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Corporate News *  Service tax penalty can’t survive when assessee acted on dept.’s own view of non-taxability: Delhi High Court. *  GST section 74 extended limitation questionable when form 26AS mismatch was already known: Karnataka High Court grants interim relief. *  CGST demand prima facie impermissible after state GST settlement under section 128A: Bombay High Court. *  Supreme Court asks GSTAT to sympathetically consider delay as taxpayers pursued remedy before wrong forum. *  Supreme Court stays Tripura High Court ruling protecting genuine buyers from ITC denial over supplier’s GST default. *  Diary entries alone can’t prove clandestine removal of goods: CESTAT quashes excise penalty on steel trader. *  Customs could investigate preferential tariff claims even before sec. 28DA: Delhi High Court. *  Customs dept. relied on fake AI generated case laws: supreme court quashes Rs. 425.28 crore penalty. *  No GST exemption in affiliation and annual registration charges for admission or conduct Of examinations: GSTAT. *  Mere invoices, cheque payments insufficient to establish genuine movement of goods: GSTAT restores Rs. 43.44 lakh ITC demand. *  Consolidated GST show cause notice covering multiple financial years is not without jurisdiction: Delhi High Court. *  Construction of independent houses on separate plots not taxable as ‘Residential Complex’ without common facilities: CESTAT. *  GST penalty exceeding statutory maximum unsustainable; Allahabad High Court quashes ? 50,000/- penalty after taxpayer filed return and paid late fee. *  GST order against standard chartered bank passed without hearing set aside by Bombay High Court. *  Retracted statements can’t be relied upon without cross-examination: CESTAT quashes gold confiscation. *  Burden to prove misclassification lies on customs department: CESTAT. *  CESTAT quashes Rs. 98 lakh excise demand on clearance of used refractory brick scrap. *  Service tax demand on irrigation works quashed: Karnataka High Court rules sale of goods component not taxable as service. *  GSTAT restores tax and penalty for transporting iron scrap without E-way bill citing intent to evade tax. *  Madras High Court stays GST recovery from directors without opportunity to show cause under section 89. *  Madras high court stays GST recovery notice against directors; finds prima facie case on applicability of section 79(1)(c). *  Procedural lapses can’t justify harsh punishment without serious customs breach: CESTAT quashes customs broker licence revocation. *  Service tax payable on land leasing and sports complex charges: CESTAT. *  Settled customs dispute can’t be reopened through Article 226 challenge to interest liability: Delhi High Court. *  Mere facilitation of customs clearance can’t establish knowledge of smuggling: Madras High Court. *  GST registration cancellation stayed: Allahabad High Court questions 99% ITC utilisation cap under rule 86B. *  Composition scheme lapses automatically on crossing Rs. 1.5 crore turnover: GSTAT. *  Gujarat High Court quashes GST cancellation orders after officer relied on non-existent AI-generated case laws. *  Importers liable for customs duty benefits availed through manipulated scrips: Delhi High Court. *  Procedural E-way bill lapse alone can’t justify penalty where genuine transaction and absence of tax evasion are established: GSTAT.
Subject News *  Documentary evidence dominates probe, further custody unwarranted: mumbai court grants bail in Rs. 22.44 crore customs duty evasion case. *  Business premises can’t remain sealed for non-participation in GST search: Allahabad High Court. *  GST pre-deposit must be refunded proportionately when taxpayer partly succeeds in appeal: Bombay High Court. *  Supreme Court grants 30 days to file GST appeal; keeps pre-deposit issue open due to deposit in parallel CGST proceedings. *  GST demand can’t exceed amount proposed in SCN: Allahabad High Court quashes Rs. 20.47 Crore order. *  Hundreds-of-crores GST demand and heavy 10% pre-deposit no ground to bypass statutory appeal: Punjab & Haryana High Court. *  Delhi High Court refuses to entertain challenge to gold confiscation due to statutory appeal remedy and unexplained delay. *  Procedural error in customs broker licence inquiry can be rectified through remand: Delhi High Court. *  GSTR-2A mismatch alone can’t justify ITC denial without invoice-wise verification; personal hearing mandatory: GSTAT. *  GST order passed without uploading personal hearing notices violates sec. 75(4): Allahabad High Court. *  TAX EVASION - Sec. 74 GST SCN quashed for not spelling out fraud, wilful misstatement or suppression: Allahabad High Court. *  STPI’s SOFTEX certification and NoC charges taxable as business support services: CESTAT. *  Suspicion can’t replace proof: CESTAT quashes penalty in alleged gold-smuggling operation. *   Limitation runs from communication of order: Madras High Court upholds rejection of delayed GST Appeals. *  Rajasthan High Court quashes GST demand over unsigned show cause notice. *  ITC recovery upheld where supplier failed to deposit GST: Rajasthan High Court. *  Customs commissioner’s empowered to make port trust liable for duty on pilfered goods: Supreme Court. *  Rectification proceedings can’t be used to challenge an uncontested GST assessment through a writ petition: Andhra Pradesh HC. *  GST proceedings against deceased proprietor unsustainable without notice to legal heir: GSTAT. *  Mere availment of ineligible self-assessed ITC doesn’t amount to suppression without evidence of fraud or wilful misstatement: GSTAT. *  Disposal of mining overburden by entity authorised by mining lease holder constitutes taxable service: CESTAT. *  Toll plaza data not mandatory for ITC refund: GSTAT. *  Disputed GST fraud allegations require investigation: Punjab and Haryana High Court makes interim bail absolute in alleged fraud and GST fraud case. *  Non-manufacturer contractor liable to deposit excess excise duty collected from buyer: CESTAT. *  GST order can’t reject taxpayer’s reply as “not satisfactory” without reasons: Madhya Pradesh High Court. *  Uncorroborated statements can’t establish alleged diversion of duty-free goods: CESTAT. *  Erection services were not liable to service tax prior to 10th september 2004: CESTAT. *  Sec. 74 GST notice must spell out statutory ingredients for invoking extended tax demand proceedings: Allahabad High Court. *  No jurisdictional bar under section 6(2)(b) in parallel CGST SGST proceedings: Delhi High Court refuses to bypass GST appeal remedy. *  Madras High Court remits GST demand for fresh adjudication after taxpayer claims it was unaware of SCN following business closure.  

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12771GST UPDATE ON POWER OF HIGH COURT IN CASE OF DECISION BY AAAR

12771GST UPDATE ON POWER OF HIGH COURT IN CASE OF DECISION BY AAAR
GST law allows a taxpayer to apply for an advance ruling to obtain clarifications from the Authority for Advance Ruling (‘AAR’). If the taxpayer or the Revenue Authority is aggrieved by the order passed by the AAR, they have an option to file an appeal before the Appellate Authority for Advance Ruling (‘AAAR’). The ruling pronounced by AAR / AAAR is binding on all such parties. However, no further remedy by way of an appeal is provided under the GST law against the order of AAAR. Can an assessee file writ petition against the order of AAAR?
The same matter was discussed in the case of JSW energy ltd by Bombay High court where assessee has filed writ petition to HC against the order of AAAR. The HC has declined the examination of the case on the basis of merits because there is no provision under GST to appeal against the order of AAAR. The case was remanded back to the AAAR for the fresh consideration on the basis of merits. Supreme Court in the case of Smt. Sudha Patil also took the similar view that in case no appellate provision are given in the law it does not enlarge the power of High Court to exercise an appellate power.
Assessee can apply to the writ petition in HC in the exceptional cases like where principle of natural justice is not followed or assessee is challenging the constitutional validity of a provision. Moreover, in the cases where AAAR does not follow proper decision-making process, the court can refer back case to AAAR without examining the case on basis of merits as the same was held in case of C.M.S. Info Systems Ltd.
Decision of AAR is final and binding on the assessee and concerned departmental officers till the time there are changes in law, facts and circumstances supporting the advance ruling. This is clearly given in Sectio 103(2) of CGST Act, 2017. In case of changes in law, facts etc after ruling by AAR/AAAR the binding nature of ruling comes to an end but if circular in issued in subject matter after the AAR ruling than it will not affect the AAR ruling because circulars are not considered as change in law and they are only binding on department.
From the above reference to the case laws, it is clear that decision of the AAR final or binding and the Court may not accept the petitions challenging the AAAR ruling. It can be said that the order passed by the AAAR cannot be challenged in the High Court under GST law. It can only be challenged in case the AAAR goes beyond its jurisdictional limits or breach of principles of natural justice or committing errors of law or constitutional validity of a provision is being challenged.
Moreover, we have seen that the CBIC has many times given a clarification by way of circular over an issue where AAR has given verdict. One example can be of salary paid to directors. Advance Ruling of Rajasthan said in case of Clay Craft India Private Limited that GST is payable on the same but the CBIC has clarified vide circular number 140/10/2020 – GST dated June 10, 2020contrary to the same. Such type of situations arise in many cases.
But the circular cannot be said to be amendment in law or facts. Hence, these are not binding. It leads to peculiar situation where all taxpayers are taking benefit of CBIC circular which is against the appellant. The applicant who has sought advance ruling has to follow it as per provision of Section 103 of CGST Act ibid. He cannot even go to High Court as per above referred decisions. But some advocates are of the opinion that above advance ruling can be challenged on the basis of discrimination.
These all difficulties are attached with Advance Ruling. But the pro-revenue approach of departmental officers appointed in Advance Ruling has given a signal to taxpayers not to approach advance ruling. To save this authority, trade and industry should demand national level authority of advance ruling. Secondly, it should also be demanded that judicial member should be appointed so that confidence of taxpayers is restored in Advance Ruling authority.  
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