Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
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.  

Comments

Publish Date: 05 Mar, 2015
Print   |    |  Comment

Old practice of Government-High Court Decision undone!!

Old practice of Government-High Court Decision undone!!
 
An article by: CA Pradeep Jain,
CA Neetu Sukhwani &
Bharat Rathore
 
Introduction:-It is a very old tactic followed by the government that when the interpretation taken by High Court or Supreme Court on an issue is consistently held against the revenue, the best solution lies with amending the statutory provision or adding explanations to it. This is the strategy that the Modi’s government has adopted in this Budget also. All the propaganda regarding ‘non-adversial and stable tax environment’ with doing away the practice of retrospective amendments were only made to lure the public to give votes. The amendment made by the government in Rule 5 of the Cenvat Credit Rules, 2004 by the notification no. 06/2015-CE (N.T.) dated 01.03.2015 is yet another example of the practice of the government to override and nullify the judicial pronouncements.
Backdrop of the issue under consideration:-Rule 5 of the Cenvat Credit Rules, 2004 pertains to the refund of accumulated cenvat credit available to the exporters. The Rule (1) states that:-
RULE 5 Refund of CENVAT Credit.– (1) A manufacturer who clears a final product or a intermediate product for export without payment of duty under bond or letter of Undertaking , or a service provider who provides an output service which is exported without payment of service tax, shall be allowed refund of CENVAT credit as determined by the following formula subject to procedure, safe guards, conditions and limitations, as may be specified by the Board by notification in the Official Gazette.
It is worth noting that Explanation no. 1 (1) to this Rule states that for the purpose of this rule,- “export service” means a service which is provided as per Rule 6A of the Service Tax Rules, 1994. However, there is no clarification for the “export of goods”. Consequently, the issue that arose was whether clearances by a manufacturer to 100% EOU would be eligible for the refund of accumulated credit under Rule 5 or the refund is to be granted only for the physical exports made without payment of duty under ‘bond or letter of undertaking’. It was contended by the assessees that clearance to 100% EOUs are effected against CT-3 that is issued by debiting the requisite amount from the bond executed by 100% EOUs and consequently, such clearances are also to be considered at par with export under bond. Moreover, the Hon’ble Gujarat High Court has held in the case of Commr of C.Ex. Vs Shilpa Copper Wire Industries [2011(269) E.L.T. 17 (Guj.)] that refund of unutilised cenvat credit in case of deemed exports is also admissible and while pronouncing this reliance has been placed on Apex Court decision. Not only this, similar view was taken by the Hon’ble Gujarat High Court in the case of Commr of C.Ex. & Customs Vs NBM Industries [2012 (276) E.L.T. 9 (Guj.)] wherein it was also concluded that refund under Rule 5 cannot be denied on the ground that it is available for physical exports only and not admissible for deemed exports. In this case, the decision was delivered by placing reliance on another Apex Court decision given in the case of Virlon Textile Mills Ltd. Vs Commr of C.Ex., Mumbai [2007(211) E.L.T. 353 (S.C.)]. It is also worth observing that recently, the same Gujarat High Court in the case of E I Dupont India Pvt. Ltd. Vs Union of India [2014(305) E.L.T. 282 (Guj.)] has confirmed the fact that even deemed exports are eligible for refund under Rule 5 of the Cenvat Credit Rules, 2004 and even proposed to issue strictures against the adjudicating authority which ignored the binding precedents laid by the High Court and Supreme Court. In pursuant to the above decision, the Board also issued Instruction no.F. No. 201/01/2014-CX.6 dated 26.06.2014wherein it has been strictly instructed to follow the judicial discipline by the adjudicating authorities when the issue is covered by decisions of High courts or Supreme court. This instruction also clearly states that if there exists any precedent judgement which has been decided against the revenue then the officers shall be bound by it. Moreover, even if the appeal has been filed against the precedent judgment by the revenue department, still the same is required to be followed for deciding the issue in case of other assessees in view of the decision given by the Supreme Court in the case of Kamalakshi Corporation Ltd.
Inspite of the above cited decisions pronounced by the High Court, the assessees claiming refund under Rule 5 for deemed exports were harassed by taking contention that the revenue department has filed Special Leave Petition against the decision given by the Hon’ble Gujarat High Court in the case of E I Dupont India Pvt. Ltd. Vs Union of India [2014(305) E.L.T. 282 (Guj.)]. It is also worth mentioning here that the stay application filed by the revenue department was heard on 28.11.2014 wherein no stay was granted by the Apex Court and the matter was posted for final hearing on 24.02.2015 and the final outcome is still pending in this case.
Amendment made in Rule 5 vide this Budget:-In this budget, a new clause (1A) has been inserted in the Explanation to Rule 5 which specifies that “export goods” means any goods which are to be taken out of India to a place outside India. This insertion by way of explanation has nullified the ratio of the above cited judicial pronouncements of the Gujarat High Court. This explanation has clearly mentioned that export goods means any goods which are to be taken out of India to a place outside India thereby meaning that the deemed exports will be out of the purview of the provision of Rule 5 of the Cenvat Credit Rules, 2004. Hence, the outcome of the SLP in the case of E I Dupont India Pvt. Ltd.will be of less relevance.
Before Parting:-The above analysis clearly reflects that the government is vested with discretionary powers to undo decisions pronounced against them by amending the statutory provision in their interest. Not only this, the assessees may be prepared to face litigations even for the prior period on the ground that the explanation inserted vide Budget, 2015 is clarificatory in nature and is to be applied retrospectively. Well, all the hapless assessees can do is to face the torture of litigation even on settled issues! 

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com