Newsletter – Vol. 1, Issue 5 – 22.08.2021

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Whether interest liability is automatic under GST? : Hon’ble Supreme Court   
In Union of India and Ors. v. M/s LC Infra Projects Pvt. Ltd., Special Leave to Appeal (C) No. 6977/2021, an interesting and most debated question came before the Hon’ble SC. Whether the liability to pay interest under Section 50 of the GST Act arises automatically in respect of the delayed payment of the tax and, whether notice for adjudication under Section 73 is required in such interest liability cases? Pending Adjudication.
History: Hon’ble Karnataka HC has held that SCN is required even for the liability to pay interest under Section 50 of the GST Act.  

SLP dismissed as the appeal lies under section 107: Hon’ble Supreme Court
In M/s Siddhi Vinayak Trading Company v. Union of India & Ors., SLP(C) No. 11071/2021, Hon’ble SC held that since an appeal lies under Section 107 of the UPGST Act against the order of assessment, we are not entertaining the Special Leave Petition under Article 136 of the Constitution. We leave it open to the petitioners to pursue the alternative remedy keeping all the rights and contentions of the parties open.
History: The writ petition was filed before Hon’ble Allahabad High Court broadly on two grounds (i) Notice/summons had been issued (u/s. 70) by the Central Tax Authority whereas adjudication under Section 74 had been made by the State Authority (objecting as parallel proceedings) (ii) No opportunity of hearing while passing order u/s. 74. Hon’ble HC distinguished both the proceedings u/s. 70 and section 74, and held that they are independent of each other.  Further, it was observed that the state authority has served the SCN but the petitioner never submitted the explanation/objection, and held that the opportunity of hearing should be challenged before the authority u/s. 107.  [M/s Siddhi Vinayak Trading Company v. Union of India & Ors, WTAX 822 of 2020]

Writ Petition to revise GSTR- 3B cannot be entertained: Hon’ble Allahabad High Court
In M/s Ajay Rolling Shutter and Engineering Works v. Union of India and Ors., Writ Tax No. 150 of 2021, Hon’ble HC observed that there is no statutory obligation existing on the State authorities to allow the petitioner to revise GSTR 3B for the month of March 2019. The fact that under a circular some discretion has been granted may not be enough in the facts of the present case where adjudication proceedings have also been concluded against the petitioner. Without adjudicating the issue on merits, Hon’ble HC disposed of the matter. No relief on revising GSTR 3B.

Attachment and cancellation of registration stayed: Hon’ble Chhattisgarh High Court
In Cheema Local Carrier & Construction v. Assistant Commissioner SGST, WP (T) No. 51 of 2021, Hon’ble HC observed that after attachment of the bank account on 17.02.2021, the reply was filed by the petitioner on 22.03.2021 and it appears the same has not been decided. Therefore, prima facie it would be non-compliance with Rule 159(5) of the CGST Rules. Now, with respect to the cancellation of registration, in the order, prima facie the reasons have not been assigned as mandated under Rule 21 of the CGST Rules. In light of such observation, Hon’ble HC stayed the attachment of bank account and cancellation of registration.

GST not leviable on the employees’ portion amount of canteen charges: Authority for Advance Ruling, Gujarat
In Re: M/s Dishman Carbogen Amcis Ltd., Order No.- GUJ/GAAR/R/22/2021 dtd. 09.07.2021, Company-applicant facilitating the supply of food to the employees and is recovering only employees share without making any profit. For instance, the company and canteen contractor has agreed to provide a dish at INR 60/- per plate and the contractor charges the GST on such supply. The company pays INR 40/- directly to the contractor and INR 20 recovered from employees and pays to the contractor. It was ruled that GST, at the hands of the applicant, is not leviable on the amount representing the employees’ portion of canteen charges, which is collected by the applicant and paid to the Canteen service provider.

GST is applicable on agreeing to part with the leasehold interests: Authority for Advance Ruling, Tamil Nadu
In Re: M/s India Pistons Ltd., Order No. TN/26/AAR/2021 dtd. 30.07.2021, INOX approached IPL for transfer of the un-utilized portion of the allocated land by SIPCOT and IPL transferred the leasehold rights in respect of the un-utilized portion of land subject to approval by SIPCOT. Issue: whether such activity is taxable under GST? AAR ruled that the activity undertaken by IPL in agreeing to part with the interests of the leasehold rights in the land required by INOX for the furtherance of their business, against a consideration is an activity of ‘agreeing to do an act’, which is a taxable service classifiable under ‘Other Miscellaneous Services’, with SAC 9997.

Input tax credit is not admissible on Air-conditioning and Cooling Systems and Ventilation Systems, as this is blocked credit falling under section 17(5)(c) of the CGST Act : Authority for Advance Ruling, Gujarat
In Re: M/s Wago Pvt. Ltd., GUJ/GAAR/R/33/2021 dtd. 30.07.2021, it was ruled that the central air conditioning system is not a machine and a movable property. The supply and erection of subject immovable property- Central Air conditioning system merit its classification under works contract service and hence the credit will be blocked u/s. 17(5)(c). The same analogy for the ventilation system.  Bizarre

Conducting R&D activities on products provided by a foreign company in India is not Export of Services: Authority for Advance Ruling, Gujarat Court
In Re: M/s Hilti Manufacturing India Pvt. Ltd., Order No. GUJ/GAAR/R/26/2021 dtd. 09.07.2021, the applicant had entered into an agreement with foreign company for carrying out various R&D activities on the product samples provided to the applicant in India. It was ruled that the place of supply is covered u/s 13(3)(a) of the IGST Act and it will be the location where the services are actually performed. The place of supply of services is, therefore, Gujarat.


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