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GST - Celebrations of new tax regime mean nothing - regime is not tax friendly - wake up and put in place the requisite mechanism: High Court

By TIOL News Service

MUMBAI, FEB 09, 2018: A fortnight ago, we reported the Allahabad High Court decision in the case of Continental India Pvt. Ltd. - 2018-TIOL-04-HC-ALL-GST wherein the High Court, while disposing of the petition, observed thus -


GST - Petitioner seeks a writ of mandamus directing the GST Council to make recommendations to the State Government to extend the time period for filing of GST TRAN-1 because their application was not entertained on the last date i.e. 27.12.2017 and they have filed complete application for the necessary transitional credit - Petitioner submits that despite making several efforts on the last date for filing the application, the electronic system did not respond as a result of which petitioner is likely to suffer loss of credit that it is entitled to by passage of time; that they have also submitted an application for transitional credit manually on 10.01.2018 - Respondents were served with a notice on 19.1.2018 with a copy of the petition and they have also obtained instructions and it is submitted by counsel for respondents that portal is likely to be opened but is unable to say that when the portal is likely to be opened.

Held: Respondents are directed to reopen the portal within two weeks from today - In the event they do not do so, they will entertain the application of the petitioner manually and pass orders on it after due verification of the credits as claimed by the petitioner - They will also ensure that the petitioner is allowed to pay its taxes on the regular electronic system also which is being maintained, for use of the credit likely to be considered - Writ petition stands disposed: High Court [para 5]

The above decision fairly highlighted the misery faced by an assessee while he interacts with the much-touted state-of-the-art 'portal' assisting him in paying the Good and Simple Tax.

Though there was not much Court bashing involved in the aforementioned case, the Bombay High Court did not mince its words while coming down heavily in an almost similar facts that came before it recently.

To begin with, the High Court quipped - "The petitioner has brought before this Court his grievance and it is little peculiar."

The petitioner submitted that they are unable to access its online profile on the Goods and Service Tax Network; that there is no fault or negligence on the part of the petitioner; that the petitioner says that it is the respondents who have decided to put in place an automated and electronic system of accepting tax returns based on self­-assessment.

Without access to the online profile, the petitioner cannot generate E­way bills and without such E­ way bills, the petitioner will not be allowed to move the goods anywhere and that will paralyse its business; that lack of access would mean that the petitioner is unable to file return or pay tax or undertake any other compliances required by the statute; that such lack of access to the online profile also inhibits the petitioner from securing the final registration number; that, therefore, the petitioner is exposed to interest liability and may have to face even penal consequences and importantly, the petitioner as well as its customers are unable to avail input tax credit mechanism.

The petitioner further submitted that after filing of this petition they have been allowed access to the online profile, however, the petitioner could not file the necessary return, and particularly the Return GSTR-­3B, and the payment of tax is not possible without this return; that this return is not being accepted without payment of late fee for the period from October 2017 onwards.

The High Court enquired with the counsel for the Revenue as to when is the next meeting of the GST Council; whether the grievance of the petitioner would be projected and raised before the Council or not.

As the Revenue counsel could not give any definite answer but sought two weeks' time to take instructions and file affidavit, the High Court remarked -

"It is not the business of this Court to grant such access as is claimed by the petitioner. It is for the authorities to work out the necessary mechanism and set that in place. It must also set up and establish a grievance redressal mechanism."

Commenting that these were not a satisfactory state of affairs, the High Court had the following acerbic words for the Revenue -

++ A tax like Goods and Services Tax was highly publicised and termed as popular.

++ We had yet not seen a celebration of New Tax regime, but that has followed with great hue and cry. These celebrations mean nothing.

++ The special sessions of Parliament or special or extraordinary meetings of Council would mean nothing to the assessees unless they obtain easy access to the website and portals.

++ The regime is not tax friendly. We hope and trust that those in charge of implementation and administration of this law will at least now wake up and put in place the requisite mechanism.

++ This is necessary to preserve the image, prestige and reputation of this country, particularly when we are inviting and welcoming foreign investment in the State and the country.

++ We hope and trust that such petitions are rarity and the Court will not be called upon to administer the implementation of the law, leave alone monitoring and supervising the working of the individual officials, howsoever high ranking he may be.

Adverting to the Allahabad High Court decision (supra), the Bombay High Court mentioned that - "it would also be constrained to pass such order and that would not be restricted to the petitioner before us alone."

The matter was posted for the 16th February, 2018.

In passing:

Incidentally, the same Bench had in the matter of a Revenue appeal recently held thus -

"…It is precisely that which compels us to term this litigation as frivolous and a clear waste of time. Since this is a clear waste of our precious judicial time, we can also safely term the exercise as an abuse of the process of the Court by the Revenue. No abuse can go unpunished and, therefore, while dismissing this appeal, we impose costs of Rs.1,00,000/- (Rupees One Lakh only) on the Revenue. The costs to be paid within four weeks from today, after which the assessee can recover the same by treating the Department to be in default of payment of arrears of land revenue." - 2018-TIOL-187-HC-MUM-CX.

And by the way, the present petitioner is a company engaged in manufacturing of robotic and automation equipment.

(See 2018-TIOL-05-HC-MUM-GST)