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GST - Discharge of Outward Tax Liability by cash or by way of ITC is a matter of option - Having exercised such option, same cannot be reversed unless the Act/ Rules permit such reversal or swapping of the entries: SC

GST - Form GSTR-3B filing - No necessity of reading down paragraph 4 of Circular 26/26/2017-GST: SC

GST - GSTR­-2A is only a facilitator for taking an informed decision while doing self­-assessment - Non­-operability of the same does not deprive the assessee of any benefits: SC

Cus - Board of Approval cannot, for the purpose of cancelling a letter of approval, re-demarcate the processing areas and non-processing areas in a SEZ: HC

Cus - LOA has been granted specifying the authorised operations and the same cannot be altered by general guidelines: HC

ST - SVLDRS, 2019 - Declaration made offers an amount in excess of what it needed to - Petitioner has been more than generous - demand that is barred by limitation cannot be included: HC

2021-TIOL-251-SC-GST

UoI Vs Bharti Airtel Ltd

GST -   Petitioner (now respondent) had alleged that there has been excess payment of taxes, by way of cash, to the tune of approximately Rs.923 crores and that this was occasioned to a great degree due to non-operationalization of Forms GSTR-2A,    GSTR-2    and    GSTR-3    and the system related checks which could have forewarned the petitioner about the mistake; that since there were no checks on the Form    GSTR-3B    which was manually filled up by the Petitioner, the excess payment of tax went unnoticed; that, therefore, the Petitioner desired to correct its returns, but is being prevented from doing so as there is no enabling statutory procedure implemented by the Government - Delhi High Court while allowing the petition [ 2020-TIOL-901-HC-DEL-GST ] had held that 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; that the Petitioners cannot be denied the benefit due to the fault of the respondents; that the 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; that 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; that the 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; that the correction mechanism is critical to sustaining successful implementation of GST; that the Petitioner is 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 - It was also held that 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; that there is 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; that the Petitioner has a substantive right to rectify/adjust the ITC for the period to which it relates; that rectification/adjustment mechanism for the months subsequent to when the errors are noticed is contrary to the scheme of the Act; that the Respondents cannot defeat the statutory right of the petitioner by putting in a fetter by way of the impugned Circular - Against this order, Revenue had filed a Special Leave Appeal before the Supreme Court - Supreme Court Larger Bench had stayed the operation of the impugned judgment by its order dated December 17, 2020 [ 2020-TIOL-179-SC-GST-LB ] and had listed the matter in March 2021 for final disposal.

Held:  [para 37, 38, 46 to 50]

++ The question of reading down paragraph 4 of the said Circular would have arisen only if the same was to be in conflict with the express provision in the 2017 Act and the Rules framed thereunder. The express provision in the form of Section 39(9) clearly posits that omission or incorrect particulars furnished in the return in Form GSTR­-3B can be corrected in the return to be furnished in the month or quarter during which such omission or incorrect particulars are noticed. This very position has been restated in the impugned Circular. It is, therefore, not contrary to the statutory dispensation specified in Section 39(9) of the Act.

++ High Court in paragraph 23 of the impugned judgment, noted that the relief sought in the case before it, was indispensable. This logic does not commend to us. For, if there is no provision regarding refund of surplus or excess ITC in the electronic credit ledger, it does not follow that the assessee concerned who has discharged OTL [Output Tax liability] by paying cash (which he is free to pay in cash in spite of the surplus or excess electronic credit ledger account), can later on ask for swapping of the entries, so as to show the corresponding OTL amount in the electronic cash ledger from where he can take refund. Payment for discharge of OTL by cash or by way of availing of ITC, is a matter of option, which having been exercised by the assessee, cannot be reversed unless the Act and the Rules permit such reversal or swapping of the entries.

++ The entire edifice of the grievance of the writ petitioner (respondent No. 1) was founded on non­-operability of Form GSTR­-2A during the relevant period, which plea having been rejected as untenable and flimsy, it must follow that the writ petitioner/respondent No. 1 with full knowledge and information derived from its books of accounts and records, had done self­-assessment and assessed the OTL for the relevant period and chose to discharge the same by paying cash. Having so opted, it is not open to the respondent to now resile from the legal option already exercised.

++ Form GSTR­-2A is only a facilitator for taking an informed decision while doing such self­-assessment. Non­ performance or non­-operability of Form GSTR­-2A or for that matter, other forms, will be of no avail because the dispensation stipulated at the relevant time obliged the registered person to submit returns on the basis of such self­-assessment in Form GSTR­-3B manually on electronic platform.

++ Registered person is not denied of the opportunity to rectify omission or incorrect particulars, which he could do in the return to be furnished for the month or quarter in which such omission or incorrect particulars are noticed.

++ It is not a case of denial of availment of ITC as such. If at all, it is only a postponement of availment of ITC. The ITC amount remains intact in the electronic credit ledger, which can be availed in the subsequent returns including the next financial year. Further, there is no express provision permitting swapping of entries effected in the electronic cash ledger vis­-a-vis the electronic credit ledger or vice versa.

++ Despite an express mechanism provided by Section 39(9) read with Rule 61, it was not open to the High Court to proceed on the assumption that the only remedy that can enable the assessee to enjoy the benefit of the seamless utilization of the input tax credit is by way of rectification of its return submitted in Form GSTR­3B for the relevant period in which the error had occurred.

++ Any indulgence shown contrary to the statutory mandate would not only be an illegality but in reality, would simply lead to chaotic situation and collapse of tax administration of Union, States and Union Territories. Resultantly, assessee cannot be permitted to unilaterally carry out rectification of his returns submitted electronically in Form GSTR-­3B, which inevitably would affect the obligations and liabilities of other stakeholders, because of the cascading effect in their electronic records.

++ Matching and correction process happens on its own as per the mechanism specified in Sections 37 and 38, after which Form GSTR­-3 is generated for the purposes of submission of returns; and once it is submitted, any changes thereto may have cascading effect. Therefore, the law permits rectification of errors and omissions only at the initial stages of Forms GSTR­-1 and GSTR-­3, but in the specified manner.

++ Stipulations in the stated Circular 26/26/2017-­GST dated 29.12.2017 including in paragraph 4 thereof, are consistent with the provisions of the 2017 Acts and the Rules framed thereunder.

++ There is no necessity of reading down paragraph 4 of the impugned Circular as has been done by the High Court. The direction issued by the High Court, being in the nature of issuing writ of mandamus to allow the writ petitioner to rectify Form GSTR­-3B for the period ­ July to September 2017, in the teeth of express statutory dispensation, cannot be sustained.

- Appeal is allowed: SUPREME COURT OF INDIA

2021-TIOL-2093-HC-MAD-ST

Prabhu Dhananjayan Vs Designated Committee

ST - Petitioner had filed an application under the SVLDRS, 2019 for settlement of service tax arrears relating to the period April 2012 to June 2017 which amount is indicated as Rs.14,35,147/- based on the communication dated 29.12.2017 received from the department - However, the application came to be rejected without affording any opportunity to the petitioner to support its case - It is the case of the respondent department that the service tax demand was higher as per the quantification [dated 12.08.2021] arrived at and which is Rs.19,60,721/- -  Counsel for Revenue submits that the period for which the demand is raised is 2012-13 to June 2017-18 and no such demand was raised since the period in question is beyond limitation and hence department was constrained to drop the proceedings.

Held: Bench observes that no alternate demand or reasoning is set out to justify the rejection of the declaration or attributing any lapse to the declaration filed - Furthermore, the quantification put forth by the revenue is liable to be rejected since it is not supported by any demand of equal amount and is wholly  ad hoc - Moreover, the demand raised [dated 12.08.2021] cannot be enforced and at any rate, cannot form the basis of quantification of tax arrears for the purpose of the scheme - Declaration of the petitioner is based entirely upon the respondent's communication dated 29.12.2017 wherein the quantification admittedly is in excess for the period covered under the SCN dated 15.05.2020 [which covers the period from October 2014 to June 2017] - The declaration made by the petitioner offers an amount in excess of what it needed to, and the petitioner has been more generous than needed - Q uantification of the demand by Revenue under cover of its compilation of documents dated 12.08.2021 is not valid because, even according to the Department, a substantial portion of that demand was barred by limitation - That apart, the impugned order is clearly non-speaking and does not set out any alternate demand -  Moreover, the scheme itself provides, at Section 127 that once there is a variation between the amount stated in the declaration and the estimate arrived at by the Department, Form-2 shall be issued accompanied by personal hearing notice and which has not been done in the present case -  The term 'quantified' has been defined under Section 121(r) to state that 'quantified', with its cognate expression, means a written communication of the amount of duty payable under the indirect tax enactment -  In the present case, communication dated 29.12.2017 would satisfy the requirement of Section 121(r) read with Section 123(c) of Finance Act, 2019 on all fours - SVLDRS Form-3 is quashed and the respondent is directed to issue Form-3 afresh accepting the declaration of the petitioner within a period of four weeks - Writ petition is allowed: High Court [para 6, 8 to 13]

- Petition allowed: MADRAS HIGH COURT

2021-TIOL-2092-HC-DEL-CUS

Moser Baer India Ltd Vs UoI

Cus - Petitioner is impugning an order dated 28.12.2016 passed by the Board of Approval, whereby the petitioner's appeal against an order dated 18.04.2016 passed by the Unit Approval Committee, NOIDA SEZ was rejected - The petitioner also prays that the petitioner may be allowed benefits under Section 26 of the Special Economic Zones Act, 2005 in respect of maintenance and duty free imports of raw materials and consumables for operation and maintenance of the power plant ('O&M benefits').

Held : It is apparent from Sub-section (8) of Section 15 of the SEZ Act that the Central Government has ample powers to impose certain terms and conditions subject to which a unit can carry out its operations - Letter of approval has been granted specifying the authorised operations and the same cannot be altered by general guidelines, which at best qualify to be a policy decision by the Central Government - Contention that the Central Government is entitled to demarcate processing areas and non-processing areas and the unit established by the petitioner had ceased to be a unit in the processing area whereby rendering it ineligible for O&M benefits is also not supported by the scheme of the SEZ Act - Under the 2009 Guidelines, a power plant could be set up by the developers/co-developers as a part of the infrastructure facilities only in the non-processing area of the SEZ - However, under the 2012 Guidelines, this condition was relaxed and, therefore, with the reinstatement of the 2009 Guidelines, such units would now require to be placed in the non-processing area - One principal difference between the 2009 Guidelines and the 2012 Guidelines is that under the 2009 Guidelines, a power plant set up by a developer/co-developer as a part of infrastructure facility was required to be placed only in a non-processing Area of the SEZ and would not be entitled to any O&M benefits - Petitioner's unit was granted approval in the processing area under the 2009 Guidelines and, therefore, restoration of the 2009 Guidelines cannot possibly require the petitioner's unit to be demarcated as a non-processing area - Even assuming that the Central Government had the power to re-demarcate areas post-issuance of the letter of approvals, the Second Letter on the basis of which the petitioner has been denied the O&M benefits with effect from 01.04.2015 to 16.02.2016, cannot be construed in the manner so as to be applicable to the petitioner's unit which was granted the LoA under the 2009 Guidelines - It is apparent from the plain language of Section 9(5) of the SEZ Act that the Board of Approval would "in exercise of its powers or performance of its functions" be bound by the directions of the Central Government on the questions of policy under the SEZ Act - Clearly, if the policy of the Central Government is not to permit power plants to be set up in processing areas, the Board of Approval is required to ensure that no letter of approval is granted to a unit or a developer to do so - However, that does not mean that the Board of Approval is required to proceed to cancel an existing letter of approval even though there is no default on the part of the entrepreneur in complying with the terms and conditions or its obligations subject to which, the letter of approval was granted to him - Letter of approval granted to an entrepreneur can be cancelled if the conditions as stipulated under Section 16(1) of the SEZ Act are met and not otherwise - Board of Approval cannot, for the purpose of cancelling a letter of approval, re-demarcate the processing areas and non-processing areas in an SEZ - Demarcation of such areas is not to be done for the purpose of cancelling existing letter of approvals - Controversy in this case is not regarding the petitioner complying with any terms and conditions for grant of concessions under Section 26(1) of the SEZ Act - The dispute in the present case relates to the direction to re-demarcate the petitioner's power plant as a non-processing unit for the purposes of the 2009 Guidelines - Such direction to re-demarcate is clearly not traceable to Section 26(2) of the SEZ Act - Present petition is allowed to the limited extent that the condition imposed by Unit Approval Committee of refunding the O&M benefits obtained by the petitioner during the period 01.04.2015 to 15.02.2016 by its letter dated 18.04.2016, is set aside - Petition disposed of: High Court [para 36, 39, 48, 49, 50, 52, 53, 54, 55]

- Petition disposed of: DELHI HIGH COURT

2021-TIOL-2091-HC-MAD-CUS

Janatha Timber Industries Vs CC

Cus - Petitioner seeks quashing the order dated 28.07.2021 and consequently directing the third respondent to grant Relaxation for clearance of subject consignment covered under Bill of Entry dated 19.05.2021, on payment of necessary four times penalty charges for dispensing with the Phytosanitary Certificate and to further direct the second and third respondents to release the above subject consignment on the above relaxation granted.

Held: Court feels that the impugned order can be set aside and the matter can be remitted back to the third respondent for consideration as to whether the petitioner has made any earlier request and availed any relaxation or not and if there is no such relaxation benefit or waiver of the production of phytosanitary certificate, the officer concerned, i.e., the third respondent can very well consider for grant of such relaxation, within the meaning of Clause 14 of the said Order, 2003, but at the same time, if the petitioner is not able to satisfy the third respondent and if there are records to show that the petitioner has already availed the relaxation benefit or waiver of the production of phytosanitary certificate, then the matter can be referred to the Joint Secretary (Plant Protection), Department of Agriculture and Co-operation, to take a decision thereon and accordingly, the petitioner can put forth his case before the Joint Secretary concerned, for getting such relaxation for the second time or subsequent time, as the case may be - Matter remanded: High Court [para 22, 23]

- Matter remanded: MADRAS HIGH COURT