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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. 90TH ON REFUND OF TAX FOR NON-REALISATION FROM RECIPIENT

GST UPDATE NO. 90TH ON REFUND OF TAX FOR NON-REALISATION FROM RECIPIENT
The ultimate burden of taxes is to be borne by the service recipient in case of indirect taxation laws. There is provision to reverse credit availed by the recipient if payment has not been made to the supplier within a period of 180 days. However, recently, an interesting case was reported wherein the hon’ble Orissa High Court allowed refund of excess taxes paid by the service provider on the grounds that the recipient became bankrupt and the service provider would receive only portion of the amount due from recipient. In the present update, we are discussing the latest judgement pronounced by Hon’ble Orissa High Court in the case of M/S JAGAT JANANI SERVICES where the refund of excess service tax paid was allowed. In the instant case, the petitioner was in the CIRP process under insolvency and bankruptcyproceedings and was entitled to receive a certain sum against the service tax amount. The petitioner has contended that the service receiver has earlier claimed the ITC on the service tax paid by him and has rightfully reversed the same in the ITC ledger maintained by the service receiver. It was also contended that the refund is rightfully eligible to them as there was reduction in outstanding amount from January 2017-December 2017 where the petitioner has paid the service tax liability on the same. Hence the petitioners claim refund of service tax on the reduction of amount receivable from their insolvent recipient. The hon’ble High Court held that since the petitioner is entitled to receive only 20.5% of the admitted claim amount under the IBC, the excess service tax paid by the petitioner is to be refunded back tothem. The above decision is extremely favourable to the assessee as there are situations wherein service tax has been paid but the amount of consideration is not being realised from the service recipient because service tax is to be paid on accrual basis. In such cases, although as per law, the incidence of service tax is to be borne by the service recipient, the said service tax is borne by the service provider as it is being paid by service provider from his own pocket. In such situation, this decision will come to the rescue of the service provider. It is worth mentioning that similar situation arises when recipient is required to reverse input tax credit for non-payment to supplier within a period of 180 days from the date of invoice. Hence, refund should be granted in such cases also by placing reliance on the decision given by the Hon’ble Orissa High Court. One may also ponder upon other situations where tax has been paid by the supplier but recipient is not willing to avail the services infuture. For example, what happens if a supplier receives an advance payment for a service contract for which the supplier has raised an invoice and paid GST but subsequently no service is provided? Whether supplier should claim refund of tax paid or adjust his tax liability in his returns? The CBIC clarifies that in such a situation, the supplier is required to issue a credit note and declare the details of such credit notes in the return for the month during which such credit note has been issued. The tax liability will be adjusted in the subsequent return and there is no need to file a separate refund claim. However, if there is no output liability against which a credit note can be adjusted, supplier may file a claim under "Excess payment of tax, if any" through Form GST RFD-01.
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