2022-TIOL-1478-HC-JHARKHAND-GST
Usha Martin Ltd Vs Addl. CCGST & Excise
GST - Respondent No. 1- Additional Commissioner, C.G.S.T. & Excise, Jamshedpur, has disallowed the CENVAT credit amounting to Rs.10,21,05,096/- carried forward by the petitioner by filing TRAN-1, in terms of Section 140 of the C.G.S.T. Act, 2017 by impugned order in original dated 30th March, 2022 – Petitioner has raised the question of lack of jurisdiction of the adjudicating authority to decide upon the availment of CENVAT credit by the petitioner under the pre goods and service tax regime – Petitioner submits that Respondent No.1 has wrongly assumed jurisdiction and adjudicated upon the issue of availment of regular CENVAT Credit brought forward from the previous years; that these proceedings being inchoate, legal proceedings or recovery of arrears or any such tax, surcharge, penalty, interest etc. could be levied or imposed under the pre GST laws as if the repealed Acts, i.e. Finance Act, 1994 and Central Excise Act, 1944 are not being so amended or repealed.
Held:
+ Writ petition has been preferred purely on the question of legality and jurisdiction of Respondent No.1 to initiate a proceeding under Section 73(1) of the C.G.S.T. Act for transition of CENVAT Credit which was allegedly inadmissible under C.E.A. and Finance Act read with C.C.R. [para 13]
+ Apex Court has [in Magadh Sugar & Energy Ltd. vs. State of Bihar & others reported in 2021 SCC Online Supreme Court 801 ] laid down that the test that is to be applied for the determination of a question of law is whether the rights of the parties before the court can be determined without reference to the factual scenario. As such, the presence of alternative remedy of appeal under Section 107 of the C.G.S.T. Act does not operate as a restriction to delve upon and decide the question of jurisdiction of respondent no.1 raised in the writ petition. [para 14]
+ When one legislative system ends and another begins it is considered necessary by the legislature to enact special provisions for the circumstance which exists when that legislation came into force. [para 16]
+ Under the existing law, CENVAT Credit admissible to any registered Tax payer could have been utilized as input tax credit for discharge of tax liability. The same would have remained idle or unutilized if such transitional provisions were not provided for under the G.S.T. regime. Therefore, the legislature provided for transitional arrangement for input tax credit under the C.G.S.T. Act i.e. CENVAT Credit or under the State G.S.T. Acts i.e. input tax credit as are admissible at the time of transition under the existing Vat laws or Entry Tax Act etc. [para 17]
+ The enumerated conditions [in s.16] under which the registered person shall not be entitled to avail of the credit of input tax are not one which are applicable to the case of the present petitioner. The show cause notice under which the instant adjudication proceedings were initiated is worded/allege similar contraventions under the CEA, Finance Act, 1994 and the CCR as the previous show cause notices issued under the existing law against the petitioner relating to contravention of the C.E.A., Finance Act and C.C.R..
+ The adjudicating authority does not hold that the transition of CENVAT Credit under Section 140 of the C.G.S.T. Act by the petitioner and relating to the period just before the appointed date i.e. 1st July, 2017 are not one which are inadmissible to be credited in terms of section 16 (2) of the C.G.S.T. Act.
+ The Show cause notice itself alleges contravention of the C.E.A., Finance Act, 1994, read with C.C.R., 2004. As such, sub clause ( i ) of proviso to section 140 does not apply to the case of the petitioner at hand. It is neither the allegation against the petitioner that he had not furnished his returns required under the existing law for the period of six months immediately preceding the appointed date as per clause (ii) to the proviso to Section 140. In substance, the contraventions which have been alleged and the proceedings which have been initiated under Section 73(1) of the C.G.S.T. Act are in relation to violation of the C.E.A. and Finance Act read with C.C.R.
+ Similar was the imputation in respect of the previous show cause notices issued under the existing law which are pending adjudication before the CESTAT or the Commissioner (Appeals) for different periods and in some of which the petitioner has already got a stay by the learned CESTAT.
+ Whether the CENVAT credit under the existing law were admissible to be availed and transitioned by the petitioner was not an issue lying within the jurisdiction of the C.G.S.T authorities to be proceeded against and determined under the relevant provisions of Section 73 of the C.G.S.T. Act. [para 18]
+ It is also a well settled legal position that on account of the new legislation, the implementation of the G.S.T. regime could not be left to a realm of uncertainty. For a violation under the existing law, parallel proceedings could not be conducted under the existing law at the behest of jurisdictional officer and at the same time under the new law at the instance of another jurisdictional officer of the G.S.T. Act. It is in this conceptual background that the purport and construction of the repeal and saving provisions under Section 174 of the C.G.S.T. Act is to be understood. [para 20]
+ To decide whether any particular transaction is affected by the repeal of an Act, it is necessary to ascertain whether the transaction in question was completed when the Act was repealed. The present repeal and saving clause expressly engrafts that notwithstanding the repealing Act the repeal shall not affect any right or liability acquired accrued or incurred. [para 21]
+ Therefore, it is clear that the repeal of the existing laws upon coming of the G.S.T. law regime did not leave a vacuum as to past transactions which were not closed. The repeal and saving clause (e) under Section 174(1) of the C.G.S.T. Act allowed such legal proceedings to be instituted in respect of inchoate rights except rights under transactions which were past and closed.
+ The duty of the constitutional courts is to interpret the law and also to ensure that there is certainty about the law not only in the minds of the law enforcement agencies but also in the common person as to where he stands in the eye of law.
+ If proceedings for transition of CENVAT Credit alleged to be inadmissible is permitted to be carried under the C.G.S.T. Act, it may lead to uncertainty not only in the minds of the ordinary citizen but also in the minds of the Tax authorities.
+ In some cases, a jurisdictional proper officer under the C.G.S.T. Act may initiate proceedings under the provisions of the C.G.S.T Act for such contravention. In other cases the competent jurisdictional officer may initiate proceedings under the existing law [that is the C.E.A. and Finance Act, 1994] for the same contravention in view of the repeal and saving provisions under Section 174 of the C.G.S.T. Act.
+ Such a course cannot be countenanced in law. As such, Bench is of the considered view that the initiation of proceedings by respondent no. 1 under section 73 (1) of the C.G.S.T. Act, 2017 for alleged contravention of the C.E.A. and Finance Act, read with C.C.R. against the petitioner by filing TRAN 1 in terms of Section 140 of the C.G.S.T. Act for transition of CENVAT Credit as being inadmissible under the existing law was beyond his jurisdiction.
+ Consequently the Order in Original dated 30th March, 2022 passed by the respondent no. 1 being without jurisdiction cannot be sustained in the eye of law. The impugned adjudication proceedings and the order in original dated 30th March, 2022 are accordingly quashed. [para 22]
+ Respondent authorities are at liberty to initiate proceedings under the provisions of the existing law, i.e. C.E.A, 1944, Finance Act, 1994 read with C.C.R, 2004. [para 23]
- Petition disposed of: JHARKHAND HIGH COURT
2022-TIOL-1477-HC-JHARKHAND-GST
GTS Coal Sales Vs Directorate General of GST Intelligence
GST - Petitioners in both these writ applications have prayed for a direction to refund the involuntarily deposited amount of Rs. 60 lakhs and Rs. 47,64,900/- respectively without there being any demand and/or adjudication proceeding - Both the petitioners have further prayed for a declaration that the works executed by them pursuant to the work orders given by the Coal Companies should be classified under SAC 9965 viz. 'Goods Transport Agency Services', leviable to tax @12%; as against its classification under SAC 9986, being 'Support Services to Mining' which is leviable to tax @18%.
Held: Counsel for Respondent Revenue fairly admits that the petitioners are cooperating in the investigation and the moment investigation will be completed, show cause notice will be issued against the respective petitioners - Bench is of the considered view that at this stage any determination on the issue of leviability of tax; whether @12% or whether @18 % will certainly hamper the entire investigation - It appears that as per the work orders issued to the respective petitioners, the tax which are paid by the petitioners are to be reimbursed by the Coal-Company; as such, if in future the revenue holds that the tax for the work done by the respective petitioners comes under Heading No. 9986 being 'Support Services to Mining' which is leviable to tax @18%, then the petitioners would be entitled to raise their claim for the differential tax from the Respondent-Coal Companies - Petitions are disposed of: High Court [para 11, 12]
- Petitions disposed of: JHARKHAND HIGH COURT
2022-TIOL-38-AAAR-GST
Sivantos India Pvt Ltd
GST - Applicant is engaged in the business of trading of hearing aids and their parts and accessories - They had sought an advance ruling in the matter of classification of parts and accessories suitable for use solely with hearing aids; the rate of tax and whether they are exempted in terms of notification 2/2017-CTR , Sr. no. 142 - AAR had held that Parts & accessories of hearing aids are covered specifically under heading 9021 9010; that the rate of tax applicable on supply of such parts & accessories of hearing aids is 18% in terms of entry no.453 of Schedule III to the Notification No. 1/2017-CTR ; that the Clarification provided in the Circular 113/32/2019-GST dated 11.10.2019 is regards to classification of parts of ophthalmic equipment and not relevant to the facts of the present case - Aggrieved, an appeal has been filed before the AAAR.
Held: Scope of the entry Sl.No 142 of exemption notification is confined only to hearing aids under heading 9021 and does not include parts and accessories of hearing aids falling under tariff item 9021 90 10 - Argument of the Appellant that entry Sl.No 142 of exemption notification which specifies the goods at four-digit heading level should be read to include all sub-headings and tariff item level goods i.e parts and accessories of hearing aids is dismissed - Parts and accessories of hearing aids are neither covered in the scope of entry Sl.No 221 of Schedule II at 12% tax nor are they covered under the exemption entry Sl.No 142 of Notification No 02/2017 Central-Tax (Rate) - Since the parts and accessories of hearing aids falling under tariff item 9021 90 10 are not specifically mentioned in any of the entries of the exemption notification No 02/2017 Central Tax (Rate) and are also not specifically mentioned in either Schedule I, II, IV, V and VI of the rate Notification No 01/2017 Central Tax (Rate), they will get covered under entry Sl.No 453 of Schedule III of Notification No 01/2017 Central Tax (Rate) as this is a residuary entry which covers goods under any chapter which are not specified under any of the other rate Schedules - If the Appellant's argument that the four-digit heading level entry in the rate notification must always cover all sub-headings and tariff items under that heading, then there would be no purpose of the residuary entry Sl.No 453 in Schedule III - The manner of reading the GST rate notification is based on the chapter/heading/sub-heading/tariff item mentioned in the entry together with the description of goods specified in the said entry - One cannot assume that the indication of a chapter or heading in an entry will automatically cover all goods under a sub-heading and tariff items under that chapter or heading and ignore the description of goods specified in the said entry - Ruling given by the lower authority is upheld - Appeal dismissed: AAAR
- Appeal dismissed: AAAR
2022-TIOL-37-AAAR-GST
Myntra Designs Pvt Ltd
GST - Appellant is engaged in the business of selling of fashion and lifestyle products through the e-commerce portal www.myntra.com - In furtherance of its business, the Appellant entered into an Advertising Agreement with Lenzing Singapore Pte Ltd, a company registered in Singapore, in terms of which the Appellant is providing advertisement space to Lenzing on their e-commerce portal, mobile application or any other online platform of the Appellant - Given that the activity is for a non-resident and the consideration is received in foreign exchange, the Appellant approached the Authority for Advance Ruling (AAR) seeking a ruling on Whether the transaction of providing space on its web portal for advertisements provided by a foreign entity ie Lenzing Singapore Pte Ltd for a consideration, is taxable? & Consequently, what will be the correct classification of the services provided and rate of tax on the transaction of providing space on its web-portal for advertisements provided by a foreign entity i.e Lenzing Singapore Pte Ltd.? - AAR in its order dated 1st July 2022 opined that it cannot answer the first question since the same involves determination of place of supply which is outside the jurisdiction of the Authority and insofar as classification is concerned, it held that the same is classifiable under SAC 998365 viz. ‘Sale of internet advertising space (except on commission)' and the same is chargeable to tax @18% [CGST + SGST] as per Sl. No. 21 of 11/2017-CTR - Aggrieved with this ruling, the present appeal is filed.
Held: A plain reading of the section 97(2) shows that determination of 'place of supply' is not a subject matter covered under Section 97(2) of the CGST Act - Kerala High Court in the case of Sutherland Mortgage Services Inc - 2020-TIOL-486-HC-KERALA-GST held that even though the issue relating to determination of place of supply is not expressly enumerated in any of the clauses as per clauses (a) to (g) of Section 97(2) of the CGST Act, the issue relating to determination of place of supply, would come within the ambit of the larger issue of 'determination of liability to pay tax on any goods or services or both' as envisaged in clause (e) of Section 97(2) of the CGST Act - The above decision of the Kerala High Court has not been appealed against by the Department - Appellate authority is, therefore, of the opinion that clause (e) of Section 97(2) covers within its scope the determination of place of supply if such determination is linked with the liability to pay tax and in such cases the Advance Ruling Authority has the jurisdiction to pass a ruling on the issue of place of supply - Appellate Authority, therefore, holds that the lower Authority was incorrect in not passing a ruling on the question of taxability of the transaction of selling advertising space on its web portal to a foreign entity - Appellate Authority is a creature of the statute and draws its powers from the provisions of Sections 99 to 106 of the KGST/CGST Acts - It is, therefore, evident from the provisions of the statute that the Appellate Authority can pass an original ruling only when the matter is referred to them under Section 98(5) - Where a ruling has been pronounced by the lower Authority, an appeal by the aggrieved party lies before the Appellate authority and the authority, under the appeal proceedings, can pass such order as it thinks fit, either confirming or modifying the ruling - In the instant case, there is no ruling pronounced by the lower Authority on the question of taxability - In the absence of a ruling, there is nothing for this Authority to confirm or modify - Appellate authority can only go so much as to say whether the lower Authority was correct in not giving a ruling on the question of taxability, which Appellate Authority have already held as being incorrect - When the application for advance ruling is admitted, the questions raised in the application are answered by an order issued in terms of Section 98(4) - On the other hand, when the application is rejected, the order is passed in terms of Section 98(2) - However, in terms of Section 100 of the CGST Act, an appeal can by filed before the Appellate Authority only against an order passed under Section 98(4) - The provisions of Section 100 make it very clear that an appeal cannot be filed before this Authority when any application for advance ruling has been rejected by the lower Authority in terms of Section 98(2) - In the instant case, the application for advance ruling filed by the Appellant had 2 questions; the lower Authority has pronounced a ruling on the 2nd question in terms of Section 98(4) while the 1st question of the application was unanswered on the grounds that it was outside the scope of Section 97(2) - To this extent, it can be construed that the 1st question of the application relating to the taxability of the transaction with the foreign entity was rejected by the lower Authority in terms of Section 98(2) - Therefore, legally speaking, no appeal can be filed before Appellate authority against the rejection of ruling on the question of taxability - However, having filed the appeal which has also been heard, Appellate authority can only go so far as to say whether the lower Authority was correct in not passing a ruling on the question of taxability - Therefore, Appellate Authority disagrees with the Appellant's contention that it has the authority to go beyond and decide the point on merits when there has been no ruling by the lower Authority - The question of taxability having been rejected by the lower Authority albeit incorrectly, without any ruling, the matter is not appealable as per the law - But, considering the fact that the lower Authority's actions of not answering the question of taxability on the grounds of jurisdiction has been held as incorrect by the Appellate Authority, AAAR is constrained, in the interests of justice, to send the matter back to the lower Authority to pronounce a ruling on the question of taxability after considering the place of supply provisions - Order of AAR set aside and matter remanded: AAAR
- Appeal disposed of: AAAR
2022-TIOL-36-AAAR-GST
Magnetic Infotech Pvt Ltd
GST - Questions before the AAR were - (1) Whether GST exemption is applicable to applicant in respect of the pre and post Examination services being provided to the Educational Boards and Universities (including Open Universities)? & (2) If answer to Q.No.1 is affirmative, whether the exemption is available to the applicant in case of the services are provided on sub-contract basis i.e., the applicant provides pre and post examination services to the main contractor who in turn provides the said services to the Educational Boards and Universities (including Open Universities)? - Question number 1 was answered in the affirmative by both the Members - However, since there was no uniform opinion arrived by the Members of the Authority for Advance Ruling in respect of Question No. 2 raised by applicant representing Central Tax and State Tax and they have expressed two different views on the issue raised by the applicant on the applicability of GST as sub-contractor or the application filed by M/s Magnetic Infotech Pvt Ltd, the same has been referred to the Appellate Authority in terms of Section 98(5) of the CGST/TGST Act, 2017 for hearing and decision on the question No. 2 on which Advance Ruling is sought.
Held: The applicant sought ruling about whether the exemption is available to them in case of the services provided on sub-contract basis i.e. the applicant provides pre and post examination services to the main contractor who in turn provides the said services to the Educational Boards and Universities (including Open Universities) - Since, in the present case the main contractor to whom the applicant is to provide services as sub-contractor is not an educational institution, though the services are allegedly being provided to the Educational Boards and Universities by the main contractor, the exemption contained in the impugned notification is not available to the applicant - When exemption contained in a notification is to be claimed, an applicant is to satisfy the conditions prescribed therein - The wordings of any notification have to be strictly read to allow or deny any exemption - Applicant, M/s Magnetic Infotech Private Ltd., as a sub-contractor, is not eligible to claim exemption as available under Notification No. 12/2017-(R), dt. 28.6.2017 - Appeal disposed of: AAAR
- Appeal disposed of: AAAR |
