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Explore the latest developments in GST we have covered in the April 2024 GST Updates. Discover important changes and major court decisions shaping the tax landscape, offering valuable insights for businesses and taxpayers

Section A: News & Updates

1. Notification No. 07/2024- Central Tax dated 08/04/2024

CBIC vide captioned notification has notified that ‘Nil’ rate of interest shall be charged for the registered persons mentioned in the said notification who were required to furnish the return in Form GSTR-3B but could not do so due to technical glitch on the portal.

2. Advisory on ‘Reset and Re-filing of GSTR-3B of some taxpayers’

Discrepancies were noticed in the returns of some taxpayers during the filing process between the saved data in the GST system and actually filed data in the fields of ITC availment and payment of tax liabilities. Therefore, the Grievance Redressal Committee of the GST Council gave an opportunity to the said taxpayers to re-file their GSTR-3B within 15 days of receipt of such communication on their registered email-ids.
The complete advisory on the captioned subject is provided in the link mentioned below.

3. Advisory: Auto-populate the HSN-wise summary from e-Invoices into Table 12 of GSTR-1

HSN-wise summary in Table 12 of GSTR-1 shall get auto-populated from the details provided in the e-invoice

4. Important Update: Enhancement in the GST Portal

GSTN shall launch an enhanced version of the GST portal on 3rd May 2024 so as to improve user experience and ensure that the information one need’s is accessible and easy to navigate.
The key enhancements to be included in this updated version, is reproduced herewith –

1. News and Updates Section: We have introduced a dedicated tab for all news and updates. This section now includes a beta search functionality, module wise drop downs and access to archived advisories dating back to 2017.
2. User Interface Improvements: Minor tweaks have been made to the homepage to enhance usability and aesthetics especially to make it convenient to use.
3. Updated Website Policy: We have updated our website policy, including the data archival policy. Details regarding web managers have also been included.

Section B: Summary of Case Laws (GST)

M/S ECO PLUS STEELS PVT. LTD. VERSUS STATE OF U.P. AND 3 OTHERS [2024 (4) TMI 291 – ALLAHABAD HIGH COURT]

The Petitioner, in the captioned case has filed two writ petitions, wherein one is challenging the impugned orders passed (by assessing officer & appellate authority) for confiscation and levy of penalty thereon; and the second is assailing the impugned orders (by assessing officer & appellate authority) passed under Section 74 of the CGST Act, 2017 for liability arising out of additional stock lying with the petitioner.

Facts of the case:

• The Appellate Authority had come to the finding that the officers in the survey did not carry out the quantification of the stock in the correct manner i.e. the stock was not weighed or counted even though the same could have been done in the Petitioner’s premises. Despite this finding, the Appellate authority upheld the confiscation and penalty.
• The calculation of the stock by the Appellate authority was merely on basis of an eye-estimate and accordingly the penalty was reduced by making a fresh assessment.
• While after the survey, the petitioner immediately raised an objection, however the order of confiscation by the assessing authority was passed after almost 11 months of the date of survey.

Hon’ble Allahabad HC held that-

1. The entire procedure followed by the authorities indicated not only a lackadaisical (careless) approach but also showcases the incompetence and inefficiency of the authorities that had carried out the survey in a shoddy manner and thereafter issued the show cause notice and passed impugned order of confiscation and penalty belatedly.
2. It is trite law that the burden of proof for imposition of penalty and confiscation of goods is on the Department and the same cannot be done on estimates especially when a physical verification based on counting and weighing of the goods is possible.
3. In addition, the inordinate delay in issuing show cause notice leads to an inference that the authorities have acted in a callous manner.
4. Since the said finding of excess stock is clearly without any basis in law and illegal, the initiation of proceedings under Section 74 of the Act cannot stand on any footing.

Thus, both the writ petitions were allowed and the impugned orders were quashed and set-side.

PEPSICO INDIA HOLDINGS PVT. LTD., VERSUS THE ADDITIONAL COMMISSIONER [2024 (4) TMI 161 – BOMBAY HIGH COURT]

The captioned case deals with the issue wherein the quasi-judicial adjudication was not fairly conducted and was bereft of the attributes of judicial adjudication despite the High Court order.

The petitioner had initially challenged the impugned show cause notice issued by the respondents, and pursuant to the hearing, the co-ordinate bench of Bombay HC has held that the petitioner shall raise preliminary objections concerning the maintainability of show cause notice and pursuant to such objections being considered and decided by the adjudicating officer, within four week’s of the petitioner being heard; the proceeding would continue in the said Court.

Accordingly, the petitioner raised the preliminary objections on the decided date. However, instead of considering only the preliminary objections, the adjudicating officer (without putting the petitioner on specific note or allowing any fair chance to place on record all relevant documents) proceeded to decide the show-cause notice itself and passed an O-I-O thereon. Thereafter, the Petitioner challenged the said Order.

HC, after perusing the documents and the previous order passed by this court, held that there could not be any vagueness in the course of quasi-judicial adjudication especially when there was a High Court order to that effect. The adjudicating officer ought to have granted an opportunity to the Petitioner to raise all contentions in the course of adjudication in the event he intended to decide the Show Cause Notice and not the preliminary objections. Neither was the petitioner informed of the intentions of the adjudicating officer nor did the department seek any modification of order expressing its intention to take decide the show cause notice and come to its conclusion, which breached a fair and proper opportunity to the petitioner.

Therefore, the impugned Order-in-Original was quashed and set aside and the proceedings were remanded to the adjudicating officer for deciding all the issues, including the preliminary objections, by a fresh order to be passed.

DIAMOND BEVERAGES PRIVATE LIMITED & ANR. VS. THE ASSISTANT COMMISSIONER OF CGST & CX [M.A.T. 1948 OF 2023 WITH I.A. NO. CAN 1 OF 2023]

The petitioner filed the captioned appeal against the order dated 25 September 2023 passed by the Ld. Single Bench challenging a show cause notice issued under Section 73(1) of the CGST Act.

The allegations in the impugned show cause notice was that

1. During F.Y 2018-19, the appellants had availed/utilized ITC on supplies, from suppliers whose registration was cancelled retrospectively; and
2. The appellants had claimed input tax credit arising out of debit notes by suppliers, who have not filed GSTR-3B Returns during the financial year 2018-19.

In light of the above, the appellants, in their reply to show cause had requested the authority to investigate at the supplier’s end. Further, reliance was placed on the judgement of Suncraft Energy Private Limited and another Vs The Assistant Commissioner, State Tax, Ballygunge Charge & others [2023-VIL-487-CAL] since the issue dealt in said case was identical. The HC in the said regard had allowed the writ upon holding that the department’s action of not resorting to any action against the supplier and ignoring the submissions of the petitioner was arbitrary.

Thus, in the said case, HC remanded the matter back to the adjudicating authority and directed to –

1. Inquire/investigate the matter from supplier’s end;
2. Collect necessary information;
3. Afford an opportunity to appellants to make their submissions;
4. Afford an opportunity of personal hearing; and

Then formulate their decision as to whether a show cause notice under Section 73(1) of the Act has to be issued or otherwise.

TVL. PERIYASAMY CHANDRAN VERSUS THE DEPUTY STATE TAX OFFICER [2024 (4) TMI 759 – MADRAS HIGH COURT]

In the captioned case, the petitioner is a registered contractor engaged in doing service-maintenance of streetlights in the Municipalities of Theni and Dindigul Districts of Kodaikanal. The petitioner is also registered under the GST Act, 2017.

Despite executing works amounting to Rs. 15,14,204/-, to the Municipality and recording the same in his GSTR-1, the Kodaikanal Municipality has wrongly reported the petitioner’s turnover in GSTR-7 as Rs. 1,79,99,069. This resulted in mismatch between GSTR-7 and GSTR-1. The grievance of the petitioner is that the respondent (department) without verifying the documents and returns, which are very much available in the web portal has passed the impugned order stating the escaped turnover of the petitioner as Rs. 1,64,84,865/-. Further, the notice sent by the Department through the electronic mode went unnoticed by the petitioner and therefore, he could not reply to the SCN in time. Therefore, the said scenario raised questions pertaining to the mode of communication to the taxpayers.

In the said regard, the HC opined that when Section 169 of CGST Act read with Rule 142 of the CGST Rules delineates the options available to department to prefer any mode of communication provided therein, the Department should work out on the possibility of issuing notice and other communications through post and that too, in a regional language. This would certainly enable the taxpayers to respond in time and the same will definitely reduce the unnecessary litigations. Also, when the department is conducting an enquiry and an adverse order is anticipated based on the enquiry, the Department, in all fairness, shall take a decision after providing sufficient opportunity to the taxpayers.

HC noted that while the Government is promoting Tamil language, is taking action against the traders like carpenters, cooks, vegetable vendors by issuing notice in English language. Also, the HC stated that the object of issuing notice is based on the principles of natural justice. “No one should be punished unheard. This object can be achieved only when the notices are issued in Regional languages, HC once again reiterates that the intention of any Government must be to promote the trade and not to curtail the same. While initiating action as against the traders, which would affect them adversely, the Department has to work out the possibility of issuing the notice in a regional language and also through post and phone, text message so that the traders can have the real opportunity. Otherwise, it would be an empty formality

Accordingly, the writ petition was allowed and the impugned order was set aside with a direction that respondent shall re-do the assessment for the year 2019-20 by providing an opportunity of hearing to the petitioner.

PACE SETTERS BUSINESS SOLUTIONS PVT. LTD. VERSUS UNION OF INDIA AND ORS. [2024 (4) TMI 289 – DELHI HIGH COURT]

The petitioner aggrieved by the denial of input tax credit on supplies of recovery agent services, (as the same are chargeable on reverse charge basis) has challenged Notification No. 30/2012-ST dated 20.06.2012, Notification No. 10/2014-ST dated 11.07.2014 and Notification No. 10/2017-Integrated Tax (Rate) dated 28.06.2017 issued by the Central Government in the captioned case. Further, in similar context the petitioner also impugned Section 17(3) of the CGST Act.

The petitioner is engaged in the business of providing services as a recovery agent to a Non-Banking Financial Company (NBFC). The service tax on services of a recovery agent to a banking company, a financial institution, or a non-banking financial company, is chargeable on a reverse charge basis. Therefore, the recipient paid the service tax on such services rendered by the petitioner and the petitioner is unable to utilize the credit in respect of the services availed by it from its sub-contractors for rendering the services as a recovery agent.

In relation to the impugned Notifications, HC held that in view of Section 68 (2) of the Finance Act, the Central government is duly empowered to notify the taxable services in respect of which service tax would be paid wholly or partially by the service recipient or for that matter any other person, and prescribe the manner thereof. The same powers have continued in Section 9(3) of the CGST Act and Section 5(3) of the IGST Act. Therefore, the impugned notifications were in exercise of the Central government’s legislative power conferred upon them by law.

HC also held that ITC is not a vested or inherent right of an assessee but a statutory right. The matter relating to whether any such credit is available and to which extent it is available, is a matter of statutory prescription. The right to avail input tax credit is available only if the statute provides for the same and that too to the extent that the statute permits. The service provider rendering services liable to reverse charge is not liable to pay tax on output and thus has no liability against which it can set off the ITC. Hence the denial of ITC in respect of services where GST is payable on reverse charge basis, cannot by any stretch be held to be irrational and arbitrary. Therefore, HC found that there are no merits in petitioner challenging the impugned notifications or the provisions of Section 17(3) of CGST Act.

LARSEN AND TOUBARO LIMITED AND ORS. VERSUS COMMISSIONER OF DELHI GOODS AND SERVICE TAX [2024 (4) TMI 160 – DELHI HIGH COURT]

The impugned show cause notice in the captioned case was issued covering grounds, namely- excess claim of Input Tax Credit (ITC), under-declaration of ineligible ITC, and ITC claimed from cancelled dealers, return defaulters, and tax nonpayers. The petitioner had submitted a detailed reply covering all the grounds mentioned in the SCN. However, without considering the detailed reply, the impugned order was passed under Section 73 of the CGST Act recording that the reply submitted by the taxpayer was not satisfactory.

In light of the above, the Hon’ble Delhi HC held that the observation of Proper officer in the impugned Order that the reply is not satisfactory, ex-facie shows that the detailed reply was not considered on merits and that the proper officer has not applied his mind. Further, in case any further details were required, no efforts were made to seek the same nor any opportunity was afforded to the petitioner to clarify its reply. Accordingly, the impugned order was set-aside and the matter was remanded back to the proper officer for passing a fresh speaking order in accordance with the law.

MAINA DEVI CHORARIA VERSUS THE UNION OF INDIA AND 6 ORS., [2024 (4) TMI 215 – GAUHATI HIGH COURT]

The petitioner in this writ petition has assailed the notification no. 09/2023-CT dated 31.03.2023, by virtue of which the time limit provided under Section 73(10) of the CGST Act for the financial years 2017-18, 2018-19 and 2019-20 was respectively extended to 31.12.2023, 31.03.2024 and 30.06.2024. The said notification is challenged on the ground that the conditions as provided in explanation to Section 168(A) of CGST Act were not prevalent on the date when the said notification was issued.

The contention of the department was that in view of the agenda of 49th CGST Council meeting, the extension of timelines under Section 73 (10) was made considering the incapacity of Officers to attend office or attending duty during the Covid-19 period. Consequently, it resulted in a huge backlog of the files for examination and issuance of Order for recovery of tax not paid or short paid or input tax credit wrongly availed or utilized during said period.

In response to the issues raised, HC opined that since the similar issue is pending before different High Courts, the recovery of amount assessed against the petitioner by the final order shall not be enforced.

VADIM INFRASTRUCTURE PRIVATE LIMITED VERSUS THE COMMERCIAL TAX OFFICER [2024 (4) TMI 363 – MADRAS HIGH COURT]

In this case, pursuant to audit observations, the department issued the SCN, wherein the primary allegation pertains to turnover reconciliation and differences between GSTR 3B and Form 26AS. Consequently, the impugned order was passed and the petitioner’s bank account was attached.

The respondents in the impugned order recorded that the petitioner did not reply to the show cause nor placed on record documents pertaining to the turnover from Tamil Nadu.

The petitioner contented that the turnover (based on which the tax demand was confirmed) was inclusive of turnover from all States. Also, w.r.t differences between the GSTR 3B return and Form 26AS, it was contended that the amounts mentioned in the Form 26AS also related to transactions across India thus there was a potential duplication between turnover reconciliation and GSTR 3B/Form 26AS differences.

HC noted that the conclusion drawn by department cannot be completely disregarded in as much as the petitioner should have placed on record the trial-balance relating to Tamil Nadu and supported with a CA certificate, Therefore, the HC set aside the impugned order on the following terms:-

1. The respondents are permitted to appropriate- (a) 10% of the disputed tax demand relating to all heads of demand, other than turnover reconciliation and difference between the GSTR 3B return and Form 26AS, and (b) 5% of the tax demand relating to turnover reconciliation and GSTR 3B/Form 26AS differences.
2. The attachment of the petitioner’s bank account would be lifted upon realization of the appropriated amounts, which shall be retained until the outcome of the remanded proceedings.

M/S. SILVER&C.Z. INTERNATIONAL VERSUS ASSISTANT COMMISSIONER (ST) (FAC), CHENNAI [2024 (4) TMI 664 – MADRAS HIGH COURT]

The petitioner engaged in the bullion and jewellery trading business, claims that he was unaware of proceedings culminating in impugned order because the intimation and show cause notice were uploaded on the “View Additional Notice and Orders” tab on the GSTN portal, without any other form of communication made to the petitioner.

While the petitioner was denied a reasonable opportunity to contest the tax demand on merits, the court examined the impugned order wherein the ground on which the tax demand was confirmed, petitioner’s failure to respond to the show cause notice with relevant documents. Thus, acknowledging the importance of affording a fair opportunity to contest the tax demand, the court set aside the impugned order and the matter was remanded back for reconsideration, with the condition that the petitioner remits 10% of the disputed tax demand within stipulated time.

SOUTHERN ENGINEERING SERVICES VERSUS DEPUTY STATE TAX OFFICER – 1, CHENNAI [2024 (4) TMI 653 – MADRAS HIGH COURT]

In July quarter of assessment period 2017-18 i.e. during the nascent stage of GST implementation, the petitioner, while filing the GSTR-1, inadvertently reported a supply made to a SEZ Unit (zero-rated supply) under taxable head. The petitioner placed on record the relevant tax invoice which prima-facie indicated that the supply was made to SEZ and thus qualifies as a zero-rated supply. The same could be validated from the corresponding GSTR-3B.

In light of the above, HC quashed the impugned assessment order is and remanded the matter for re-consideration by the assessing officer.

BPD STEEL SYNDICATE PVT. LTD. VERSUS UNION OF INDIA AND OTHERS [2024 (4) TMI 652 – ORISSA HIGH COURT]

HC in the said case observed that the impugned order in this writ petition is appealable under Section 112 of the CGST Act i.e. appealable before the Appellate Tribunal; also that the non-constitution of Appellate Tribunal as required under Section 109 of CGST Act has deprived the petitioner of its statutory remedy of Appeal and the corresponding benefits envisaged under Section 112 of CGST Act.

Acknowledging the absence of constitution of Appellate Tribunal, the Government of India issued the Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019, dated 3.12.2019 clarifying the calculation of timelines to make appeals. The calculation of the start of 3 months under Section 112(1) and 6 months (in case of appeals by government) under Section 112(3) shall be considered to be the later of the following dates:-

1. date of communication of order; or
2. the date on which the President or the State President, as the case may be, of the Appellate Tribunal after its constitution under section 109 of CGST Act, enters office;

In tune with the above-mentioned Order, the Central Board of Indirect Taxes and Customs, GST Policy Wing vide Circular No.132/2/2020-GST Dated 18th March, 2020 further clarified that since the time limit to make application to appellate tribunal will be counted from the date on which President or the State President enters office, the appellate authorities may (without waiting for the constitution of the appellate tribunal), dispose all pending appeals expeditiously by mentioning the clarified timeline in the preamble.

Considering the above order and circular, the court directs as follows:

1. The petitioner is granted the statutory benefit of stay under Section 112 (9) of CGST Act subject to verification of deposit of sum equal to 20% of the remaining amount of tax in dispute; in addition to the amount earlier deposited under Section 107(6) of the CGST Act.
2. The petitioner is required to file their appeal under Section 112 of CGST Act once the Tribunal is constituted, and the President or State President enters office.
3. Failure to file an appeal before the Tribunal within the specified period, would grant the respondent-authorities the liberty to proceed further in accordance with the law.

RAVI CHITRA VERSUS THE ASSISTANT COMMISSIONER (ST) & Anr. [2024 (4) TMI 655 – MADRAS HIGH COURT]

The allegation on the petitioner was pertaining to wrongful availment of ITC for FY 2018-19. In its reply, the petitioner had submitted original tax invoices, the supplier’s ledger accounts, bank statement and relevant GSTR returns; however, e-way bills, lorry receipts, weighment slips and the like were not submitted. Therefore, the impugned Order confirming the demand was issued due lack of proof for actual movement of goods. The petitioner sought another opportunity to place all relevant documents on record and contest the tax claim on merits.

HC taking into account the nature of documents submitted by the petitioner which includes bank statement showing payments to supplier, the GSTR-2A indicating availability of ITC, was of the view that it just and appropriate to accord opportunity to the petitioner to prove actual movement of goods; subject to petitioner remitting 20% of disputed tax demand within the stipulated time.

Consequently, the impugned order was set-aside and the order of bank attachment was raised.

M/S. SATYAM CASTINGS PVT. LTD. V. DEPUTY DIRECTOR, DGGI, & ORS. [2024 (4) TMI 419 – ORISSA HIGH COURT]

Hon’ble Orissa HC in the captioned case has dealt with deep-dived into the provisions of Section 6(2) of the CGST Act concerning simultaneous investigation by the Central and State GST authorities.

In the captioned case, the petitioner is a MSME dealing in manufacture of cast iron products. The petitioner has raised the dispute w.r.t the parallel proceedings initiated by the officer under the State GST Act and DGGI. In petitioner’s case, the State authorities conducted the investigation 20 months prior to initiation of proceeding by DGGI authorities. Also, it was petitioner’s submission that the period covered by both the authorities is same. Department’s argument was that the DGGI was investigating clandestine supply by the petitioner during March’ 2022 while State authorities were investigating receipt of materials from one supplier namely- M/s Anamika Enterprises.

The Honourable HC opined that if the subject matter of the proceeding is entirely different, there is no bar to the maintainability of the proceeding. What is barred is the initiation of the proceeding on the same subject matter by the proper officer. Also, the words “subject matter can be equated with the words “cause of action”.

Further, reference was made to the judgement of Apex Court in case of Vallabh Das v. Madan Lal & Ors. to discuss the concept of ‘subject matter’. Accordingly, it was held that the expression includes cause of action and the relief claimed. Unless the cause of action and the relief claimed in the second suit are the same as in the first suit, it cannot be said that the subject matter of the second suit is the same as that in the previous suit.

HC refrained itself from recording any definite opinion at this stage that the impugned show cause notice issued by the DGGI is barred or not by virtue of operation of Section 6(2)(b) of the CGST/OGST, Act. Considering the fact that show cause notice has already been issued, HC declined to interfere in the matter with a liberty to petitioner to file a reply against the said SCN.

M/S. FIRST CHOICE OUTSOURCING SERVICES, TN/1/ARA/2024 2024 (4) TMI 358 – AUTHORITY FOR ADVANCE RULING, TAMILNADU

The applicant is involved in supply of labour/employees to others (Principal Employer) where the said labour/employees work under the direct supervision and control of the Principal Employer. As per the work order sample, the applicant was responsible for paying the salary, and depositing the EPF, ESIC etc. pertaining to the said labour/employees supplied by him to the principal employers. However, the applicant submitted that only the payment to these employees were routed through them and the same does not constitute as their income. Thus, according to the applicant in view of Schedule III of the CGST Act, the salary/wages and related payments should not form part of the taxable value for the purpose of levy of GST.

Hence, in the present case the applicant filed an advance ruling application (ARA) to seek clarity on whether GST is payable only on the service charges/commission received by them upon supply of manpower or even on the salary/wages and related payments made to the employees.

Incidentally, the applicant was issued a show cause notice (SCN) alleging short declaration of taxable outward supply, availment and utilization of ineligible ITC, excess availment of ITC etc. The members of the Advance Ruling were appraised of the issuance of SCN during the personal hearing for the said application.

Although, the said SCN was issued pursuant to advance ruling application however, the initiation of case (based on which the said SCN was issued) was prior to said application. Therefore, in light of (i) first proviso to Section 98(2) of the CGST Act which provides “the Authority shall not admit the application where the question raised in the application is already pending or decided in any proceedings in the case of an applicant under any of the provisions of this Act”; and (ii) considering the applicants failure to prove non-existence of nexus between clarification sought vide said advance ruling and issue contended in the SCN pertaining to short payment of GST, the said application was rejected

Section B: Summary of Case Laws (SERVICE TAX)

M/S FEDERAL MOGUL TPR INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE [2024 (4) TMI 31 – CESTAT BANGALORE]

The appellants and their sister concern namely M/s. Federal Mogul Goetze India Ltd. (FMGL, for short) were functioning within the same premises using common human resources at Bangalore. The appellant had availed cenvat credit of the service tax paid on ‘management fee’, and on ‘common sharing of Head office services’; but the department contended the said availment to be inadmissible since the same were not in the prescribed form/format as per the provisions of Rule 9(1) of Cenvat Credit Rules (CCR) 2004.

In the said regard, the captioned case deals with three main issues namely:-

1. Whether appellants are eligible to avail cenvat credit on input services viz. ‘management fee’ and ‘common sharing of Head office services’;
2. Whether the documents on which credit is availed were in order; and
3. Show cause notices were beyond limitation.

Concerning the first issue, the HC held that there was reasonable nexus between the services and the activities of the appellant hence there could be no dispute on the admissibility of the cenvat credit on management fee and HO common expenses and the same was allowed.

For the second issue, the appellant’s argued that – the service tax paid by the service provider cannot be questioned in the hands of the service receiver and supported it with a Madras HC judgement in case of Modular Auto Limited Vs. CCE, Chennai [2018 (8) TMI 1691 – Madras High Court]. Consequently, the HC held that while the payment of service tax made by FMGL on ‘management fee’ and ‘common sharing of HO expenses’ were undisputedly accepted by the department, then denying cenvat credit to the appellant (as receiver of service) could not be sustained. In addition to this, the HC observed the provisions mentioned in Rule 9(2) of CCR, 2004, (i.e. when the documents have the particulars/details as mentioned therein and the jurisdictional Deputy Commissioner/Assistant Commissioner is satisfied that the goods covered by the document have been received and accounted for in the books of the account of the receiver, he may allow the Cenvat credit) and found the availment of cenvat credit to be in order.

Lastly, with respect to the third issue, the HC held that, the appellant filing ER-1 returns regularly establishes that there has been no suppression of facts and therefore the impugned show cause notices invoked extended period of limitation and the imposition of penalties under Section 11AC of Central Excise Act, 1994 read with Rule 15 of CCR, 2004 could not be sustainable.

M/S VC SOLUTIONS PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE & CGST [2024 (4) TMI 112 – CESTAT ALLAHABAD]

The captioned case deals with adjustment of service tax paid with subsequent service tax liability and the dispute is concerning Rule 6(3) of the Service Tax Rules, 1994.

The appellant’s balance sheet for the year 2009-10 captured the total value of services provided at INR. 24,55,90,004/- whereas as in the ST-3 returns, the total value of services appeared at INR. 27,63,86,166/-; and the difference was nothing but the excess amount refunded back to their service recipients by way of issuing credit notes (inclusive of service tax). The said adjustment was made by the appellant in light of Rule 6(3) of the Service Tax Rules, 1994.

Consequently, the respondent, refused to accept the said credit note on the ground that it was issued in respect of only one bill and without any apparent discussion and negotiation; therefore raising doubt on the genuineness of the credit note. In addition to this, the respondent contended that the Rule 6(3) is applicable only to the case of excess payment of service tax which can be made good in subsequent period, and not to the case where taxable values are not ascertainable for longer period.

The HC in the said case after perusing the said Rule 6(3) held that the excess amount of service tax paid by the assessee can be adjusted against his service tax liability for the subsequent period provided that the assessee has refunded the value of taxable service and service tax thereon to the person from whom it was received. Accordingly since the appellant in this case has refunded the excess service tax back to its customers, the appeal was allowed.

M/S. INOX AIR PRODUCTS PVT. LTD. VERSUS THE ASSISTANT COMMISSIONER [2024 (4) TMI 32 – HIMACHAL PRADESH HIGH COURT]

The captioned case clarifies the position w.r.t “place of removal” for the GTA services provided under a F.O.R sale contract.

The appellant, who is a manufacturer of industrial gases, had entered into an agreement for delivery of its products upto the customer’s premises. As per the purchase order, the outward transportation from factory premises to customer’s premises was appellant’s responsibility i.e. the ownership is transferred only when the goods are delivered and accepted by customers. Also, the consideration in the purchase order was inclusive of transportation charges, the excise duty and VAT (as applicable). The appellant availed and utilized the CENVAT credit of duty paid on Inputs, capital goods and the input services including GTA services (i.e. service tax paid on the outward freight for transporting the gases from factory gate to the customer’s premises) in terms of Rule 3(1) read with Rule 3(4) of the CENVAT Credit Rules, 2004 (CCR).

Per contra, the respondents contended that under Rule 2(1) of the CCR, 2004, the place of removal shall be construed as the factory gate and therefore the credit of service tax paid on outward transportation of goods from factory gate to the customer’s premises, availed by the appellant was inadmissible. The said stand was upheld by the First Appellate Authority and even by the CESTAT wherein the reliance was placed upon the judgement of Apex Court in case of Ultra Tech Cement.

Hon’ble HC held that the eligibility to avail credit of the service tax paid on the transportation during removal of excisable goods would depend upon the “place of removal” which is the place where sales take place. Further, in an F.O.R Sale, freight charges form part of assessable value and since the ownership & responsibility of seller is transferred only upon delivery, the place of sale shall be considered as – the buyer’s premises.

Therefore, upon referring to similar SC precedents and in light of the CBIC Circular No. 1065/4/2018-CX dated 08.06.2018, HC allowed the appeal and set aside the impugned orders.

CLICK HERE April 2024- Latest GST Notifications and Judgements.pdf

CLICK HERE Monthly Statutory Compliance Calendar for F.Y. 2024-25