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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 317 on discrepancies in Order passed in GST DRC-07 vis a vis allegations in ASMT-10

GST Update No 317 on discrepancies in Order passed in GST DRC-07 vis a vis allegations in ASMT-10
It is often observed that the revenue authorities ignore the statutory provisions in force while issuing the order in original. The repercussions of careless attitude of revenue authorities are faced by taxpayers hampering their business operations. There had been various cases in the past as well wherein Courts have bashed the departmental authorities for being grossly negligent in performing their duties. Recently, a case was reported before Madras High Court in the case of M/S VADIVEL PRYOTECH PRIVATE LIMITED V/S THE ASSISTANT COMMISSIONER (ST) wherein the discrepancies were noticed in the allegations raised in ASMT-10 as compared to the order passed in GST DRC-07. The decision imparted in this case is subject matter of discussion of our present update.The impugned notice under DRC-01 and order in DRC-07 are passed pursuant to scrutiny of GST returns as per Section 61 of CGST Act, 2017 for the Financial Year 2018-19. The petitioner challenged the impugned order dated 09.05.2022 and submitted that the proceedings are vitiated as per Rule 99 of TNGST Rules, 2017. The petitioner is engaged in the business of manufacture and supply of pyrotechnic products and filed proper GST returns and discharged GST liability after availing input tax credit. A notice ASMT-10 was issued dated 22.12.2021 wherein discrepancies between GSTR-3B, GSTR-1 and GSTR-2A were pointed out. The petitioner furnished GST-DRC 03 dated 27.12.2021 and submitted the explanation in ASMT-11 dated 18.01.2022. When enquired on phone from the departmental officers regarding the subject matter, to petitioner’s surprise, they were informed that order dated 09.05.2022 was passed and a summary of the notice in FORM GST DRC-01 and Order in FORM GST DRC-07 had also been uploaded in the GST portal which contained six defects.It was submitted that the said defects were different from the defects/discrepancy which were pointed out in the Form ASMT 10 issued on 22.12.2021 and hence, the entire proceedings has been made behind their back and they were completely unaware of either the summary of the Notice in GST DRC-01 or the Order in GST DRC-07. Therefore, there is gross violation of principles of natural justice. Reliance was paled on decision of this court in W.P. No. 27651 of 2021. Furthermore, various provisions of CGST Act, 2017 were also referred to.The court held that ASMT-10 is mandatory before proceeding to issue GST DRC- 01, failure to issue the same in respect of the discrepancies forming the subject matter would vitiate the entire proceedings. It is well settled that when the Act prescribes the method and manner for performing an act, such act shall be performed in compliance with the said method and manner and no other manner. It was noticed that as the basis of allegations in ASMT-10 were different from the order passed in DRC-07, it was decided to remand back the case to the Assessing Officer to conclude the case after providing opportunity osf hearing to the assessee.The above decision is another example wherein courts have stepped forward and provided relief to the aggrieved assesses. It is very essential that the initial notice prescribing certain allegations aligns with the order passed thereon. The order which is passed beyond the scope of the allegations levelled in the show cause notice is non-est and deserves to be quashed. The revenue authorities should take a note of these settled judicial precedents before initiating any proceeding against the assessee failing which will result into sheer wastage of time and energy of courts and taxpayers.
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