Newsletter – Vol. 1, Issue 9 – 19.09.2021

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Rule 89(5) is valid: Hon’ble Supreme Court
In Union of India v. VKC Footwear Pvt. Ltd., Civil Appeal 4810 of 2021, Hon’ble SC has upheld the validity of Rule 89(5). Now, in the case of an inverted duty structure, GST refund is admissible only for accumulated ITC inputs and not for input services. 

No proceeding pending to invoke provisional attachment, provisional attachment set aside: Hon’ble Punjab and Haryana High Court 
In M/s Punjab Plywood Industries v. Commissioner, CGST and Ors., CWP-16784-2021 (O&M), Hon’ble HC held that no notice has been issued to the petitioner under section 74 or any other section. In the circumstances, the conclusion is inescapable that the facts are covered by the judgment in the case of M/s Radha Krishan Industries (supra). In view of the binding precedent of the SC, the petition is allowed and an order of provisional attachment is set aside.
Same order
In Dharmesh Gandhi v. Assistant Commissioner (Anti-Evasion) CGST and CE and Ors., Writ Petition (L) No. 14725 of 2021, Hon’ble Bombay High and, In M/s Real Trade v. Union of India and Ors., Writ Petition (L) No. 4733 of 2021, Hon’ble Bombay High Court.

Interest u/s 50 is not on credit: Hon’ble Calcutta High Court
In M/s Shree Automotive (P) Ltd. & Anr. V. Joint Commissioner of State Tax, Government of West Bengal & Ors., W.P.A. 16781 of 2019, Hon’ble HC held that interest u/s. 50 is payable only on that portion of the tax which is paid by debiting the electronic cash ledger. It is the case of the petitioner that interest of ₹ 1,22,283/- only is payable by it under section 50 and the rest of the demand is in respect of tax paid by debiting the electronic credit ledger. In view of the retrospective amendment of section 50 with effect from July 1, 2017 the impugned order is not sustainable in law and is set aside. Consequently, the garnishee notice is also set aside.

Pre-consultation before SCN has to be conducted: Hon’ble Bombay High Court
In M/s Excellency Services v. Union of India and Ors., Writ Petition No. 1 of 2021, Hon’ble HC didn’t set aside the SCN (when no effective pre-consultation was involved), but the Hon’ble HC directed the department to conduct pre consultation process with the petitioner. 

Cannot block ITC beyond a year: Hon’ble Tripura High Court
In M/s Sahil Enterprises v. Union of India, IA No.1/2021 with WP(C) No.531/2021, Hon’ble HC held that blocking of ITC cannot be imposed beyond a year. On Rule 86A(3), Hon’ble HC stated that it clearly brings about this legislative intent while it provides that such restrictions shall cease to have effect after the expiry of a period of one year. Two things are significant in this sub-rule; first, there is no scope of extension of this time and secondly, upon expiry of a period of one year the effect of the restriction seizing to take effect would be automatic.

Not affording reason for the conclusion, order set aside: Hon’ble Allahabad High Court
In M/s Jaiswal Iron Stores v. State of U.P. and Ors., Writ Tax No. – 684 of 2021, Hon’ble HC found that the impugned order only records the conclusion of the adjudicating authority without either discussing the facts or affording reasons for the conclusion reached. Therefore, notwithstanding prior to the service of notice as claimed by the revenue authority, the impugned order has been passed in violation of the essential principle of natural justice.

DRC-01 and DRC-01A not uploaded, order quashed: Hon’ble Patna High Court
In M/s Shashikant Singh v. Union of India and Ors., Civil Writ Jurisdiction Case No. 6509 of 2021, the order was quashed as the order was passed without affording the adequate opportunity of hearing. Hon’ble HC quashed the impugned order while observing that undisputedly, the information was not uploaded on the GST Portal (Form DRC 01 and DRC 01A) and the notice cannot be said to have been served upon the petitioner, for copy of the receipt of the Gmail does not indicate the petitioner’s name

The opportunity of hearing will be in all cases of adverse decision irrespective of whether an opportunity is sought under writing:  Hon’ble Madras High Court
In M/s Ayyanar Steel Trading v. State Tax Officer and Ors., W.P. No. 18582 of 2021, Hon’ble HC held that it is not necessary that an opportunity of hearing will arise only when a request in writing is made. An opportunity of hearing will be given in the case where an adverse decision is contemplated. 

Provisional attachment set aside on the violation of Rule 159(5): Hon’ble Karnataka High Court 
In M/s Sterne India Pvt. Ltd. v. Union of India and Ors., Writ Petition No. 12875 of 2020 (T-Res), Hon’ble HC set aside the provisional attachment order because the department violated the provisions of Rule 159 (5) of CGST Rules which provides a right of (1) submitting an objection to the attachment (2) an opportunity of being heard.
Interestingly the court didn’t remand the matter back for fresh adjudication by giving proper reasoning. 

Generate E-way bill (if satisfy Rule 138) in cases where along with the principal supply of service, movement of some goods is also involved: GSTN Advisory

The gist of the 45th GST Council Meeting
(i) The major issue was the inverted duty structure in the footwear industry and textile industry. Expecting some relief on this, however, the rate change will be implemented from 01.01.2022 (ii) As if now petrol will not be brought under GST (iii) Nothing on Compensation Cess (iv) W.e.f. 01.01.2022, the registered person shall not be allowed to furnish FORM GSTR-1, if he has not furnished the return in FORM GSTR-3B for the preceding month etc. (more at GST IVY)

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