BackgroundPrahitha Construction Pvt. Ltd., a commercial real estate developer, entered into a JDA dated 28.12.2017 with two landowners — M/s. Jitvan Land Limited and M/s. Janina Marine Properties Pvt. Ltd. — for development of land admeasuring 8.30 acres and 1.82 acres at Hyderabad Knowledge City, Raidurg Village, Serilingampally Mandal, Ranga Reddy District, Telangana into an IT/ITES and commercial office project. Under the JDA, the landowners granted permissive possession to the developer, who agreed to construct three towers. The developer was to receive the Developer's Undivided Share (UDS) of land and the built-up area as consideration, but only after handing over the Landowner's Share upon project completion. The JDA expressly stated that permissive possession shall not be construed as delivery of possession in part performance under Section 53-A of the Transfer of Property Act, 1882. The petitioner challenged Notification No. 4/2018 as amended by Notification No. 23/2019-CT(Rate) dated 30.09.2019, which imposed GST on transfer of development rights under a JDA, seeking its declaration as ultra vires Articles 14, 246A and 265 of the Constitution and the CGST/TGST Act, 2017. Court Observations (Verbatim)"Reading of the aforesaid clause further gives a clear picture of the fact that mere execution of JDA by itself would not mean that the right, title and ownership of the property or a portion of that property stands transferred in the name of the petitioner/developer. There are certain conditions/milestones/stages which have to be crossed before which the petitioner would be entitled to have a certain element of right over the completed constructed area which has been agreed to be left at the disposal of the petitioner. But that does not mean that mere execution of the JDA would amount to transfer of right to the petitioner.""The transfer of development rights is hence a service under GST Law which the landowner is offering to the developer and that too for a consideration. Thus, the transfer of development rights is a service and not an outright sale of an immovable property.""From plain reading of the JDA that was entered into between the two parties, what is apparently visible is that, there was no outright sale of land being effectuated and the JDA per se cannot be considered merely as a medium adopted by the landowner selling his land and the JDA does not lead to sale of land by itself.""The transfer of ownership from the landowner goes directly to the purchaser of the constructed property and not in favour of the petitioner unless and until the land stands transferred in the name of the petitioner. The same cannot be brought within the ambit of sale. Transferring of the development rights does not result in transfer of ownership rights. That the sale of land/transfer of land or undivided share of land would get executed only after issuance of completion certificate of the project. This itself would give a clear indication that the services rendered by the petitioner in execution of JDA was supplied prior to the issuance of completion certificate and would thus be amenable to GST.""On conjoint reading of the clauses under JDA, clause d of the JDA along with clause 2.2, 2.3, 2.4, 6.1, 6.7 and 23.4...it will clearly indicate that there is no automatic transfer of ownership given to the petitioner at the time of execution of the JDA...In the absence of any cogent and substantial material to establish right, title and ownership being created in favour of the petitioner/developer, the transfer of development rights as it stands is amenable to GST and cannot be brought within the purview of Entry 5 of Schedule-III of the GST Act.""The Notification No. 4 of 2018 dated 25.01.2018 as amended by Notification No. 23/2019-Central Tax (Rate), dated 30.09.2019, on its plain reading would reveal that it is not with which there is a charge created on the transfer of development rights, but in fact only provide for the time when the tax need to be paid.""Taking into consideration the provisions of Article 246A of the Constitution of India and also considering the extraordinary powers which have been conferred upon the GST Council and upon whose recommendation the Government has issued the notification clarifying the aspect of transfer of development rights being attracted to GST/TGST, the challenge to the notification issued by the Government of India can be safely held to be devoid of merits." Final VerdictThe Writ Petition was dismissed. The Court held that transfer of development rights under a JDA is a taxable supply of service under GST and does not amount to sale of land under Entry 5 of Schedule III of the CGST Act. The impugned Notification No. 23/2019-CT(Rate) dated 30.09.2019 was upheld as valid.
Prahitha Construction — GST on Transfer of Development Rights under JDA 09-02-2024
BackgroundPrahitha Construction Pvt. Ltd., a commercial real estate developer, entered into a JDA dated 28.12.2017 with two landowners — M/s. Jitvan Land Limited and M/s. Janina Marine Properties Pvt. Ltd. — for development of land admeasuring 8.30 acres and 1.82 acres at Hyderabad Knowledge City, Raidurg Village, Serilingampally Mandal, Ranga Reddy District, Telangana into an IT/ITES and commercial office project. Under the JDA, the landowners granted permissive possession to the developer, who agreed to construct three towers. The developer was to receive the Developer's Undivided Share (UDS) of land and the built-up area as consideration, but only after handing over the Landowner's Share upon project completion. The JDA expressly stated that permissive possession shall not be construed as delivery of possession in part performance under Section 53-A of the Transfer of Property Act, 1882. The petitioner challenged Notification No. 4/2018 as amended by Notification No. 23/2019-CT(Rate) dated 30.09.2019, which imposed GST on transfer of development rights under a JDA, seeking its declaration as ultra vires Articles 14, 246A and 265 of the Constitution and the CGST/TGST Act, 2017. Court Observations (Verbatim)"Reading of the aforesaid clause further gives a clear picture of the fact that mere execution of JDA by itself would not mean that the right, title and ownership of the property or a portion of that property stands transferred in the name of the petitioner/developer. There are certain conditions/milestones/stages which have to be crossed before which the petitioner would be entitled to have a certain element of right over the completed constructed area which has been agreed to be left at the disposal of the petitioner. But that does not mean that mere execution of the JDA would amount to transfer of right to the petitioner.""The transfer of development rights is hence a service under GST Law which the landowner is offering to the developer and that too for a consideration. Thus, the transfer of development rights is a service and not an outright sale of an immovable property.""From plain reading of the JDA that was entered into between the two parties, what is apparently visible is that, there was no outright sale of land being effectuated and the JDA per se cannot be considered merely as a medium adopted by the landowner selling his land and the JDA does not lead to sale of land by itself.""The transfer of ownership from the landowner goes directly to the purchaser of the constructed property and not in favour of the petitioner unless and until the land stands transferred in the name of the petitioner. The same cannot be brought within the ambit of sale. Transferring of the development rights does not result in transfer of ownership rights. That the sale of land/transfer of land or undivided share of land would get executed only after issuance of completion certificate of the project. This itself would give a clear indication that the services rendered by the petitioner in execution of JDA was supplied prior to the issuance of completion certificate and would thus be amenable to GST.""On conjoint reading of the clauses under JDA, clause d of the JDA along with clause 2.2, 2.3, 2.4, 6.1, 6.7 and 23.4...it will clearly indicate that there is no automatic transfer of ownership given to the petitioner at the time of execution of the JDA...In the absence of any cogent and substantial material to establish right, title and ownership being created in favour of the petitioner/developer, the transfer of development rights as it stands is amenable to GST and cannot be brought within the purview of Entry 5 of Schedule-III of the GST Act.""The Notification No. 4 of 2018 dated 25.01.2018 as amended by Notification No. 23/2019-Central Tax (Rate), dated 30.09.2019, on its plain reading would reveal that it is not with which there is a charge created on the transfer of development rights, but in fact only provide for the time when the tax need to be paid.""Taking into consideration the provisions of Article 246A of the Constitution of India and also considering the extraordinary powers which have been conferred upon the GST Council and upon whose recommendation the Government has issued the notification clarifying the aspect of transfer of development rights being attracted to GST/TGST, the challenge to the notification issued by the Government of India can be safely held to be devoid of merits." Final VerdictThe Writ Petition was dismissed. The Court held that transfer of development rights under a JDA is a taxable supply of service under GST and does not amount to sale of land under Entry 5 of Schedule III of the CGST Act. The impugned Notification No. 23/2019-CT(Rate) dated 30.09.2019 was upheld as valid.
Facts :The petitioner challenged a penalty order dated 20.12.2020 and appellate order dated 17.09.2021 passed under GST law. The goods were detained during transit solely on the ground of alleged undervaluation. All documents including invoice and e-way bill were available and there was no discrepancy in description of goods. The detention and penalty were confirmed by the authorities on the same ground.Court Decision:The Court held that undervaluation is not a valid ground for detention of goods under Section 129. It observed that when documents are proper and there is no mismatch, detention cannot be justified merely on valuation issues. The Court held that in cases of undervaluation, proceedings must be initiated under Sections 73 or 74 and not by detention and penalty during transit. Accordingly, the impugned penalty and appellate orders were quashed and set aside, with direction to refund any deposited amount.Cases Referred:Hindustan Coca Cola Pvt. Ltd. v. Assistant State Tax OfficerN.V.K. Mohammed Sulthan Rawther caseJ.K. Synthetics Ltd. v. Commercial Taxes Officer
Shamhu Saran Agarwal and Company v. Additional Commissioner Grade-2 & Ors. 31-01-2024
Facts :The petitioner challenged a penalty order dated 20.12.2020 and appellate order dated 17.09.2021 passed under GST law. The goods were detained during transit solely on the ground of alleged undervaluation. All documents including invoice and e-way bill were available and there was no discrepancy in description of goods. The detention and penalty were confirmed by the authorities on the same ground.Court Decision:The Court held that undervaluation is not a valid ground for detention of goods under Section 129. It observed that when documents are proper and there is no mismatch, detention cannot be justified merely on valuation issues. The Court held that in cases of undervaluation, proceedings must be initiated under Sections 73 or 74 and not by detention and penalty during transit. Accordingly, the impugned penalty and appellate orders were quashed and set aside, with direction to refund any deposited amount.Cases Referred:Hindustan Coca Cola Pvt. Ltd. v. Assistant State Tax OfficerN.V.K. Mohammed Sulthan Rawther caseJ.K. Synthetics Ltd. v. Commercial Taxes Officer
Facts :The petitioner challenged penalty order dated 20.12.2020 and appellate order dated 17.09.2021 arising from detention of goods in transit. The goods were detained solely on the allegation of undervaluation despite accompanying invoice, e-way bill, and proper documents. The appellate authority affirmed the penalty on the same ground of undervaluation. The petitioner relied on departmental circular stating that goods should not be detained merely on valuation disputes.Court Decision:The Court held that undervaluation is not a valid ground for detention of goods under Section 129 of the Act. Where all documents are proper and there is no discrepancy, detention cannot be justified on valuation issues. Issues of undervaluation must be examined through proceedings under Sections 73 or 74 of the GST Act and not through detention proceedings. Penalty imposed under Section 129 on mere suspicion of undervaluation was held unsustainable and set aside. The impugned orders were quashed and consequential relief including refund was directed.Cases Referred:Hindustan Coca Cola Pvt. Ltd. vs Assistant State Tax OfficerN.V.K. Mohammed Sulthan Rawther’s caseJ.K. Synthetics Ltd. vs Commercial Taxes Officer
Shamhu Saran Agarwal and Company vs Additional Commissioner Grade-2 & Others 31-01-2024
Facts :The petitioner challenged penalty order dated 20.12.2020 and appellate order dated 17.09.2021 arising from detention of goods in transit. The goods were detained solely on the allegation of undervaluation despite accompanying invoice, e-way bill, and proper documents. The appellate authority affirmed the penalty on the same ground of undervaluation. The petitioner relied on departmental circular stating that goods should not be detained merely on valuation disputes.Court Decision:The Court held that undervaluation is not a valid ground for detention of goods under Section 129 of the Act. Where all documents are proper and there is no discrepancy, detention cannot be justified on valuation issues. Issues of undervaluation must be examined through proceedings under Sections 73 or 74 of the GST Act and not through detention proceedings. Penalty imposed under Section 129 on mere suspicion of undervaluation was held unsustainable and set aside. The impugned orders were quashed and consequential relief including refund was directed.Cases Referred:Hindustan Coca Cola Pvt. Ltd. vs Assistant State Tax OfficerN.V.K. Mohammed Sulthan Rawther’s caseJ.K. Synthetics Ltd. vs Commercial Taxes Officer
BACKGROUNDThe petitioner, a trader, was subjected to a confiscation order by the Enforcement Officer who determined the total demand at Rs.1,41,11,633/-, which included tax, fine, penalty and other components, with the tax component alone determined at Rs.6,71,983/-. When the petitioner filed an appeal before the Appellate Authority under Section 107(1) of the CGST Act, the Appellate Authority declined to admit the appeal on the ground that the petitioner had failed to comply with the pre-deposit requirement under Section 107(6) of the CGST Act — having calculated 10% pre-deposit on the entire demand of Rs.1,41,11,633/- (i.e., Rs.14,11,163/-). The petitioner, however, had already deposited 10% of the tax component alone amounting to Rs.67,200/-. FACTSThe petitioner challenged the entire demand confirmed in the confiscation order. The Appellate Authority, while examining the maintainability of the appeal, called upon the petitioner to deposit 10% of the total composite demand of Rs.1,41,11,633/- (inclusive of fine, penalty, fee and interest). The petitioner contended that the expression "tax in dispute" in Section 107(6)(b) of the CGST Act refers only to the tax component and does not include interest, penalty, fine and fee, and that he had already deposited 10% of the tax as determined by the Enforcement Officer. The Appellate Authority, rejecting this contention, refused to admit the appeal, leading to the present writ petition before the High Court. COURT OBSERVATIONS (Verbatim)"In the context of disputing the entire tax amount, the 10% pre-deposit requirement pertains exclusively to the remaining disputed tax amount as articulated in the statutory language. Consequently, there exists a statutory basis for asserting that 10% pre-deposit obligation is confined to the contested tax quantum excluding penalty, fee and interest. This interpretation aligns with the legal principle that penalties are consequential to the determination of the underlining tax liability.""The intentional exclusion of disputed interest, fine, fee, and penalty from sub-clause (b) of Section 107(6) of the CGST Act signifies a crucial legislative distinction. Analyzing this deliberate separation provides insights into the lawmaker's clear intent regarding the nature and scope of the pre-deposit obligation in appeals.""By isolating 'a sum equal to ten per cent of the remaining amount of tax in dispute' in sub-clause (b), the legislator conveys a focused pre-deposit requirement specifically related to the disputed tax amount. This implies that the legislative design prioritizes the financial commitment associated directly with the primary tax liability being contested.""The appellate authority therefore, was not justified in calling upon the petitioner to deposit 10% of not only tax liability, but, also fine which is imposed by the Enforcement Officer equivalent to the value of the goods. If the order passed by the appellate authority under challenge is accepted, then the condition under clause (b) giving an option to the aggrieved person who disputes the entire tax liability to deposit 10% of the remaining amount of tax in dispute would be defeated.""Therefore, the order under challenge is not sustainable. There is no need for the petitioner to deposit any percentage of disputed interest, fine, fee and penalty arising from the impugned order. In essence, the legislative intent as construed from Section 107(6)(b) of the CGST Act is that aggrieved party has to pre-deposit 10% of the tax liability and it does not extend to penalties, fees or interest when the petitioner has contested the entirety of the tax liability." FINAL VERDICTThe Writ Petition was allowed. The impugned order of the Appellate Authority calling for 10% pre-deposit on the total demand of Rs.1,41,11,633/- was set aside. Since the petitioner had already deposited 10% of the tax liability (Rs.67,200/-), the Appellate Authority was directed to admit the appeal and decide it on merits in accordance with law.👍 IN FAVOUR OF ASSESSEE CASES REFERRED BY THE COURT#Case NameCitation1Carbon Resources (P) Ltd. vs. State of Bihar & OthersCivil Writ Jurisdiction Case No. 24120 of 2023 (Patna High Court)2Durga Raj Vijay Kumar vs. State of U.P.(2022) 66 GSTL 321 (Allahabad High Court)3Commissioner of Income Tax vs. Hindustan Bulk Carriers2003 (3) SCC 57 (Supreme Court)4J.K. Synthetics Ltd. vs. CTO(2004) 4 SCC 276 (Supreme Court)5Prakash Nath Khanna vs. CIT(2004) 9 SCC 686 (Supreme Court)6B. Premanand vs. Mohan Koikal[2011] 4 SCC 266 (Supreme Court)
Tejas Arecanut Traders vs. Joint Commissioner of Commercial Taxes & Another 20-12-2023
BACKGROUNDThe petitioner, a trader, was subjected to a confiscation order by the Enforcement Officer who determined the total demand at Rs.1,41,11,633/-, which included tax, fine, penalty and other components, with the tax component alone determined at Rs.6,71,983/-. When the petitioner filed an appeal before the Appellate Authority under Section 107(1) of the CGST Act, the Appellate Authority declined to admit the appeal on the ground that the petitioner had failed to comply with the pre-deposit requirement under Section 107(6) of the CGST Act — having calculated 10% pre-deposit on the entire demand of Rs.1,41,11,633/- (i.e., Rs.14,11,163/-). The petitioner, however, had already deposited 10% of the tax component alone amounting to Rs.67,200/-. FACTSThe petitioner challenged the entire demand confirmed in the confiscation order. The Appellate Authority, while examining the maintainability of the appeal, called upon the petitioner to deposit 10% of the total composite demand of Rs.1,41,11,633/- (inclusive of fine, penalty, fee and interest). The petitioner contended that the expression "tax in dispute" in Section 107(6)(b) of the CGST Act refers only to the tax component and does not include interest, penalty, fine and fee, and that he had already deposited 10% of the tax as determined by the Enforcement Officer. The Appellate Authority, rejecting this contention, refused to admit the appeal, leading to the present writ petition before the High Court. COURT OBSERVATIONS (Verbatim)"In the context of disputing the entire tax amount, the 10% pre-deposit requirement pertains exclusively to the remaining disputed tax amount as articulated in the statutory language. Consequently, there exists a statutory basis for asserting that 10% pre-deposit obligation is confined to the contested tax quantum excluding penalty, fee and interest. This interpretation aligns with the legal principle that penalties are consequential to the determination of the underlining tax liability.""The intentional exclusion of disputed interest, fine, fee, and penalty from sub-clause (b) of Section 107(6) of the CGST Act signifies a crucial legislative distinction. Analyzing this deliberate separation provides insights into the lawmaker's clear intent regarding the nature and scope of the pre-deposit obligation in appeals.""By isolating 'a sum equal to ten per cent of the remaining amount of tax in dispute' in sub-clause (b), the legislator conveys a focused pre-deposit requirement specifically related to the disputed tax amount. This implies that the legislative design prioritizes the financial commitment associated directly with the primary tax liability being contested.""The appellate authority therefore, was not justified in calling upon the petitioner to deposit 10% of not only tax liability, but, also fine which is imposed by the Enforcement Officer equivalent to the value of the goods. If the order passed by the appellate authority under challenge is accepted, then the condition under clause (b) giving an option to the aggrieved person who disputes the entire tax liability to deposit 10% of the remaining amount of tax in dispute would be defeated.""Therefore, the order under challenge is not sustainable. There is no need for the petitioner to deposit any percentage of disputed interest, fine, fee and penalty arising from the impugned order. In essence, the legislative intent as construed from Section 107(6)(b) of the CGST Act is that aggrieved party has to pre-deposit 10% of the tax liability and it does not extend to penalties, fees or interest when the petitioner has contested the entirety of the tax liability." FINAL VERDICTThe Writ Petition was allowed. The impugned order of the Appellate Authority calling for 10% pre-deposit on the total demand of Rs.1,41,11,633/- was set aside. Since the petitioner had already deposited 10% of the tax liability (Rs.67,200/-), the Appellate Authority was directed to admit the appeal and decide it on merits in accordance with law.👍 IN FAVOUR OF ASSESSEE CASES REFERRED BY THE COURT#Case NameCitation1Carbon Resources (P) Ltd. vs. State of Bihar & OthersCivil Writ Jurisdiction Case No. 24120 of 2023 (Patna High Court)2Durga Raj Vijay Kumar vs. State of U.P.(2022) 66 GSTL 321 (Allahabad High Court)3Commissioner of Income Tax vs. Hindustan Bulk Carriers2003 (3) SCC 57 (Supreme Court)4J.K. Synthetics Ltd. vs. CTO(2004) 4 SCC 276 (Supreme Court)5Prakash Nath Khanna vs. CIT(2004) 9 SCC 686 (Supreme Court)6B. Premanand vs. Mohan Koikal[2011] 4 SCC 266 (Supreme Court)
Facts :Petitioner wrongly transitioned balance from Personal Ledger Account as input tax credit under Section 140 of CGST Act.Refund was sanctioned, but ₹9,25,366 was adjusted towards interest on such utilization.Petitioner contended that sufficient Input Tax Credit was available and there was no loss to revenue.Dispute arose on legality of interest adjustment while granting refund.Court Decision:Petitioner ought to have claimed refund under Section 11B of Central Excise Act read with Section 142(3) of CGST Act.Wrong transition of credit was acknowledged, but tax liability was subsequently squared up using available Input Tax Credit.There was no loss to revenue, as sufficient credit existed.Directions:Deduction of ₹9,25,366 towards interest held unsustainable.Impugned order modified to that extent.Respondent directed to refund ₹9,25,366 to petitioner.Refund to be made within 8 weeks.
Infac India Pvt. Ltd. v. Deputy Commissioner of GST & Central Excise 14-09-2023
Facts :Petitioner wrongly transitioned balance from Personal Ledger Account as input tax credit under Section 140 of CGST Act.Refund was sanctioned, but ₹9,25,366 was adjusted towards interest on such utilization.Petitioner contended that sufficient Input Tax Credit was available and there was no loss to revenue.Dispute arose on legality of interest adjustment while granting refund.Court Decision:Petitioner ought to have claimed refund under Section 11B of Central Excise Act read with Section 142(3) of CGST Act.Wrong transition of credit was acknowledged, but tax liability was subsequently squared up using available Input Tax Credit.There was no loss to revenue, as sufficient credit existed.Directions:Deduction of ₹9,25,366 towards interest held unsustainable.Impugned order modified to that extent.Respondent directed to refund ₹9,25,366 to petitioner.Refund to be made within 8 weeks.
Background & Relevant FactsThe petitioner, Guru Storage Batteries, a partnership firm based in Nagpur, challenged the action of Respondent No. 3 — the State Tax Officer, Kamptee — in blocking its Electronic Credit Ledger (ECL). The blocking was carried out by Mr. Ujval Shrirampant Deshmukh, a State Tax Officer, who is admittedly an officer of a rank below that of Assistant Commissioner. The respondents sought to justify this action by relying on a Notification dated 24/01/2020, contending that the Commissioner had delegated the power to block ECL to Respondent No. 3. The petitioner also alleged that illegal recovery notices were being issued consequent to the said blocking. Court Observations (Verbatim)"A perusal of Rule 86A of the Central Goods and Services Tax Rules, 2017, indicates that such a blocking can be done by the Commissioner or an officer authorized by him in this behalf, not below the rank of Assistant Commissioner. Admittedly, the respondent No.3 does not fall within that category and is an Officer of the rank below that of the Assistant Commissioner.""Though the Notification dated 24/1/2020 has been relied upon to contend that the power has now been delegated by the Commissioner to the respondent No.3 (page 104), the same is under the State GST Act, whereas Rule 86-A of the aforesaid Act would contemplate a delegation by way of amendment to the Rule. The Notification dated 24/01/2020, would be of no assistance to the respondents." Final VerdictThe action of Respondent No. 3 in blocking the ECL was held to be without authority and was quashed and set aside. The petition was allowed with no costs, and the Rule was made absolute. Cases ReferredDee Vee Projects Ltd. vs. Government of Maharashtra and Ors. — 2022(2) Bom.C.R. 239 (Bombay High Court)
Guru Storage Batteries vs. State of Maharashtra & Ors. 11-09-2023
Background & Relevant FactsThe petitioner, Guru Storage Batteries, a partnership firm based in Nagpur, challenged the action of Respondent No. 3 — the State Tax Officer, Kamptee — in blocking its Electronic Credit Ledger (ECL). The blocking was carried out by Mr. Ujval Shrirampant Deshmukh, a State Tax Officer, who is admittedly an officer of a rank below that of Assistant Commissioner. The respondents sought to justify this action by relying on a Notification dated 24/01/2020, contending that the Commissioner had delegated the power to block ECL to Respondent No. 3. The petitioner also alleged that illegal recovery notices were being issued consequent to the said blocking. Court Observations (Verbatim)"A perusal of Rule 86A of the Central Goods and Services Tax Rules, 2017, indicates that such a blocking can be done by the Commissioner or an officer authorized by him in this behalf, not below the rank of Assistant Commissioner. Admittedly, the respondent No.3 does not fall within that category and is an Officer of the rank below that of the Assistant Commissioner.""Though the Notification dated 24/1/2020 has been relied upon to contend that the power has now been delegated by the Commissioner to the respondent No.3 (page 104), the same is under the State GST Act, whereas Rule 86-A of the aforesaid Act would contemplate a delegation by way of amendment to the Rule. The Notification dated 24/01/2020, would be of no assistance to the respondents." Final VerdictThe action of Respondent No. 3 in blocking the ECL was held to be without authority and was quashed and set aside. The petition was allowed with no costs, and the Rule was made absolute. Cases ReferredDee Vee Projects Ltd. vs. Government of Maharashtra and Ors. — 2022(2) Bom.C.R. 239 (Bombay High Court)
Facts :The petitioner challenged an assessment order dated 10.12.2021 passed under Section 73(9) of the BGST Act determining excess input tax credit. Notices were issued through the GST portal and reminders were sent, but the petitioner did not respond. The petitioner later filed an appeal with delay, which was rejected as time-barred, and thereafter approached the High Court.Court Decision:The Court held that the statutory remedy of appeal under Section 107 must be filed within three months with a further condonable period of one month. Even considering the extension of limitation granted by the Supreme Court in In Re: Cognizance for Extension of Limitation, the appeal should have been filed by 28.06.2022, but it was filed only on 10.07.2022.The Court held that when the statute prescribes a specific period for condonation of delay, neither the appellate authority nor the High Court under Article 226 can extend the limitation further. As the petitioner failed to avail the statutory appellate remedy within the prescribed period and no jurisdictional error or violation of natural justice was established, the writ petition was dismissed.Cases Referred by Court: In Re: Cognizance for Extension of Limitation, Suo Motu Writ Petition (C) No.3 of 2020 (Supreme Court of India ; State of H.P. & Ors. v. Gujarat Ambuja Cement Limited & Anr., (2005) 6 SCC 499
Punit Kumar Choubey vs The Commissioner, Commercial Tax, Patna & Ors. 10-08-2023
Facts :The petitioner challenged an assessment order dated 10.12.2021 passed under Section 73(9) of the BGST Act determining excess input tax credit. Notices were issued through the GST portal and reminders were sent, but the petitioner did not respond. The petitioner later filed an appeal with delay, which was rejected as time-barred, and thereafter approached the High Court.Court Decision:The Court held that the statutory remedy of appeal under Section 107 must be filed within three months with a further condonable period of one month. Even considering the extension of limitation granted by the Supreme Court in In Re: Cognizance for Extension of Limitation, the appeal should have been filed by 28.06.2022, but it was filed only on 10.07.2022.The Court held that when the statute prescribes a specific period for condonation of delay, neither the appellate authority nor the High Court under Article 226 can extend the limitation further. As the petitioner failed to avail the statutory appellate remedy within the prescribed period and no jurisdictional error or violation of natural justice was established, the writ petition was dismissed.Cases Referred by Court: In Re: Cognizance for Extension of Limitation, Suo Motu Writ Petition (C) No.3 of 2020 (Supreme Court of India ; State of H.P. & Ors. v. Gujarat Ambuja Cement Limited & Anr., (2005) 6 SCC 499
Background & Relevant FactsThe petitioner, Blackberry India Pvt. Ltd., was engaged in providing marketing, administration and support services to Blackberry Singapore Pte. Ltd., an overseas entity. The petitioner claimed these services constituted export of services under the Service Tax Rules, 1994 and accordingly filed three separate applications for refund of unutilised CENVAT Credit for the following periods:April–June 2012: Rs. 3,18,11,287/- filed on 28.03.2013April–June 2013: Rs. 2,89,94,208/- filed on 31.03.2014July–September 2013: Rs. 2,47,28,850/- filed on 30.06.2014Total: Rs. 8,55,34,345/-The refund applications were not processed for years. The Adjudicating Authority issued a Show Cause Notice dated 22.01.2020, proposing to reject the refund on the ground that the petitioner was an "intermediary" and hence the place of provision of services was India, not outside India. By Order-in-Original dated 31.08.2020, the refund claims were rejected. The Commissioner (Appeals) upheld this rejection on 19.08.2021.The petitioner appealed to CESTAT, which by Final Order No. 51150/2022 dated 07.12.2022 allowed the appeal and held the services to be export of services — entitling the petitioner to refund. Even after CESTAT's order, the refund was not processed. The petitioner sent a letter dated 07.02.2023 requesting processing of the refund. The Revenue also filed an appeal against the CESTAT order before the Delhi High Court (SERTA 7/2023), which was dismissed on 12.07.2023.The Adjudicating Authority then processed the refund by the impugned order dated 04.05.2023 — sanctioning the principal amount of Rs. 8,55,34,345/- but denying interest under Section 11BB, treating the petitioner's letter dated 07.02.2023 as the date of refund application and holding that since refund was granted within three months thereof, no interest was payable. The petitioner challenged only the denial of interest in the present writ petition.Court Observations (Verbatim)"In a case where Revenue denies the claim for refund and the assessee succeeds before the Appellate Authorities, the interest is required to be calculated from the date immediately after the expiry of three months from the date of application for the refund and not from the date of the appellate orders. This issue was settled by the Supreme Court in Ranbaxy Laboratories Ltd. v. Union of India: (2011) 10 SCC 292.""The said contention [that interest should be calculated from three months from the CESTAT order dated 07.12.2022] is unmerited and as stated above, the said issue stands authoritatively settled by the Supreme Court in Ranbaxy Laboratories Ltd. (supra).""The impugned order is, ex facie, erroneous to the extent it rejects the petitioner's claim for interest. The impugned order sets out a tabular statement...clearly stating the dates on which the petitioner had made its claim for refund.""The Adjudicating Authority has failed to consider that the petitioner had filed its applications of refund on 28.03.2013, 31.03.2014 and 30.06.2014 for the tax periods April-June 2012, April-June 2013, and July-September 2013 respectively. And the interest payable to the petitioner is required to be calculated from the date immediately after expiry of three months from the dates on which those applications were made."Final VerdictWrit petition allowed. The Adjudicating Authority directed to forthwith process the petitioner's claim for interest under Section 11BB of the Central Excise Act read with Section 83 of the Finance Act, computed from the date immediately after expiry of three months from the original application dates (28.03.2013, 31.03.2014 and 30.06.2014 respectively) — not from the letter dated 07.02.2023. 👍 In favour of Assessee.
Blackberry India Pvt. Ltd. vs. The Assistant Commissioner, 03-08-2023
Background & Relevant FactsThe petitioner, Blackberry India Pvt. Ltd., was engaged in providing marketing, administration and support services to Blackberry Singapore Pte. Ltd., an overseas entity. The petitioner claimed these services constituted export of services under the Service Tax Rules, 1994 and accordingly filed three separate applications for refund of unutilised CENVAT Credit for the following periods:April–June 2012: Rs. 3,18,11,287/- filed on 28.03.2013April–June 2013: Rs. 2,89,94,208/- filed on 31.03.2014July–September 2013: Rs. 2,47,28,850/- filed on 30.06.2014Total: Rs. 8,55,34,345/-The refund applications were not processed for years. The Adjudicating Authority issued a Show Cause Notice dated 22.01.2020, proposing to reject the refund on the ground that the petitioner was an "intermediary" and hence the place of provision of services was India, not outside India. By Order-in-Original dated 31.08.2020, the refund claims were rejected. The Commissioner (Appeals) upheld this rejection on 19.08.2021.The petitioner appealed to CESTAT, which by Final Order No. 51150/2022 dated 07.12.2022 allowed the appeal and held the services to be export of services — entitling the petitioner to refund. Even after CESTAT's order, the refund was not processed. The petitioner sent a letter dated 07.02.2023 requesting processing of the refund. The Revenue also filed an appeal against the CESTAT order before the Delhi High Court (SERTA 7/2023), which was dismissed on 12.07.2023.The Adjudicating Authority then processed the refund by the impugned order dated 04.05.2023 — sanctioning the principal amount of Rs. 8,55,34,345/- but denying interest under Section 11BB, treating the petitioner's letter dated 07.02.2023 as the date of refund application and holding that since refund was granted within three months thereof, no interest was payable. The petitioner challenged only the denial of interest in the present writ petition.Court Observations (Verbatim)"In a case where Revenue denies the claim for refund and the assessee succeeds before the Appellate Authorities, the interest is required to be calculated from the date immediately after the expiry of three months from the date of application for the refund and not from the date of the appellate orders. This issue was settled by the Supreme Court in Ranbaxy Laboratories Ltd. v. Union of India: (2011) 10 SCC 292.""The said contention [that interest should be calculated from three months from the CESTAT order dated 07.12.2022] is unmerited and as stated above, the said issue stands authoritatively settled by the Supreme Court in Ranbaxy Laboratories Ltd. (supra).""The impugned order is, ex facie, erroneous to the extent it rejects the petitioner's claim for interest. The impugned order sets out a tabular statement...clearly stating the dates on which the petitioner had made its claim for refund.""The Adjudicating Authority has failed to consider that the petitioner had filed its applications of refund on 28.03.2013, 31.03.2014 and 30.06.2014 for the tax periods April-June 2012, April-June 2013, and July-September 2013 respectively. And the interest payable to the petitioner is required to be calculated from the date immediately after expiry of three months from the dates on which those applications were made."Final VerdictWrit petition allowed. The Adjudicating Authority directed to forthwith process the petitioner's claim for interest under Section 11BB of the Central Excise Act read with Section 83 of the Finance Act, computed from the date immediately after expiry of three months from the original application dates (28.03.2013, 31.03.2014 and 30.06.2014 respectively) — not from the letter dated 07.02.2023. 👍 In favour of Assessee.
Facts The appellant availed Input Tax Credit on purchases made from a supplier and paid the tax amount along with the value of goods/services. The department issued notices alleging mismatch between GSTR-2A and GSTR-3B and non-reflection of supplier invoices in GSTR-1. A demand order under Section 73(10) was passed reversing ITC along with interest and penalty. The writ petition was disposed of directing the appellant to file a statutory appeal, which led to the present intra-court appeal. Court Decision:The High Court set aside the demand order and held that reversal of ITC was not justified without first taking action against the selling dealer. The Court held that when the purchasing dealer has fulfilled conditions under Section 16(2), including possession of invoice, receipt of goods/services, and payment of tax, ITC cannot be denied merely due to non-reflection in GSTR forms. It was further held that proceedings against the purchaser can arise only in exceptional circumstances such as fraud, collusion, or where the supplier is non-existent or without assets. Cases Referred by Court:• Union of India v. Bharti Airtel Ltd. • Arise India Limited v. Commissioner of Trade and Taxes, Delhi • Commissioner of Trade and Taxes v. Arise India Limited (SLP dismissed)
Suncraft Energy Private Limited & Anr. v. Assistant Commissioner, State Tax, Ballygunge Charge & Ors. 02-08-2023
Facts The appellant availed Input Tax Credit on purchases made from a supplier and paid the tax amount along with the value of goods/services. The department issued notices alleging mismatch between GSTR-2A and GSTR-3B and non-reflection of supplier invoices in GSTR-1. A demand order under Section 73(10) was passed reversing ITC along with interest and penalty. The writ petition was disposed of directing the appellant to file a statutory appeal, which led to the present intra-court appeal. Court Decision:The High Court set aside the demand order and held that reversal of ITC was not justified without first taking action against the selling dealer. The Court held that when the purchasing dealer has fulfilled conditions under Section 16(2), including possession of invoice, receipt of goods/services, and payment of tax, ITC cannot be denied merely due to non-reflection in GSTR forms. It was further held that proceedings against the purchaser can arise only in exceptional circumstances such as fraud, collusion, or where the supplier is non-existent or without assets. Cases Referred by Court:• Union of India v. Bharti Airtel Ltd. • Arise India Limited v. Commissioner of Trade and Taxes, Delhi • Commissioner of Trade and Taxes v. Arise India Limited (SLP dismissed)
BACKGROUND The Department issued a Demand-cum-Show Cause Notice under Section 73(1) of the CGST Act alleging wrongly availed Input Tax Credit amounting to Rs. 19.51 crores for Financial Year 2017-18. The alleged discrepancy was that the petitioner-assessee had not submitted information in Table 14 of Form GSTR-9C, resulting in a mismatch with details in Form GSTR-9. The assessee challenged the notice before the High Court contending that Table 14 of GSTR-9C had been made optional for FY 2017-18 onwards by a series of Government Notifications, and more crucially, that the mandatory pre-condition of issuing Form GST ASMT-10 under Section 61 read with Rule 99 was never complied with before jumping directly to the SCN under Section 73(1). The Department admitted non-issuance of Form GST ASMT-10 but argued that CAG letters had been sent to the assessee and that natural justice was not violated since the SCN itself provided an opportunity of hearing. CRUCIAL COURT OBSERVATIONS (Verbatim)"Prior to issuance of a show cause notice under Section 73[1] of the CGST Act, 2017, it is mere discrepancy. At that stage, the alleged discrepancy would only be a discrepancy simplicitor but at the stage of issuance of Demand-cum-Show Cause Notice under Section 73[1] of the CGST Act, 2017, there is formation of a prima facie opinion on the part of the Proper Officer that there is an act, which is in violation of the statutory obligation cast on the noticee.""The issues raised in the present writ petition, prima facie, are not relatable to any disputed questions of fact. The petitioner has raised a contention that the statutory prescriptions contained in Section 61 and Section 73 of CGST Act, 2017 r/w Rule 99 of the CGST Rules, 2017 have not been adhered to and without adherence to the conditions precedent, that is, issuance of notice to the registered person in Form GST ASMT-10 to provide the noticee either to accept or not to accept the discrepancy or to furnish an explanation for the discrepancy in Form GST ASMT-11 or not to furnish any explanation, at a period of time anterior to the impugned Demand-cum-Show Cause Notice, the Proper Officer could not have assumed jurisdiction to issue the Demand-cum-Show Cause Notice under sub-section [1] of Section 73 of the CGST Act, 2017.""Prima facie, this Court finds force in the above contentions advanced by the petitioner that an act of issuance of the impugned Demand-cum-Show Cause Notice dated 05.09.2023 under Section 73[1] of the CGST Act, 2017 by the Proper Officer was without compliance of the mandatory conditions precedent, prescribed under the CGST Act, 2017 and the CGST Rules, 2017, more particularly, the provisions of Section 61 of the CGST Act, 2017 r/w Rule 99 of the CGST Rules, 2017, to derive jurisdiction to issue such a Demand-cum-Show Cause Notice under Section 73[1] of the CGST Act, 2017." FINAL VERDICT The High Court stayed the operation of the impugned Demand-cum-Show Cause Notice, finding prima facie force in the petitioner's contention that issuance of Form GST ASMT-10 is a mandatory condition precedent before invoking Section 73(1) and its non-compliance goes to the root of jurisdiction. 👍
Pepsico India Holdings Pvt. Ltd. vs. Union of India & 3 Ors. 13-02-2023
BACKGROUND The Department issued a Demand-cum-Show Cause Notice under Section 73(1) of the CGST Act alleging wrongly availed Input Tax Credit amounting to Rs. 19.51 crores for Financial Year 2017-18. The alleged discrepancy was that the petitioner-assessee had not submitted information in Table 14 of Form GSTR-9C, resulting in a mismatch with details in Form GSTR-9. The assessee challenged the notice before the High Court contending that Table 14 of GSTR-9C had been made optional for FY 2017-18 onwards by a series of Government Notifications, and more crucially, that the mandatory pre-condition of issuing Form GST ASMT-10 under Section 61 read with Rule 99 was never complied with before jumping directly to the SCN under Section 73(1). The Department admitted non-issuance of Form GST ASMT-10 but argued that CAG letters had been sent to the assessee and that natural justice was not violated since the SCN itself provided an opportunity of hearing. CRUCIAL COURT OBSERVATIONS (Verbatim)"Prior to issuance of a show cause notice under Section 73[1] of the CGST Act, 2017, it is mere discrepancy. At that stage, the alleged discrepancy would only be a discrepancy simplicitor but at the stage of issuance of Demand-cum-Show Cause Notice under Section 73[1] of the CGST Act, 2017, there is formation of a prima facie opinion on the part of the Proper Officer that there is an act, which is in violation of the statutory obligation cast on the noticee.""The issues raised in the present writ petition, prima facie, are not relatable to any disputed questions of fact. The petitioner has raised a contention that the statutory prescriptions contained in Section 61 and Section 73 of CGST Act, 2017 r/w Rule 99 of the CGST Rules, 2017 have not been adhered to and without adherence to the conditions precedent, that is, issuance of notice to the registered person in Form GST ASMT-10 to provide the noticee either to accept or not to accept the discrepancy or to furnish an explanation for the discrepancy in Form GST ASMT-11 or not to furnish any explanation, at a period of time anterior to the impugned Demand-cum-Show Cause Notice, the Proper Officer could not have assumed jurisdiction to issue the Demand-cum-Show Cause Notice under sub-section [1] of Section 73 of the CGST Act, 2017.""Prima facie, this Court finds force in the above contentions advanced by the petitioner that an act of issuance of the impugned Demand-cum-Show Cause Notice dated 05.09.2023 under Section 73[1] of the CGST Act, 2017 by the Proper Officer was without compliance of the mandatory conditions precedent, prescribed under the CGST Act, 2017 and the CGST Rules, 2017, more particularly, the provisions of Section 61 of the CGST Act, 2017 r/w Rule 99 of the CGST Rules, 2017, to derive jurisdiction to issue such a Demand-cum-Show Cause Notice under Section 73[1] of the CGST Act, 2017." FINAL VERDICT The High Court stayed the operation of the impugned Demand-cum-Show Cause Notice, finding prima facie force in the petitioner's contention that issuance of Form GST ASMT-10 is a mandatory condition precedent before invoking Section 73(1) and its non-compliance goes to the root of jurisdiction. 👍
