I-T - Faceless Assessment - If assessee requests personal hearing, then it is to be provided: HC

I-T - Failure to pay portion of tax cannot be construed to mean wilful attempt to evade payment of tax so as to initiate criminal proceedings : HC

GST - Fraudulent ITC - 'Forcing' customer to deposit in petitioner's Electronic cash ledger - Ingenious way of creating liquidity crunch to ensure such amount is not frittered away: HC

GST - Whether the amount that was directed to be paid was under coercion or was voluntary is a disputed question of fact; cannot be decided in a summary proceedings: HC

GST - Straightaway invocation of s.79(1)(c) is pre-mature - Recovery has to be in consonance with Rule 145 of the CGST Rules, 2017: HC

CX - If goods are supplied on FOR basis, Cenvat credit of service tax paid on GTA services cannot be denied for the reasons that said service has been availed for transportation of goods beyond place of removal: CESTAT

2022-TIOL-396-HC-MAD-GST

MNS Enterprises Vs Addl. Director General Directorate of GST Intelligence

GST - Revenue Allegation is that one Joseph Selvaraj, who is the partner of M/s Coral Steel having business in Chennai, have admitted that they prepared fake GSTN Bills and Invoices to facilitate the writ petitioner to avail input tax credit wrongly based on fictitious entries which was used by the petitioner to discharge the GST liability under the provisions of the CGST Act, 2017 - Counsel for respondent Revenue submits that the department has unearthed fraud of approximately Rs.11.80 Crores committed by the petitioner on the strength of fictitious invoices to discharge the tax liability and the amount which is lying in the GSTN account for a sum of Rs. 88,17,754/- is a mere 7% of the estimated tax liability, which is pegged at Rs.11.80 Crores; that pursuant to the letter dated 01.09.2021 of the proprietor of the petitioner, a notice was also issued to the petitioner's customer, namely, Nobal Tech Industries Pvt. Ltd., on 2.09.2021, asking them to remit the amount directly to the GSTN account of the petitioner; that on the date when the aforesaid letter was given, an amount of Rs.75 lakhs was lying in the account of the petitioner's bank account which has been separately attached; that there are 7 more vendors apart from the aforesaid Nobal Tech Industries Pvt. Ltd. and approximately, a sum of Rs.2 Crores is due from these 7 vendors and that the proprietor of the petitioner in his statement dated 01.09.2021 had requested the Department to take appropriate action as deemed fit to recover the GST liability in respect of the petitioner and the petitioner's Sister Concern, namely, M/s. Noordeen Enterprises - Writ petition has been filed for a Mandamus to direct the respondent to refund Rs.88,17,754/- lying in the petitioner's Electronic Cash Ledger which has been frozen.

Held:

+ Whether the amounts that was directed to be paid by the petitioner's customer namely Nobal Tech was under coercion or it was voluntarily paid at the behest of the petitioner is a disputed question of fact which cannot be decided in a summary proceedings under Article 226 of the Constitution of India [para 22]

+ Amount which has been deposited into the Electronic Liability Register of the petitioner by the petitioner's customer / client cannot be ordered to be refunded directly. The deposit into the electronic cash ledger of the petitioner can be made not only by the petitioner, but also by any other person on behalf of the petitioner. This is evident from a reading of Section 49 of the CGST Act, 2017 read with Rule 86 of the CGST Rules, 2017. [para 25]

+ If the payment was coerced to be paid into the Electronic Liability Register of the petitioner by obtaining a letter from the petitioner, it may be ingenious way of creating liquidity crunch to ensure such amount is not frittered away. It is for the petitioner to work out the remedy under law for refund of the amount under Section 54 of the CGST Act, 2017 read with provisions of Chapter X of the CGST Rules, 2017. [para 27]

+ Considering the fact that there are serious allegations against the petitioner of having availed fraudulent input tax credit in the Electronic Credit Ledger on the strength of bogus and fictious input tax invoice for discharging GST liability, with no supply, no refund can be ordered straight away in this proceedings. [para 28]

+ Invocation of Section 79(1)(c) is pre-mature. Recovery under Section 79 of the Act has to be in accordance with Chapter XVIII of CGST Rules, 2017. Recovery under Section 79(1)(c) of the Act has to be in consonance with Rule 145 of the CGST Rules, 2017. [para 29]

+ Even if the respondent has forced the petitioner's client to pay the tax directly into the petitioner's Electronic Liability Register, the amount has not been appropriated or debited towards tax, interest, penalty, late fee or any other amount. The amount is to be debited at a future date towards tax liability of the petitioner. Even, if the petitioner's client was asked to pay the amount into the aforesaid Electronic Liability Register, the amount has not been debited towards any tax liability or penalty under the Act. [para 31]

+ Respondent is directed to complete investigation within a period of 3 months and issue appropriate Show Cause Notice under Section 73 or 74 of CGST Act, 2017. [para 32]

+ As the amount has not been debited and since it has not been appropriated so far, there is no scope for granting any relief to the petitioner in this writ petition. Therefore, the present Writ Petition is liable to be dismissed. [para 34]

+ Refund of amount will be subject to the final outcome of the show cause proceedings and in accordance with Section 54 of the CGST Act read with Chapter X of the CGST Rules. [para 37]

- Petition dismissed: MADRAS HIGH COURT

2022-TIOL-234-CESTAT-AHM

Pramukh Realty Vs CCE & ST

ST - Refund claim of assessee was rejected only on the ground of time bar which shows that the issue of refund on merit attained finality - Assessee have paid service tax even though the service was not completed and subsequently when the sale agreement was cancelled, assessee have returned the value of flat along with service tax to their customers - The date of finalization i.e. Cancellation of sale of flat and refund of amount should be taken as a relevant date for computing the limitation under Section 11B - From the provision of clause (eb) of section 11B(B), it is clear that in case where service tax payment need to be adjusted at a later stage, date of adjustment has to be reckoned for the purpose of computing limitation - This stage should be considered as adjustment of service tax hence, the one year period should be computed from the date of refund of amount made to their customers against cancellation of sale of flats - The appellant's refund claim is not time bar - Accordingly, assessee is entitled for refund - Impugned order is set aside: CESTAT

- Appeal allowed: AHMEDABAD CESTAT

2022-TIOL-233-CESTAT-AHM

Sunil Rathi Vs CCE & ST

CX - The issue involved is that whether the appellant is entitled for Cenvat Credit in respect of GTA services - The lower authorities have denied the Cenvat Credit on GTA Services on the sole ground that the appellant have not supplied CAS4 Certificate to ascertain the cost of product and whether the freight element is included - Sale of goods is on Principle to Principle basis - The freight is deemed to have been included in assessable value and on such assessable value excise duty was charged which is evident from sale invoice which shows that the appellant have not collected freight separately from the customer - The freight charge was borne by appellant themselves - Transaction should be considered as FOR sale and accordingly, buyer's place shall become place of removal as all the expenses up to delivery of goods at the buyer's place was borne by appellant - On this principle, Tribunal has considered the issue of admissibility of Cenvat credit on Outward GTA in case of Ultratech Cements Ltd 2019-TIOL-1420-CESTAT-AHM & Sanghi Industries Ltd 2019-TIOL-1709-CESTAT-AHM and the credit was allowed - These judgments have been upheld by High Court of Gujarat - Accordingly, following the binding precedent of Gujarat High Court, appellant is entitled for Cenvat Credit on Outward GTA - Moreover, identical issue in appellant's own case has been considered and decided in favour of appellant in the judgment of M/S. SALASAR COPPER 2019-TIOL-1946-CESTAT-AHM - On the basis of CA Certificates produced by appellant regarding the nature of sale i.e. FOR Sale and also the inclusion of freight charge, Tribunal has taken a view that appellant is entitled for Cenvat Credit - Accordingly, the impugned order is set aside: CESTAT

- Appeal allowed: AHMEDABAD CESTAT