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Corporate News *  Missing seized records must be considered while testing ITC claim; duplicate GST demands ordered corrected: Delhi High Court. *  GST appeal can’t be rejected without addressing taxpayer’s grounds: Allahabad High Court. *  Surplus IGST credit can offset CGST, SGST shortfall: GSTAT. *  GST refund can’t be denied when cancelled airfares are returned with tax: GSTAT. *  3 Hearing notices issued within 2 minutes: Gujarat High Court flags portal flaw, seeks report. *  GSTR-9, GSTR-9C filing for FY 2025-26 enabled; pending GSTR-1 and GSTR-3B must be filed first. *  Dupattas are exempt fabrics, can’t be taxed as fibres at 4%: Madras High Court. *  Full transitional credit allowed on capital goods received after GST rollout: GSTAT denies Rs. 6.99 lakh export duty credit. *  GST return mismatch alone can’t justify fraud proceedings: GSTAT orders fresh adjudication under section 73. *  Supplier found non-existent later can’t alone justify input tax credit denial: GSTAT. *  GST interest stops once tax reaches government account, can’t run until return filing: GSTAT. *  Cancelled flat booking- GST refund can’t be denied without excluding COVID period from limitation: GSTAT. *  India notifies rules of origin for India–New Zealand FTA. *  Incomplete E-bike kits classifiable as complete vehicles, but not eligible for CKD duty concession: CESTAT. *  Same GST rate on main input and output can’t by itself bar inverted duty refund: GSTAT. *  Unjust enrichment doesn’t apply to customs refunds from assessments finalised before July 13, 2006: Gujarat High Court. *  CENVAT credit can’t be denied solely because plant And machinery are embedded in earth: Karnataka High Court. *  DFIA exports ineligible for RoDTEP benefits; customs directs repayment with applicable interest. *  Second E-Way bill alone doesn’t prove another supply: GSTAT. *  Bail denied in Rs. 1.19 crore fake GST refund case over risk of accused absconding again: Punjab and Haryana High Court. *  GST registration can be restored after revocation deadline if outstanding dues are paid: Gauhati High Court. *  Multiple GST proceedings over same suppliers: Calcutta High Court directs dept. to share findings for adjudication. *  E-Governance portal services not OIDAR, fixed deposit interest not taxable: CESTAT. *  Rs. 500 Stamp duty required on authority letters for CAs, CMA and GST practitioners in Pune GST division.  *  Rs. 1.10 crore GST refund must be paid in cash after business closure: Allahabad High Court. *  Godown rent attracts 18% GST even when used exclusively for exempt agricultural warehousing: AAR. *  GST portal launches "Multi-State Registration" facility: one master TRN for registration applications across multiple States/UTs. *  RoDTEP scheme extended till 31st December, 2026.  *  Mere disagreement with order can’t override Rs. 20 lakh appeal limit: GSTAT. *  Customs interest can’t be backdated before confiscation liability is determined; nearly 8 year period excluded: Delhi High Court.
Subject News *  GST summons: anticipatory bail maintainable without arrest order, but relief denied in evasion case: Allahabad High Court. *  GST Appeal can’t be decided without hearing taxpayer’s objections to fresh evidence: Allahabad High Court. *  GST ITC can’t be reversed merely because supplier grants discount without reducing tax liability: GSTAT. *  Mere quoting of GST provision is not a valid charge: GSTAT quashes ITC denial. *  Personal hearing mandatory before adverse GST order, even without taxpayer’s request: Rajasthan High Court. *  Parallel bail pleas without full disclosure amount to abuse of process Rs. 43.08 crore GST case sent for fresh hearing: Supreme Court. *  GST refund based on unchallenged advance ruling can’t be recovered using later circular: GSTAT. *  Payment of GST alone doesn’t end interest and penalty liability when tax and interest remain unpaid beyond 30 days of notice: GSTAT. *  GST demand over builders’ 80% procurement rule requires reasoned adjudication: GSTAT. *  Eligible ITC doesn’t automatically entitle taxpayers to compensation cess refund on domestic sales: GSTAT. *  GST confiscation order passed before reply deadline invalid: GSTAT. *  GST interest can’t be retained after tax refund on delayed export receipts: Punjab & Haryana High Court. *  GST appeal can’t be dismissed over pre-deposit shortfall without opportunity To respond: Bombay High Court. *  DGGI SCN can’t be challenged before reply and adjudication:Chhattisgarh High Court. *  GST input tax credit can’t be denied solely due to supplier’s retrospective registration cancellation: GSTAT. *  GST notice must explain fraud allegations; merely repeating section 74 Is not enough:  Himachal Pradesh High Court. *  Audit detection alone can’t justify GST fraud penalty; specific suppression must be proved: GSTAT. *  GST order uploaded only under ‘Additional Notices’ tab without separate intimation set aside: Calcutta High Court. *  Service Tax appeal can’t be rejected for missing pre-deposit proof when payment is already recorded: CESTAT. *  SGST dept. can’t hear appeal against CGST order: Calcutta High Court. *  Mere dispatch of tax order can’t prove service or make appeal time-barred: CESTAT. *  Dealer incentives can’t be taxed merely on ledger entries: CESTAT. *  DGFT orders quashed for failure to supply DRI letter relied upon in SCN: Bombay High Court. *  GST penalty u/s 122(1A) can’t apply to Pre-2021 transactions; unregistered beneficiaries also covered: Delhi High Court. *  Expired E-way bill caused by wrong PIN code can’t justify GST penalty without intent to evade tax: GSTAT. *  Used railway rails can’t be taxed as track material without proof they are fit for reuse: CESTAT. *  Earlier DGGI notice doesn’t bar separate GST demand on different issue: Delhi High Court. *  ITC dispute involves no question of law: GSTAT directs appeal to Vice-President. *  Earlier DGGI notice doesn’t bar separate GST demand On different issue: Delhi High Court. *  No E-way bill required for interstate goods movement in november 2017: GSTAT quashes detention and penalty.  

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GST Update No 171 on grant of bail when interest of revenue safeguarded

GST Update No 171 on grant of bail when interest of revenue safeguarded
Under taxation laws, demand and recovery proceedings take considerable amount of time during which, the taxpayers might flee or adopt some measures to escape to avoid tax collections. To safeguard such practices on the part of taxpayers, powers are given to the authorities under GST Act, to provisionally attach the property of the concerned person during pendency of proceedings. The present update focuses on one of the Judicial Rulings delivered by Gujarat High Court in the case of NIRAJ JAIDEV ARYA V/S STATE OF GUJARAT. The analysis of the decision is subject matter of our present update. The petitioner is the partner of “Utkarsh Ispat LLP”, engaged in business of purchasing mild steel scrap and converting it into steel Billet. The authorities conducted search at the office premises of the LLP on the grounds of fictious purchases of Rs. 172.36 Crores from 24 fictious entities wherein it was alleged that input credit of Rs. 31.02 Crores was availed. The petitioner suffered from chest pain and admitted to Cancer Institute on being diagnosed with cancer. The Counsel of petitioner submitted all the documents related to goods along with their photographs. It was contended that since the petitioner was not at fault, he cannot be held liable. It was submitted that restrictions should be imposed on selling dealer and not on bona fide purchasing dealer failing which result in violation of principle of vicarious liability. Further, the recipient cannot examine each and every transaction of the seller who have illegitimately availed input tax credit. It was also contended that the department had attached immovable property of Rs. 44 crores for alleged tax evasion of Rs.41 Crores, which was more than the quantum of default alleged against the petitioner thereby adequately safeguarding the interest of the revenue. It was alleged that out of 270 firms of applicant, 41 were shell companies and that false documents were generated to claim ineligible input tax credit. The CA. PRADEEP JAIN ??www.capradeepjain.com??pradeep@capradeepjain.com??5 statements of goods transporter were recorded to substantiate those goods were not actually transported to the premises of the applicant, while they were tested in laboratories, delivered at the premises and e-way bill was generated thereof. The Public Prosecutor contended that when the inquiry was carried out on the purchases made by the said firm, it was found that the said firm has shown voluminous purchase transaction from the fictious entities and consequently, wrongful availment of ineligible input tax credit. Therefore, a huge cartel working in collusion with ill intention of causing huge loss to the Government Exchequer. It was stated that the appellant has committed grave economic offence to the country which is detrimental to the financial health of the county. Reliance was placed on the decision of the Apex Court in the case of Nimmagadda Prasad v. C.B.I., (2013) 7 SCC 466. The prosecutor submitted that everything was happening under the knowledge of the petitioner and during the search proceedings no cooperation was rendered by him. Therefore, it was submitted that since the petitioner is financially sound, his release may hamper the investigation and therefore, application of release is to be rejected. The court held that the present case is covered under Section 132 of CGST Act, 2017 which states that the said offence is compoundable offence. It was stated that although the offence has resulted in loss of Exchequer still the seriousness of charge is not only the relevant factor which is to be considered while dealing with the bail applications. The other factors are also to be considered. Reliance was placed on the decision of Apex Court in the case of P. Chidambaram v. Directorate of Enforcement, (2020) 13 SCC 791. During arguments, it was pointed that the property attached belonging to the applicant was in excess of the amount alleged evasion of input tax credit. Further, the applicant was also suffering from the cancer. He was granted regular bail subject to certain conditions and the appeal stands allowed. The above decision is a favourable decision for recipients levelled with the charge of wrongful availment of input tax credit on account of fake invoice racket. The above decision imparted is in alignment with the directions issued by CBIC vide Circular no. CBEC20/16/05/20211-GST/359 dated 23.02.2021 to the officers to exercise CA. PRADEEP JAIN ??www.capradeepjain.com??pradeep@capradeepjain.com??6 utmost caution and prudence in attachment of property of the taxpayer. It was also directed that the value of property attached provisionally should not be excessive. As it is settled principle of Law that lower authorities are bound by the directions and guidelines issued by higher authorities, the revenue department is bound by the guidelines issued by CBIC. Reliance can be placed on the decision of Apex Court in the case of Dhiraj Chemicals. The guidelines issued by CBIC should be strictly complied with so as to protect revenue leakage on one side and reducing unnecessary harassment of genuine taxpayers, thus creating a winwin situation.
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