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 of the Case:-* ED registered an ECIR against Ram Kishor Arora in connection with an alleged money laundering case arising out of a scheduled offence.* He was arrested by the ED under “Section 19 of the PMLA”.* He challenged his arrest before the Delhi High Court, arguing that: * the arrest was illegal; * he was not supplied with a copy of the ECIR; and * the mandatory requirements of Section 19 were not followed. * The Delhi High Court dismissed his petition, after which he approached the Supreme Court. Issues1. Whether supplying a copy of the ECIR to the accused is mandatory before arrest?2. Whether ED complied with Section 19 of the PMLA while arresting the appellant?3. Whether the arrest was illegal merely because the ECIR was not furnished? Observations of the Supreme CourtECIR is an internal document of the ED. It is not equivalent to an FIR, and there is no statutory requirement under the PMLA to supply a copy of the ECIR to the accused.* Under Section 19 PMLA, the authorised officer must have “reason to believe” that the person is guilty of an offence under Section 3; * record those reasons “in writing”and * inform the arrested person of the grounds of arrest.* The Court held that “communicating the grounds of arrest is mandatory”, but “supplying the ECIR is not mandatory”. Decision* The Supreme Court “dismissed the appeal”.* It upheld the validity of the arrest, holding that the requirements of Section 19 had been complied with.* The Court reaffirmed that: * ECIR is only an internal document of the ED. * Non-supply of the ECIR does not make the arrest illegal. * Compliance with Section 19 PMLA is the relevant legal requirement.
Ram Kishor Arora v. Directorate of Enforcement 15-12-2023
Facts of the Case:-* ED registered an ECIR against Ram Kishor Arora in connection with an alleged money laundering case arising out of a scheduled offence.* He was arrested by the ED under “Section 19 of the PMLA”.* He challenged his arrest before the Delhi High Court, arguing that: * the arrest was illegal; * he was not supplied with a copy of the ECIR; and * the mandatory requirements of Section 19 were not followed. * The Delhi High Court dismissed his petition, after which he approached the Supreme Court. Issues1. Whether supplying a copy of the ECIR to the accused is mandatory before arrest?2. Whether ED complied with Section 19 of the PMLA while arresting the appellant?3. Whether the arrest was illegal merely because the ECIR was not furnished? Observations of the Supreme CourtECIR is an internal document of the ED. It is not equivalent to an FIR, and there is no statutory requirement under the PMLA to supply a copy of the ECIR to the accused.* Under Section 19 PMLA, the authorised officer must have “reason to believe” that the person is guilty of an offence under Section 3; * record those reasons “in writing”and * inform the arrested person of the grounds of arrest.* The Court held that “communicating the grounds of arrest is mandatory”, but “supplying the ECIR is not mandatory”. Decision* The Supreme Court “dismissed the appeal”.* It upheld the validity of the arrest, holding that the requirements of Section 19 had been complied with.* The Court reaffirmed that: * ECIR is only an internal document of the ED. * Non-supply of the ECIR does not make the arrest illegal. * Compliance with Section 19 PMLA is the relevant legal requirement.
Facts :The petitioners filed Special Leave Petitions challenging the judgment and order dated 02.08.2023 passed by the High Court at Calcutta. The dispute pertained to tax demand raised against the respondent. The matter was placed before the Supreme Court for admission, including an application for condonation of delay.Court Decision:The Supreme Court condoned the delay but declined to interfere with the impugned judgment of the High Court in exercise of its jurisdiction under Article 136. The Court noted the facts and circumstances of the case and the relatively low tax demand, and dismissed the Special Leave Petitions.
Assistant Commissioner of State Tax, Ballygunge Charge & Ors. v. Suncraft Energy Private Limited & Ors. 14-12-2023
Facts :The petitioners filed Special Leave Petitions challenging the judgment and order dated 02.08.2023 passed by the High Court at Calcutta. The dispute pertained to tax demand raised against the respondent. The matter was placed before the Supreme Court for admission, including an application for condonation of delay.Court Decision:The Supreme Court condoned the delay but declined to interfere with the impugned judgment of the High Court in exercise of its jurisdiction under Article 136. The Court noted the facts and circumstances of the case and the relatively low tax demand, and dismissed the Special Leave Petitions.
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 (Background):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 (Background):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. 👍
BACKGROUNDThe petitioner, a sole proprietor trading in steel/iron bars, purchased a consignment of steel and sold it onward. An e-way bill was generated for transporting the goods directly from the seller's premises to the buyer's premises. The e-way bill reflected the petitioner's GSTIN, while the address mentioned was that of the buyer, since the goods had already been sold. RELEVANT FACTSThe truck carrying the goods was intercepted by GST authorities on 19-10-2020 at 11:00 p.m. and detained on the ground that the documents accompanying the goods were found defective. A detention order dated 23-10-2020 was passed, followed on the same date by a show-cause notice under Section 129(3) of the CGST Act stating the reason as "prima facie, the documents tendered are found to be defective" — without specifying any particular defect. Simultaneously, an order of demand of tax and penalty of Rs. 2,78,129 each was raised. Since the petitioner urgently required the goods, he paid the demanded tax and penalty to secure release of the goods. Thereafter, the petitioner filed an appeal, which was dismissed by the appellate authority on 31-12-2021, which also failed to disclose the specific discrepancy alleged between the e-way bill and the goods. The petitioner then filed the present writ petition before the Delhi High Court challenging both orders. COURT OBSERVATIONS (Verbatim)Para 20: "We are unable to accept that the order of demand and penalty is a consent order and the petitioner was precluded from challenging the same. The goods had been detained and it is not disputed that the same would not have been released unless the tax and penalty was paid. We are persuaded to accept that the petitioner had paid the tax and penalty for release of the goods and the said payment was not voluntary."Para 21: "As stated above, it is apparent that neither the show-cause notice nor the order of demand clearly sets out the reason for imposing the tax liability as well as penalty."Para 22: "In the given facts, we are of the view that it would be apposite to remand the matter to the GST officer concerned to decide afresh after giving the petitioner full opportunity to address the allegation against him." FINAL VERDICT 👍Both the order dated 23-10-2020 raising demand of tax and penalty, and the appellate order dated 31-12-2021, were set aside. The matter was remanded to the GST officer concerned, who was directed to issue a fresh show-cause notice within two weeks and pass a fresh order after affording the petitioner a reasonable opportunity of hearing.
Ram Prakash Chauhan v. Commissioner of Delhi (GST) & Anr. 19-01-2023
BACKGROUNDThe petitioner, a sole proprietor trading in steel/iron bars, purchased a consignment of steel and sold it onward. An e-way bill was generated for transporting the goods directly from the seller's premises to the buyer's premises. The e-way bill reflected the petitioner's GSTIN, while the address mentioned was that of the buyer, since the goods had already been sold. RELEVANT FACTSThe truck carrying the goods was intercepted by GST authorities on 19-10-2020 at 11:00 p.m. and detained on the ground that the documents accompanying the goods were found defective. A detention order dated 23-10-2020 was passed, followed on the same date by a show-cause notice under Section 129(3) of the CGST Act stating the reason as "prima facie, the documents tendered are found to be defective" — without specifying any particular defect. Simultaneously, an order of demand of tax and penalty of Rs. 2,78,129 each was raised. Since the petitioner urgently required the goods, he paid the demanded tax and penalty to secure release of the goods. Thereafter, the petitioner filed an appeal, which was dismissed by the appellate authority on 31-12-2021, which also failed to disclose the specific discrepancy alleged between the e-way bill and the goods. The petitioner then filed the present writ petition before the Delhi High Court challenging both orders. COURT OBSERVATIONS (Verbatim)Para 20: "We are unable to accept that the order of demand and penalty is a consent order and the petitioner was precluded from challenging the same. The goods had been detained and it is not disputed that the same would not have been released unless the tax and penalty was paid. We are persuaded to accept that the petitioner had paid the tax and penalty for release of the goods and the said payment was not voluntary."Para 21: "As stated above, it is apparent that neither the show-cause notice nor the order of demand clearly sets out the reason for imposing the tax liability as well as penalty."Para 22: "In the given facts, we are of the view that it would be apposite to remand the matter to the GST officer concerned to decide afresh after giving the petitioner full opportunity to address the allegation against him." FINAL VERDICT 👍Both the order dated 23-10-2020 raising demand of tax and penalty, and the appellate order dated 31-12-2021, were set aside. The matter was remanded to the GST officer concerned, who was directed to issue a fresh show-cause notice within two weeks and pass a fresh order after affording the petitioner a reasonable opportunity of hearing.
