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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. 315 DETENTION ORDER TO BE SERVED ON OWNER OF GOODS AND NOT TRUCK DRIVER

GST UPDATE NO. 315 DETENTION ORDER TO BE SERVED ON OWNER OF GOODS AND NOT TRUCK DRIVER
The cases of detention and confiscation of goods during their movement has been a regular feature in GST regime. However, the root cause of concern is not following the proper procedure as prescribed by Circular No. 41/15/2018-GST dated 13.04.2018. It is often observed that the interception officers not issue show cause notice or other prescribed documents in prescribed format or fail to properly serve the notices or orders to the owner of goods. Recently, similar issue was raised before the hon’ble Gujarat High Court in the case of M/S TANAY CREATION VERSUS STATE OF GUJARAT [W.P. NO. 15195 OF 2021]. The outcome of this decision is the subject matter of discussion of our present update.
The petitioner is engaged in the trading of grey fabrics. It purchases goods from various manufacturers from different parts of the country and sell the same to various manufacturers.
It is averred that the petitioner sent goods under four tax invoices to the processors at Jetpur under the instructions of the buyers in the truck bearing No.GJ-01-JT-0689 through Kailash Translogistics Pvt. Ltd. The driver of the truck was carrying the goods mentioned in the tax invoice issued by the petitioner, which was intercepted by mobile squad on 22.08.2021 for at 11:10 a.m. at Kamrej Toll Plaza, Kamrej, Surat. According to the petitioner, the driver produced all the required documents relating to the goods, including tax invoice evidencing description, the value of the goods and rate of IGST of such transaction and tax on such goods. However, the truck was detained on the grounds that neither in the bill nor in the e-way bill, the receiver’s name and full address was mentioned.Moreover, there was mismatch in the quantity mentioned in the bill and the e-way bill. It was alleged that the goods were being transported to the unknown recipient for evasion of tax. Therefore, mobile squad directed physical verification of the conveyance, goods and documents.
The petitioner contended that on the directions of the buyers, goods were being sent to Jetpur for processing. However, while preparing tax invoice, inadvertently, the name of the supplier of the goods from whom the petitioner had purchased the goods had been mentioned as Consignee instead of the processors at Jetpur, but in the E-way bill, the correct place of delivery was mentioned i.e. Jetpur, Gujarat. It was alleged that no copy of SCN or order was served on the petitioner but the documents were served on the truck driver. The petitioner stated that inspite of the fact that they had paid the tax and penalty, goods were not provisionally released and rather order of confiscation under section 130 of the CGST Act, 2017 was being passed.
It is contended that though the total amount of tax and penalty had been already paid, the respondents are not inclined to release the goods without payment of redemption of fine, as there is clear violation of the principles of natural justice.
The revenue authorities justified the orders passed and contended that present petition is not sustainable as alternate remedy is available to the petitioner.
The hon’ble High Court denied the contention of availability of alternate remedy of appeal to the petitioner on the grounds that Court may entertain writ petition in case of exception such as violation of the principles of natural justice. It was held that the notice and order was served to the truck driver and not to the petitioner or truck owner. It was also reckoned that petitioner has already paid the amount of tax and penalty. Reliance was placed on the decision given in the case of SITARAM ROADWAYS (URP) and SYNERGY FERTICHEM PVT. LTDWhile in the case of SITARAM ROADWAYS (URP), show cause notice was issued to the petitioner and the date had also been fixed for hearing but the only allegation was of passing the non-speaking order without affording opportunity of hearing; in the present case, petitioner being the owner of goods was not even served the SCN and opportunity was afforded to the driver. The detention order was also served on the person-in-charge of the conveyance. Hence, no opportunity of hearing was given to the petitioner and the order is complete breach of the principles of natural justice.
Therefore, the confiscation order was quashed and matter is restored to the revenue authorities to issue the notice under section 130 and decide the matter afresh in accordance with law, after affording an opportunity of personal hearing to the petitioner by passing a reasoned order.
Furthermore, it was held that as the petitioner has deposited the amount of tax and penalty, the conveyance and goods shall be released by the competent authority within 7 days from the date of receipt of the copy of this order.
The above decision is yet another example of intervention of High Court where the principle of natural justice has been violated. The fundamental right of the taxpayer is to receive SCN or order so as to defend themselves by taking appropriate course of action. It is hoped that the revenue authorities strictly follow these decisions so as to avoid unnecessary disputes in future.
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