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GST - Credit card holder offered loan - Service rendered by Citi Bank in extending loan is nothing but a service pertaining to the said credit card - Interest component of EMI of loan advanced by bank is not exempted: HCGST -Since the petitioner has prayed for a relief to compel the respondent bank to grant exemption, the writ petition is maintainable: HCCus - Order cancelling Special Warehouse Licence is an appealable order before the Tribunal - Respondent to work out the remedies in accordance with law: HCGST - Printing of content provided by recipient using paper & materials of applicant and supply of such printed leaflets to recipient is a composite supply - Supply of service of printing is principal supply; GST @18%: AARCX - SVLDRS, 2019 - In the SCN, it is not mentioned that the duty demand is jointly and severally payable - A co-noticee is one who is liable for the very same amount along with others: HCGST - Authority has proceeded to pass order for cancellation of registration on new material or facts which neither formed part of SCN nor the same were disclosed to writ applicant - Order set aside: HCGST - TRAN-1 - Rule 117 being directory in nature, the time limit for transitioning of credit would in no manner result in forfeiture of rights even when credit is not availed within the period prescribed: HCGST - Age is just a numberI-T - Amount received in excess of amount standing to credit of partnership firm which is paid towards notional gain on revaluation of land is liable to tax : HCGovt revises tariff value of edible oils & goldI-T - Prosecution of assessee upheld where wilful concealment of correct income by not filing ITR within time stipulated, is clearly established : HCDigital Assets transfer - CBDT notifies Form 26QF for crypto exchangeI-T - Re-assessment - Best of judgment order - Assessee not diligent in pursuing matter, failed to give adequate reply to notices; cannot later allege contravention of natural justice: HCCBDT notifies NFT resulting in transfer of ownership to be excluded for taxation purposeI-T - One opportunity can be granted to assessee as offence is compoundable: HCNiti Aayog & WFP table report on Take Home Ration schemeI-T - Case can be fixed for either limited scrutiny or complete scrutiny and in case it is for complete scrutiny, then no written approval is required by AO from PCIT: ITATConsumer Price Index for Industrial Workers for May 2022 rises by 1.02%I-T - Penalty imposed u/s 271(1)(c) sustained where assessee does not submit any evidence to show that it made voluntary disclosure during assessment proceedings, before detection of bogus loss claimed: ITAT8 Core Industries - Power, Cement, Coal & Fertilisers record high growth in May 2022I-T - Assessee did not write off provisions for doubtful debts due to fear of losing right to civil proceedings for recovery of debts; deduction allowed for provision of doubtful debts: ITATGovt releases calendar for Treasury Bills auctionI-T - Amount received in excess of amount standing to credit of partnership firm which is paid towards notional gain on revaluation of land is liable to tax : ITATGST Tribunal - Challenge is to remove microbes of bias in fleshing it out!Cus - Once in 100% EOU, raw material imported duty free is used in manufacture of final product and same is cleared on payment of duty in DTA, customs duty on raw material cannot be demanded: CESTATGST FileCX - Empty packaging material of cenvatable input is not liable for payment either as excise duty or as cenvat credit under Rule 6(3) of CCR, 2004: CESTATGovt releases Public Debt Management report for Jan-Mar 2022ST - Relevant date for computing six months periods under Notification No. 41/2007-ST to be taken the date when service tax paid and not first day of month following quarter in which export made, merely on the ground of limitation refund cannot be rejected: CESTATMigration of e-BRC Portal/Website to new IT platformST - Since the typographic error in challan number and corelation of compiled record of appellant is impressed upon by them, request of remanding the matter is hereby accepted: CESTAT
 
Supreme court on ocean freight issue – Few observations

MAY 24, 2022

By Abhijit Saha

IN the case of Mohit Minerals Pvt. Ltd - 2022-TIOL-49-SC-GST-LB, the company imported non-coking coal by ocean transport on a 'Cost-Insurance-Freight' basis. The company paid IGST on the import of coal which included the value of the ocean freight as per Section 5(1) of the IGST Act, 2017, read with Section 3 of the Customs Tariff Act, 1975. The foreign exporter engaged a foreign shipping line for transportation of the goods to India from abroad. The ocean freight invoice was issued by the foreign shipping line to the foreign exporter (the Indian importer is not involved in this leg of transaction). The Department demanded IGST on such ocean freight separately, although the company has paid IGST on import of goods which included this ocean freight charges. The Hon'ble Supreme Court (SC) in an elaborate judgment has held that such IGST on ocean freight is not payable as the company has already paid IGST on import of goods as composite supply.

In the process of analyzing the issue, SC made the following observation which is the subject matter of this article:

148. Based on the above discussion, we have reached the following conclusion:

(i) The recommendations of the GST Council are not binding on the Union and States for the following reasons:

(a) The deletion of Article 279B and the inclusion of Article 279(1) by the Constitution Amendment Act 2016 indicates that the Parliament intended for the recommendations of the GST Council to only have a persuasive value, particularly when interpreted along with the objective of the GST regime to foster cooperative federalism and harmony between the constituent units;

(b) Neither does Article 279A begin with a non-obstante clause nor does Article 246A state that it is subject to the provisions of Article 279A. The Parliament and the State legislatures possess simultaneous power to legislate on GST. Article 246A does not envisage a repugnancy provision to resolve the inconsistencies between the Central and the State laws on GST. The 'recommendations' of the GST Council are the product of a collaborative dialogue involving the Union and States. They are recommendatory in nature. To regard them as binding edicts would disrupt fiscal federalism, where both the Union and the States are conferred equal power to legislate on GST. It is not imperative that one of the federal units must always possess a higher share in the power for the federal units to make decisions. Indian federalism is a dialogue between cooperative and uncooperative federalism where the federal units are at liberty to use different means of persuasion ranging from collaboration to contestation; and

(c) The Government while exercising its rule-making power under the provisions of the CGST Act and IGST Act is bound by the recommendations of the GST Council. However, that does not mean that all the recommendations of the GST Council made by virtue of the power Article 279A (4) are binding on the legislature's power to enact primary legislations;

…………………………………

In view of the above observation, a message would be conveyed that GST Council decisions are not binding on the central and state governments. It is also mentioned that the Union and States are conferred equal power to legislate on GST. The concern after the SC decision is whether various states will now begin pulling in different directions taking indirect tax back to the VAT era. In this situation, and given the SC ruling, there is a concern on whether the level of uniformity in GST legislation across states, presently in force, will continue in future.

As per my understanding Hon'ble SC intends to make recommendation of the GST Council binding on the legislature except to the extent such recommendation is repugnant to the objective and spirit of the GST regime. But such message, I humbly submit, has not come out loud and clear in this decision of the Supreme Court.

Article 279A of the Constitution was introduced to constitute GST Council only to foster cooperative federalism and harmony between the Central Law and the State Law of GST.

Article 279A(4): The Goods and Service Tax Council shall make recommendation to the Union and the States on –

- ………..

- The goods and services that may be subject to, or exempted from the goods and service tax.

Article 279A(6): While discharging the functions conferred by this article, the Goods and Services Tax Council shall be guided by the need for a harmonized structure of goods and services tax and for the development of a harmonized national market for goods and services.

In view of the above constitutional mandate, it is evident that GST Council recommendation has the objective to foster and ensure 'One Nation, One Tax' .

So, in deference to the Constitutional mandate, as per my understanding, the decision of the Hon'ble Supreme Court is to be interpreted to mean that the GST Council recommendation is not binding only to the extent it violates the objects and purpose of the GST Law. This is known as Doctrine of Basic Structure. Inspite of the Constitutional mandate, the GST Council recommendation to the extent it violates the Basic Structure of the GST Law, is not binding on the central and state legislature. It is in line with the 13 Member Bench decision of the Supreme Court in the case of Kesavananda Bharati [1973 AIR 1461] which struck down the amendment to the Constitution which was in violation of the fundamental architecture of the Constitution by upholding the Doctrine of Basic Structure. In fact, in para 20 of the judgment of Mohit Minerals , Hon'ble Supreme Court observed that to analyse the vires of the impugned notifications, it is pertinent to contextualize the constitutional architecture of the GST.

[The views expressed are strictly personal.]

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