Category: High Court

Appeal allowed to be filed Manually – Rule 108 of Haryana GST Rules (up to 04-08-2023)

In the case of Optum Global Solutions (India) (P.) Ltd Vs. State of Haryana C.W.P. No. 26273 of 2023, 2024 158 Taxmann.com 20 (Punjab & Haryana) Appeal against rejection of refund was filed manually for the period April 2018 to June 2018 on 31-08-2020 against order dated 4-6-2020. Appellate Authority has rejected the appeal on the grounds that it was filed manually.

Hon’ble High Court of Punjab and Haryana has restored the appeal stating that up to 04-08-2023, appeal may be filed “Electronically or Otherwise”. Hence, Manual filing has also been accepted prior to that period.

Relevant Provisions:

Rule 108(1) of CGST Rules (Appeal to Appellate Authority) has been amended vide Central Goods and Services Tax (Second Amendment) Rules, 2023, w.e.f. 04-08-2023, wherein the words “electronically or otherwise as may be notified by the commissioner” has been replaced by “Electronically”. Hence, Appeal can be filed only electronically after 4th August 2023.

However, Proviso to Rule 108(1) inserted vide the same rules states that “An appeal to the Appellate Authority may be filed manually in FORM GST APL-01, along with the relevant documents, only if-

(i) the Commissioner has so notified, or

(ii) the same cannot be filed electronically due to non-availability of the decision or order to be appealed against on the common portal,

and in such case, a provisional acknowledgement shall be issued to the appellant immediately.

9 days is not reasonable time to reply to Show Cause Notice – Audi Alteram Partem Violated – SCN is invalid

Citation:

Raymond Ltd. Vs. Union of India

Writ Petition No. 26693 of 2022 – Hon’ble High Court of Madhya Pradesh

[2023] 157 taxmann.com 654 (Madhya Pradesh)

Facts of the Case:

  1. A Show Cause Notice (SCN) was issued on 03-09-2022 under Section 73 of CGST Act, 2017, affording 30 days of time for the petitioner (Raymond Ltd) to respond.
  2. Order of Demand was issued on 12-09-2022 (Within 9 days of issue of SCN).

Grounds for Filing the Petition:

The following three grounds were preferred:

  1. Denial of Reasonable Opportunity: Though the SCN has provided 30 days, Order was passed within 9 days, not providing reasonable time to reply to the SCN.
  2. Principle of Audi Alteram Partem Violated: SCN is not self-contained – It fails to inform about the material of adverse nature which constituted the foundation of the SCN, thereby disabling the petitioner to respond. Hence, Principle of Audi Alteram Partem (Hear the Other Side) was violated.
  3. Opportunity of Personal Hearing was not afforded.

Findings:

  1. Though Section 73 does not specify a time period to respond to SCN, the statute contemplates affording reasonable opportunity to reply. Section 73(2) states that SCN needs to be issued at least 3 months prior to the issue of the Order u/s. 73(10)
  2. Concept of reasonable Opportunity demands that reasonable time to reply should be not less than 15 days at least.
  3. As per Section 73(8), time period provided for payment of tax, interest, and penalty is 30 days from the date of SCN(For the proceedings in respect of the SCN to be considered as deemed to be concluded). Hence, the reasonable period for responding to the SCN ought to be 30 days.
  4. Any SCN should contain enough and adequate material which motivated the authority to take a view against the noticee. If the contents of the SCN are lacking in Material particulars or are vague in regard to any entries contained therein, then it would be vulnerable to judicial review.
  5. Hence, the present SCN falls short of minimum period of 30 days to afford reasonable opportunity to noticee to respond and also appears to be lacking in material particular.

Order:

  1. The Impugned SCN dated 03-09-2022 and the Order dated 12-09-2022 are set aside
  2. Revenue is at liberty to issue fresh and legal SCN and proceed after affording reasonable and sufficient opportunity of being heard, to the petitioner.
  3. The petitioner shall be entitled to a cost of Rs. 10,000 to be paid by the respondents and compliance report to be filed by them (respondents) in Registry within 60 days.

Relevant Provisions:

Section 73(1) and (2) of CGST Act:

(1) Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised for any reason, other than the reason of fraud or any wilful-misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty leviable under the provisions of this Act or the rules made thereunder.

(2) The proper officer shall issue the notice under sub-section (1) at least three months prior to the time limit specified in sub-section (10) for issuance of order.

Section 73(8):

Where any person chargeable with tax under sub-section (1) or sub-section (3) pays the said tax along with interest payable under section 50 within thirty days of issue of show cause notice, no penalty shall be payable and all proceedings in respect of the said notice shall be deemed to be concluded.

Section 73(10):

The proper officer shall issue the order under sub-section (9) within three years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within three years from the date of erroneous refund.

Ex-Parte Order Passed – Assessee was allowed to file reply to SCN thereafter, on Medical Grounds

Citation:

Pragati Construction Vs. Commissioner of C.T. & G.S.T.,

W.P.(C) No. 41802 of 2023 December 21, 2023, Hon’ble High court of Orissa

[2023] 157 taxmann.com 681 (Orissa)

Facts:

  1. A Show Cause Notice dated 27-09-2023 was issued for the Tax Period 1st July 2017 to 31st March 2018.
  2. Assessee could neither reply to the Show Cause Notice (SCN) nor appear before the authority, due to his Medical Condition of “Reeling of Head and Imbalance of Gait” and was undergoing treatment.
  3. An Order dated 23-11-2023 was passed Ex Parte (Without appearance of the assessee) by the Deputy Commissioner of State Tax, CT & GST under Section 73 of OGST Act, 2017.
  4. Hence, the assessee has filed this petition, enclosing the medical certificate.

Decision:

Hon’ble High Court of Orissa has held that:

  1. The Impugned Order is set aside and the petitioner ought to be given one more chance to first reply to the SCN on or before 02-01-2024 and appear before the adjudicating authority.
  2. The Authority shall take up the matter before 08-01-2024 for a fresh Assessment Order to be passed within 2 months.
  3. If the petitioner is aggrieved by the order, he may seek appropriate remedies as per Law.

Detention of Goods for absence of E-Way Bill – Double payment of Tax, Penalty and Fine – Transporter to claim refund manually

Citation:

Nitin Vs. Union of India – W.P.(C) No. 2952 of 2023 (High Court of Delhi)

[2023] 157 taxmann.com 543 (Delhi)

Brief Facts of the Case:

  1. Due to absence of E-Way Bill, the petitioner being the Transporter, has paid Tax, Penalty and Fine upon detention of the Truck. Three days later, the supplier has also paid the same amount. Upon verification of documents, the goods were released.
  2. Therefore, Tax, Interest and Fine as quantified in GST MOV-10 has been paid twice.
  3. In the absence of facility for claiming refund of this amount through GST Portal, the petitioner has filed this WP.
  4. Hence, the Hon’ble High Court has disposed of the petition by permitting the petitioner to make an application for Refund manually and directed the Concerned officer to process the said refund application preferably within a period of 4 Weeks.

Where the right of Personal Hearing is not waived, Ex Parte order cannot be passed

Citation:

Kuehne Nagel (P.) Ltd. Vs. State of Maharashtra – Writ Petition No. 15210 of 2023

[2023] 157 taxmann.com 366 (Bombay)

Hon’ble High Court of Bombay

Relevant Facts:

  1. The assessee has in their reply to SCN specifically requested for Personal Hearing, but while submitting the reply in the GST Portal, they have checked the box “No” with regard to selection of Option for Personal Hearing.
  2. Hence, the department has not granted Personal Hearing.

Provisions governing grant of Opportunity of Personal Hearing:

Section 75(4):

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.

Section 75(5):

The proper officer shall, if sufficient cause is shown by the person chargeable with tax, grant time to the said person and adjourn the hearing for reasons to be recorded in writing:

Provided that no such adjournment shall be granted for more than three times to a person during the proceedings.

Findings:

  1. This is an Inadvertent error on the part of the petitioner in ticking the Box “No”, because in the written reply to the Show Cause Notice, they have expressly requested for Personal Hearing.
  2. The department was under an obligation to grant Personal Hearing.
  3. The adjudicating officer (AO) was required to take into consideration the specific request. A Mechanical approach was adopted by AO in only noticing the box where the petitioner has inadvertently put a tick mark on “No”.
  4. This was not a case where the petitioner has expressly waived its right of Personal Hearing.
  5. Section 75(4) is applicable and the impugned order is in breach of Principles of Natural Justice and is contrary to Section 75(4).

Order:

  1. The Impugned Order is Quashed and Set Aside.
  2. The Petitioner shall be granted an Opportunity of Personal Hearing and after considering the contentions of the petitioner, appropriate Order shall be passed within 4 Weeks.

Amendment in form GSTR-1 for FY 2021-22 to be allowed for inadvertent error in mentioning wrong GSTIN

Citation:

Star Engineers (I) (P.) Ltd. Vs. Union of India – Writ Petition No. 15368 of 2023

[2023] 157 taxmann.com 285 (Bombay)

Hon’ble High Court of Bombay

Brief Facts:

  1. Assessee has shipped goods on Bill-to-Ship-to Basis and by mistake, they have mentioned the GSTIN of the party to whom goods are delivered, in the GSTR-1 Returns.
  2. When their Customer refused to make payment since the GST was not reflected in their GSTR-2B returns (Reflected in the Other Party’s GSTR-2B), the assessee requested the department (State Tax Officer) to allow them to amend GSTR-1 returns.
  3. On department’s refusal (Considering that due date for amendment of GSTR-1 returns for FY 2012-22 is 30th November 2022), this Writ Petition was filed.

Relevant Provisions – Due Date for amendment of GSTR-1 Returns:

Proviso to Section 37(3):

Any registered person, who has furnished the details under sub-section (1) for any tax period, shall, upon discovery of any error or omission therein, rectify such error or omission in such manner as may be prescribed, and shall pay the tax and interest, if any, in case there is a short payment of tax on account of such error or omission, in the return to be furnished for such tax period:

Provided that no rectification of error or omission in respect of the details furnished under sub-section (1) shall be allowed after the thirtieth day of November (Due date for furnishing the return for the month of September, up to 1st October 2022) following the end of the financial year to which such details pertain, or furnishing of the relevant annual return, whichever is earlier:

Proviso to Section 39(9):

Where any registered person after furnishing a return under sub-section (1) or sub-section (2) or sub-section (3) or sub-section (4) or sub-section (5) discovers any omission or incorrect particulars therein, other than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities, he shall rectify such omission or incorrect particulars in such form and manner as may be prescribed, subject to payment of interest under this Act:

Provided that no such rectification of any omission or incorrect particulars shall be allowed after the thirtieth day of November (Due date for furnishing thereturn for the month of September, up to 1st October 2022) following the end of the financial year to which such details pertain, or the actual date of furnishing of relevant annual return, whichever is earlier.

Findings:

  1. The Situation is Revenue Neutral – No Loss of Revenue (Amendment of GSTIN does not result in increase or decrease of GST Liability).
  2. This was mere Procedural error which was Bonafide and inadvertent on the part of the assessee and there was nothing illegal in it.
  3. GST regime as contemplated under the GST Law unlike the prior regime, has evolved a scheme which is largely based on the electronic domain.
  4. The traders and the assessees would be having limited expertise and resources. There are likely to be inadvertent and bonafide human errors, in the assessees adopting themselves to the new regime. For a system to be understood and operate perfectly, it certainly takes some time.
  5. The provisions of law are required to be alive to such considerations and it is for such purpose the substantive provisions of sub-section (3) of Section 37 and sub-section (9) of Section 39 minus the proviso, have permitted rectification of inadvertent errors.

Cases Relied Upon:

  1. Sun Dye Chem Vs. Assistant Commissioner – Madras High Court
  2. Pentacle Plant Machineries Pvt. Ltd. Vs. Office of GST Council & Ors – Madras High Court
  3. Shiva Jyoti Construction Vs. The Chairperson, Central Board of Excise & Customs and Ors – Orissa High Court
  4. Mahalaxmi Infra Contract Ltd. Vs. Goods and Services Tax Council and ors. – Jharkhand High Court

Order:

The department was directed to permit the assessee to amend the GSTR-1 returns for July 2021, November 2021 and January 2022 either through Online or Manual means, within 4 weeks.

Where goods were found with Proper Tax Invoice and E-way Bill, Section 129(1)(a) is applicable and not 129(1)(b)

In the case of:

Halder Enterprises Vs. State of U.P. Writ Tax No. 1297 of 2023

[2023] 157 taxmann.com 231 (Allahabad)

Relevant Facts were:

  1. On the date of Interception of goods, i.e., on 3rd October 2023, the petitioner had a valid GST registration, whereas the same was suspended on 6th October 2023, with effect from 18th September 2023. There was no discrepancy on Physical verification of goods – Goods were as per Invoice and E-Way Billl.
  2. The goods were detained on 11th October 2023 (during the period when the registration was suspended), on the grounds that both the Consignor and Consignee were non-existent.

Issue:

After the detention, the petitioner came forward as the owner of the goods and requested for release of goods under Section 129(1)(a) of the CGST Act.

However, the authorities have demanded penalty under Section 129(1)(b).

Relevant provisions are as below:

129. (1) Notwithstanding anything contained in this Act, where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released,-

  1. on payment of penalty equal to two hundred per cent of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to two per cent of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such penalty;
  2. on payment of penalty equal to fifty per cent of the value of the goods or two hundred per cent of the tax payable on such goods, whichever is higher, and in case of exempted goods, on payment of an amount equal to five per cent of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such penalty;
  3. upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be prescribed:

Provided that no such goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods.

Section 129(1)(a) and (b) of CGST Act w.e.f. 1st January 2022

Decisions Relied Upon:

Hon’ble High Court of Allahabad has relied upon the following decisions in this regard:

  1. M/s Sahil Traders v. State of U.P. and another, 2023:/AHC:116953-DB (Coram: Hon’ble Saumitra Dayal Singh, J. and Hon’ble Rajendra Kumar-IV, J.), wherein it was held that: “When the tax invoice and the E-way bill are produced by the assessee, the goods shall be treated as belonging to the assessee, who comes before the authorities as the owner of the goods and produces the above documents. Further, in such cases that the security is required to be in terms of Section 129(1)(a) and not under section 129(1)(b) of the CGST Act“.
  2. M/s Sanjay Sales Agency v. State of U.P. and another, 2023: AHC:193624-DB (Coram: Hon’ble Printinker Diwaker, CJ and Hon’ble Ashutosh Srivastava, J.), wherein the same principle has been followed.

Findings and Order:

Hon’ble High Court of Allahabad has held that:

  1.  It is clear that in the present case, goods were found with proper tax invoice and E-way bill belonging to the petitioner. Hence, Circular dated December 31, 2018 would apply and the petitioner would be deemed to be the owner of the goods.
  2. In light of above, the order passed by the authorities dated October 19, 2023 is quashed and set aside. The authorities are directed to carry out the exercise in terms of Section 129(1)(a) of the CGST Act within a period of three weeks from today.

Adjudication Order passed without providing written notice of Personal Hearing and ignoring the reply of the assessee is set aside

Citation:

Cart2India Online Retail (P.) Ltd. Vs. Union of India

Writ Petition (L) No. 25179 of 2023

[2023] 157 taxmann.com 212 (Bombay)

Facts of the Case:

  1. Petitioner has submitted a reply in DRC-06 dated 17th June 2023 to the Show Cause Notice, where Option for Personal Hearing has been selected as “Yes”.
  2. They have received a phone call on 5th July 2023 requiring them to attend personal hearing on 7th July 2023. No written Notice was issued regarding the hearing. Though the petitioner has stated on call that he would appear, he could not appear on the said date.
  3. Without providing a final opportunity for personal hearing, order been issued in DRC-07 demanding Tax, along with Interest u/s. 50 and Penalty u/s. 73(9) of CGST Act and Section 20 of IGST Act by the State Tax Officer (STO).
  4. Petitioner stated that the order passed is against the principles of Natural Justice and therefore the same needs to be set aside and passed after providing an opportunity of Personal Hearing.
  5. Hon’ble High Court of Bombay has observed that:
    • Petitioner has sufficiently requested for grant of personal hearing.
    • Merely because they have not attended the hearing without valid reason, it should not be presumed that they are not interested in hearing.
    • No written notice was issued regarding the hearing and the Order also did not consider the submissions of the petitioner as given in their reply to the Show Cause Notice.
  6. It was held that:
    • The Impugned Order dated 26th July 2023 is quashed and Set Aside and remanded back to STO, to be decided after providing an opportunity of personal hearing.
    • Petitioner is directed to appear before STO on 8th December 2023 to undertake to appear for Personal Hearing on a fixed date.
    • If the petitioner does not appear for hearing after undertaking to do so, STO is free to proceed further and pass an appropriate Order.

2 days is not enough to pay Interest on GST, of around Rs. 6.55 Lakhs. Period of 3 months was granted for payment in Instalments

Citation:

Everyday Banking Solutions Vs. Assistant Commissioner (ST)

W.P. No. 32160 of 2023 [2023] 157 taxmann.com 151 (Madras)

Relevant Facts:

  1. Due to some technical glitch and practical difficulties, the petitioner made delay in payment of GST for the period 2017-18 to 2021-22.
  2. Notice was issued by the department demanding payment of interest of Rs. 9,25,417 within 2 days, out of which only Rs. 2,69,877 was paid.

Submissions of Both Parties:

  1. Petitioner has submitted that time of 2 days is not sufficient, since the notice was issued all of a sudden and therefore requested sufficient time for payment of amount demanded.
  2. Department has submitted that already a period of 1 month was expired and that the time limit sought by the petitioner is on a higher side. However, it has requested that appropriate time limit may be fixed, considering the facts and circumstances.

Findings and Order:

Hon’ble High Court of Madras has held that: 

  1. Time period of 2 days is not sufficient to make payment of amount demanded
  2. A period of 3 months is granted to the petitioner for payment of the balance amount of Rs. 6,55,540 by way of 3 instalments – Rs. 2,10,000, Rs. 2,10,000 and Rs. 2,35,540.
  3. If the petitioner fails to pay the amount on the specified dates, department is free to initiate the recovery proceedings.

Appellate Authority is bound to look into the merits even in the absence of Assessee during proceedings

Citation:

SK Construction and Co Vs. State of Bihar

[2023] 156 Taxmann.com 553 (Patna)

Decision:

It was held that Appellate Authority is obligated under Section 107 to look into the merits of the matter and examine the grounds mentored by the assessee, even if his presence is not recorded during the proceedings.