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2021-TIOL-2142-HC-TELANGANA-GST Appario Retail Pvt Ltd Vs UoI
GST - Petitioner assails the order-in-appeal denying the refund of excess amount lying to the credit of electronic cash ledger of the petitioner maintained under the Act, 2017 - Petitioner submits that they procure electronic goods from various vendors based on forecasted demand of business and maintain huge inventory for the purpose of ensuring timely deliveries; that as a result of purchases effected by it, a very high balance of input tax credit of GST paid on its purchases is available in the electronic credit ledger; that on receiving orders through Electronic Commerce Operator (ECO), the sale is affected through ECO and goods are dispatched to customers; that the tax liability is discharged by the petitioner by debiting the Electronic Credit ledger - ECO, before remitting the amount for the supply of goods effected through it to customers, retains a percentage of amount from and out of such consideration received and deposits such amount retained by the ECO with the Government in terms of Section 52 of the CGST Act as 'Collection of tax at source'; that such deposit of amount made by the ECO with the Government is allowed to be claimed as credit by the petitioner in the electronic cash ledger of the petitioner, on the basis of the statement filed by ECO in Form GSTR-8 in terms of Rule 67 of the Rules, 2017 - Petitioner also contends that due to maintenance of huge inventory on account of purchases affected to meet the forecasted demand, the petitioner invariably has excess balance of ITC in its electronic credit ledger which is utilized for discharge of GST liability, as and when sale of goods is effected through ECO, and, therefore, the amount retained by the ECO and deposited with the Government under Section 52 of the CGST Act, as tax collected at source and reflected in petitioner's electronic cash ledger remains unutilized; that the said unutilized balance in the petitioner's electronic cash ledger can be claimed as refund in terms of Section 49(6) read with Section 54 of the CGST Act; and that the said balance amount in the electronic cash ledger is being refunded to the petitioner throughout India where it has operations, including in the State of Telangana - Petitioner contends that, upon the 5th respondent sanctioning the refund of excess amount available in the electronic cash ledger, the 3rd respondent examined the said refund sanction order dt.18.09.2019 and passed review order dt. 09.06.2020 observing that the refund was sanctioned without examining whether the principle of "unjust enrichment" has been complied with as required under Section 54(5) read with Section 54(8) of the CGST Act and the impugned refund sanction order is also legally improper - 4th respondent, by the impugned Order-in-Appeal, has held that there is no provision under Section 54(1) for refund of TCS deposited u/s 52 of the CGST Act; that the Circular dt.18.11.2019 allows refund of TCS - TDS, only when the same has been erroneously deposited in excess, under wrong head; that as the case of the petitioner is not an erroneous/excess deposit under wrong head, refund would not be admissible, that the Frequently Asked Questions (FAQs) issued by the CBIC are not binding on the Appellate Authority, and that there is a remedy of further appeal before the 2nd respondent - Petitioner contends that though the impugned Order-in-Appeal can be appealed before the GST Appellate Tribunal, the said Appellate authority has not been constituted in the State of Telangana, as on date - Thus, it is claimed that the petitioner is invoking the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India, assailing the correctness of the impugned order-in-appeal passed by the 4th respondent - In response, Respondents contend that the present writ petition is not maintainable, inasmuch as there is an effective remedy of appeal before the Appellate Tribunal provided under Section 109 of the CGST Act; that though the regional GST Tribunal has not been established as on date, by virtue of the order issued by CBIC, vide order No. 9/2019-Central Tax , the three months period for filing of appeal has to be considered from the date of communication of the order or the date on which the President or the State President, as the case may be, of the Appellate Tribunal, after its constitution under Section 109 of the CGST Act, enters office as clarified by CBIC by its Circular No. 132/2/2020-GST dt.18.03.2020 - Respondents also contend that the amount deducted by the ECO from the consideration payable to the supplier under Section 52 of the CGST Act and deposited with the Central Government is not a 'tax' or that it is the liability of the petitioner; thus, the TCS is not an amount which is paid by the assessee and the refund thereof in terms of Section 54(1) of the CGST Act or proviso thereto is not provided; and that the amount deposited by the ECO with the Government is to be utilized only for payment of tax by the supplier for his outward supplies, and Section 52 of the CGST Act does not envisage refund of such amount.
Held:
+ A reading of Section 49(1) of the CGST Act would indicate that it is not only the person in whose name the electronic cash ledger is maintained, but also other person can make deposits into the electronic cash ledger. This would be evident from the language used in Section 49(1), as while allowing deposit, reference is made to 'by a person', and while giving credit to the electronic cash ledger, the word used is 'such person'. If the intent of the section is to allow the deposit only by the person in whose name the Electronic Cash Ledger is maintained, the same could have been mentioned by using the words like 'of the said person' or by stating "his electronic cash ledger maintained'. [para 29]
+ The use of the term 'by a person' for making deposit has to be given a wider meaning having regard to the definition of 'person' defined 2(84) of the CGST Act. On the other hand, the use of word 'such', which is qualified by the use of words 'shall be credited to the electronic cash ledger of such person to be maintained' connotes a different and restrictive meaning, implying the person in whose name the Electronic cash Ledger is maintained and credit is to be given. [para 30]
+ Section 52 of CGST Act deals with 'collection of tax at source' and mandates every ECO to collect an amount calculated at such rate not exceeding one per cent, as may be notified by the Government on the recommendations of the Council, of the net value of taxable supplies made through it by other suppliers where the consideration with respect to such supplies is to be collected by the operator.
+ Section 52(3) mandates that the amount so collected by the ECO of the net value of taxable supplies made through it is to be paid to the Government within ten days after the end of the month in which such collection is made. Sub-sections (4) and (5) of Section 52 of the CGST Act mandates such ECO to file monthly and annual statements electronically providing the details of outward supplies effected through it and the amount collected under sub-section (1) during the month and financial year. [para 31]
+ In the normal course of business, ECO would be required to remit to the supplier the consideration received by it, but for the provisions of Section 52(1) of the CGST Act. Thus, it is by virtue of operation of law, the ECO is required to deduct and remit to Government, the specified percentage of amount from and out of the net value of taxable supplies effected, which otherwise is the value receivable by the supplier. It is in this context, the Sub-section (7) of Section 52 specifies that the supplier who had supplied the goods or services or both through ECO shall claim credit in his electronic cash ledger of the amount collected and reflected in the statement of the ECO furnished under sub-section (4) on a monthly basis. [para 32]
+ Bench cannot lose sight of the fact that the collection so permitted under Section 52 is specified in Chapter X dealing with 'Payment of Tax' and the heading of Section 52 also deals with 'Collection of tax at source'. If the contention of the respondents that the said amount collected under Section 52 is not a 'tax', then such collection would have to be treated as without authority of law, if the same does not partake the character of 'tax', which is only permitted to be levied and collected by the charging Section i.e. Section 9 of the CGST Act. [para 33]
+ Once it is held that the amount collected by ECO and paid to the Government under Section 52(3) of the CGST Act, is tax, to which the supplier is entitled to take credit in his electronic cash ledger under sub-section (7) of Section 52, the provisions of Section 54 of CGST Act would apply for claiming refund of the same. [para 35]
+ Section 54(1) covers two different classes of persons who can claim refund namely (i) any 'person' and (ii) 'registered person'. Similarly, it also covers two different types of refunds namely (i) tax, interest of any other amount and (ii) balance in electronic cash ledger. [para 41]
+ The petitioner is covered by class of person specified in (ii) and the refund claimed is also under (ii) type of refund specified above. [para 42]
+ The balance amount in the electronic cash ledger till it is appropriated by making payment towards discharge of liability of tax, interest or any other amount to the Government, would be the amount available to the 'registered person' in whose name the said electronic cash ledger is maintained. Therefore, the stand of the respondents that since the amount collected by ECO under Section 52 of the CGST Act is not paid by the petitioner by himself and, therefore, it is not entitled to claim refund of the same, is totally misplaced. As the petitioner is claiming refund balance in electronic cash ledger, it is covered by the proviso to sub-section (1) of Section 54 and would not fall under sub- section (1) of Section 54. [para 43]
+ It is also to be seen that the CBIC in the form of FAQs on TCS under GST issued on 20.09.2018 had by way of answer to Question No.24 also permitted the actual supplier to claim refund of excess balance lying in his electronic cash ledger in accordance with the provisions contained under Section 54(1) of the CGST Act. [para 44]
+ It is settled position of law that the circulars/ instructions/clarifications issued by the board binds all the authorities under the Act. [para 49]
+ The above clarification provided leaves no doubt as to the entitlement of the petitioner to claim refund of the excess balance in its electronic cash ledger, which includes the amount that has been collected by the ECO under Section 52 of the CGST Act from the net value of consideration payable to the petitioner in respect of sales/supplies effected through it, as such amount paid to the Government is allowed as a credit in the electronic cash ledger of the petitioner under Section 49(1) of the CGST Act and such balance being eligible for refund under Section 49(6) of the CGST Act. Therefore, the petitioner is entitled to claim refund of the balance in electronic cash ledger under proviso to sub-section (1) of Section 54 of the CGST Act. [para 45]
+ Impugned Order-in-Appeal passed by the 4th respondent, cannot be held to be a validly passed order for it to be sustained. [para 52]
+ Writ petition is allowed. Petitioner is entitled for refund of the balance in electronic cash ledger as claimed in Form CGST RFD-01A, dt.20.05.2019, for the month of October, 2018, in a sum of Rs.1,17,29,989/- [para 53]
GST - Writ Petition - Maintainability - Although an effective remedy of appeal to the Appellate Tribunal is provided under Section 109 of the CGST Act, it is an admitted fact that the said Tribunal has not yet been constituted, though more than 3 years have elapsed after the CGST Act has been introduced - Petitioner cannot be compelled to wait for eternity to agitate its claim seeking refund of the amount to which it is entitled to under the statute and also blocking its funds affecting its cash flows, merely because of existence of (non-functional) alternate forum/remedy on paper, by not invoking the jurisdiction under Article 226 of the Constitution of India - Further, mere existence of alternative remedy is no bar for invoking the jurisdiction under Article 226 of the Constitution of India, when right to carry on business is being impeded, resulting in violation of fundamental right as guaranteed under Article 19(1)(g) of the Constitution of India: High Court [para 51]
- Petition allowed: TELANGANA HIGH COURT
2021-TIOL-2141-HC-P&H-GST
SBI Cards And Payment Services Ltd Vs UoI
GST - The petitioner-company is a joint venture with the State Bank of India, and is engaged in the business of issuing credit cards to its customers - Upon introduction of the GST regime, the assessee held one registration under service tax which continued under the new GST regime - Thereafter, the petitioner obtained separate registration for all 28 states - However, during the initial stage the complete break up of individual transactions was not available to the petitioner and in the absence thereof for the period April 2018 to December 2018 the petitioner paid CGST & SGST of about Rs.108 crores approximately considering the transactions to be intra-state sales - The supply was reported under GSTR 1 and 3 B as a Business to Customer (B2C) supply as GST registration number of the acquiring banks were not known - The petitioner filed the present petition to challenge an order whereby the petitioner's prayer for refund of CGST & SGST amounting to about Rs 108 crores which had been wrongly paid in excess of the tax due u/s 77 of the CGST Act, was rejected.
Held - In normal case this may have been an appropriate order to pass but in the present case it cannot be lost sight of that there is no dispute about the amount of tax, rather it was on the requirement of the respondents that the petitioner paid an additional amount of Rs.108 crores approximately - Once the petitioner paid that extra amount on asking of the Revenue under the IGST the liability of the Revenue to refund an amount of Rs.108 crores odd wrongly deposited under CGST & SGST cannot be disputed - One cannot lose sight of the fact that the money has now lain with the Revenue for the past two and a half years - Hence the Revenue authorities concerned are directed to refund the amount of Rs 108 crores earlier deposited by the petitioner towards CST & SGST, along with applicable interest, within a period of one month: HC
- Writ petition allowed: PUNJAB AND HARYANA HIGH COURT
2021-TIOL-2140-HC-P&H-GST
Manish, Rajesh And Inder Partap Singh Vs State of Haryana
GST - Case of the department is that the said accused float bogus firms and by entering into bogus transactions with bigger firms, they were getting huge amounts deposited in the bank accounts of the bogus firms so floated and were eventually facilitating the big firms to save on GST in fraudulent manner and thus, deprived the State Exchequer of the GST which was legitimately due - Upon investigation, it was found that the said 18 firms had been incorporated/registered by associating persons of limited means like rickshaw pullers etc. - It was also revealed that the 18 firms so constituted by the accused had further issued bills in favour of 421 different industrial units based in Panipat and the said industrial units of Panipat, on the basis of such bills which also reflected payment of GST had inflated their expenditure and payment of GST, though in fact, such expenditure had never been actually incurred - In other words, such industrial units of Panipat were evading payment of a substantial amount of GST on the ground that the initial supplier i.e. M/s Lalit Trading Company had already charged GST - Although, the payments by the said industrial units used to be made by the aforesaid bogus 18 firms by way of banking transactions but the said amount used to be withdrawn from the accounts of the said firms by the accused and used to be given back to the industrial units of Panipat after retaining a certain percentage - It is the case of prosecution that fraudulent transactions of colossal amount of more than Rs.1325 crores had been effected ultimately leading to a loss of about Rs. 80 crores to the State Exchequer in the shape of evasion of payment of GST - Bail applications have been filed by the alleged accused persons.
Held: The evidence collected during the course of investigation certainly points towards the complicity of the petitioners, particularly the fact that bogus firms have been registered while furnishing e-mail ID and phone numbers of the accused - Still further, in various of the firms, it is Rajesh Mittal, who is the authorised signatory - Further, transfer of amounts in the personal bank account of the accused from the accounts of the firms would also nail the accused as regards their guilt - However, in the instant case, the challan was presented about 2 years back and till date even the charges have not been framed - An amount of about Rs.6 crores has already been recovered by way of compounding, from the owners of the industrial units in Panipat who had allegedly benefited from the forged bills - The petitioners have been behind bars for a substantial period of about two and half years - Conclusion of trial is also likely to consume time as the trial has not even commenced till date - Keeping the aforesaid facts and circumstances in mind, particularly the fact that the trial is yet to commence, no useful purpose would be served by further detaining the petitioners behind bars who have been in custody since last about 2 1/2 years - Consequently, the petitions merit acceptance and are hereby accepted and the petitioners are ordered to be released on regular bail on their furnishing bail bonds/surety bonds to the satisfaction of learned trial Court/Chief Judicial Magistrate/Duty Magistrate concerned: High Court
- Applications allowed: PUNJAB AND HARYANA HIGH COURT
2021-TIOL-250-AAR-GST
Prodip Nandi
GST - Applicant is engaged in supplying manpower services to his clients on daily/ monthly basis for different jobs as required by his clients - Applicant submits that the clients also authorise him to make payment of salary/wages on monthly basis to the manpower provided by him; that, therefore, he raises periodical invoices to his clients indicating salary/ wages payable against the manpower services supplied by him and also indicates the service charges payable to him at the agreed rates in the invoices in a separate manner; that upon receipt of payment from his clients, he disburses the salary/wages to the manpower provided by him - Applicant has sought a ruling on the following - Whether the applicant is acting as a pure agent as defined in Explanation to Rule 33 of the CGST Rules, 2017? & Whether the payment of salary/wages by the supplier can be excluded from the value of supply for the purpose of section 15 of the CGST Act, 2017?
Held: For the purpose of supplying manpower services as per requirement of his clients, the applicant also enters into 'Employment Agreement' with different workmen specifying the terms and conditions to be followed by the workmen and the wages/salary to be paid against services provided by them - Applicant also maintains 'Register of Wages' in Form XVII under rule 78(1) (i) of the Contract Labour (Regulation and Abolition) Central Rules, 1971 in respect of such supply of workmen - Applicant thus engages contract labour towards supply of manpower services as requisitioned by his clients (recipient of services) - Rule 33 of the CGST/WBGST Rules, 2017 clearly speaks that one of the conditions that has to be satisfied for exclusion of expenditure or costs from the value of supply which has been incurred by a supplier as a "pure agent" if the services procured by the service provider, as a pure agent of the recipient of service, from the third party are in addition to the services which he provides on his own account - Admittedly, in the instant case, the applicant first enters into an agreement with his client for supplying of manpower services and subsequently engages different workmen (third party) at the place of business of his clients and thereby supplies manpower services only - By virtue of the "Employment Agreement" made between the applicant (service provider) and workmen (third party), the applicant, being the employer is liable to make payment to the third party (workmen/employee) - In the instant case, undisputedly the applicant is the person who is liable to pay salary/wages to the workmen employed by him under 'Employment Agreement' to provide manpower services to his clients and just showing such amount in a separate manner in the invoice doesn't shift his liability on the recipient of services and makes him qualify as a 'pure agent' in terms of rule 33 of the CGST/WBGST Rules, 2017 - The contention of the applicant that the recipient of services authorises him to make payment of salary, wages and all allowances on his behalf doesn't hold water on the same ground that such amount is actually payable by the applicant himself - Authority, therefore, refuses to accept the argument that the applicant makes payment of such amount “on behalf of” his client i.e., the service recipient - Held, therefore, that the answer to both the questions on which a ruling is sought, is in the negative: AAR
- Application disposed of: AAR |
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