GST Return and Compliance – Outspire Innovations https://outspireinnovations.com Sun, 19 May 2024 08:30:58 +0000 en-US hourly 1 https://wordpress.org/?v=6.7.2 Refund Claim Cannot Be Denied Due to Technical Issues: Delhi High Court Ruling https://outspireinnovations.com/refund-claim-cannot-be-denied-due-to-technical-issues/ Sun, 19 May 2024 08:24:43 +0000 https://outspireinnovations.com/?p=6979

In a recent landmark ruling, the Delhi High Court has reaffirmed the rights of taxpayers in refund claims, emphasizing that technical glitches should not impede rightful claims. Let’s delve into the specifics of this case and its implications for taxpayers and tax authorities alike.

Case Overview: M/S. Sethi Sons (India) vs. Assistant Commissioner and Ors

📅 Date of Ruling:22nd December 2023

📝 Case No.: W.P.(C) 4179/2022

The petitioner, M/s Sethi Sons (India), a sole proprietorship firm engaged in exporting goods and services, encountered technical difficulties while filing refund applications for unutilized Input Tax Credit (ITC) on the GST portal. Despite multiple attempts, the petitioner could not complete the online filing process due to technical errors.

Key Events Leading to the Dispute

1⃣ Attempted Refund Filing: The petitioner attempted to file refund applications for unutilized ITC for the months of August 2017 and July 2017 on separate occasions. However, technical glitches on the GST portal hindered the filing process.

2⃣ Manual Submission Attempts: Despite facing online challenges, the petitioner made several efforts to manually submit the applications. However, the concerned officer declined to accept them.

3⃣ Delayed Consolidated Application: Subsequently, the petitioner filed a consolidated refund application on 5th February 2020, seeking a refund of ₹13,43,757/-. However, the claim was denied citing it was filed beyond the stipulated two-year period from the date of export.

Court’s Ruling and Implications

The High Court, acknowledging the challenges faced by taxpayers and GST authorities during the initial implementation of the GST regime, emphasized the importance of bona fide attempts by taxpayers to file refund applications. The Court held that if a taxpayer is prevented from filing an application due to technical glitches or any reasons attributable to GST authorities, the claim cannot be denied based on delay.

Key Takeaways for Taxpayers

✅ Protection of Rights:Taxpayers can take assurance from the Court’s stance, ensuring their rights are protected even in the face of technical challenges.

✅ Bona Fide Efforts:The ruling underscores the significance of bona fide attempts by taxpayers to comply with refund procedures, even in the presence of technical obstacles.

✅ Legal Precedent: This ruling sets a legal precedent, providing clarity on the treatment of refund claims affected by technical issues.

Conclusion

The Delhi High Court’s verdict in the case of M/S. Sethi Sons (India) vs. Assistant Commissioner and Ors reaffirms the principle that genuine efforts by taxpayers to file refund claims should not be thwarted by technical hurdles. This ruling not only upholds taxpayer rights but also fosters a more equitable tax environment.

]]> Understanding Recovery Proceedings Under the CGST Act: A Recent High Court Ruling https://outspireinnovations.com/understanding-recovery-proceedings-under-the-cgst-act/ Sun, 19 May 2024 07:20:20 +0000 https://outspireinnovations.com/?p=6969

In a significant judgment, the Hon’ble Madras High Court addressed an important issue regarding the initiation of recovery proceedings under the Central Goods and Services Tax (CGST) Act, 2017. This ruling clarifies the timeline and the procedures authorities must follow before initiating such proceedings.

Case Background: TVL. Cargotec India Pvt. Ltd. vs. Assistant Commissioner (ST), Chennai

On April 23, 2024, the Hon’ble Madras High Court delivered its verdict in the case of TVL. Cargotec India Pvt. Ltd. vs. Assistant Commissioner (ST), Chennai. The crux of the matter was whether recovery proceedings could be initiated against an assessee before the expiry of three months from the date of the order passed by the department.

Key Issue

Is it possible to initiate recovery proceedings against an assessee before the expiry of three months from the date of the order passed by the department?

The Court’s Judgment

The court ruled that recovery proceedings should not be initiated before the statutory period of three months for filing an appeal has expired. Here’s a breakdown of the court’s findings:

1️⃣ Assessment Order and Tax Debit: In this case, the tax amount was debited from the electronic ledger of the assessee before the three-month period for filing an appeal had expired.

2️⃣ Section 78 of the CGST Act: The authorities invoked Section 78 of the CGST Act, 2017, which allows the recovery of tax. However, the court found that the authorities failed to adequately explain the application of this section.

3️⃣ Refund Ordered: As a result, the court ordered that the amount debited be refunded to the assessee.

Implications of the Ruling

This judgment has significant implications for businesses and tax authorities alike:

1️⃣ Adherence to Statutory Periods: Authorities must respect the statutory period of three months given to assessees to file an appeal against an assessment order.

2️⃣ Proper Invocation of Legal Provisions: Authorities need to clearly justify the invocation of any legal provisions, such as Section 78, before proceeding with the recovery of taxes.

3️⃣ Assessee Rights: This ruling reinforces the protection of assessees’ rights, ensuring they have adequate time to appeal without premature financial burden.

Section 78 of the CGST Act, 2017

Section 78 stipulates that recovery proceedings can only commence after the expiry of three months from the date of the order. This period allows the assessee to file an appeal. The section ensures that the assessee is not unduly pressured by immediate recovery actions, providing a fair opportunity to contest the assessment.

Conclusion

The Madras High Court’s decision in favor of TVL. Cargotec India Pvt. Ltd. is a critical reminder of the protections afforded to businesses under the law. By ensuring that recovery proceedings cannot start prematurely, this ruling upholds the integrity of the appeals process.

If you believe your business has been subject to premature recovery actions, contact us for expert advice and assistance. We are here to help you navigate complex compliance landscapes and protect your rights.

At Outspire Innovations, we are committed to keeping you informed about important legal and regulatory developments that impact your business.

Stay tuned for more insights and updates.

]]> Blocking ITC by Creating a Negative Credit in the Electronic Credit Ledger https://outspireinnovations.com/blocking-itc-by-creating-a-negative-credit-in-the-electronic-credit-ledger/ Thu, 16 May 2024 11:02:33 +0000 https://outspireinnovations.com/?p=6945

The recent decision by the Telangana High Court in the case of Laxmi Fine Chem v. Assistant Commissioner (WRIT PETITION NO. 5256 OF 2024) marks a significant moment in GST law. This ruling, dated March 18, 2024, clarifies an important aspect of the Central Goods and Services Tax (CGST) Rules, 2017, particularly Rule 86A, which deals with the blocking of input tax credit (ITC).

Key Takeaways from the Ruling
  1. Permissible ITC Blocking: The court held that authorities can block ITC only up to the amount currently available in the taxpayer’s electronic credit ledger.
  2. Prohibition on Future ITC Blocking: Blocking credit that the taxpayer could avail in the future is not allowed.
  3. Contravention of Rule 86A: Creating a negative balance in the electronic credit ledger to block future ITC is against Rule 86A of the CGST Rules.
  4. Immediate Action Required: Authorities were directed to recall the order blocking the ITC immediately.
Implications of the Ruling

This ruling emphasizes the need for tax authorities to adhere strictly to procedural and substantive requirements. Here’s why this decision is crucial:

  1. Fairness in Compliance: Ensures taxpayers are treated fairly under the GST framework.
  2. Legal Boundaries: Reinforces that authorities must operate within the boundaries set by the law.
  3. Taxpayer Rights: Protects the rights of taxpayers to claim ITC without facing arbitrary restrictions.
Understanding Rule 86A of the CGST Rules, 2017

Rule 86A gives tax authorities the power to block ITC in certain circumstances, such as fraud, willful misstatement, or suppression of facts. However, this power is not unlimited:

  1. Scope of Blocking: ITC can only be blocked up to the amount currently in the electronic credit ledger.
  2. No Negative Balances: Authorities cannot create a negative balance by blocking future credits.
Case Overview: Laxmi Fine Chem v. Assistant Commissioner

In this case, Laxmi Fine Chem challenged the action of the Assistant Commissioner who blocked their ITC by creating a negative balance in the electronic credit ledger. The Telangana High Court ruled in favor of Laxmi Fine Chem, stating that such action was beyond the authority’s powers as defined under Rule 86A. The court’s directive to recall the blockage order reaffirmed the necessity for compliance with the GST rules.

Conclusion

The Telangana High Court’s decision is a landmark ruling that upholds the principles of fairness and legality in the administration of GST. It serves as a reminder to both taxpayers and tax authorities about the importance of adhering to the rules and protecting the rights enshrined within them.

At Outspire Innovations, we are committed to keeping our clients informed about crucial legal developments like this one. Understanding these changes helps you stay compliant and make informed decisions about your business operations.

Let us help you navigate the complexities of GST and other statutory requirements with ease.

]]> Input Tax Credit Benefits: Telangana AAR Ruling on Demo Car Purchases https://outspireinnovations.com/telangana-aar-ruling-on-demo-car-purchases/ Tue, 07 May 2024 08:28:15 +0000 https://outspireinnovations.com/?p=6819

Are you in the automobile business, grappling with the complexities of input tax credit (ITC) on demo car purchases? A recent ruling by the Authority for Advance Rulings (AAR) in Telangana brings clarity to this issue. In the case of M/S. LANDMARK CARS EAST PRIVATE LIMITED, the AAR provided crucial insights that could significantly impact your tax planning strategies.

Let’s delve into the details:

Key Takeaways from the Telangana AAR Ruling

  1. Exemption from ITC Restriction: The AAR clarified that the restriction on input tax credit, as outlined in section 17(5)(a)(A) of the GST Act, does not apply to purchases of demo vehicles. This exemption is applicable when the demo cars are supplied after the specified time for providing test drive facilities.
  2. Uniform Tax Rate: In line with the ruling, the outward supply of demo cars would attract the same rate of tax as their inward supply. This uniformity simplifies tax calculations and ensures consistency in compliance.
  3. Treatment of Reimbursement: According to the AAR, amounts received by the applicant for reimbursement of “Loss on Sale of Demo Car” constitute a supply of services. This is because the reimbursement implies an agreement to tolerate the act of suffering a loss. As a result, such reimbursements are subject to tax at the rate of 18%, as per Notification No. 11/2017-Central Tax I(Rate) dated 28.06.2017.
Implications for Businesses
  1. Tax Planning Opportunities: The ruling presents an opportunity for businesses in the automobile sector to optimize their tax planning strategies. By leveraging the exemption from ITC restrictions, businesses can enhance their cash flow and minimize tax liabilities.
  2. Compliance Alignment: Understanding the tax implications of demo car purchases is crucial for ensuring compliance with GST regulations. With clarity from the Telangana AAR ruling, businesses can align their compliance practices accordingly, reducing the risk of non-compliance.
  3. Financial Management: The treatment of reimbursements for loss on demo car sales as a taxable supply underscores the importance of robust financial management practices. Businesses need to accurately account for such transactions to avoid penalties and maintain financial transparency.
Conclusion
The Telangana AAR ruling on demo car purchases provides much-needed clarity and guidance for businesses operating in the automobile sector. By unlocking input tax credit benefits and clarifying the tax treatment of reimbursements, the ruling empowers businesses to make informed decisions and enhance their tax efficiency. As you navigate the complexities of GST compliance, it’s essential to stay updated on regulatory developments and leverage expert advice to optimize your tax strategies.

Stay informed and consult with tax experts to leverage the benefits of the Telangana AAR ruling on demo car purchases for your business. By proactively aligning your tax planning strategies and compliance practices, you can maximize savings and streamline your operations in the competitive automotive market.

]]> Implications of Ancillary Services in Goods Transportation: AAR Telangana’s Ruling https://outspireinnovations.com/implications-of-ancillary-services-in-goods-transportation-aar-telanganas-ruling/ Mon, 06 May 2024 18:30:42 +0000 https://outspireinnovations.com/?p=6812

In a recent ruling by the Authority for Advance Rulings (AAR) in Telangana, the case of M/S. DRS Dilip Roadlines Limited shed light on the classification of ancillary services such as packing, loading, unloading, and unpacking in relation to transportation. Let’s delve into the details and implications of this ruling.

Key Insights from the Case

  1. Facts of the Case: M/S. DRS Dilip Roadlines Limited, functioning as a Goods Transport Agency (GTA), asserted that transportation of goods constituted their primary activity. They contended that ancillary services like packing, loading, unloading, and unpacking were integral to their operations and were often preferred by clients for their comprehensive service offerings. Additionally, they operated under the Forward Charge Mechanism (FCM).
  2. Central Issue: The primary issue before the AAR was whether the supply of services, including transportation and ancillary activities, constituted a single bundled supply, with transportation being the principal supply.
  3. AAR’s Rulings: The AAR’s ruling centered on the interpretation of Entry No. 9(iii) of Notification No. 11/2017-CT(R), dated 28-06-2017, which covers “Services in relation to transport of goods by road.” The ruling clarified that all services associated with the transportation of goods, including packing, loading, unloading, and unpacking, fall under this entry. However, for these services to be classified as part of the Goods Transport Agency, they must have a direct and immediate link with the transportation agreement.
Key Takeaways

  1. Definition of Ancillary Services: Ancillary services such as packing, loading, unloading, and unpacking are considered integral to the transportation of goods when directly linked to the transportation agreement.
  2. Classification under GTA: If the transactions primarily involve the transport, packing, loading, unloading, and unpacking of the same goods, they fall under the purview of a Goods Transport Agency.
  3. Implications for Businesses: This ruling has significant implications for businesses operating in the logistics and transportation sector. It clarifies the classification of services and ensures compliance with relevant tax regulations.
Conclusion

The AAR’s ruling in the case of M/S. DRS Dilip Roadlines Limited provides clarity on the classification of ancillary services in the context of goods transportation. By establishing the direct link between these services and transportation agreements, businesses can ensure proper classification and compliance with GST regulations.

Understanding these implications is crucial for businesses to navigate the complexities of the regulatory landscape and optimize their operations effectively. Compliance with tax regulations not only ensures adherence to legal requirements but also fosters trust and credibility among stakeholders.

As businesses continue to evolve in the dynamic landscape of logistics and transportation, staying informed about regulatory changes and interpretations becomes paramount. By leveraging expert insights and staying proactive, businesses can adapt to regulatory changes and drive sustainable growth in the long term.

]]> Gujarat High Court’s Ruling: Mango Pulp Subject to 12% GST Since July 2017 https://outspireinnovations.com/decoding-gujarat-high-courts-ruling-mango-pulp/ Sat, 04 May 2024 09:48:02 +0000 https://outspireinnovations.com/?p=6795

In a recent judicial interpretation, the Gujarat High Court has shed light on the taxation ambiguity surrounding mango pulp under the Goods and Services Tax (GST) regime. Since the inception of GST in July 2017, the court ruled that mango pulp attracts a 12% GST rate, contrary to the contentions raised by concerned companies and revenue officials.

Here’s a breakdown of the key highlights of the ruling:

  1. The Dispute Unveiled: The case revolved around the taxation applicability on mango pulp, with Vimal Agro Products and others challenging the imposition of a 12% GST since July 2017. The crux of the dispute rested on the interpretation of government notifications and the categorization of mango pulp for GST purposes.
  2. Judicial Verdict: The Gujarat High Court unequivocally dismissed the arguments put forth by the companies, asserting that the 12% tax rate on mango pulp has been effective since the introduction of GST in July 2017. Contrary to the contention that the tax rate came into force only from July 2022, the court upheld the retrospective application of the 12% GST rate.
  3. Clarificatory Notification: A pivotal aspect of the ruling was the interpretation of a government notification issued in July 2022. This notification explicitly stated that mangoes, other than sliced and dried varieties, attract a 12% GST. The court emphasized that while the notification provided clarity, it merely affirmed the existing tax treatment applicable since GST’s inception.
  4. Tax Categorization: Addressing the argument raised by revenue officials advocating for an 18% GST on mango pulp, the court emphasized that mango pulp falls under the category of ‘mangoes other than sliced and dried.’ Consequently, it aligns with the 12% GST rate prescribed for this category, as clarified by the government notification.
  5. Implications and Insights: The ruling not only resolves the specific dispute concerning mango pulp but also provides clarity on the taxation framework for derived products under GST. It underscores the distinction between fresh mangoes, which are exempt from GST, and processed products like mango pulp, consistently taxed at 12%.

This judicial interpretation serves as a significant precedent, reaffirming the retrospective application of GST rates and providing clarity on the taxation of agricultural products and their derivatives. It highlights the importance of understanding the nuances of GST notifications and their implications on tax liabilities.

As businesses navigate the complex landscape of GST compliance, staying abreast of judicial interpretations and regulatory updates becomes paramount. Clarity on tax implications fosters compliance and enables businesses to make informed decisions, mitigating the risk of disputes and ensuring seamless operations in a dynamic regulatory environment.

In conclusion, the Gujarat High Court’s interpretation of the taxation of mango pulp under GST not only resolves a contentious issue but also underscores the significance of legal interpretation and regulatory compliance in the realm of indirect taxation.

Stay tuned for more insights on GST compliance and regulatory developments.

]]> Delhi High Court Rules: Provisional Attachment Order Expires After One Year https://outspireinnovations.com/delhi-high-court-rules-provisional-attachment-order-expires-after-one-year/ Fri, 03 May 2024 08:56:21 +0000 https://outspireinnovations.com/?p=6787

In a recent ruling by the Delhi High Court, the validity of provisional attachment orders under Section 83 of the Central Goods and Services Tax (CGST) Act, 2017, has been clarified. The case of M/s. Krish Overseas v. Commissioner Central Tax-Delhi West & Ors. sheds light on the expiration of such orders after a period of one year from their issuance.

Case Overview

  1. The petitioner challenged a communication issued under Section 83 of the CGST Act to seize funds from their bank account by the Branch Manager of HDFC Bank Ltd.
  2. They argued that according to Section 83(2) of the GST Act, every provisional attachment order loses effect after one year from its issuance date.
  3. The petitioner contended that despite the passage of one year, the bank continued to restrict account operations.

Court Decision

  1. The High Court noted that the communication of attachment was dated August 14, 2019, and since a year had elapsed, the order ceased to be effective.
  2. Consequently, the bank could no longer restrict the operation of the petitioner’s bank account solely based on this order.
  3. The court emphasized that according to Section 83(2) of the GST Act, the lifespan of a provisional attachment order is limited to one year.
  4. It was clarified that this ruling does not prejudice any other provisional attachment orders communicated to HDFC Bank by the tax department or any other authority.
  5. If such orders are communicated, the bank must adhere to them regardless of the court’s decision.

Section 83 of the CGST Act

  1. Section 83 empowers the Commissioner to provisionally attach any property, including bank accounts, belonging to a taxable person to protect government revenue during certain proceedings.
  2. The provisional attachment ceases to have effect after one year from the date of the order’s issuance.

This ruling by the Delhi High Court provides clarity on the duration of provisional attachment orders under Section 83 of the CGST Act. It ensures that such orders do not indefinitely restrict the operations of bank accounts and other assets, thereby balancing the interests of taxpayers and government revenue protection.

For taxpayers and legal practitioners, it’s crucial to be aware of these timelines to ensure compliance with the law and safeguard against undue restrictions on financial operations.

]]> Telangana High Court: Unsigned Orders Lack Legal Validity https://outspireinnovations.com/telangana-high-court-unsigned-orders-lack-legal-validity/ Fri, 03 May 2024 08:21:16 +0000 https://outspireinnovations.com/?p=6779

The Telangana High Court recently made a significant ruling regarding the validity of unsigned orders in the case of M/S. SILVER OAK VILLAS LLP (WRIT PETITION No. 6671 OF 2024 dated 14.03.2024). The court held that an assessment order issued by the department loses its legal efficacy if it lacks the required signature, whether physical or electronic, as mandated by Rule 26(3) of the CGST Rules 2017 and the TGST Act and Rules 2017.

Key Points from the Case
  1. Petitioner’s Challenge: The petitioner contested the validity of an assessment order issued without a signature. It was argued that such orders, as per Rule 26 of the CGST Rules 2017, must bear the signature of the issuing authority, either physically or digitally.
  2. Legal Basis: The High Court based its decision on previous judgments that emphasized the necessity of a signature for an order to be legally valid. Merely uploading an unsigned order, even by the competent authority, does not rectify the fundamental defect in the absence of authentication.
  3. Fundamental Requirement: Despite being uploaded onto digital platforms, orders lacking signatures fail to meet the fundamental requirement of authentication. Therefore, the Court ruled that such orders cannot be considered valid.
Implications of the Ruling

  1. Lack of Efficacy: An unsigned order issued by a department, even if uploaded digitally, lacks legal efficacy.
  2. Requirement of Authentication: The ruling underscores the importance of authentication in legal documents, particularly in the context of administrative orders.
  3. Setting Precedent: This ruling sets a precedent for future cases involving unsigned orders, emphasizing the necessity of compliance with Rule 26(3) of the CGST Rules 2017 and relevant provisions of the TGST Act and Rules 2017.
Conclusion

The Telangana High Court’s ruling in the case of M/S. SILVER OAK VILLAS LLP serves as a reminder of the importance of proper authentication in administrative orders. Unsigned orders, whether in physical or electronic form, lack legal validity and cannot be considered as valid orders. This decision reaffirms the fundamental principles of legality and due process in administrative proceedings.

Businesses and individuals involved in administrative proceedings should ensure that all orders and documents are properly signed and authenticated to avoid legal challenges to their validity. Compliance with relevant rules and regulations, such as Rule 26(3) of the CGST Rules 2017, is essential to ensure the legal efficacy of administrative actions.

]]> Interpretation of Relevant Date for Tax Refund: Delhi High Court Ruling Analysis https://outspireinnovations.com/interpretation-of-relevant-date-for-tax-refund-delhi-high-court-ruling-analysis/ Mon, 29 Apr 2024 14:02:04 +0000 https://outspireinnovations.com/?p=6771

The Delhi High Court recently addressed a significant issue regarding the determination of the “relevant date” for claiming refunds in cases of incorrect tax payment. In the case of DMI ALTERNATIVES PRIVATE LIMITED VERSUS ADDITIONAL COMMISSIONER CGST APPEALS 1 DELHI & ORS., the court’s ruling shed light on the interpretation of tax laws and the implications for taxpayers. Let’s delve into the details of this case and its implications.

Background of the Case

The petitioner, DMI ALTERNATIVES PRIVATE LIMITED, encountered an issue while filing its monthly statement of outward supply in Form GSTR-1 for November 2017. Inadvertently, the petitioner declared the total taxable value for intra-State supply of services under the wrong head of tax, specifically under the Integrated Goods and Service Tax (IGST) instead of Central Goods and Service Tax (CGST) and State Goods and Service Tax (SGST). Consequently, the petitioner paid tax under the wrong head on 20th December 2017. Upon realizing the error, the petitioner corrected the mistake and deposited the correct CGST and SGST amounts on 19th August 2019, resulting in double taxation.

Despite rectifying the error, the petitioner’s refund application, filed on 11th May 2020, was denied by the department due to alleged delay in filing. The department considered the date of payment of tax under the wrong head as the relevant date for the refund application, leading to the rejection of the petitioner’s claim.

Petitioner’s Submission

The petitioner referred to Circular No. 162/18/2021-GST, which clarified the concept of the “relevant date” for claiming refunds. According to the circular, the relevant date would be the one when tax is paid under the correct head. Moreover, the circular stipulated that if the taxpayer had made payment under the correct head before the issuance of certain notifications, the refund application could be filed within a specified timeframe.

Court’s Analysis

The High Court scrutinized the dates of tax payments by the petitioner and the timeline of refund applications. It noted that the petitioner had paid tax under the wrong head on 20th December 2017 and under the correct head on 19th August 2019. The first refund application was filed on 11th May 2020, which was rejected on 29th June 2020, and the subsequent appeal was dismissed on 30th June 2021, predating the clarification provided by the circular dated 25th September 2021.

Judgment by the High Court

In light of the circular’s clarification, the High Court determined that the petitioner could have filed the refund application within two years from the date of payment of tax under the correct head, i.e., before 19th August 2021. However, the circular further extended the timeframe for cases where payment was made under the correct head before its issuance. As a result, any application seeking refund filed on or before 23rd September 2023 for taxes paid under the correct head before 24th September 2021 would be considered within time.

The court concluded that both refund applications filed by the petitioner fell within the ambit of the circular dated 25th September 2021 and were within the limitation period. It deemed the department’s rejection of the appeal based on timing as erroneous and unsustainable.

Implications of the Ruling

The ruling of the Delhi High Court has far-reaching implications for similar cases involving incorrect tax payments and subsequent refund claims. It underscores the importance of adhering to circulars and notifications issued by tax authorities and provides clarity on the determination of the relevant date for refund applications. This decision reaffirms the rights of taxpayers and emphasizes the obligation of government departments to consider relevant guidelines and notifications before rejecting claims.

Conclusion

The case of DMI ALTERNATIVES PRIVATE LIMITED VERSUS ADDITIONAL COMMISSIONER CGST APPEALS 1 DELHI & ORS. serves as a precedent for interpreting the relevant date for claiming refunds in cases of erroneous tax payments. The Delhi High Court’s judgment highlights the significance of adherence to tax laws, circulars, and notifications for both taxpayers and government departments. By clarifying the timeline for refund applications, the court has provided much-needed guidance to taxpayers navigating the complexities of indirect taxation.

]]> Bombay High Court Quashes GST Demand on Ocean Freight for Goods Imported from Abroad https://outspireinnovations.com/bombay-high-court-quashes-gst-demand-on-ocean-freight-for-goods-imported-from-abroad/ Fri, 26 Apr 2024 12:27:41 +0000 https://outspireinnovations.com/?p=6755

In a significant ruling, the Bombay High Court, in the case of M/S. AGARWAL COAL CORPORATION PVT. LTD. VERSUS THE ASSIST. COMMISSIONER OF STATE TAX, dated 5th March 2024, has invalidated a show cause notice (SCN) seeking GST on ocean freight for transportation of goods from outside India.

Case Background

The petitioner, AGARWAL COAL CORPORATION PVT. LTD., challenged the SCN issued by the Revenue Department concerning a Free on Board (FOB) Contract. The petitioner argued that the SCN lacked jurisdiction, citing the striking down of Notification No. 8/2017-Integrated Tax (Rate) by the Division Bench of the Gujarat High Court in the case of Mohit Minerals Pvt. Ltd. vs. Union of India. The Supreme Court upheld the Gujarat High Court’s decision in the case of Union of India vs. Mohit Minerals Pvt. Ltd.

In Mohit Minerals, the High Court of Gujarat ruled on cases involving both Cost, Insurance, and Freight (CIF) and FOB contracts, which was affirmed by the Supreme Court.

Court’s Decision

The Bombay High Court dismissed the department’s argument that the Mohit Minerals judgment applied only to CIF contracts, emphasizing that it covered both CIF and FOB contracts. Additionally, the court referred to the judgment in Liberty Oil Mills v. Union of India, where an SCN demanding IGST on ocean trade services under a FOB contract was set aside due to the Notification being deemed ultra vires.

Drawing from the Supreme Court’s ruling in M/s. Kusum Ignots & Alloys Ltd. v. Union of India and Anr., the court declared the Notification ultra vires, rendering it unavailable to the State authorities. Consequently, the application of the Notification for issuing the impugned SCN was deemed illegal.

The court directed the respondent to refund the tax amount deposited under protest by the petitioner, along with interest, upon the filing of a refund application.

Key Takeaway

This ruling by the Bombay High Court provides clarity on the applicability of GST on ocean freight for goods imported from abroad under FOB contracts. It underscores the importance of adhering to legal provisions and court judgments while issuing tax demands, ensuring fairness and compliance within the taxation framework.

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