Legislation UpdatesNotifications

The Government has been receiving a number of representations regarding the need to extend due date for filing Annual Return (FORM GSTR-9) and Reconciliation Statement (FORM GSTR-9C) for 2018-19 on the grounds that on account of the COVID-19 pandemic related lockdown and restrictions, normal operation of businesses have still not been possible in several parts of the country. It has been requested that the due dates for the same be extended beyond 31st October 2020 to enable the businesses and auditors to comply in this regard.

In view of the same, on the recommendations of the GST Council, it has been decided to extend the due date for filing Annual Return (FORM GSTR-9/GSTR-9A) and Reconciliation Statement (FORM GSTR-9C) for Financial Year 2018-19 from 31st October 2020 to 31st December, 2020. Notifications to give effect to this decision would follow.

It may be noted that filing of Annual Return (FORM GSTR-9/ GSTR-9A) for 2018-19 is optional for taxpayers who had aggregate turnover below Rs. 2 crore. The filing of reconciliation Statement in FORM 9C for 2018-19 is also optional for the taxpayers having aggregate turnover upto Rs. 5 crore.

Ministry of Finance

[Press Release dt. 24-10-2020]

Case BriefsHigh Courts

Madras High Court: G.R. Swaminathan, J., directed the confiscated goods to be released on a provisional basis noting the delay on the part of Authorities in the adjudication of the matter.

Petitioner a dealer registered under the Goods and Services Tax Act who imports toys from China. It also purchases goods from Delhi-based dealers.

Dealer’s Stand

Dealer’s state that the returns till March 2020 have been filed and there are no arrears. Due to the lockdown restrictions amidst the pandemic, the business was shut down since April, 2020.

Following the partial lifting of restrictions, the petitioner reopened the business. Superintendent, CGST conducted a search at the petitioner’s place of business.

After the search operation, mahazar was drawn which was followed by a seizure order.

The said orders of seizure and prohibition issued by respondent 3 have been put to a challenge.

Analysis & Decision

Bench while addressing and analysing the issue, stated that,

Lord Atkin in his celebrated dissent in Liversidge v. Anderson, (1942) AC 206, proclaimed that laws speak the same language in war as in peace and that the words have only one meaning.

Likewise, laws speak the same language during normal as well as in pandemic times.

“…contemporary imperatives demand that courts, whenever possible, ought to adopt that approach which will kick- start the economy.”

Court also referred to Section 67 (1) and (2) of the Central Goods and Services Tax Act, 2017 which talks about the Power of inspection, search and seizure.

Supreme Court in ITO v. Lakhmani Mewal Das, (1976) 3 SCC 757, held that 

“…the existence of the belief can be challenged by the assessee but not the sufficiency of reasons for the belief. The expression “reason to believe” does not mean a purely subjective satisfaction on the part of the officer. It must be held in good faith. It cannot be merely a pretence. It is open to the Court to examine whether the reasons for the formation of the belief have a rational connection with or a relevant bearing on the formation of the belief and are not extraneous or irrelevant for the purpose of the section.”

Evading GST

In the present matter, the impugned proceedings were initiated based on the intelligence developed by CGST (HPU), Madurai that the petitioner is evading GST by mis-declaring the goods while importing.

It has been shown that the stock register was not maintained at the petitioner’s place of business, hence the Court doesn’t want to quash the seizure order, through the order of prohibition has to be necessarily interfered with.

No show-cause notice to date after the lapse of 40 days was issued.

In view of the above, Court stated that the respondent may not be in a hurry, they can afford to wait. Officials who get their salaries in the first week of every month may not be conscious of the cost of delays in such cases.

Further, the Court added that Adjudication proceedings may go on for months. That is why the statute provides for the provisional release of the detained goods.

Therefore, the Court directed the respondents to release the goods on a provisional basis and on taking a personal bond with a payment of Rs 2 lakhs.

While parting with its decision, Bench stated in regard to the Chinese products that,

“…general market is flooded with Chinese goods. The public must make a conscious choice to encourage swadeshi products.”

“The Indian entrepreneur must rise to the occasion. He must ask himself as to why the chinese products are preferred and he must come out with alternatives. There must be no compromise in quality. At the same time, the price factor should also be borne in mind.”

Petition was partly allowed in the above terms. [Tvl.Rising International Co. v. Commr. of Central GST and Central Excise,  2020 SCC OnLine Mad 2951, decided on 06-10-2020]

Advance RulingsCase Briefs

Punjab Authority for Advance Ruling: Navdeep Bhinder (Member, SGST) and Parul Garg (Member, CGST) addressed the following issue:

Whether the parking lot services provided by the Contractor appointed by the Market Committee, which is a Government Authority is exempt under Notification 12 of 2017 as the parking lot activity is covered under Article 243 of the Constitution of India?

Applicant was appointed as a contractor for providing parking lot services at the place of the market committee at Jalandhar.

Further, the applicant stated that,

“Market Committee” is a Government Authority as per the definition of Government Authority provided in the clause (zf) of the notes appended to Notification No. 12/2017 as it is established by the State Government and the services provided by the Governmental Authority by way of any activity in relation to any function entrusted to a municipality under Article 243W of the Constitution is NIL rated service under Notification No. 12/2017-Central Tax (Rate).

Adding to the above, the applicant stated that whenever the market committee provides parking lot services directly the same is exempt and whenever it provides through an agent the same is taxable.


Bench at first examined whether the Market Committee is a Government Authority or not and it was observed that the Market Committee (Mandi Board) does not fall under the definition of the local authority.

A definition has to be read in its fulfillment and not in parts or out of context to suit a particular purpose.

Market Committees are service rendering agencies and their main source of income is the market fee. Mandi board is not established by the State Government for providing Parking Lot services to the people.

On perusal of the agreement between the applicant and the Mandi Board, it was established that the applicant had been appointed as a Contractor for providing parking lot services and the applicant would have recovered the said amount by charging the vehicles entering the market committee.

Hence the Market Committee was to earn revenue from the persons entering the parking area.

It has been consistently held that any statutory authority which works on business principles, the fees collected by it cannot be considered as statutory fee.

Only in case where the fee is collected towards sovereign functions and deposited with Government revenue qualify to be outside the levy of any tax.

Parking fees collected by the applicant are not in the nature of statutory fees.

Therefore, the Authority held that the parking lot services provided by the contractor appointed by the Market Committee, are not exempt under Notification No. 12/2017 as the Market Committee is not a Government Authority as per the definition in clause 2(zf) of the notes appended to Notification 12/2017.

The said activity/services of parking provided by the applicant fall under Heading 9967 and attract GST @18% (CGST 95 + SGST 9%).[Pushpa Rani Pabbi, In Re., AAR/GST/PB/011, decided on 06-09-2019]

Advance RulingsCase Briefs

Authority for Advance Ruling, Madhya Pradesh (AAR): A Division Bench of Virendra Kumar Jain Choubey and Manoj Kumar, Members, examined the classification of Fried Fryums of different shapes, sizes and varieties which are ready to eat and in regard to the HSN Code and GST rate applicable on such goods manufactured.

Applicant through the present application sought correct classification of ‘Papad’ and ‘Papad Fryums’ of different shapes, sizes and varieties (commonly known as Fried Fryums). The applicant is involved in the activity of manufacturing and selling of the said ready-to-eat product.

Further, at the time of the hearing, the applicant reframed the question as follows:

What is the correct classification of Fried fryums of different shapes, sizes and varieties which are ready to eat and What is the HSN Code and GST rate applicable on such goods manufactured?

The officer concerned stated that the Fried Fryums will be classified under Tariff 2016 90.

Decision & Analysis

Bench noted that the main issue is with regard to the classification of Fried Fryums and the GST rate applicable to it.

As the applicant tried to equate Fried Fryums with Papad, it is important to know what ‘Papad’ is:

Papad as such has not been defined under Customs Tariff Act, 1975, GST Act or the Notification issued under the CGST Act, 2017/MGGST Act, 2017.

As per the settled principle of interpretation of statute, word not defined in the statute must be construed in its popular sense, the sense which people conversant with the subject matter with which the statute is dealing would attribute to it.


Fried Fryums are eatable and used as food articles or eatables and such fried, salted Fryums are found to be commonly known and used as ‘Namkin’ ‘papad’ even after roasting or frying are known and used as ‘Papad’ only.

Whereas, in commercial or trade parlance also, the ‘Fried Fryums’ cannot be said to be known as ‘Papad’.

Hence, Fried Fryums cannot be equated with ‘Papad’.

Authority ruled that Fried Fryums will be classified under Tariff Item No. 2106 90 99 and GST Rate of 18% (CGST 9% or IGST 18%) will be applicable to the said product. [Alisha Foods, In Re., 2019 SCC OnLine MP AAR-GST 91, decided on 28-11-2019]

Advance RulingsCase Briefs

West Bengal Authority for Advance Ruling, GST (WB AAR): A Division Bench of Susmita Bhattacharya and Parthasarathi Dey (Members) while addressing the present application with regard to the applicability of GST on “assignment of leasehold right” held that,

The activity of assignment is in the nature of agreeing to transfer one’s leasehold rights. It does not amount to further sub-leasing, as the applicant’s rights as per the Deed of sub-lease stands extinguished after assignment. Neither does it create fresh benefit from the land. It is in the nature of compensation for agreeing to do the transfer of the applicant’s rights in favour of the assignee. It is a service classifiable under “Other miscellaneous service‟ (SAC 999792) and taxable @ 18%.

National Company Law Tribunal, Kolkata Bench admitted the applicant as the corporate debtor and passed an order under Section 33 of the Insolvency and Bankruptcy Code, 2016 to start the process of liquidating the corporate debtor.

One of the assets under liquidation is the leasehold property unit along with care parking space (Demised Premises). West Bengal Industrial Development Corporation Ltd. granted the applicant possession of the Demised Premised for 99 years under a registered deed.

Applicant submitted that according to clause 12.28 of the deed, applicant, after the expiry of at least five years from the date of the Deed coming into force, is entitled to assign to another person the unexpired residual period of the sub-lease after taking written approval of the sub-lessor and on payment of transfer fee, being 10% of the prevailing market value of the property as assessed by the Registering Authority of the State Government.

Question for consideration:

Liquidator raised the question as to whether GST is payable on the consideration receivable on such assignment. If so, what should be the SAC and the rate applicable? He also seeks clarity on whether he can claim input tax credit for the GST paid on the transfer fee.

Officer Concerned from the Revenue submitted that the assigning of the sub-lease is a service classifiable under the heading “Other Miscellaneous Services‟ (SAC 99979) and taxed accordingly.

Observations of the Authority

Scope of supply under Section 7 (1) of the GST Act includes all forms of supply of goods and services, including a sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made.

Bench noted that the benefits arising from land in the forms specified in paragraph 2 of Schedule II are not to be treated as transactions in immovable property but as the supply of service for the purpose of the GST Act.

Deed | Service Contract of Lease

Authority stated that the Deed confers upon the applicant no better title to the Demised Premises other than a service contract of lease.

Applicant can only transfer to the assignee his right to receive the service of the lease for the unexpired period after obtaining prior approval of the Sub-lessor on payment of the transfer fee.

Conditional Possession

Hence, it is clear that the applicant, apart from the conditional possession of the Demised Premises, enjoys no title or ownership, which is central to the sale of any immovable property within the meaning of Section 54 of the Transfer of Property Act, 1882.

Therefore, the assignment does not amount to transfer of any benefit other than leasehold rights in terms of the Deed for the unexpired period of the lease and is no transfer of any immovable property in the context of the GST Act.

Thus, the activity of assignment of leasehold right is a service classifiable under ‘Other miscellaneous service‟ (SAC 999792) and taxable @ 18% under Sl No. 35 of Notification No. 11/2017 – CT (Rate) dated 28/06/2017 (State Notification No. 1135- FT dated 28/06/2017), as amended from time to time.

Further, the transfer fee charged by the Sub-lessor is in the nature of a consideration for tolerating an act that the applicant is otherwise refrained from doing in terms of clause 12.28 of the Deed. It is also a service classifiable under “Other miscellaneous service‟ (SAC 999794) and taxable @ 18% under Sl No. 35 of the Rate Notification.[Enfield Apparels Ltd. In Re., 2020 SCC OnLine WB AAR-GST 7, decided on 10-08-2020]

Advance RulingsCase Briefs

West Bengal Authority for Advance Ruling, GST (WB AAR): A Division Bench of Susmita Bhattacharya, Joint Commissioner, CGST & CX and Parthasarathi Dey, Additional Commissioner, SGST, addressed the question with regard to classification of a three-wheeler battery operated vehicle.

In the present application, the applicant is a manufacturer of “three-wheeled motor vehicles”  commonly known as “Toto”.

Question raised in the present application

Whether the stated three-wheeled vehicle is classifiable as an ‘electronically operated motor vehicle’ under HSN 8703 when supplied with a battery pack?

Another question raised by the applicant is the classification of the stated vehicle if supplied without the battery pack.

Observations of the Advance Authority Ruling:

The goods supplied by the applicant have been described as electronically operated three-wheeled vehicles. It is an e-rickshaw as defined in the Section 2A (2) of the Motor Vehicles Act, 1988.

The Authority notes that, a combined reading of the provisions of Section 2A (2) of the MV Act and Entry No. 242A of Schedule I of the Rate Notification establishes that the battery pack is an essential character of an e-rickshaw.

If the battery pack is withdrawn, it will no longer be a three-wheeled electrically operated vehicle.

Heading 8703 of First Schedule of Customs Tariff Act, 1975

Further, Motor vehicles for carrying less than ten passengers are classified under Heading 8703 of the First Schedule of the Customs Tariff Act, 1975, which is adopted in the GST Act for classification.

Sub-heading 8703 10 covers the vehicles specially designed for travelling on snow, golf cars and similar vehicles.

Adding to the above, it has been stated by the AAR that all other sub-headings except the residual subheading 8703 90, refer to vehicles fitted with an internal combustion engine.

E- rickshaws or electrically operated three-wheeled vehicles are, therefore, classifiable under Tariff heading 8703 90 10 of the Tariff Act.

Hence, a three-wheeled motor vehicle is classifiable under HSN 8703 as an electrically operated vehicle, provided it is fitted with the battery pack. Otherwise, it will be classifiable under HSN 8706. [Hooghly Motors Pvt Ltd., In Re., 2020 SCC OnLine WB AAR-GST 8, decided on 10-08-2020]

Hot Off The PressNews

The Central Board of Indirect Taxes & Customs (CBIC) today clarified that the Notification No. 63/2020-Central Tax dated 25th August 2020 relating to interest on delayed payment of GST has been issued prospectively due to certain technical limitations.

However, it has assured that no recoveries shall be made for the past period as well by the Central and State tax administration in accordance with the decision taken in the 39th Meeting of GST Council.

This will ensure full relief to the taxpayers as decided by the GST Council.

CBIC explanation came in response to an assortment of comments in the social media with respect to Notification dated 25th August 2020 regarding charging of interest on delayed payment of GST on net liability (the tax liability discharged in cash) w.e.f. 1st September 2020.

Ministry of Finance

[Press Release dt. 26-08-2020]  

Case BriefsHigh Courts

Kerala High Court: A.K. Jayasankaran Nambiar, J. allowed the writ petition and quashed the series of detention notices issued against the petitioner.

The petitioner challenged a series of notices of detention, whereby a consignment of goods transported at the instance of the petitioner was detained by the respondent on the allegation that there was a discrepancy in the e-way bill that accompanied the transportation of the goods. The Court on reviewing the series of notices inferred that the reason for the detention was that, while the consignment was supported by an invoice which contained the details of the goods transported as also the tax paid in respect of the goods, there was no mention of the tax amounts separately in the e-way bill that accompanied the goods. The Court further inferred that the respondents, therefore, detained the goods on the ground that there was no valid e-way bill supporting the transportation in question.

Meera Menon and Harisankar Menon, counsel on behalf of the petitioner argued that the transportation was covered both by a tax invoice, as also an e-way bill in FORM GST EWB-01, and when both the documents are perused together, it was amply clear that the transportation was covered by documents that clearly indicated the fact of payment of tax on the goods that were being transported. Thus, the detention under Section 129 was unfounded and baseless.

Dr Tushara James, counsel appearing on behalf of the respondent contended that as per Section 33 of the GST Act, there is an obligation on every person, who makes supply for consideration and who is liable to pay tax for such supply, to prominently indicate in all documents relating to assessment, tax invoice and other like documents, the amount of tax which shall form part of the price at which such supply is made. Referring to the provisions of Section 129, the respondent further contended that the goods in question were being transported under cover of documents that had been raised in contravention of the provisions of Section 33. It was further argued that, the e-way bill being a document akin to a tax invoice, in relation to an assessment to tax, and not having carried the details regarding the tax amount, the transportation itself had to be viewed as in contravention of the Act and Rules for the purposes of Section 129.

As per the statutory provisions applicable to the instant case, a person transporting goods is obliged to carry only the documents enumerated in Rule 138(A) of GST Rules, during the course of transportation. The said documents are

  • the invoice or bill of supply or delivery challan, as the case may be and
  • the copy of e-way bill in physical form or e-way bill number in electronic form etc.

The Court pointed out that if a prescribed form under the GST Act does not contain a field for entering the details of the tax payable in the e-way bill, then the non-mentioning of the tax amount cannot be seen as an act in contravention of the GST Rules.

Nevertheless, the Court held that the e-way bill has to be in FORM GST EWB-01, and in that format, there is no field wherein the transporter is required to indicate the tax amount payable in respect of the goods transported and that the transpiration was covered by a valid tax invoice, which clearly showed the tax collected in respect of the goods and an e-way bill in the prescribed format.[M.S Steel and Pipes v. Asst. State Tax Officer, 2020 SCC OnLine Ker 3214, decided on 12-08-2020]

Case BriefsHigh Courts

Orissa High Court: S.K. Paigrahi, J., while addressing a matter, observed that,

One cannot lose sight of the fact that GST regime is relatively new and is still evolving.

“…attempts to dampen the spirit of GST proper implementation are already assuming huge proportions and need to be curbed with an iron fist so that the contours of fiscal compass will be extended to the advantage of the people.”

Petitioner filed the bail application under Section 439 of the Criminal Procedure Code, 1973 for being punishable under Section 132(1)(b)(c) and (1) of the OGST Act, 2017.

Business transactions were made using several fictitious firms including G.S Unitrade,  G.S. Steels and Alloys Co., B.B Associates, Om Shri Ganesh Traders. Petitioner, Ronak Beriwal, Subhash Chandra Swain and Basanta Kumar are the proprietors of GS Unitrade, G.S. Steels & Alloys Co, B.B. Associates and Omm Shree Ganesh Traders respectively.

Above persons, individually and in collusion with each other alleged to have created several dummy and non-existent entities to avail bogus Input Tax Credit (ITC), for the purpose of defrauding the Revenue.


Creation of dummy and non-existent firms was the matter of concern.

Fake and fraudulent transactions have, among others, caused huge loss to the State exchequer at least to the tune of Rs 122.67 crores.


After intensive analysis of data from GSTN/e-way bill portal and inputs from various sources, the Joint Commissioner of State Tax, CT & GST Enforcement Range, Sambalpur detected the fraud committed by the accused.

Several incriminating documents, containing business transactions of such business entities, were unearthed and seized.

Petitioner, in his capacity as the proprietor of G.S. Unitrade, had shown to have purchased goods from many bogus firms and has availed ITC on the strength of fake invoices, without actual transfer of goods.

“…manner in which the accused, in collusion with other accused, had been operating would suggest that there are certain inherent flaws in the GST system, which is prone to such abuse.”

“Fraudsters are taking advantage of the inadequacy of electronic trails of all transactions by employing ingenious methods.”

The search and inspection conducted by the State Authorities revealed that no business was actually being conducted by the declared place of business.

Fictitious firms were created in the name of many daily labourers, private tutors, housewives etc., with the help of their identity documents like PAN, Aadhaar Card, Mobile phone, Voter Card, etc.

Hence accused was alleged to have committed of offences under Section 132(1)(i) read with Section 132(5) of the OGST Act, 2017, which are a non-bailable and cognizable.


In the instant case, the alleged GST fraud committed by the petitioner is having humongous ramification on the revenue collection by the State.

Further the bench added that, the possibility of the accused tampering the evidence and/or influencing/intimidating the witnesses also cannot be ruled out.

Moreover, the Courts cannot lose sight of the adverse impact such activities would have in the economy.

Bench stated that a large number of cases emerged in different parts of the country where such persons, with vested interests, have created a host of unscrupulous and bogus entities.

Fake entities are then used for the purpose of indulging in issuances of false and fabricated invoices, without actual movement or supply of goods and services and without payment of any GST to the public exchequer, but for the purpose of claiming ITC, by defrauding the Revenue.

Enormity of such devious activities touch the raw nerve of the economic system and strike at the root of the proper and effective functioning of the GST regime, which has been set up with the laudable object of “One Nation, One Tax, One Market”.

High Court stated that a countrywide cartel specializing in defrauding the GST system is operating to bring the economy to its knees.

High Court declined the release of the accused petitioner on bail at this stage. Accordingly, the bail petition filed on behalf of the accused/petitioner was rejected. [Amit Beriwal v. State of Odisha, 2020 SCC OnLine Ori 546 , decided on 27-07-2020]

Case BriefsTribunals/Commissions/Regulatory Bodies

Authority for Advanced Ruling, Madhya Pradesh: The Bench comprising of Manoj Choubey (Joint Commissioner) and Virendra Jain (Joint Commissioner), ruled evenly in the matter brought by Atriwal Amusement Park under Section 98(4) of Central Good and Services Tax, 2017.

Atriwal Amusement Park was incorporated on 13th March, 2018. Applicant proposed activity of construction of water park for which various components and services would be used that are taxable under GST. Thus, applicant has approached the Tribunal for admissibility of input tax credit of tax paid or deemed to have been paid.

There were four major issues before the court, which dealt with instances of where input tax credit may be paid. First, whether applicant was eligible for credit on input tax of water slides. Second, whether steel and civil structure which is a support structure for slides, will be available for credit. Third, whether input tax be available on development and preparation land where slides are constructed. Fourth, whether applicant will get credit for construction of swimming pools as water slides directly run into pool.

Bench addressed each point individually, and initially dwelled specifically into the definition of ‘Plant & Machinery’. It included support structure and foundation as part of plant & machinery, and excluded buildings and civil structure from the definition. The bench found the applicant to be eligible for Input tax credit on water slides as they were included under the term ‘plant & machinery’ due to them being foundation and structural support.  For the second issue, bench found steel and civil structure to be a part of ‘plant & machinery’, therefore, they found it eligible for credit. For the third issue, bench found land to be excluded from the definition of ‘plant & machinery’ and hence, ousted the applicability for credit on land. For the final issue, bench decided swimming pool is a ‘civil structure’ and cannot be called a ‘support structure’, hence, credit was not available for swimming pool. [Atriwal Amusement Park, In re, Case No. 29 of 2019, decided on 09-06-2020]

Business NewsNewsTreaties/Conventions/International Agreements

A Memorandum of Understanding (MoU) was signed between the Central Board of Direct Taxes (CBDT) and the Central Board of Indirect Taxes and Customs (CBIC) for data exchange between the two organisations.

This MoU supersedes the MoU signed between CBDT and the erstwhile Central Board of Excise and Customs (CBEC) in the year 2015. Significant developments have taken place since the signing of earlier MoU in 2015 including introduction of GST, incorporation of GSTN and change in the nomenclature of Central Board of Excise and Customs (CBEC) to Central Board of Indirect Taxes and Customs (CBIC). Changed circumstances, including advancements in technology, are duly incorporated in the MoU signed today.

This MoU will facilitate the sharing of data and information between CBDT and CBIC on an automatic and regular basis. In addition to regular exchange of data, CBDT and CBIC will also exchange with each other, on request and spontaneous basis, any information available in their respective databases which may have utility for the other organisation.

The MoU comes into force from the date it was signed and is an ongoing initiative of CBDT and CBIC, who are already collaborating through various existing mechanisms. A Data Exchange Steering Group has also been constituted for the initiative, which will meet periodically to review the data exchange status and take steps to further improve the effectiveness of the data sharing mechanism.

The MoU marks the beginning of a new era of cooperation and synergy between the CBDT and CBIC.

Ministry of Finance

[Press Release dt. 21-07-2020]

[Source: PIB]

Advance RulingsCase Briefs

Goa Advance Authority Ruling: A Division Bench of J.K. Meena and Sarita S. Gadgil (Members), while addressing an application held that,

“mere classification of goods as essential commodity will not bring it under the category of exempted goods from GST.”

Applicant is a registered partnership firm manufacturing Hand Sanitizers.

Officer concerned commented that,

Hand sanitizers are primarily used for disinfecting/ sanitizing hands.

Further he opines that following factors may be considered for classifying the said product:

  • Curative effect of the product (therapeutic use)
  • Preventive effect of the product (prophylactic use)
  • Period of usage i.e., to be used for limited period or regularly,
  • Product contains curative/preventive ingredients
  • Trade parlance, i.e., how it is known in the market.

Applicant in the present application has asked for Advance ruling on the issue as to classification of the Goods namely “Hand Sanitizer” and rate of GST to be applied.

Opinion was also sought on whether Hand Sanitizers supplied by them are classifiable as essential commodity and to be exempt from GST.

In Applicant’s opinion, Hand Sanitizers are covered under HSN 30049087 and to be taxed @ 12% under GST.


Hand Sanitizers manufactured by the applicant are of the category of Alcohol based hand sanitizers and are classifiable under heading 3808 of HSN to which rate of GST applicable is 18%.

Merely classifying any goods as essential commodity will not be the criteria for exempting such Goods from GST.

In view of the above ruling sought by applicant was answered. [Springfields (India) Distilleries, In Re., GOA/GAAR/1 of 2020-21, decided on 17-06-2020]

Case BriefsTribunals/Commissions/Regulatory Bodies

West Bengal Authority for Advance Ruling (WB AAR): A Division Bench of Susmita Bhattacharya and Parthasarathi Dey, (Members) held that the supply of composite printing service to recipients located in India, is  taxable for GST.

The question dealt in the present application is:

Whether the activities undertaken by procuring orders from a foreign buyer to print texts and thereafter deliver them to various places in India is a taxable transaction?

Applicant’s submissions

Applicant is awarded a contract for printing booklets in various Indian languages. For the said contract applicant arranges physical inputs like paper, ink and other physical inputs, prints the content and binds the printed material into booklets and delivers the same.

For the above contract, applicants receives consideration in US Dollars.

Applicant argued that the recipient was not providing any goods for performing the printing service. Provisions under Section 13(3)(a) of the IGST Act, 2017 are not, therefore, applicable.

Further adding to the above submissions, applicant stated that recipient being located outside India and consideration received in convertible foreign exchange, the activity should be considered as export of service.

Observation and Decision

Bench observed that, applicant prints booklets that are classifiable under heading 4901 of the Tariff Act.

The recipient provides the content usually on a digital media and retains usage right on such intangible inputs. The applicant prints the content on physical media, binds them into booklets and supplies the printed material. The goods so supplied have no utility other than displaying the printed content. Service of printing, therefore, is the predominant element of the composite supplies the applicant is making.

The place at which the printed booklets are delivered is the place of supply of the composite printing service.

Applicant fails to appreciate the true meaning of the terms ‘recipient’, as defined under Section 2(93) of the GST Act. It is an exhaustive definition, implying it can neither be expanded or reduced.

Hence, AAR states that applicant supplies the composite printing service to the recipient located in India. Such supplies are not, therefore, export of services within the meaning of Section 2(6) of the IGST Act, 2017.

Thus, applicant’s supply of the composite printing service is taxable under Sl No. 27(i) of Notification No. 11/2017 – Central Tax (Rate) dated 2810612017 (corresponding State Notification No. 1135 – FT dated 2810612017) or Sl No. 27 of Notification No. 8/2017 – lntegrated Tax (Rate) dated 2810612017, as the case may be.[Swapna Printing Works (P) Ltd., In Re., 45/WBAAR/2019-20, decided on 06-03-2020]

Image credits: Global Banking and Finance

Advance RulingsCase Briefs

West Bengal Authority for Advance Ruling: A Division Bench of Susmita Bhattacharya, Joint Commissioner, CGST & CX and  Parthasarathi Dey, Additional Commissioner, SGST, while addressing a matter, with regard to liability of tax on the applicant, held that,

Applicant’s activities do not amount to ‘supply’ of service, neither is it a recipient of the services for which it often provides financial assistance to the women survivors of sexual and other violence, therefore, not liable to pay GST on the activities described.

Applicant in the present application is a charitable trust under Section 12 A of the Income Tax Act, 1961.

It is involved in extending legal, medical, psychological and financial support to the women and their children surviving violence and abuse along with facilitating training programmes and workshops for the survivors.

Applicant in the present application approached the AAR in order to know whether it is liable to pay tax on its activities or not?

The above-stated question is admissible under Section 97(2)(e) and (g) of the GST Act.

Adding to its submissions, it also states that it does not charge anything on the survivors for the services it extends and the payments for aiding the services are done through donations.


Applicant is assisting the women survivors in various ways to get back on their feet. Survivors of sexual and other violence need services like legal aid, medical assistance, and vocational training. Recipient of such services is, therefore, not the applicant but the survivor woman.

Hence, the AAR concluded that the applicant makes payments not to the supplier of the services, but as financial support in the form of reimbursement to the recipient survivor. It is, therefore, not liable to pay GST based on reverse charge mechanism on such payments.

Applicant does not charge any consideration for facilitating the legal aid and other assistance. Such activities of the applicant, therefore, does not result in ‘supply’ of service as defined under Section 7 (1) of the GST Act. The applicant is not, therefore, liable to pay tax thereon. [Swayam, In Re., 03/WBAAR/2020-21, decided on 29-06-2020]

Advance RulingsCase Briefs

Karnataka Authority of Advance Ruling (Goods and Services Tax):  In the instant application the question was that whether the preparation of “Whole Wheat Parota” and “Malabar Parota”  can attract GST at the rate of 5% under Chapter Heading 1905, the AAR (GST Department) comprising of Ravi Prasad M.P., (Additional Commissioner of Commercial Taxes) and Mashhood- ur- Rehman Farooqui (Joint Commissioner of Central Tax), held that the product “parota” requires further processing for human consumption and is completely different from products like ‘roti’, ‘chapatti’ etc.; furthermore ‘parota’ also falls under the category of ‘food preparations not elsewhere specified or included’, thus the product can be classified under Chapter Heading 2106, upon which 18% GST will be applicable.

The applicant stated that the ‘parota’ is available in ambient and frozen form, with a shelf life of 3-7 days. The ingredients for the product include refined flour, RO purified water, edible vegetable oil, fat and salt. After adding the said ingredients, the product is then subjected to heat on a pan for making it available for consumption. With this description, the applicant contended that the product should be classified under Chapter Heading 1905 under the description of “Khakhra, Plain Chapatti and Roti”.

Perusing the contention and the nature of the product in question, the AAR observed that under Rule 3(c) of the General Rules of Interpretation under the Customs Tariff Act, 1975, where goods are not classifiable under appropriate heading then, the product is to be classified under the heading which occurs last in the numerical order among those headings which equally merit consideration. Since, Heading 2106 occurs last in the numeric order and the impugned product does not fall under any category enumerated in Rule 3(a) and Rule 3(b) General Rules of Interpretation under the Customs Tariff Act, 1975, thus the product ‘parota’ shall fall under Heading 2106 by the virtue of aforementioned Rule 3(c). It was further observed that unlike ‘khakhra’, ‘roti’ and ‘plain chapatti’ which are completely cooked preparations requiring no processing before human consumption and are thus ‘ready to eat food preparations’; the same cannot be said for ‘parota’ which is to be heated before consumption.[ ID Fresh Food (India) Pvt. Ltd., 2020 SCC OnLine Kar AAR-GST 1 , decided on 22-05-2020]

Case BriefsCOVID 19High Courts

Public interest must outweigh private gain.

Delhi High Court: Najmi Waziri, J., has capped the price of the COVID-19 Rapid Test Kit at Rs 400 per unit which is 40% lesser than the price of Rs 600 per unit approved by ICMR.

The Court was considering a petition filed by Rare Metabolics Life Sciences Pvt. Ltd., the exclusive distributer of medical products imported into India by the respondent, Matrix Labs. The petitioner was seeking the release of 7.24 lakh COVID-19 Rapid Test Kits and other COVID-19 related materials imported by the respondent from People’s Republic of China. On 25th March, the petitioner had desired to import 10 lakh WONDFO SARS CoV-2 Antibody test kits, for which proforma invoice was requested from the respondent. Subsequently, on 27th-28th March, ICMR placed an order with petitioner’s distributor for 5 lakh COVID-19 Rapid Test Kits at the rate of Rs 600 per unit. The total order was for Rs 30 crores. Of the said 5 lakh kits, 2.76 lack kits have already been delivered to ICMR and the remaining 2.24 lakh kits were expected to be delivered very shortly.

The petitioner submitted that it has already paid Rs 12.75 crores to the respondent, which amount covers the cost of 5 lakh kits. It was submitted that it will pay the balance when payment is received from ICMR. Whereas, the respondent contended that the entire amount was to be paid upfront. The Court stated that be as it may, since the kits are required in the country on urgent basis, the remaining 2.24 lakh kits shall be delivered to ICMR the moment it lands in India and the balance payment due to respondent shall be paid by the petitioner within 24 hours of receiving payment from ICMR.

The Court was informed that the actual cost paid to the supplier of these 5 lakh test kits is Rs 11.25 crores and ICMR will pay Rs 30 crores for purchasing the same, which means that Rs 18.75 crores will be shared by intermediaries without any value addition to the goods.

The Court was of the view that the profit mark-up of 61% on the landed cost of these kits is much on the higher side. It stated that

“The country is going through an unprecedented medical crisis affecting public order. People have been cloistered in their homes or constrained to stay wherever they were on 24th March 2020. The economy is virtually at a standstill for the last one month. There is an element of disquiet apropos one’s safety. For people to be assured that the pandemic is under control and for governments to ensure and for agencies engaged in the frontline battle to safeguard people’s health, more kits/tests should be made available urgently at the lowest cost, for carrying out extensive tests throughout the country. Public interest must outweigh private gain. The lis between the parties should give way to the larger public good.”       

In view of the above, the Court ordered that the kits should be sold at a price not beyond Rs per kit, inclusive of GST.

The Court was also informed that State of T.N. had placed an order of Rs 50,000 test kits with the respondent at the rate of Rs 600 per unit.

Accordingly, the Court directed that from the other 5 lakh kits (apart from those 5 lakh to be delivered to ICMR), 50,000 shall be excluded for the State of T.N. and the remaining 4.5 lakhs would be available to the respondent to be disposed of in the terms mentioned above. [Rare Metabolics Life Sciences (P) Ltd. v. Matrix Labs, 2020 SCC OnLine Del 569 , decided on 24-4-2020]

New releasesNews

Milind Kumars Goods and Services Tax: Law and Practice is a crisp introduction on the implementation of GST which heralded a simplified indirect taxation regime in the country. This book gives an overview of the road to GST and the pre-GST era explaining why the change was needed. This follows a chapter on the constitutional amendment which brought the law into force.

The author has compared the GST regime of India with the rest of the world. Chapters on understanding GST and GST slab rates have been included. GST Council, GSTN, DGGSTI, GSPs have their own dedicated chapters. The various sections and their corresponding rules have been discussed together in this book.

The notable features of this book are:

  • Short, accessible chapters so that you can navigate through the book with ease.
  • Fully updated with latest legislative and case law developments.
  • Relevant and interesting facts and information are provided in each chapter.
  • Includes a companion  web  resource  EBC  ExplorerTM (www.ebcexplorer.com), providing access to important statutes related  to  GST,  indicated  by  Book  ResourcesTM

This book will be useful to entrepreneurs, managers, students, academicians as well as to judges and lawyers.

Table of Contents

1. Road to GST

2. Indirect Taxation — Pre-GST

3. Constitution (101st Amendment) Act, 2016

4. Goods and Services Tax Council (GST Council)

5. GST Around the World

6. Understanding GST

7. GST Rate Slabs and Compensation Cess Rates

8. Goods and Services Tax Network (GSTN)

9. Directorate General of Goods and Service Tax Intelligence (DGGSTI)

10. GST Suvidha Providers (GSPs)/GST Seva Kendra

11. Central Goods and Services Tax Act, 2017

12. E-way Rules

13. Integrated Goods and Services Tax Act, 2017

14. Union Territory Goods and Services Tax Act, 2017

15. Goods and Services Tax (Compensation to States) Act, 2017

Subject Index

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Here is the link to buy: Goods and Services Tax: Law and Practice by Milind Kumar

New releasesNews

Jaya Vasudevan’s Indirect Taxes (GST & Other Indirect Taxes) is a textbook for law students. It explains the principles of indirect tax law in general and GST in particular with a special emphasis on the legislative shift from an origin-based system of taxation to a destination-based system.

This book is the first of its kind work. It elucidates the various concepts under indirect tax law, right from customs law to goods and services tax law under one umbrella. It critically analyzes various  Supreme Court, High Courts  and  Tribunal decisions.

The author throws light on the provisions of GST in relation to manufacture and consumption. The book elaborates on the scenarios that brought together the taxation of goods and services under a uniform system of taxation with a detailed account of the Constitutional amendment leading to the introduction of GST.

Written in a lucid and easy to understand style, the book provides complete clarity and understanding of the subject. The detailed explanation of the existing laws and the newly introduced GST law makes it a ready referencer for the study of integrated tax in an all-inclusive manner.

Notable Features:

  • Topic-wise discussions on all topics related to GST.
  • Fully updated with the latest legislative and case law developments.

Also included are additional learning resources on www.ebcexplorer.com:

l   Provides access to important case law as indicated by Case PilotTM , a Discussion ForumTM  to post comments, discuss and explore ideas and a Useful LinksTM feature to get access to a compilation of articles on GST, updates and other learning resources.

This book will be immensely useful to law students, law teachers, Managers, entrepreneurs and tax professionals, lawyers and judges.

Table Of Contents:

1. Concept of Indirect Taxation and GST

2. GST on Manufacture and Consumption

3. Customs Law

4. Tax on Services

5. GST and Sale of Goods

6. Transitional Provisions

Grab your copy here: Indirect Taxes by Dr. Jaya Vasudevan Suseela

Case BriefsHigh Courts

“Constitution of GST Appellate Tribunal is unconstitutional.”

Madras High Court: A Division Bench comprising of S. Manikumar and Subramonium Prasad, JJ., while deciding a writ petition in respect to declaring Sections 109 and 110 of the Central Goods and Services Tax Act, 2017 and Tamil Nadu Goods and Services Tax Act, 2017 held that,

  • Section 110(1)(b)(iii) of the CGST Act which states that a Member of the Indian Legal Services, who has held a post not less than Additional Secretary for three years, can be appointed as a Judicial Member in GSTAT, is struck down.
  •  Section 109(3) and 109(9) of the CGST Act, 2017, which prescribes that the tribunal shall consists of one Judicial Member, one Technical Member (Centre) and one Technical Member (State), is struck down.
  •  The argument that Sections 109 & 110 of the CGST Act, 2017 and TNGST Act, 2017 are ultra vires, in so far as exclusion of lawyers from the scope and view for consideration as members of the tribunal, is rejected. Parliament must consider to amend section for including lawyers to be eligible to be appointed as Judicial Members to the Appellate Tribunal in view of the issues which are likely to arise for adjudication under the CGST Act and in order to maintain uniformity in various statutes.

Facts pertaining to the present case:

Present writ petition was filed for the issuance of a writ declaration in order to declare Sections 109 and 110 of the Central Goods and Services Tax Act, 2017 and Tamil Nadu Goods and Services Tax Act, 2017 as void, defective and unconstitutional.

The above-said sections relate to the constitution of the Goods and Services Tax Appellate Tribunal and the qualification and appointment of members.

Section 109 of the CGST Act, 2017 and the TNGST Act, 2017 lays down the constitution of the Appellate Tribunal and the benches thereof and Section 110 prescribes the qualification of the President and the members of the Appellate Tribunal.

Section 109 of the CGST Act, states that the Government shall on the recommendations of the Council, constitute an Appellate Tribunal, known as the Goods and Services Tax Appellate Tribunal, for hearing appeals against the orders passed by the Appellate Authority or the Revisional Authority.

Section 110 of the Act prescribes the qualification, appointment and conditions of service, etc., of the President and the Members of the Appellate Tribunal. President of the Appellate Tribunal is a retired judge of the Supreme Court of India or a sitting or retired Chief Justice of any High Court or a Judge of a High Court or a retired Judge of a High Court, with not less than five years of service.

 Section 110 (2) prescribes that the President and the Judicial Members of the National Bench and Revisional Benches shall be appointed by the Government of India after consultation with the Chief Justice of India or its nominee.

The present writ petition challenges the validity of Sections 109 and 110 of the CGST Act, 2017 and TNGST Act, 2017, particularly the composition and qualification of the members to the Goods and Services Tax Appellate Tribunal.

Challenges laid down:

 First Challenge – It is to the vires of Section 110 (1) (b) of the CGST Act on the ground of exclusion of lawyers from being eligible to be appointed as a Judicial Member of the Tribunal. The exclusion of lawyers from the zone of consideration as a Judicial Member is violative of Article 14 of the Constitution of India.

Advocates are eligible to be considered as members of various tribunals and there is no justification or reason as to why they should be excluded from the zone of consideration of being appointed as Judicial members under the CGST and TNGST Act.

There has been no valid explanation as to why the CGST Act, 2017 and TNGST Act, 2017 exclude Advocates having more than 10 years of experience, from being considered as Judicial Members of the Tribunal.

Another Challenge- Challenge to the consideration of a Member of the Indian Legal Services who is eligible for being appointed as a member of the Appellate Tribunal has also been placed.

Next Challenge- It is in respect to the Composition of the Appellate Tribunal.

Composition of the Appellate Tribunal of CGST or TNGST, as the case may be, under Sections 109(3) and 109(9) of the CGST Act, 2017 prescribes that the tribunal will consist of one Judicial Member, one Technical Member (Centre) and one Technical Member (State). Thus, there are two Technical Members as against one Judicial Member. The two Technical Members, therefore, can overrule the Judicial Member who will be in minority.

Contentions of the Senior Counsel, Arvind Datar, representing the petitioners:

 He submitted that Section 110 (1) (b) of the CGST Act, 2017 lays down the qualification for appointment of a Judicial Member for Appellate Tribunal excludes advocates.

It is a departure from the existing practice of making Advocates with ten years experience at Bar and Advocates qualified for appointment as a Judge of a High Court, being considered as a Judicial Member of the tribunal.

Senior Counsel, Arvind Datar, placed reliance on the Supreme Court Judgment in R.K. Jain v. Union of India, (1993) 4 SCC 119, wherein the emphasis was on the need for recruitment of members f the Bar to man the tribunal.

“…Judicial review and remedy are fundamental rights of the citizens. The dispensation of justice by the tribunals is much to be desired. We are not doubting the ability of the members or Vice- Chairmen (non-Judges) who may be experts in their regular service. But judicial adjudication is a special process and would efficiently be administered by advocate Judges…”

Further substantiating his submissions, he stated that a lawyer with 10 years of experience in the subject would be in a better place to understand, appreciate and adjudicate the matters, which would be placed before the tribunal compared to a District Judge, who would not have experience at all for selection as a Judicial Member.

Reliance was placed on the decision of the Supreme Court in Madras Bar Association v. Union of India, (2014) 10 SCC 1, wherein it was that,

“…where the prescription of qualification was found by the court, to be not proper and conducive for the proper functioning of the Tribunal, it will result in invalidation of the relevant provisions relating to the constitution of the Tribunal. If the qualifications/eligibility criteria for appointment fail to ensure that the members of the Tribunal are able to discharge judicial functions, the said provisions cannot pass the scrutiny of the higher Judiciary.”

 Section 110 (1) (b) which excludes lawyers from being considered eligible for appointment as Judicial Member of the Tribunal is arbitrary of Article 14 of the Constitution of India.

Counsel for the petitioner reiterated that a District Judge even though be fit to be a Judge of High Court, might not be as oriented to deal with subjects, without having any expertise in the taxation laws.

An officer of the Indian Legal Services would also have no training in law or judicial expertise. Excluding lawyers from the ambit of consideration without any reason whatsoever makes the Section 110(1) (b) as violative of Article 14 of the Constitution of India.

Practice of considering advocates for appointments to specialised tax tribunals have been continued without break from 1941 with the advent of the Income Tax Appellate Tribunal.

 Denying the Advocates even the right of being considered will fall foul of the constitutional protection under Article 14 of the Constitution of India, as it would be capricious and irrational and more so, when there is no reason forthcoming from the respondents as to why lawyers are being excluded and why is there a departure from the norm of considering lawyers eligible to be appointed as Judicial Members of the tribunal.

For challenge in respect to the eligibility of a member of the Indian Legal Service for being considered as Judicial Member, reliance was placed on the Supreme Court decision in Union of India v. R. Gandhi, (2010) 11 SCC 1, to state that persons who have held a Group A post under Central or State Government with experience in the Indian Company Law Service (Legal Branch) and the Indian

Legal Service (Grade I) cannot be considered for appointment as judicial members while dealing with Section 10-FD(2)(c) and (d) of the Companies Act, 2013.

Adding to the above, he stated that Section 110(b)(iii) is per se contrary to the law laid down by the Supreme Court in the said judgment and must be struck down.

Further the Counsel for the petitioner submits that composition of the Benches in which the Technical Members would be in majority is unconstitutional and Section 109 of the CGST Act, 2017 which prescribes that two administrative members as against one judicial member is contrary to mandate of Article 50 of the Constitution of India and such a composition would seriously affect the independence of the judiciary.

Article 50 of the Constitution of India, provides that State shall take steps to separate the judiciary from the executive in the public services of the State.

 If the majority members on the bench are administrative members then Article 50 stands diluted.

In all the cases, which come to the tribunal, the revenue is either respondent or the appellant and that any assessee would not be confident of getting justice because the composition of the tribunal is such, it would give a genuine impression that the tribunal might not be an independent body and that it will only carry out the orders of the Government.

It was also pointed by the Counsel for the petitioner that it is for the first time that a statute provides for a composition of a tribunal where the administrative members exceed the judicial members.

 Judgments of the Supreme Court in Supreme Court Advocates-on-Record Assn. v. Union of India, (1993) 4 SCC 441 and Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17 was relied on.

Rajagopalan, Additional Solicitor General and Aparna Nandakumar, appeared on behalf of the Union of India:

They contended that there is no fundamental right for an Advocate to be considered for appointment as a Judicial Member of the tribunal.

Advocates Act, 1961 does not give any right to an Advocate, to be considered to be appointed as a Judge in a Tribunal and it is for the Government to decide as to whether an Advocate must or must not be considered to be eligible to be appointed as Judicial Member of the tribunal.

Union of India submitted that, since the minimum quorum of two members has already been prescribed under the GST Act, the apprehension entertained by the petitioner herein that there would be preponderance of technical members over judicial member is wholly untenable.


 Bench considered the following issues:

  • Whether the exclusion of advocates from being considered for appointment as a Judicial Member in GST Appellate Tribunal, is violative of Article 14 of the Constitution of India.
  • Whether Section 110 (b)(iii) which makes a member of the Indian Legal Service, eligible to be appointed as a Judicial Member of the appellate tribunal, contrary to the law laid down by the Supreme Court in Union of India v. R. Gandhi, (2010) 11 SCC 1.
  • whether the composition of the National Bench, Regional Benches, State Bench and Area Benches of the GST Appellate Tribunal, which consists of one Judicial Member, one Technical Member (Centre) and one Technical Member (State), by which the administrative members outnumber the judicial member is violative of Articles 14 and 50 of the Constitution of India and the judgments of the Supreme Court of India.

High Court on perusal of the facts and submissions, has put its analysis and observation below:

Even though the constitutional validity of Section 110(1) (b) cannot be struck down on the ground of non-inclusion of advocates as being eligible for being considered for appointment as Judicial Member to the Appellate Tribunal under the CGST or TNGST, yet this court is of the opinion that the Union of India must evaluate as to why it is making a departure from the existing practice. Advocates are eligible to be appointed as Judicial Members in the ITAT which is the oldest Tribunal in the country.

 Senior Counsel Arvind Datar is justified in contending that when the constitution provides that lawyers are eligible to be appointed as Judges of the High Court, then there is no reason to exclude them from being considered for appointment as Judicial Officers.

Judgment of the Supreme Court case in R.K. Jain v. Union of India, it was held that

“…the Members of the tribunal must have a judicial approach and also knowledge and expertise in the particular branch of law.”

 A lawyer practising for 10 years in Taxation would definitely be well-equipped to grapple with the legal issues arising under the Act.

High Court recommends that the Parliament should reconsider the issue regarding the eligibility of lawyers to be appointed as Judicial Members in the Appellate Tribunal.

Further, the Court added in respect to the other challenge of appointment of a person, who is or has been a member of Indian Legal Service and has held a post not less than Additional Secretary for a period of 3 years, is no longer res integra. The issue stand settled.

 In Union of India v. R. Gandhi, (2010) 11 SCC 1, it has been categorically stated that a person who has held a position under the Indian Legal service cannot be considered for appointment as judicial members.

Court agreed with Counsel for the petitioner’s submission that the GSTAT is replacing the CESTAT, Sales Tax/ VAT Tribunals. The composition of GSTAT, therefore, has to be on the same lines.

 Article 50 of the Constitution of India which provides for separation of the judiciary from the executive, must be interpreted in such a way that the dominance of the departmental/technical members, cannot overwhelmingly outweigh the judicial members.

 Tribunals that primarily decide disputes between the State and citizens cannot be run by a majority consisting of non-judicial members.

 Supreme Court in L. Chandrakumar v. Union of India, (1997) 3 SCC 261, after analysing the provisions in S.P. Sampath Kumar v. Union of India, 1987 (1) SCC 124 and M.B.Majumdar v. Union of India, (1990) 4 SCC 501, went on to hold that the tribunals created under Articles 323 and 323-B would not be a substitute for the High Court for the purpose of exercising Articles 226 & 227 of the Constitution of India. If that being so, then and in such cases, in order to maintain the independence of the judiciary, the expert members cannot outnumber the judicial members.

Supreme Court in L. Chandrakumar v. Union of India, (1997) 3 SCC 261 adverted to the Report of the Arrears Committee (1980-90), popularly known as the Manlimath Committee, which has made recommendations regarding functions of tribunals.

It specifically stated that tribunals have not inspired confidence in the public mind and the foremost reason being lack of competence, objectivity and judicial approach.

 High Court added to its observation that in all GST related issues, the litigation shall be between an Assessee and the Govt. and this is yet another reason, that the presence of two members from the Government would create a further apprehension of bias, and lead an Assessee to believe, that perhaps the remedy itself is non-existent.

The issue regarding dominance of the technical members and constitutional validity of the same shall have to be examined keeping in mind the Judgments of the Supreme Court, relating to the importance of the independence of the Judiciary, as well as the manner in which the Parliament could establish Tribunals, to discharge what is essentially a Judicial Function.

Following cases were noted by the Court with respect to the independence of judiciary:

“… To preserve the doctrine of separation of powers, it is necessary that the provisions falling in the domain of judicial field are discharged by the judiciary and that too, effectively.”

Thus, the law has been settled by the Supreme Court, insofar, as the creation of alternative institutions that would exercise judicial function, would be that the alternative institutional mechanism must not be less effective than the High Court.

To be effective as a High Court, would not be limited to having powers akin to High Court, it would also include the ability to exercise judicial function akin to a High Court, in the sense of being impartial and independent.

Even though the judgment of the State Bench or the Area Benches is subject to an appeal to High Court, it is well settled that while giving judicial decisions, Judges should be able to act impartially, objectively and without any bias.

Supreme Court in Manak Lal v. Prem Chand Singhvi, 1957 SCR 575 has observed that when a tribunal or a court decides the matter, the test is not whether, in fact, a bias has affected the judgment. The test always is and must be whether a litigant could reasonably apprehend that a bias attributable to a member of the Tribunal might have operated against him in the final decision of the tribunal.

The Court also stated the fact that the appellate tribunal is constituted also to see whether the legal principles and the decision-making process are correct and fair. The expert members, who are not well trained in the law, cannot be permitted to overrule the judicial member on these aspects.

Hence, the principle which emerges is that while deciding issues as to whether the decision making process by the adjudicating authority or the appellate authority was just, fair and reasonable and to decide issues regarding the interpretation of notifications and sections under the CGST Act a properly trained judicially mind is necessary which the experts will not have. The number of expert members, therefore, cannot exceed the number of judicial members on the bench. [Revenue Bar Assn. v. Union of India, 2019 SCC OnLine Mad 8910, decided on 20-09-2019]

Legislation UpdatesNotifications

Earlier, guidelines have been given to the departmental officials for verification of TRAN-1 credit by Internal Circulars referred above. In most of the cases, verification must have been done. However, some queries have been received from the departmental officials and tax payers and hence firther guidelines are being given in this circular. For the sake of consistency in the terminology, the term “dealer” is used for tax-payers.

2. Credit as per revised return under MVAT:

Earlier by Internal Circular No. 1A of 2018 and 23A of 2018, instructions had been given to allow credit in TRAN-1, as per original MVAT return for the period ending on 30th June 2017 and not to allow credit as per the revised MVAT return for the said period.

It has been brought to our notice that there are some cases, in which the credit in TRAN-1 u/s 140(1) of the MGST Act is being denied. In this regard, following guidelines are being issued, for different situations, to allow TRAN-1 credit u/s 140(1):

i. Situation 1: A dealer has mentioned an amount in his MVAT original return field “excess credit claimed as refund in this return” for the period ending on 30th June 2017. Actually, this dealer desired to carry forward the excess MVAT credit in TRAN-1 and hence was required to mention such amount in MVAT return field “excess credit carried forward to subsequent tax period”.

Realising the mistake, the dealer corrects the mistake and :

a) files revised MVAT return and mentions same amount in the field “excess credit carried forward to subsequent tax period”.

Clarification: In this situation, the credit claimed in TRAN-1 may be allowed.

b) files revised MVAT return and mentions higher amount in the field “excess credit carried forward to subsequent tax period”.

Clarification: In this situation, the credit may be allowed to be claimed in TRAN-1, equal to the amount of refund claimed as per the original return.

The difference in amount of such credit as per the original return and the revised return can be considered during MVAT assessment proceedings of the said dealer. In case, such dealer has not applied in e-501 for MVAT refund, then the dealer may make a request in writing to the nodal authority. The nodal authority, after verification of such request, shall send it to the Zonal Selection Committee through proper channel.

c) files revised MVAT return and mentions lesser amount in the field “excess credit carried forward to subsequent tax period”.

Clarification: In this situation, the credit may be allowed to be claimed in TRAN-1, as per the revised return.

ii. Situation 2: A dealer has carried forward credit in revised MVAT return for the period ending on 30th June 2017 but such amount is more than amount of credit carried forward by him in his original MVAT return.

Clarification: In this situation, the credit, carried forward in original return, shall be allowed to be taken in TRAN-1.

As explained on page 2, difference in credit claimed and credit allowed can be considered during MVAT assessment.

iii. Situation 3: A dealer has carried forward credit in revised MVAT return but such amount is less than amount of credit carried forward by him in his MVAT original return for the period ending on 30th June 2017.

Clarification:  In this situation, the amount of excess credit carried forward by him in the revised MVAT return (i.e. lesser amount), for the period ending on 30th June 2017 should be considered for the purpose of allowing TRAN-1 credit claim.

iii. Situation 4: A dealer has claimed refund and has also carried forward balance credit in his original MVAT return for the period ending on 30th June 2017. Subsequently, he files a revised return for the period ending on 30th June 2017, claiming refund as well as carrying forward credit but the amounts so claimed as refund and carried forward as excess credit are different.

Clarification: In this situation, the amount of credit carried forward by him in his original return and the amount of credit carried forward in his revised return shall be compared and the lesser of these two amounts shall be allowed to be claimed in TRAN-1.

It goes without saying that in no case, the dealer shall be  eligible for MVAT refund of excess credit as well as to claim  it in TRAN-1, in respect of the same credit and hence the MVAT refund application shall not be considered for the grant of refund. In any case, the nodal authorities shall ensure  avoidance of such duplicate claims.

3. Verification of CST declarations:

Verification of CST declarations is necessary to determine the credit eligible to be taken u/s 140(1) and u/s 140(4)(a) of the MGST Act.

A. Periods for which verification to be done: A dealer, who has carried forward credit in his MVAT return for the period ending on 30th June 2017 in his TRAN-1, is expected to furnish details of CST declarations received for the periods starting from 1st April 2015 to 30th June 2017.

Nodal authorities are expected to verify CST declarations, only for the years or periods for which credit is being carried  forward.

Illustration 1: A dealer has carried forward credit in his return for the period ending on 30th June 2017 and has also claimed 0edit TRAN-1 u/s 140(1). He has claimed MVAT refund for the year 2015-16 and 2016­17. In this case, CST declarations for the period 1st April 2017 to 30th June 2017 must be verified however, CST declarations for the years 2015-16 and 2016-17 need not be verified during TRA1V-1 verification proceedings. Illustration 2: A dealer has can-led forward credit in his MVAT return for the period ending on 30th June 2017 and has accordingly claimed credit in TRAN-1 u/s 140(1). He has claimed MVAT refund for the year 2015-16, but has carried forward excess MVAT credit for the year 2016-17. In this case, CST declarations for the year 2016-17 and for the period 1st April 2017 to 30th June 2017 must be verified, however CST declarations for the year 2015-16 need not be verified during TRAN-1 verification proceedings.

B. CST declarations received after filing of IRAN-1:

It is also noticed that some dealers have claimed lesser credit in TRAM-1 u/s 140(1) than the amount of credit carried forwaixi in their MVAT returns for the period ending on 30th June 2017 because they were not in possession of all CST declarations. Subsequently, such CST declarations may have been received by them.

Clarification: In such cases, credit claimed in TRAN-1 u/s 140(1), supported by valid CST declarations, should only be allowed. However, in any case, as provided in the proviso to sec. 140(1), such dealers may ask for MVAT refund, if otherwise eligible. In case, such a dealer has not filed an application for refund in e-501, then he may make a request in writing for taking up his case for MVAT/CST assessment to grant MVAT refund. The nodal authority, after verification of such request shall send the application to the Zonal Selection Committee through the respective Jt. Commissioner.

4. Verification of MVAT Credits:

A. Mismatch of VAT credit: Earlier, by Internal Circular No 23A of 2018, the nodal authorities had been asked to verify MVAT set­off on the basis of the EIU data and the SAP portal data [BI Launch pad]. In case of mismatch, instructions were given to issue notice in FORM-603. Such verification may have already been done. In case, any such verification is pending in any case, then it need not be done now by the nodal authorities. Instead, EIU would communicate such reports to the nodal authorities after data analysis and recommend suitable cases for MVAT assessment etc.

B. Verification of MVAT credit, in respect of cases, allotted to central tax authorities: Earlier, administrative instructions, had been given that after verification of MVAT credit in TRAN-1 is completed, in respect of a dealer, allotted to the central tax authorities, a report should be submitted to the respective central tax authority and the central tax authority was expected to complete further process by issuing notice in DRC-01 etc. and vice versa.

5. TRAN-1 verification process:

A.Issuing of DRC-01A & DRC-01 Proceedings u/s 73 must have been initiated by issuing show cause notice along with summary in DRC-01 [Rule 142(1)(a)]. Rule 142 has now been amended by notification No. 49 dated 9th Oct. 2019. In view of thsi amendment, it is now necessary to communicate details of any tax and interest, as ascertained by the nodal authority, in Part A of the newly introduced Form DRC-01A before issuing show cause notice and summary in DRC-01. Such communication in DRC-01A may be made physically to the dealers till this functional utility becomes available on the GSTN BO System.

B. Intimation in DRC-03: Dealers must have been informing about the payments made by them in Form DRC-03 [rule 142(2)]. Now, by virtue of the amendment to rule 142 [Notification No. 49 dated 9th Oct. 2019] , where a dealer, on whom DRC-01A has been served, makes partial payment of the amount communicated to him or desires to file any submissions against the liability proposed in DRC-01A, then he may make such submission in Part B of FORM GST DRC-01A. Normal compliances are expected to be filed by dealers in DRC-03, instead of GSTR-3B.

C. Issuing of DRC-07: In case, an order in DRC-07 has already been issued earlier physically, then such orders in DRC-07 should now be issued through the system. In this case, the actual date of service of DRC-07, which was physically served on the dealer, should be entered in the system.

6. Interest u/s 50 on excess credit availed in TRAN-1:

Clarification has been sought by the nodal authorities as regards the applicability of interest under Section 50 of the MGST Act on excess credit in TRAN-1.

In this regard, clarification is given as follows:

  1. Interest on excess credit “availed”: Interest under Section 50 is payable in case excess credit has been “availed” in TRAN-1 by a dealer. In other words, mere availment of excess credit in TRAN-1 is sufficient to attract interest u/s 50 of the MGST Act and such excess credit need not have been “utilized” to discharge GST liability. Thus, interest u/s 50 shall become payable, in respect of such excess credit claim, from the date of iling of TRAN-1 till the date the dealer reverses such excess credit in GSTR-3B (as per earlier instructions) or makes payment and informs either in DRC-03 or in Part B of DRC-01A.
  2. Revised TRAN-1: In case, a dealer has filed a revised TRAN-1 and has increased the amount of MVAT credit, which is found to be inadmissible, then interest shall be payable u/s 50 from teh date of submission of such revised TRAN-1, in respect of such inadmissible credit alimed in revsied TRAN-1.

[Circular dt. 19-10-2019]