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High Court Sets Aside ITC Disallowance Order on Incorrect GSTIN in GSTR-1

High Court Sets Aside ITC Disallowance Order on Incorrect GSTIN in GSTR-1

Shree Krishna Traders Vs State of U.P. and Another (Allahabad High Court)

Facts:

  1. Petitioner, represented by Sri Aditya Pandey, challenges proceedings under Section 74 of U.P. GST/CGST Act initiated by respondent no.2.
  2. Challenge is based on a notice dated 24.12.2022 for the financial year 2017-18 (tax period July 2017 to March 2018).
  3. Petitioner seeks to quash the order dated 26.7.2023 passed under Section 74 of U.P. GST/CGST Act for the financial year 2017-18.

Observations:

Petitioner refers to a circular dated 2.1.2023 about input tax availed in GSTR-3B, emphasizing paragraph 3(d).

  1. Circular addresses situations where the supplier incorrectly declares the recipient’s GSTIN in GSTR-1.
  2. The circular outlines a procedure in paragraph 4 to handle differences in ITC claimed in GSTR-3B and available in GSTR-2A.
  3. The proper officer of the actual recipient is to inform the tax authority if the wrong GSTIN is mentioned, disallowing ITC claimed in Form GSTR-3B.
  4. Petitioner argues that the authority should have followed the procedure in paragraph 4 but did not extend the circular’s benefit.

Conclusion:

Petitioner requests setting aside the impugned order and remitting the matter for a fresh decision.

  1. Respondent’s counsel, Sri Ankur Agarwal, agrees to the proposition.
  2. The court sets aside the order dated 26.7.2023 and remits the matter to respondent no.2 for fresh orders within one month.
  3. Fresh decision should consider the circular and any other material relied upon by the petitioner.
  4. Writ petition is disposed of with these observations.

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AAAR Tamil Nadu offers no input tax credit (ITC) for solar panel goods or services

AAAR Tamil Nadu offers no input tax credit (ITC) for solar panel goods or services

Fact and issue of the case

At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are in pari materia and have the same provisions in like matter and differ from each other only on few specific provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act, 2017 would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act, 2017.

The subject appeal was filed under Section 100(1) of the Tamilnadu Goods & Services Tax Act 2017/Central Goods & Services Tax Act 2017 (hereinafter referred to ‘the Act’) by M/s VBC ASSOCIATES (hereinafter referred to as ‘Appellant’). The Appellant was registered under the GST Act vide GSTIN 33AAFFV9173N1ZI. The appeal was filed against the Order No: 33/AAR/2022 dated: 31.08.2022 passed by the Tamil Nadu State Authority for Advance Ruling (hereinafter referred to AAR)on the Application for Advance Ruling filed by the Appellant.

The Appellant has stated to be a Partnership Firm in the business of maintenance of an immovable property located in T Nagar, Chennai. The said property is also the principal place of business of the Appellant, as the said maintenance services for the immovable property is being provided from that premises. The Appellant had filed an application before the Hon’ble Authority for Advance Ruling, seeking clarification on the following question:-

“Whether the input tax credit on solar power panels procured and installed is blocked credit under Section 17(5) (c) and (d) of CGST/ TNGST Act, 2017”

The Original Authority had vide Order No: 33/AAR/2022 dated: 31.08.2022 ruled as follows:-

“The applicant is not eligible for claim of Input Tax Credit, as per Section 17(2) of the CGST /TNGST Act read with Rule 43(a) of CGST /TNGST Rules 2017, on the Goods/Services used in installation of Solar Power Panels, which are considered as Plant and Machinery. “

Observation of the court

The Appellants have contended that the Advance Ruling Authority has not differentiated the manner in which the rulings in the case of Shri Kesav Cement and Infra Limited (2019 (31)GSTL 628 (A.A.R.-GST) and M/s Kumaran Oil Mill (2020 (42)GSTL247 (A.A.R.-GST-TN). We find that in the cited rulings, the issue is about manufacturers who have captively consumed the electrical energy generated by Solar Panels for taxable supplies or taxable and exempted supplies. However, in the instant case, as discussed above, the electrical energy produced by the Appellant and supplied to TANGEDCO are totally exempted supply. Further, as supply of electricity to tenants is covered by Lease Deed between Owners of the impugned property and their tenants, the Appellant is bound only to provide maintenance service through Maintenance Agreement to the tenants using the infrastructure made available by the Owners in the building. Hence, the facts of the case were different and the ratio of the judgements cited by the Appellant cannot be applied to the subject case.

In view of the foregoing facts, circumstances and provisions of the GST law, we hold that the issue framed for consideration by AAR was not relevant at all; and there is no case to deviate from the decision of the Authority for Advance Ruling of Tamil Nadu, vide AAR No. 33 /AAR/2022 dated: 31.08.2022, on which the present appeal is filed.

Accordingly, we pass the following order:

RULING

We uphold the decision of the Authority for Advance Ruling of Tamil Nadu, vide AAR Order No.33 /AAR/2022 dated: 31.08.2022 and reject the subject appeal.

Read the full order from here

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GST Revenue collection for November 2023, at ₹1,67,929 lakh crore records highest growth rate of 15% Y-o-Y

GST Revenue collection for November 2023, at ₹1,67,929 lakh crore records highest growth rate of 15% Y-o-Y

Gross GST collection crosses ₹1.60 lakh crore mark for the sixth time in FY 2023-24

GST collection higher by 11.9% Y-o-Y for FY2023-24 upto November, 2023

The gross GST revenue collected in the month of November, 2023 is ₹1,67,929 crore out of which CGST is ₹30,420 crore, SGST is ₹38,226 crore, IGST is ₹87,009 crore (including ₹39,198 crore collected on import of goods) and cess is ₹12,274 crore (including ₹ 1,036 crore collected on import of goods).

The government has settled ₹37,878 crore to CGST and ₹31,557 crore to SGST from IGST. The total revenue of Centre and the States in the month of November, 2023 after regular settlement is ₹68,297 crore for CGST and ₹69,783 crore for the SGST.

The revenues for the month of November, 2023 are 15% higher than the GST revenues in the same month last year and highest for any month year-on-year during 2023-24, upto November 2023. During the month, the revenues from domestic transactions (including import of services) are 20% higher than the revenues from these sources during the same month last year. It is for the sixth time that the gross GST collection has crossed ₹1.60 lakh crore mark in FY 2023-24.The gross GST collection for the FY 2023-24 ending November, 2023 [₹13,32,440 crore, averaging ₹1.66 lakh per month] is 11.9 % higher than the gross GST collection for the FY 2022-23 ending November, 2022 [₹11,90,920 crore, averaging ₹1.49 lakh crore per month].

The chart below shows trends in monthly gross GST revenues during the current year. Table-1 shows the state-wise figures of GST collected in each State during the month of November 2023 as compared to November 2022. Table-2 shows the state-wise figures of post settlement GST revenue of each State till the month of November 2023.

Chart: Gross GST Collection (Rs. crore)

State-wise growth of GST Revenues during November, 2023[1]

(Rs. Crore)

State/UTNov-22Nov-23Growth (%)
Jammu and Kashmir                430                4699%
Himachal Pradesh                672                80219%
Punjab             1,669             2,26536%
Chandigarh                175                21020%
Uttarakhand             1,280             1,60125%
Haryana             6,769             9,73244%
Delhi             4,566             5,34717%
Rajasthan             3,618             4,68229%
Uttar Pradesh             7,254             8,97324%
Bihar             1,317             1,3885%
Sikkim                209                23412%
Arunachal Pradesh                  62                  9248%
Nagaland                  34                  6799%
Manipur                  50                  40-21%
Mizoram                  24                  3337%
Tripura                  60                  8339%
Meghalaya                162                1631%
Assam             1,080             1,23214%
West Bengal             4,371             4,91512%
Jharkhand             2,551             2,6333%
Odisha             4,162             4,2953%
Chhattisgarh             2,448             2,93620%
Madhya Pradesh             2,890             3,64626%
Gujarat             9,333           10,85316%
Dadra and Nagar Haveli and Daman & Diu3053339%
Maharashtra           21,611           25,58518%
Karnataka           10,238           11,97017%
Goa                447                50312%
Lakshadweep                     0                     0-15%
Kerala             2,094             2,51520%
Tamil Nadu             8,551           10,25520%
Puducherry                209                2289%
Andaman and Nicobar Islands                  23                  3137%
Telangana             4,228             4,98618%
Andhra Pradesh             3,134             4,09331%
Ladakh                  50                  6225%
Other Territory                184                22221%
Center Jurisdiction                154                22345%
Grand Total1,06,4161,27,69520%

Table-2: SGST & SGST portion of IGST settled to States/UTs

April-November (Rs. crore)

 Pre-Settlement SGSTPost-Settlement SGST[2]
State/UT2022-232023-24Growth2022-232023-24Growth
Jammu and Kashmir1,5131,96030%  4,892    5,36710%
Himachal Pradesh 1,547 1,73112%  3,838 3,701-4%
Punjab 5,102 5,61210%12,906  14,73414%
Chandigarh    401    4399%  1,414 1,5056%
Uttarakhand 3,193 3,62514%  5,157 5,5868%
Haryana12,05213,41511%20,76123,13411%
Delhi 9,12710,34013%19,20221,03710%
Rajasthan10,14611,34812%22,85325,69912%
Uttar Pradesh17,92421,62421%43,95149,28212%
Bihar 4,715 5,37714%15,67216,9918%
Sikkim    202    32159%   558     67721%
Arunachal Pradesh    311    41834%1,059 1,27621%
Nagaland    138    20649%   635     70110%
Manipur    190    22920%   924     730-21%
Mizoram    117    18256%   557     63414%
Tripura    272    33523%   955 1,0379%
Meghalaya    298    39432%   961 1,10315%
Assam 3,379 3,88515%8,236 9,55316%
West Bengal14,29815,6009%25,87828,0428%
Jharkhand 4,947 5,86619%7,374 8,11610%
Odisha 9,27910,62615%12,48615,51524%
Chhattisgarh 4,838 5,39812%7,366 8,83120%
Madhya Pradesh 6,979 8,49622%17,77220,67316%
Gujarat24,75327,67112%37,49741,54511%
Dadra and Nagar Haveli and Daman and Diu    427    4260% 792 699-12%
Maharashtra55,65065,98319%84,63396,55114%
Karnataka23,02626,71316%43,15248,76613%
Goa 1,272 1,48717%2,325 2,61613%
Lakshadweep6      16157%     20       69239%
Kerala 8,005 9,17115%19,65720,6235%
Tamil Nadu23,80227,04614%38,84942,4729%
Puducherry    308    3307%   793     93318%
Andaman and Nicobar Islands    123    14014%   322     3478%
Telangana10,92612,99419%24,46026,6919%
Andhra Pradesh 8,325 9,29112%18,74220,95212%
Ladakh    111    15540%   378     45721%
Other Territory    114    15637%   329     702113%
Grand Total2,67,8183,09,00315%5,07,3555,67,46412%

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Unquestionable Transaction Authenticity if E-Way Bill Is Not Cancelled in Time: Allahabad High Court

Unquestionable Transaction Authenticity if E-Way Bill Is Not Cancelled in Time: Allahabad High Court

Fact and issue of the case

Heard Mr. Shubham Agarwal for the petitioner and Mr. Rishi Kumar, learned Additional Chief Standing Counsel for respondent-State.

The instant Writ Tax is being entertained by this Court in view of the fact that G.S.T. Tribunal is not functional in the State of Uttar Pradesh pursuant to the Gazette notification of the Central Government bearing number CG-DL-E-14092023-248743 dated 14.09.2023.

By means of present petition, the petitioner is assailing the order dated 9.6.2023 passed by respondent no. 4 and the order dated 17.6.2023 passed by respondent no. 3.

Brief facts of the case as stated in the writ petition, are that the petitioner is a registered company having GST No. 27AACCS3376C1ZH and engaged in the business of manufacturing & sale of basic iron and steel etc. In the normal course of business the petitioner dispatched the consignment of 30 ton of non-alloy steel in rolled round to M/s Hi-Tech Gears Limited, Bhiwadi, Rajasthan accompanying Invoice No. 232705612 dated 26.5.2023 as well as E-way Bill No. 281596024395 dated 26.5.2023 through Vehicle No. UP 94 T 6681 of Supersonic Carrier Private Limited. The said E-way was generated on 26.5.2023 and was valid up to 1.6.2023. During the onward journey from Maharastra to Rajasthan, the goods were passing through State of UP, on 28.5.2023 where at about 1:00-2:00 P.M. the vehicle was struck in mud at the side of road because of heavy load of consignment and thereafter with the help of crane the vehicle could be pulled out and after removing the break down by the mechanic the vehicle could be moved for its onward journey. On the intervening night of 2/3.6.2023, at around 10:00 A.M. the vehicle was intercepted and show cause notice was issued on 4.6.2023 which was replied by the petitioner accompanying the affidavit of driver of the vehicle however being not satisfied with the reply, the impugned order has been passed demanding a sum of Rs. 8,43,456/- as penalty. Against the said order, the petitioner has preferred an appeal, which has been rejected by the impugned order dated 17.6.2023. Hence the present writ petition.

Learned counsel for the petitioner has submitted that goods in question was accompanying with the valid documents ie. e-tax invoice, e-way bill, G.R. and the validity of e-way bill was up to 1.6.2023 and the goods in question during its onward journey from Maharastra to Rajasthan was passing through the State of UP where the vehicle was got struck in mud on the road side due to heavy load of consignment and in spite of several efforts, the vehicle could not be pulled out but on 29.5.2023, the truck was pulled out with the help of crane and after pulling out the vehicle, when the engine could not start as some break down was caused, the driver had immediately contacted to the mechanic on 30.5.2023 and as various spare parts were not available in local market of Lalitpur, he went to Jhansi along with the mechanic for purchase of spare parts and within two days the vehicle could be repaired and thereafter was ready to move for its onward journey, however the same was intercepted in the night of 2/3-6.2023 and show cause notice was issued.

He submitted that while replying the show cause notice, the petitioner has annexed the affidavit of truck driver wherein the said incident was categorically mentioned in detail. He further submitted that while passing the impugned order dated 6.9.2023, the said contention was denied but without giving due weightage, the order was passed imposing penalty of Rs. 8,43,456/-, against which an appeal was preferred by the petitioner annexing all the documentary evidences such as e-tax invoice, spare part purchase receipts, mechanic charge payment receipt as well as other evidences but the first appellate authority had rejected the appeal on the ground that these grounds were not filed before the lower authority. He further submitted that the authorities below have disbelieved the contention of the petitioner that vehicle got struck in mud and caused break­down. He further submitted that none of the authorities below have recorded any finding in respect of evade of payment of tax, therefore, the penalty is not justified in the eyes of law and impugned order is liable to be set aside. He prays for allowing the writ petition.

Per contra, Rishi Kumar, learned A.C.S.C. has supported the impugned orders and submitted that proceedings have been initiated against the petitioner under Section 138 (1) of the GST Act. He further submitted that the goods in question was not accompanying with the proper documents as prescribed under the Act as well as Rules framed thereunder as at the time of inspection, e-way bill accompanying with the goods has already been expired on 1.6.2023. He submitted that the petitioner has failed to justify for not filing the documentary evidence at the time of detention. He further submitted that there is violation of the provisions of Rule, therefore, penalty proceeding is justified. He prays for dismissing the writ petition.

After hearing learned counsel for the parties, the Court has perused the records.

Observation of the court

Punjab & Haryana High Court, in the case of M/s Raghav Metals Vs. State of Haryana & Others [CWP No. 25057/2021, decided on 14.03.2022] has held as under:-

Keeping in view these circumstances, it cannot be said that the petitioner had any intent to evade the tax or the mismatch in the quantities is of such nature which shall entail proceedings under Section 129 of the Act. A person, who has already paid a tax of Rs.1276717.68/- on a consignment cannot be said to have an intent to evade tax amounting to Rs.11000/-. At this stage, Mr. Goyal states that the petitioner is ready to pay even the tax and penalty imposed by the State-Authorities which comes to be around Rs.22000/-.

In light of the fair stand taken by the petitioner and the fact that the mismatch cannot be termed as contravention of the provisions of the Act, we deem it appropriate to allow the present writ petition. Proceedings against the petitioner under Section 129 of the Act are hereby quashed. Fine and penalty, if any, imposed against the petitioner and deposited by him, be refunded to him within a period of 15 days from the date of receipt of certified copy of this order. Since goods already stand released, no further order is required.”

The fact remains that vehicle could not reach its destination within the time mentioned in the e-way bill as the situation is beyond control of the petitioner as mentioned in the affidavit of driver of the vehicle and there was also no intention of the petitioner to evade the payment of tax, thus the impugned orders are not justified in the eyes of law and are liable to be quashed.

The writ petition is allowed. The impugned orders dated 9.6.2023 and 17.6.2023 are quashed.

The authorities below are directed to refund the amount, if any, deposited by the petitioner in pursuance of the impugned orders, within a period of one month from the date of production of certified copy of this order before the concerned authority.

Read the full order from here

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Kerala High Court Denies Writ Against Recovery Notice for GST Dues

Kerala High Court Denies Writ Against Recovery Notice for GST Dues

Fact and issue of the case

Heard Ms.N.S. Rehna, learned counsel for petitioners as well as Ms. Reshmita Ramachandran Government Pleader learned appearing for the

This writ petition is filed under Article 226 of the Constitution of India questioning the Ext.P2 revenue recovery notice in respect of GST dues of 1,39,35,225/-. I find no ground to entertain this writ petition inasmuch as the petitioner has failed to avail the statutory remedy of appeal against the assessment order. The court cannot help at all a person who is in default of statutory dues.

Observation of the court

In view thereof, the writ petition is dismissed. However, the petitioner is permitted to approach the Commissioner under Section 80 of the GST Act, 2017 for payment of the dues in there instalments, the Commissioner will take a decision in accordance with law, on the said application.

With the aforesaid liberty, the writ petition stands dismissed.

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GST Circular on Warranty

GST Circular on Warranty

A circular on the GST charge on warranties has been released by the CBIC’s GST Policy department. In this case, the guarantee covers components replacement and repair services rendered during the warranty period. Additionally, if ITC is available for warranty replacements and repairs.

The board has fielded countless questions about the GST that is levied on warranties that are issued at the time of purchase, as well as warranties that are renewed at the time of purchase and when the original guarantee expires. Some consumers pay for the extended warranty at the time of purchase, while others pay for it immediately in order to prevent the original product warranty from expiring within a predetermined window of time.

The issue of whether to charge GST for parts replacement or repairs made while the warranty is still in effect arises in a few different contexts. Additionally, whether the distributor or producer may use the ITC in the different circumstances covered below:

1. The first instance of this type of scenario is when the original equipment or product maker grants the consumer a warranty for the items they purchased from him, replaces parts as needed, or performs repairs without collecting payment in advance. Can the customer be charged GST for the repaired part or for the services rendered in this scenario?

Here, the answer is simply no. Since the GST was previously paid at the time of the first purchase and the guarantee covers the cost of such replacements and repairs, there is no need to charge additional GST.

There are situations where the manufacturer may charge the client more for any part replacement or repair services; in these situations, GST must be paid.

2. If an equipment manufacturer replaces or repairs a part of the equipment under warranty for the customer without charging more, is the company able to reverse the input tax credit for such replacement or repair?

Once again, the answer is no. The products’ pricing covers any replacement or repair costs for goods or parts throughout the warranty term; as a result, they are not offered for free and are not excluded from being eligible to claim an ITC reversal.

3. Another situation is when a distributor offers a customer a replacement or performs repairs on behalf of the manufacturer for no charge as part of the warranty. Can a distributor of this kind pay the GST?

Again, since there is no further consideration, no GST is due. GST is due on any additional charges that are made to the client in exchange for additional consideration.

4. Here’s the case: the distributor, acting on behalf of the manufacturer, offers the customer part replacements as part of the warranty. Supplies may be exchanged between the producer and the distributor. Is the distributor required to reverse the ITC on replaced parts in such a scenario?

The following options are available in this situation:

The distributor may purchase the parts from a third party and raise a tax invoice on the manufacturer, or he may replace the parts for the customer under warranty from his own stock. The manufacturer is entitled to an input tax credit (ITC) for the supplies that the distributor pays the GST for. The ITC must be reversed by the distributor.

The manufacturer will provide the part to the distributor upon receiving a requisition from the latter. The manufacturer is not obligated to pay any GST, and the distributor is not required to reverse any ITC.

The third option in this scenario is for the distributor to swap out the part that is under warranty for the client using the part that he has already received from the manufacturer, who then gives the distributor a credit note for the replaced part. If the distributor has reversed the ITC against the replaced parts, the manufacturer may modify his tax liability.

5. The distributor will raise a tax invoice on the manufacturer or issue a debit note, but he may not charge the consumer for the repair services he offers. Is the distributor required to pay GST on such a tax invoice?

In this case, the manufacturer would be eligible to receive the ITC for the services rendered and would be the beneficiary of the GST.

6. Nowadays, a lot of product manufacturers provide extended warranties at the time of purchase or just before the usual guarantee expires. Is the GST due in both situations under such circumstances?

Since the extended warranty in the first instance is a component of the composite supply and is covered by the product’s price, there is no additional GST due because it is a composite supply.

In the second scenario, opting for an extended warranty at the time the original warranty expires is akin to entering into a new agreement and, as such, constitutes a new transaction. As such, the person making the extended warranty agreement must pay GST.

Any issues that the parties involved have putting this circular into practice should be brought to the board’s attention.

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CBIC express disappointment on manual issue and upload of notices and orders by GST officers

CBIC express disappointment on manual issue and upload of notices and orders by GST officers

Serving of the summary of notice in FORM GST DRC-01 and uploading of summary of order in FORM GST DRC-07 electronically on the portal by the proper officer-regarding.

Reference is invited to the provisions of section 52, section 73, section 74, section 122, section 123, section 124, section 125, section 127, section 129 and section 130 of Central Goods and Service Tax Act, 2017 (herein after referred to as the CGST Act), as per which a notice is required to be issued by the proper officer to a person for demand and recovery of any amount of tax not paid or short paid/ amount of input tax credit wrongly availed/ amount of refund erroneously made, for recovery of interest and/ or for imposition of any penalty or fine on the said person. Attention is also invited to sub-rule (1) of rule 142 of Central Goods and Service Tax Rules, 2017 (herein after referred to as the CGST Rules) as per which, along with the notices issued under section 52 or section 73 or section 74 or section 122 or section 123 or section 124 or section 125 or section 127 or section 129 or section 130 of CGST Act, a summary
of such notice is also required to be served by the proper officer electronically on the portal in FORM GST DRC-01.

It is also mentioned that as per sub-rule (5) of rule 142 of CGST Rules, where any order is issued by the proper officer under section 52 or section 62 or section 63 or section 64 or section 73 or section 74 or section 75 or section 76 or section 122 or section 123 or section 124 or section 125 or section 127 or section 129 or section 130 of CGST Act, summary of such order is also required to be uploaded electronically on the portal by the proper officer in FORM GST DRC-07, specifying the amount of tax, interest and penalty, as the case may be, payable by the person concerned.

It has been brought to the notice of the Board that some of the field formations are serving such notices and orders manually only and are not serving the summary of the notices issued under section 52 or section 73 or section 74 or section 122 or section 123 or section 124 or section 125 or section 127 or section 129 or section 130 of CGST Act, electronically on the portal in FORM GST DRC-01, or are not uploading the summary of the order issued under section 52 or section 62 or section 63 or section 64 or section 73 or section 74 or section 75 or section 76 or section 122 or section 123 or section 124 or section 125 or section 127 or section 129 or section 130 of CGST Act electronically on the portal in FORM GST DRC-07.

It is highlighted that non-issuance of the summary of such notices/ orders electronically on the portal is in clear violation of the explicit provisions of CGST Rules. Besides, serving/ uploading the summary of notices/ orders electronically on the portal not only makes the said notices/ orders available electronically to the taxpayers on the portal, but also helps in keeping a track of such proceedings and consequential action in respect of recovery, appeal etc, subsequent to issuance of such notices/ orders. Accordingly, any deviation from this requirement under CGST Rules may adversely impact record keeping under GST. Further, such an action may also impact further proceedings of appeal and/ or recovery to be done seamlessly on the portal.

The proper officers are accordingly directed to ensure that summary of the notices issued under section 52 or section 73 or section 74 or section 122 or section 123 or section 124 or section 125 or section 127 or section 129 or section 130 of CGST Act are served, electronically on the portal in FORM GST DRC-01. Also, they should ensure that summary of the order issued under section 52 or section 62 or section 63 or section 64 or section 73 or section 74 or section 75 or section 76 or section 122 or section 123 or section 124 or section 125 or section 127 or section 129 or section 130 of CGST Act is uploaded electronically on the portal in FORM GST DRC-07.

The Principal Chief Commissioners/ Chief Commissioners of the CGST Zones and Principal Director General of DGGI may closely supervise the officers under their Zones/ Directorate to ensure strict compliance of the above provisions of rule 142 of CGST Rules by the officers within their Zones/ Directorate.

Difficulties, if any, in implementation of these instructions may be brought to the noticeof the Board

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Prior to issuing an adverse assessment order, the assessing authority is required to hold a personal hearing

Prior to issuing an adverse assessment order, the assessing authority is required to hold a personal hearing

Fact and issue of the case

Heard Sri Pranjal Shukla, learned counsel for the petitioner and learned Standing Counsel for State respondents.

Challenge has been raised to the order dated 06.12.2022 passed by the Deputy Commissioner, State Tax, Sector-1,Raebareli for the tax period 2018-19, whereby demand in excess to Rs.27,23,636/- has been raised against the present petitioner.

Solitary ground being pressed in the present petition is, the only notice in the proceedings was issued to the petitioner on 28.09.2022 seeking his reply within 30 days. Referring to item no. 3 of the table appended to that notice, it has been pointed out, the Assessing Authority had at that stage itself chosen to not give any opportunity of hearing to the petitioner by mentioning “NA” against column description “Date of personal hearing”.

Similar endorsements were made against the columns for “Time of personal hearing” and “Venue where personal hearing will be held”. Thus, it is the objection of learned counsel for the petitioner, the petitioner was completely denied opportunity of oral hearing before the Assessing Authority

Relying on Section 75(4) of the U.P. GST Act, 2017 (hereinafter referred to as the ‘Act’) as interpreted by a coordinate bench of this Court in Bharat Mint & Allied Chemicals Vs. Commissioner Commerical Tax & 2 Ors., (2022) 48 VLJ 325, it has been then asserted, the Assessing Authority was bound to afford opportunity of personal hearing to the petitioner before he may have passed an adverse assessment order. Insofar as the assessment order has raised disputed demand of tax about Rs.19 lacs, the same is wholly adverse to the petitioner. In absence of opportunity of hearing afforded, the same is contrary to the law declared by this Court in Bharat Mint & Allied Chemicals (supra). Reliance has also been placed on a decision of the Gujarat High Court in M/S Hitech Sweet Water Technologies Pvt. Ltd. Vs. State of Gujarat, 2022 UPTC (Vol. 112) 1760.

Having hearing learned counsel for the parties and having perused the record, Section 75(4) of the Act reads as under :

“An opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person.”

Observation of the court

We find ourselves in complete agreement with the view taken by the coordinate bench in Bharat Mint & Allied Chemicals (supra). Once it has been laid down by way of a principle of law that a person/assessee is not required to request for “opportunity of personal hearing” and it remained mandatory upon the Assessing Authority to afford such opportunity before passing an adverse order, the fact that the petitioner may have signified ‘No’ in the column meant to mark the assessee’s choice to avail personal hearing, would bear no legal consequence.

Even otherwise in the context of an assessment order creating heavy civil liability, observing such minimal opportunity of hearing is a must. Principle of natural justice would commend to this Court to bind the authorities to always ensure to provide such opportunity of hearing. It has to be ensured that such opportunity is granted in real terms. Here, we note, the impugned order itself has been passed on 06.12.2022. The stand of the assessee may remain unclear unless minimal opportunity of hearing is first granted. Only thereafter, the explanation furnished may be rejected and demand created.

Not only such opportunity would ensure observance of rules of natural of justice but it would allow the authority to pass appropriate and reasoned order as may serve the interest of justice and allow a better appreciation to arise at the next/appeal stage, if required.

Accordingly, the present writ petition is allowed. The impugned order dated 06.12.2022 is set aside. The matter is remitted to the respondent no.2/Deputy Commissioner, State Tax, Sector-1, Raebareli to issue a fresh notice to the petitioner within a period of two weeks from today. The petitioner undertakes to appear before that authority on the next date fixed such that proceedings may be concluded, as expeditiously as possible.

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Want to pay lower GST? Don’t buy popcorn with movie ticket

Want to pay lower GST? Don’t buy popcorn with movie ticket

Next time you plan to go to a theatre, make sure you don’t go for any combo package that offers food and beverages along with the movie ticket. While the GST Council has decided to lower the levy on food and beverages sold at theatres to 5% from 18%, the benefit will only accrue if the two are paid for separately.

“When bought together; it is treated as the principal supply there is watching the movie, or giving access to the cinema hall, which is chargeable at 18% tax. Food happens to be incidental, and billing is done in a consolidated way. But if you just buy the cinema ticket for entry and purchase food subsequently, it will not be billed with the ticket, and you will pay 5%,”Central Board of Indirect Taxes and Customs chairman Vivek Johri told TOI.

The top official suggested that the principle will apply even if the ticket is bought online. “As long as they are billed separately, they will be charged at different rates,” he said. While the GST Council has reduced the rate on food and beverages to bring it in line with the levy in restaurants, it is now for cinema halls to pass on the benefit to consumers, something that authorities will have to keep an eye on.

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GST on certain services – Clarification from GST Council/CBIC

GST on certain services – Clarification from GST Council/CBIC

The clarification is issued by CBIC, via a circular 206/18/2023 dated 31/10/2023 for the meeting held on 7th October, 2023 at New Delhi with regard to GST Levy, related to the following issues:

1. Passenger transport services

Transport of passengers and renting of motor vehicles are covered under ‘same line of businesses’ as such GST is applicable here. Whereas the leasing of motor vehicles doesn’t come into this category therefore input tax credit on such leasing services cannot be claimed.

2. Electricity supply by landlords

When electricity is paid for by the landlord and the rented property is given with electricity, means it is a composite  supply as the rent covers for all the ancillary things as well, electricity being one part. Here the GST is applicable on the principal supply that is the immovable property (rent) in this case and no separate GST is applicable for electricity as such.

3. Conversion of barely into malt (Job Work) services

The Job work services for conversion of barely into malt would be levied 5% GST whether the malt is used for food product or for manufacture of alcoholic beverages including beer. Job-work normally are levied 5% GST.

4. District Mineral Foundations Trusts (DMFTs)

These are classified as government authorities being set up by the State governments and therefore are eligible for the exemptions as extended to the Government.

5. Supply of horticulture to CPWD is exempt to an extent

Supplies of horticulture / horticulture works to the Central Public Works Department (CPWD) upto 25% of the total value of goods are exempt from GST.

The circular here has specifically cleared the doubts on the above five services where there was fair amount of doubt and confusion with regard to levying of GST has been fairly addressed to.

The CBIC is ever ready to help those who have difficulty in addressing any concern with regard to this circular and should report of any difficulty if encountered.

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