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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 28.01.2016

SECTION 20-PART C REGARDING GENERAL PROVISIONS RELATING TO DEMAND OF TAX

GST DAILY DOSE OF UPDATION:-
 
SECTION 20-PART C REGARDING GENERAL PROVISIONS RELATING TO DEMAND OF TAX:-
 
The Part C pertaining to General Provisions relating to demand of tax in the proposed section 20 of the GST Act, 2016 is being discussed in this update.
 
The sub-section (1) states that where service of notice is stayed by an order of Court or Tribunal, the period of stay shall be excluded in computing the time period of one year, three years or five years, as the case may be.
 
The sub-section (2) states that where any appellate authority or tribunal or court concludes that the notice issued under sub-section B(1) or B(2) is not sustainable for the reason that the charges of fraud or any wilful-misstatement or suppression of facts to evade tax has not been established against the person to whom the show cause notice was issued, the proper officer shall determine the tax payable by such person for the period of three years, deeming as if the notice was issued under sub-section A(1) or A(2). In this regard, it is worth observing that this provision seeks to nullify the effect of number of judicial pronouncements of Supreme Court or High Court which have quashed entire demands on the basis of fact that extended period was wrongly invoked as there was no fraud, collusion or suppression of facts. The above provision also provides liberty to the revenue department to invoke extended period of limitation in every case without fear of losing demands of normal period of limitation. This is a very harsh provision for assessees as practically there will be no harm to the revenue department even in cases where extended period of limitation has been wrongly invoked by them. This provision seeks to remove the significance of invoking normal period of limitation as even otherwise, the demands of normal period of limitation will be confirmed automatically.
 
The other provisions like grant of opportunity of personal hearing and accepting adjournment of hearing for three times are similar to the provisions already prevalent in force. It is pertinent to note that sub-section (6) prescribes that the amount of tax, interest and penalty demanded in the order shall not be in excess of the amount specified in the notice and no demand shall be confirmed on grounds other than the grounds specified in the notice. This is welcome provision as it is observed often that the demands are confirmed on the grounds that were not alleged in the show cause notice.
 
Furthermore, sub-section (8) mentions that interest on tax short paid or not paid shall be payable whether or not specified in the order determining the tax liability thereby meaning that interest is automatic. However, this is contradictory to section 20 (D)(1) which states that all the provisions of A, B and C mutatis mutandis apply to interest. On one hand, it is being stated that interest is payable whether or not specified in the order whereas on the other hand, it is being prescribed that the period of limitation also applies to interest. Suppose, if in a particular show cause notice, there is no mention of interest, and consequently, no mention in the order, then as per sub-section (8), interest is payable irrespective of the fact that it is not specified in the order. However, if provisions of sub-section (8) are implemented, the provisions of section 20(D)(1) become otiose as when interest is mandatorily payable, where is the need to compute time limit for confirming the same?
 
Finally, the important provision is contained in sub-section (9) which specifies that the officer issuing order shall be different from the officer issuing show cause notice. This is really need of the hour as practically it is difficult for the officer issuing show cause notice to drop the proceedings initiated by him. The assessees can expect a fair decision if the officer issuing notice and that passing order is different. Moreover, sub-section (10) prescribes that the adjudication proceedings shall be deemed to be concluded if the notice to show cause is not decided within one year or eighteen months as provided in sub-section A(7) or B(7). This will definitely entrust responsibility on the revenue officers to expeditiously adjudicate and decide the cases.

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