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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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GST Update No 137 GST on Ocean Freight-A never ending fight!

GST Update No 137 GST on Ocean Freight-A never ending fight!
The hallmark of levy of tax as provided under Article 265 of Constitution of India is that there cannot be any levy without an authority of law. Any incidence of double taxation will be always outside the framework of taxation. One of the burning issues in GST era is levy of GST on the ocean freight under reverse charge mechanism to be paid by the importer. Although there is favourable decision rendered by the hon’ble Gujarat High Court in the case of MOHIT MINERALS PVT. LTD. but the AAR’s and AAAR’s continue to follow their own interpretation as regards the levy of tax on ocean freight. Recently, the issue regarding levy of GST on ocean freight was again raised before Uttar Pradesh AAAR in the case of M/s SANGAL PAPERS LTD. wherein the order of AAR confirming the taxability of IGST in case of ocean freight under reverse charge mechanism was upheld. The analysis of this decision is the subject matter of discussion of our present update. The AAAR referred to the provisions of notification no. 10/2017-Integrated Tax (Rate) dated 28.06.2017 to justify imposition of IGST on ocean freight under reverse charge mechanism. It was also held that levy of tax under RCM gives a level playing field to the domestic shipping lines. Moreover, the goods are transported from a place outside India upto the customs station in India for the importer and therefore, he is directly or indirectly the recipient of service. It was also stated that the view of AAR in confirming levy of tax on ocean freight is upheld as the decision pronounced by Gujarat High Court in case of MOHIT MINERALS PVT. LTD. has been challenged before Supreme Court and the final outcome is still pending. However, the operative portion of the AAAR order states that as the matter regarding levy of IGST on ocean freight is sub-judice and pending before Apex Court, it is inappropriate for AAAR to pass any order in the instant case. It is pointed that inspite of favourable decision rendered by Gujarat High Court on the issue under consideration, the AAR and AAAR’s refrain from following the said High Court judgment. Similarly, Rajasthan AAR in case of M/S. CHAMBAL FERTILISERS & CHEMICALS LIMITED, held that importer would be liable to pay GST under reverse charge mechanism for ocean freight for CIF contracts and tax paid under RCM would be eligible for credit. Likewise, there are numerous decisions rendered by AARs that run contrary to the analogy laid down by the hon’ble Gujarat High Court. In this context, we are inclined to recall the landmark judgment rendered by the Supreme Court in the case of UNION OF INDIA V KAMALAKSHI FINANCE CORPORATION LTD., wherein, the Apex Court held that, 'THE PRINCIPLES OF JUDICIAL DISCIPLINE REQUIRE THAT THE ORDERS OF THE HIGHER APPELLATE AUTHORITIES SHOULD BE FOLLOWED COMPLETELY BY THE SUBORDINATE AUTHORITIES'. In light of the above cited decision, the orders passed by the High Court is required to be unreservedly followed by the subordinate authorities but it is often observed that the decisions rendered by High Courts are simply ignored while passing orders by revenue authorities. Revenue authorities need to give due regard to the orders of the higher appellate authorities which are binding on them in view of the principle of judicial discipline so that unwarranted litigation can be avoided.
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