RECENT ADVANCE RULINGS UNDER GOODS AND SERVICES TAX JUDICIAL DECISIONS ON INDIRECT TAXES
RECENT ADVANCE RULINGS UNDER GST
Statute: Goods and Service Tax
Decision in favour of: Assessee
Title: M/S SQUARE ONE HOMEMADE TREATS
SHRI.B.G.KRISHNAN IRS&
SHRI.B.S TYAGARAJABABU B.SC,LLM
Citation: Advance Ruling No. KER/66/2019
Bench/Court: Authority for Advance Ruling, Kerala
Applicant engaged in purchase/sale of food products (cakes, cookies, ready to eat homemade packed food etc) procured from other dealers, all items sold are pre-packed & it does not have any kitchen facility to cook food at the premises, sought advance ruling whether resale of such products falls under restaurant services.
Noted that in restaurant, food & drinks are prepared, served to customers whereas in present case already cooked food is served from the counter and only by giving a mere facility to customers to consume such foods in premises does not suffice enough to make it a restaurant service.
Held that resale of food & bakery products cannot be classified as restaurant service.
Statute: Goods and Service Tax
Decision in favour of: Revenue
Title: ARAVALI POLYART (P) LTD.
Sh. Rakesh Kumar Sharma
Dr. Preetam B. Yashvant
Citation: Appeal No. RAJ/AAAR/APP/10/2018-19
Bench/Court: APPELLATE AUTHORITY FOR ADVANCE RULING,RAJASTHAN
The applicant is running sweetshop and a restaurant in two distinctly marked separate parts of the same premises, separate accounts and billings for the two types of businesses were also maintained. Advance Ruling sought on whether the supply of sweets, namkeens, cold drinks and other edible items from a sweetshop which also runs a restaurant is a supply of goods or a supply of service.
AAR held that the above supply shall be treated as a supply of service and sweetshop will be treated as an extension of restaurant. The applicant further filed an appeal before the Appellate Authority for Advance Ruling (AAAR).
AAAR observed that as per the CGST Act, 2017, ‘composite supply’ consists of two or more taxable supplies of goods or services or both which are naturally bundled and supplied in conjunction with each other. The supply of food to customers in a restaurant or as a takeaway from the restaurant counter which is being billed under restaurant sales head should fall under ‘composite supply’ of restaurant services.
However, goods supplied to customers through sweetshop counter have no direct or indirect nexus with restaurant services. Anyone can come and purchase any item of any quantity from the counter without visiting the restaurant. These sales are completely independent of restaurant activity and will continue even when the restaurant is closed.
AAAR held that in case of sale of food items from restaurant, GST rates on restaurant service will be applicable on all such sales and ITC will not be allowed. In case of sale of those items from sweetshop counter it will be treated as supply of goods and GST rates of the respective items being sold will be levied and ITC will be allowed on such supply.
Statute: Goods and Service Tax
Decision in favour of: Assessee
Title: KALYAN JEWELLERS INDIA LIMITED
Ms.Manasa Gangotri Kata,
Thiru Kurinji Selvaan
Citation: Order No. 52/ARA/2019
Bench/Court: AUTHORITY FOR ADVANCE RULINGS, TAMIL NADU
Applicant engaged in business of manufacturing & trading of jewellery products introduced the facility of prepaid instruments (PPI) popularly called as gift vouchers/ gift cards sought ruling on GST applicability on issue of such vouchers and if yes then what would be the time of supply and rate of tax.
AAR held that these PPI’s issued are vouchers as defined under CGST/TNGST Act, 2017, are a supply of goods under GST provisions and GST is applicable.
If vouchers are specific to any particulars goods specified against it, time of supply (TOS) of such vouchers/gift cards/gift vouchers shall be date of issue of vouchers whereas if these vouchers are redeemable against any goods bought then it shall be date of redemption of voucher.
Rate of tax shall be 12% in case of paper based gift voucher classifiable under CTH 4911 & 18% for gift cards classifiable under CTH 8523.
JUDICIAL DECISIONS ON INDIRECT TAXES
Statute: Goods And Services Tax
Decision in favour of: Assessee
Title: GURDEEP SINGH SACHAR V
UNION OF INDIA (BOMBAY HIGH COURT)
Ranjit More, J.
Citation: Criminal Public Interest Litigation Stamp No. 22 of 2019
Bench/Court: BOMBAY HIGH COURT
The petitioner filed PIL to initiate criminal prosecution against the Company Dream 11 Fantasy Pvt. Ltd for conducting illegal operations of gambling/betting/wagering activities in the name of Online Fantasy Sports Gaming, which attracts penal provisions of Public Gambling Act, 1867.
As observed by the High Court in online fantasy sports game conducted by the Company, participants create virtual teams comprising of playerssimilar to real life teams. The participants compete within a time limit against such virtual teams created by other participants. The winners are decided based on points scored, using statistical data generated by the real-life performance of the players. The participants do not bet on the outcome of the match. The result of the fantasy game contest does not depend on winning or losing of any particular team in any real game on any given day.
Held that success in Dream 11 game arises due to superior sports knowledge, judgment and attention of the participants. Therefore, the Online Fantasy Sports Gaming is a ‘game of skill’ and not any ‘game of chance’.
Thus held by HC, that Online Fantasy Sports gaming of the company are not gambling services, hence, 18% GST rate shall be applicable.
Statute: Goods and services Tax
Decision in favour of: Applicant
Title: SHABNAM PETROFILS PVT. LTD v UNION OF INDIA
MR.JUSTICE A.C. RAO
Citation: Special Civil Application No. 16213 Of 2018
Bench/Court: GUJARAT HIGH COURT
The applicant engaged in manufacturing & selling of textile goods filed special civil application before HC in order to challenge the provisions of CGST Act,2017, notifications and circulars which prohibits refund of accumulated ITC on account of inverted duty structure.
The HC observed that the said notification as amended by the subsequent notification provided that accumulated ITC on inward supplies received upto 31st July, 2018 would lapse.
HC held that no inherent power could be inferred from the provisions of refund of CGST Act 2017 which could empower the CG to lapse unutilized ITC on account of inverted duty structure & hence such ITC would not lapse.
Statute:Goods and Services Tax
Decision In Favour Of : Petitioner
Title: M/S. PANDURANGA STONE CRUSHERS V
UNION OF INDIA
M SEETHARAMA MURTHI AND J.UMA DEVI
Citation:I.A NO.1 OF 2019 IN W.P. NO. 8662 OF 2019. Bench/Court: HIGH COURT OF ANDHRA PRADESH
Petition under Section 151 of CPC praying that in the circumstances stated in the affidavit filed in the W.P., the High Court may be pleased to permit the petitioner to rectify GSTR-3B statements for the months of August and December 2017 and January and February 2018 manually subject to the outcome of the writ petition, pending disposal of WP.No. 8662/2019 on the file of the High Court.
The Court while directing issue of notice to the Respondents herein to show cause why this petition should not be complied with, made the following order. (The receipt of this order will be deemed to be the receipt of notice in the case).
Petitioner is permitted to rectify GSTR-3B statements for the months of August and December, 2017 and January and February, 2018 manually subject to the outcome of the writ petition. It is made clear that if the petitioner submits a rectified statements for the above purpose, the respondents shall process the same in accordance with the procedure established by law.
Statute: Goods and services Tax
Decision in favour of: Assessee
Title: SANDEEP PATIL vs
UNION OF INDIA AND OTHERS
RANJIT MORE J&
SMT. BHARATI H. DANGRE, JJ.
Citation: Criminal Application No. 8 of 2019
Bench/Court: BOMBAY HIGH COURT
The Assessee sells goods from DFS located in International Airport at Mumbai to international passenger. Such goods are mainly imported or procured from SEZ units in India and are sold before they cross customs barriers. The assessee had challenged the order passed by the DC denying the refund of ITC accumulated on account of services received by duty free shops at the airport.
Export means ‘taking goods out of India to a place outside India’ as observed by HC. Supply by assessee from DFS to the outbound passenger constitutes export. Warehoused goods supplied before clearance for home consumption is neither supply of goods nor supply of services. Sales from DFS to arriving passengers are sales from the customs area as the goods have neither crossed customs frontier nor cleared for home consumption by DFS and, hence, customs duty and IGST are not payable by DFS.
The HC, thus, sets aside the order passed by the DC and held that the sale of goods from DFS located at International Airports constitutes ‘export of goods’ & hence, assessee is entitled to get refund of input tax credit.
Statute: Goods And Services Tax
Decision in favour of: Applicant
Title: BAI MUMBAI TRUST v SUCHITRA
S.J. KATHAWALLA, J.
Citation: Court Receiver’s Report No. 213 Of 2017 in Commercial Suit (L) No. 236 of 2017
Bench/Court: BOMBAY HIGH COURT
Issue raised whether GST is applicable on services or assistance rendered by the Court receiver appointed by the Court under order XL of CPC.
Court observed that schedule III provides that services provided by any court or tribunal established under any law is neither a supply of goods nor supply of services. Court Receiver should implement orders of the court and functions under the supervision and direction of the Court. Hence, office of the Court Receiver is an establishment of the High Court through which the orders issued by the Court are given effect to.
Therefore, the services of the Court Receiver are to be considered as services provided by any Court. Accordingly, the fees or charges paid to the Court Receiver are not liable to GST. The Honorable High Court held that GST cannot be levied or recovered on services provided by the Court Receiver.
Statute: Goods and services Tax
Decision in favour of: Applicant
Title: M/S. AMIT COTTON INDUSTRIES v
PRINCIPAL COMMISSIONER OF CUSTOMS
HONOURABLE MR.JUSTICE J.B.PARDIWALA
HONOURABLE MR.JUSTICE A.C. RAO
Citation: Special Civil Application No. 20126 of 2018
Bench/Court: GUJARAT HIGH COURT
Applicant running a cotton ginning mill exported goods and claimed refund of IGST paid on such goods which was denied by revenue authorities on the ground of excess availement of DDB.
High Court held that refund could be withheld only when request was received by the jurisdictional Commissioner regarding the same or when the goods were exported in violation of the Customs Act, 1962 as determined by proper officer of Customs.
There was neither any provision nor any circular or instruction under GST law which would restrict IGST refund for reason that higher rate of drawback was claimed. The High Court held that the applicant was entitled to claim IGST refund in respect of goods exported and directed revenue authorities to immediately sanction the refund amount along with 7 per cent interest from date of shipping bills till date of actual refund.
Statute: Goods And Services Tax
Decision in favour of: Applicant
Title: DIRECTOR GENERAL OF ANTI-PROFITEERING
v M/S NESTLE INDIA LTD (NATIONAL ANTI-PROFITEERING AUTHORITY)
Sh.B.N Sharma, Chairman ,SH. J.C Chauhan
and SH. Amand Shah
Citation:70/2019
Bench/Court: BEFORE NATIONAL ANTI-PROFITEERING AUTHORITY
The respondent, subsidiary of Nestle group, engaged in manufacturing and sale of various food products including coffee, noodles, chocolates, etc the rates on several those products were reduced from 28% to 18% w.e.f. 15.11.2017 and from 18% to 12% w.e.f. from 25.01.2018. Applicant suo moto deposited around INR 16 crore in the Consumer Welfare Fund before any notice of investigation of profiteering was issued. In the meanwhile investigation was ordered by NAA against the respondent to be conducted by DGAP.
As per the DGAP’s report, The base prices of 300 stock keeping units (SKU) increased by the respondent which were impacted by the rate reduction due to which anti-profiteering provisions gets attracted. Respondent has passed the benefit of rate reduction at aggregate level of SKU or at product level instead of passing on every SKU so that benefit could reach to every buyer of that SKU. Hence, the methodology adopted by the respondent was incorrect. The total profit made by the respondent was determined at around INR 89 crores.
The NAA directed the respondent to reduce the prices proportionately and to deposit the balance profit in the Consumer Welfare Fund.
Statute: Goods And Services Tax
Decision in favour of: Petitioner
Title: WATERMELON MANAGEMENT SERVICES v
THE COMMISSIONER, CENTRAL TAX, GST DELHI (EAST) & ANR.
HON’BLE MR. JUSTICE MANMOHAN
HON’BLE MR. JUSTICE SANJEEV NARULA
Citation: W.P.(C) 3274/2020
Bench/Court: HIGH COURT OF NEW DELHI
Provisional Attachment -- The petitioner challenged the provisional attachment order dated 05th March, 2020 issued by respondent to the petitioner’s bankers. The petitioner submitted that in the absence of any notice issued under Section 74 of the Act, 2017, no order of attachment under Section 83 of the Act, 2017 could have been passed by the respondents.
Held that:-The Hon’ble High Court directed the respondent to treat the present writ petition as an objection under Rule 159(5) of the CGST Rules, 2017 and decide the same within three working days.
Statute: Goods and services Tax
Decision in favour of: Respondant
Title: MAHADEO CONSTRUCTION CO.
v THE UNION OF INDIA
MR. JUSTICE H. C. MISHRA
MR. JUSTICE DEEPAK ROSHAN
Citation: W.P.(T) No. 3517 of 2019
Bench/Court: THE HIGH COURT OF JHARKHAND
Section 50 and 79 of the CGST Act, 2017 — Interest and Recovery Proceedings Thereof —The petitioner, a partnership firm, registered under the CGST Act. The petitioner submitted that in GSTN Portal, due date for filing of GSTR 3B Return for the month of February, 2018 and March, 2018 was reflecting as 31st March 2019. The petitioner filed its monthly return for the month of February, 2018 and March, 2018 within the due date as reflected in GSTN Portal. The respondent directed the petitioner to make payment of interest on the ground of delay in filing of GSTR-3B Return for the months of February and March, 2018. The respondent further initiated recovery proceedings under Section 79 of the Act for the aforesaid amount of interest by issuing notice to the petitioner’s Banker. The petitioner submitted that if the amount of interest is not admitted, the same requires determination through an adjudication process to be initiated as per the detailed provisions contained under Section 73 of the Act. The moot question before the Court are as to (i) whether interest liability under Section 50 of the Act can be determined without initiating any adjudication process either u/s 73 or 74 of the Act in the event of an assessee raising dispute towards liability of interest? (ii) Whether recovery proceedings u/s 79 of the Act can be initiated for recovery of interest u/s 50 of the Act without initiation and completion of the adjudication proceedings under the Act?Held that:- The Hon’ble High Court allowed the writ by quashing the order issued by the respondent for interest and notice for recovery proceedings under Section 79 of the Act to the Banker. The Hon’ble Court directed the respondent to initiate appropriate adjudication proceeding either under Section 73 or 74 of the Act against the petitioner and determine the liability of interest, if any, in accordance with law after giving due opportunity of hearing to the petitioner.
Transitional Credit — In the instant case, All the four writ petitions seek identical relief in the nature of a writ of Mandamus directing the respondents to permit the petitioners to avail input tax credit of the accumulated CENVAT credit as of 30th June, 2017 by filing declaration Form TRAN-1 beyond the period provided under CGST Rules. Held that— since all the Petitioners have filed or attempted to file Form TRAN-1 within the aforesaid period of three years they shall be entitled to avail the Input Tax Credit accruing to them. They are thus, permitted to file relevant TRAN-1 Form on or before 30.06.2020. Respondents are directed to either open the online portal so as to enable the Petitioners to file declaration TRAN-1 electronically, or to accept the same manually.
Statute : Goods and services Tax
Decision in favour of: Petitioner
Title: BHARTI AIRTEL LIMITED & ORS V. UNION OF INDIA
HON’BLE MR. JUSTICE RAJIV SAHAI ENDLAW
Bench/Court: IN THE HIGH COURT OF DELHI
The paramount grievance of the Petitioner is that during the period from July, 2017 to September, 2017 (hereinafter referred to as ‘the relevant period’), the Petitioner in its monthly GSTR- 3B recorded the ITC based on its estimate. As a result, when the Petitioner had to discharge the GST liability for the relevant period, the details of ITC available were not known and the Petitioner was compelled to discharge its tax liability in cash, although, actually ITC was available with it but was not reflected in the system on account of lack of data. The exact ITC available for the relevant period was discovered only later in the month October 2018, when the Government operationalized Form GSTR-2A for the past periods. Thereupon, precise details were computed and Petitioner realized that for the relevant period ITC had been under reported. The Petitioner alleges that there has been excess payment of taxes, by way of cash, to the tune of approximately Rs. 923 crores. Held that— the rectification of the return for that very month to which it relates is imperative and, accordingly, we read down para 4 of the impugned Circular No. 26/26/2017-GST dated 29.12.2017 to the extent that it restricts the rectification of Form GSTR-3B in respect of the period in which the error has occurred. Accordingly, we allow the present petition and permit the Petitioner to rectify Form GSTR-3B for the period to which the error relates, i.e. the relevant period from July, 2017 to September, 2017. We also direct the Respondents that on filing of the rectified Form GSTR-3B, they shall, within a period of two weeks, verify the claim made therein and give effect to the same once verified.
Statute: Goods And Services Tax
Decision in favour of: Assessee
Title: SKH SHEET METALS COMPONENTS PVT LTD v
UNION OF INDIA & ORS.
MR. JUSTICE MANMOHAN
MR. JUSTICE SANJEEV NARULA
Citation: CM APPL. 11279/2020
Bench/Court :HIGH COURT OF DELHI
Section 140 of the CGST Act, 2017— Transitional Credit -- The petitioner filed application for early hearing on the ground that the issue of transitional credit in the present case is covered by the judgment in the case of Micromax Informatics Limited Vs. UOI and Ors., W.P. (C) 196/2019 & CM APPL. 965/2019 dated 5th May, 2020 passed the Division Bench of this Court. The petitioner submitted that in the said judgment credit of erstwhile laws has been allowed to be transitioned to GST regime on or before 30th June, 2020.
Held that:-The Hon’ble High Court directed to issue notice and to list the case for final disposal on 29th May, 2020
Statute: Goods and services Tax
Decision in favour of: Assessee
Title:TEAM HR SERVICES PRIVATE LTD. v
UNION OF INDIA & ANR
MR. JUSTICE RAJIV SAHAI ENDLAW
MS. JUSTICE SANGITA DHINGRA SEHGAL
Citation: W.P.(C) 13114/2019
Bench/Court: HIGH COURT OF DELHI
Section 54 of the CGST Act, 2017—Refund—The petitioner submitted that the respondent passed an order for rejecting the refund. The instant order was telephonically informed to the Chartered Accountant of the petitioner and a copy thereof also forwarded to the petitioner but has been returned unserved. The Petitioner submitted that inspite of repeated orders, the refund has not been granted to him till date. The respondent submitted that he has a counter affidavit to the writ petition ready but could not file the same owing to the lockdown prevalent
Held that:- The Hon’ble High Court held that the respondent is permitted to email the counter affidavit along with annexure to this Court. The petitioner may file a rejoinder to the counter affidavit within two weeks, also through email. List the writ petition for hearing on 10th June, 2020.