Newsletter – Vol. 1, Issue 19 – 28.11.2021

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Date of appearance was before the date of issuance of SCN and no opportunity of hearing – SCN set aside: Hon’ble Allahabad High Court
In M/s Calcutta South Transport Co. v. State of U.P. and Ors., WTAX No. – 650 of 2021, Hon’ble HC held that the show cause notice (form GST MOV-10) dated 23.12.2020 was misleading and incorrect. The show cause notice sent does not comply with the requirement of opportunity of hearing as the date for appearance is stated as 28.11.2020 (before the date of SCN). Had the show cause notice been properly prepared, the petitioner could have had adequate opportunity to represent his case and, subject to such proof as required by Section 130(1)(v) of the Act, would not have been saddled with the liability under sub-sections (2) and (3) of Section 130 of the Act. Therefore, the show cause notice was defective which resulted in denial of opportunity to the petitioner, and as such, cannot be said to be a show cause notice in the eyes of law. Also, there is no material on record to demonstrate that an opportunity of hearing was duly granted to the petitioner as is the mandate of sub-section (4) of Section 130 of the Act. SCN set aside. 

The claims for budgetary support can be made for the period before the issuance of UID: Hon’ble Sikkim High Court
In M/s Glenmark Pharmaceuticals Ltd. v. Union of India and Ors., Writ Petition (Civil) No. 48 of 2020. Facts: Scheme of Budgetary Support introduced vide Notification 05.10.2017 w.e.f. 01.07.2017. The Circular dated 27.11.2017 made clear that the claim for the quarter ending September 2017 will be filed manually (before the allotment of UID). On 12.12.2017 the petitioner made a manual application for registration under the scheme. Thereafter, the registration was not processed. On 05.10.2018, CBIC issued another circular regarding online registration and online filing and processing of claims. The petitioner made an online application for registration and was allotted UID on 30.10.2018. Just two days after UID allotment, on 02.11.2018, the petitioner made four claims for the four quarters of the period July, 2017 to June, 2018. Department rejected the claim on the ground that the claims were made for the period prior to the registration which is impermissible. Hon’ble HC Held: The impugned orders rejected the petitioner claim for budgetary support on that sole ground without examining the application as to how much of the amount claimed was liable to be sanctioned as an admissible amount of budgetary support. The stand of the respondents is fallacious. Once a unit is found to be an eligible unit the only question kept open to the authorities is the admissible amount of budgetary support from the claims made by the eligible unit on compliance with the requirement of the scheme. Thus, the impugned orders are liable to be set aside. 

The provisional attachment shall cease to have effect after the expiry of a period of one year from the date the order had been passed u/s. 83(1) of the Act: Hon’ble Delhi High Court
In M/s Dhan Laxmi Trade House Pvt. Ltd. v. Principal Commissioner of Goods and Services Tax and Anr., W.P. (C) 13080/2021, Hon’ble HC held that at Court’s direction, learned counsel for Respondent No. 1 has obtained instructions. He admits that every provisional attachment shall cease to have effect after the expiry of a period of one year from the date the order had been passed u/s. 83(1) of the Act. The present writ petition is allowed and the Respondents are directed to de-freeze the Petitioner’s Current Account with Respondent No.2 – Bank, within three working days of uploading of the present order – petition disposed of.

Arbitral Award set aside as the principal question regarding the non-availment of ITC and hence without holding GST reimbursement was not adjudicated by the Tribunal: Hon’ble Delhi High Court
In Delhi Metro Rail Corporation Ltd. v. M/s Kone Elevators India Pvt. Ltd., O.M.P. (COMM) 211/2021. Dispute – Kone paid INR 4,16,06,515/- as GST. DMRC reimbursed an amount of INR 2,88,76,473/- against Kone’s claim for reimbursement of GST, in terms of the tax invoices but declined to pay the balance amount of INR 1,27,30,042/-. Prior to 30.06.2017, DMRC had already reimbursed a sum of INR 1,27,30,042/- as Excise duty on the said supplies and it claimed that Input Tax Credit for the said amount was available to Kone against its GST liability of INR 4,16,06,515. Counter-claim – DMRC claimed that since the milestones leading up to the delivery of the elevators at the site had been achieved prior to 30.06.2017 and the elevators had been incorporated at its site, Kone was required to issue VAT invoices in respect of the said elevators and GST was not chargeable on the said supplies. Accordingly, DMRC claimed that it was entitled to refund of INR 2,88,76,473/-, which was paid to Kone against reimbursement of GST. Hon’ble HC Held – the principal question whether Kone was entitled to Input Tax Credit for the Excise duty paid on the lifts and, whether the failure on the part of Kone to avail of the Input Tax Credit entitled DMRC to withhold an amount equivalent to the said amount is not adjudicated by the Arbitral Tribunal. This Court is of the view that since the impugned award does not address the dispute, the impugned award in this regard is liable to be set aside.

Requirement of granting an opportunity of hearing before cancellation of registration: Hon’ble Allahabad High Court
In M/s Raj Enterprises v. Commissioner Commercial and Anr., WTAX 931 of 2021, Hon’ble HC held that in the admitted facts of the present case, though no reply may have been furnished by the petitioner still, it was incumbent on Respondent No. 2 to fix a date and afford the opportunity of hearing to the petitioner in compliance of the first proviso to Section 29(2) of the Act. In view of such facts, no useful purpose would be served in keeping in the present petition pending or calling for a counter affidavit as the instructions received by the learned Standing Counsel are complete with respect to the issue being dealt with by the Court. The order dated 29.06.2019 issued by Respondent No. 2 is set aside.

Department appeal not entertained – upheld the revision of the Form TRAN-1: Hon’ble Madras High Court
In Commissioner of GST & CE and Ors. v. M/s Bharat Electronics Limited, W.A. No. 2203 of 2021, Hon’ble HC held that there seems to be a consistent view that if there is substantial compliance, denial of benefit of Input Tax Credit which is a beneficial scheme and framed with the larger public interest of bringing down the cascading effect of multiple taxes ought not to be frustrated on the ground of technicalities. The order of the learned Single Judge is affirmed in directing the petitioner/ respondent to enable the respondent herein to file a revised Form TRAN-1, by the opening of the portal and that such exercise is to be completed within a period of 8 weeks from the date of issue this order.

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