. 12/2017-Central Tax(Rate) dated 28.06.2017.
Held: While going through the Scope of Work of the agreement, Authority finds that there are certain clauses under the portion "Detailed Specification and terms and conditions" of the agreement and in terms of which the rate of supply of services includes the cost of the Collection vehicle with licensed holder driver, fuel, oil, pick axes, tools, plants, suction machine, machinery, gumboots, hand gloves, raincoat in the monsoon period etc. - Thus, from a plain reading of the aforementioned clause, it appears that the services provided by the applicant includes supply of goods also, hence it cannot be considered as Pure Services - Further, one of the clauses specifically mentions that the rate should be filled inclusive of all taxes which means that as per the agreement, rate should be inclusive of all taxes which would also include GST - This clause itself nullifies the contention of the applicant that they are providing pure services to Notified Area Authority, Vapi which they claim, are exempt from GST by virtue of Sr.No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - In view of the above, Authority concludes that the services provided by the applicant to Notified Area Authority, Vapi are not Pure Services – Held that Solid waste management service provided by the applicant to Notified Area Authority, Vapi under the above referred agreement is not exempted under the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017: AAR
-Application disposed of :AAR
2021-TIOL-74-AAR-GST
Posiedon Hydro Infratech
GST - s.97 of the CGST Act, 2017 - In the present case, Sardar Sarovar Narmada Nigam limited (SSNNL) is not making any payment of GST to the main consultant i.e. WAPCOS and in turn, WAPCOS is not making any payment to Poseidon Hydro Infratech (i.e. sub-consultant and the present applicant) - Question on which advance ruling is sought by the applicant is not related to the agreement made by them with M/S. WAPCOS or the agreement made between M/s. WAPCOS and M/s. SSNNL but is related to the liability of GST on the consultancy services rendered by various consultancy agencies to SSNNL - Authority finds the said question as being absolutely irrelevant, hypothetical and speculative which does not in anyway pertain to the services supplied/rendered by the applicant - Although the applicant has narrated the facts of his agreement made with M/s. WAPCOS and agreement of M/s. WAPCOS with SSNNL and has also submitted the copies of the same, there is no question raised by them seeking Advance Ruling with regard to these agreements, their GST liability etc. which seems perplexing - Authority fails to understand as to how the applicant expects the Advance Ruling Authorities to answer or to decide on such a hypothetical question with regard to the GST liability on the consultancy services rendered by some third parties to SSNNL - Second question is also irrelevant to the instant issue since it is connected to the first question - No decision can, therefore, be given - Application rejected: AAR
-Application rejected :AAR
2021-TIOL-73-AAR-GST
Mayank Vinodkumar Jain
GST - Applicant has entered into contract with M/s. Laxmi Kattha Udhyog Pvt Ltd., a company registered in NEPAL for providing Cargo Handling Services for its goods imported into Nepal from Vietnam - Applicant seeks a ruling as to whether the aforesaid services proposed to be rendered qualify as "Export of Services" under Section 2(6) of the Integrated Goods & Services Tax Act, 2017 or not.
Held: As per the Section 97(2) of CGST Act, the questions on which advance ruling is sought shall be in respect of, matters or issues mentioned in Section 97(2)(a) to (g) only - Authority finds that "place of supply of services" does not find mention in the said Section 97 - Further, the Appellate Authority of Advance Ruling (AAAR), Maharashtra State has decided on the subject matter i.e. "Export of services", in the case of M/s. NES Global Specialist Engineering Services Pvt. Ltd. = 2019-TIOL-73-AAAR-GST holding that questions raised by the respondent before Advance Ruling Authority were beyond the scope and jurisdiction of Advance Ruling, and hence do not warrant any ruling thereon - same views on similar matters was taken in the cases reported as 2019-TIOL-58-AAAR-GST , 2019-TIOL-52-AAAR-GST , and = 2020-TIOL-23-AAAR-GST - application filed for advance ruling is rejected, as being non-maintainable as per the provisions of the GST Act, 2017 and Rules made thereunder: AAR
-Application rejected :AAR |
