Advance RulingsCase Briefs


Authority of Advanced Ruling (Karnataka): In an application filed to sought advance ruling on the question that, whether the applicant would be eligible to avail the input tax credit, in terms of Section 16 of the Central Goods and Services (‘CGST’) Act , 2017, on vouchers and subscription packages procured by the applicant from third party vendors, the two-member bench of M.P. Ravi Prasad and T. Kiran Reddy has ruled that the applicant is not eligible to avail the input tax credit, as it is not available in terms of Section 17(5)(h) of the CGST Act, 2017.

The Authority noted that the loyalty program operates in a specified manner and the applicant does not give vouchers and subscription packages to every customer but only to eligible customers participating in the loyalty program and who wish to redeem their accumulated loyalty points and the applicant do not receive any monetary consideration from the said customers. Further these points are non-transferable, can’t be converted into cash.

Further, the applicant procures the vouchers and subscription packages from third party vendors upon payment of GST and provide the same to customers on redemption of the loyalty points earned by them and are themselves not in the business of supply of the said vouchers and subscription packages. The vendors will be raising invoices on the applicant by classifying their outward supply as ‘other professional, technical and business services’.

Moreover, the expenditure incurred by the applicant in running the loyalty program and procuring the said vouchers is not in the nature of capital expenditure or in the nature described under Sections 30 to 36 of the Income Tax Act, 1961. Thus, the said amount is expended wholly and exclusively for the purpose of business of the applicant and the same is allowed under Section 37(1) of the Income tax Act, 1961 in computing the income chargeable under the head ‘Profits and gains of business or profession’.

The Authority observed that the input tax credit is an entitlement to a registered person which can be taken subject to conditions and restrictions as may be prescribed. Also, Section 17(5) prescribes that input tax credit shall not be available in respect of certain supplies. Thus, the issue is to decide whether the inward supply i.e., the voucher merits classification as ‘goods and services’ and if they are goods whether they were disposed of by way of gift.

The Authority took note of the ‘voucher’ under Section 2(118) of the CGST Act, 2017 and observed that the subscription packages procured by the applicant from vendors and supplied to customers against loyalty points is also a ‘voucher’ as it places an obligation on the potential supplier to accept it as consideration for supply of goods and services to the holder of the instrument. Further, the vouchers printed on paper are undoubtedly goods as they are tangible, however, e-vouchers are also goods as the definition of goods under Section 2(52) of the CGST Act, is not restricted to tangible property and refers to every kind of movable property capable of transmitted or supplied.

The Authority took note of the ruling in Vikas Sales Corporation v. Commissioner of Commercial Taxes, Appeal (Civil) 7771-75 of 1996, wherein the Court held “that import licenses are not actionable claims, they have a monetary value, they are freely transferable and hence are goods”, and observed that voucher is like an import license and thus, vouchers are covered under goods. Further, Para 1 (a) Schedule II to Section 7 specifies that any transfer of the title in goods is supply of goods, as transfer of supply of voucher involves transfer of the title, thus, they are covered under supply of goods.

Moreover, the Authority observed that the applicant based on a particular transaction by the customer through their e-commerce platform subject to acceptance of terms and conditions, allows the customer to earn loyalty points. The applicant in the said transaction recovers the full amount from the customer and gives the loyalty points free of cost. As the vouchers are issued free of cost to the customer, it amounts to disposal of vouchers by way of gifts and covered under Section 17(5)(h) of the CGST Act. Thus, the applicant cannot avail the input tax credit.

[Myntra Designs Pvt. Ltd., In re, Advance ruling no. KAR ADRG 33/2022, decided on 14.09.2022]

Advocate who appeared in this case :

Represented by: Advocate Tarun Gulati.

Legislation UpdatesRules & Regulations

On 16-7-2022 the Finance Department of Rajasthan has notified the Rajasthan Goods and Services Tax (Amendment) Rules, 2022 to further amend the Rajasthan Goods and Services Tax Rules, 2017. The Amendment Rules has come into effect from 05-07-2022.

Key Amendment: –

  • In Rule 21A (4), a new proviso has been inserted which specifies suspension of registration and it will stand revoked on payment of all pending returns.
  • In Explanation to Rule 43, clause (d) has been inserted which specifies manner of determining input tax credit.
  • In Rule 86(4B) has been inserted which specifies the deposit of any registered person are erroneously sanctioned under electronic cash ledger the amount equivalent to the amount of erroneous refund deposited by the registered person shall be re-credited to the electronic credit ledger by the proper officer by an order made in FORM GST PMT-03A.
  • In Rule 87(3), clause (ia) and clause (ib) have been inserted which specifies two modes for deposit, which are as follows-

    (ia) Unified Payment Interface (UPI) from any bank;

    (ib) Immediate Payment Services (IMPS) from any bank;

  • Rule 88B, with retrospective effect from 01-07-2017 has been inserted, which deals with the manner of calculating interest on delayed payment of tax.
  • In Rule 89(1)(4), Explanation has been inserted which specifies goods exported out of India.
  • Rule 95A has been omitted with retrospective effect from 01-07-2017.
  • Rule 96(5) has been omitted with retrospective effect from 01-07-2017 and the following sub-rule (5A), (5B), (5C) has been inserted which specified the procedure for the claim of withholding refund.
    1. Rule 5A- When a refund is withheld as per Rule 96(4)(a)/(c), intimation of the same must be sent to the exporter electronically through the common portal.
    2. Rule 5B-When the refund is withheld as per Rule 96(4)(b), such claim shall be transmitted to the proper officer of Central tax, State tax or Union territory tax, as the case may be, electronically through the common portal in a system generated FORM GST RFD-01.
    3. Rule 5C- The application for refund in FORM GST RFD-01 is transmitted electronically through the common portal in terms of (5A) and (5B) that will be dealt with as per Rule 89.
  • In FORM GSTR-3 B, paragraph 3.1.1 has been inserted which deals with details of supplies notified under Rajasthan Goods and Services Tax Act, 2017.
  • FORM GST PMT- 03A has been inserted to define the manner in which the order for re-credit of the amount to Electronic Credit Ledger.
  • FORM GST RFD-10 B has been omitted with retrospective effect from 01-07-2019.

*Disha Srivastava, Publication Assistant has reported this brief.

Case BriefsTribunals/Commissions/Regulatory Bodies


Appellate Authority for Advance Ruling, Punjab: Arun Narayan Gupta Chief Commissioner, CGST Commissionerate, and Kamal Kishor Yadav, Commissioner of State Tax held that the distribution of match tickets to related persons for the promotion of business attracts GST.

The factual background of the case

The appellant entered into a Franchise Agreement in April 2008 with the Board of Control for Cricket in India (BCCI) to establish and operate a cricket team in the Indian Premier League (IPL) under the title of ‘Punjab Kings’. The Appellant intended to distribute match tickets free of cost as a goodwill gesture for the promotion of business. These tickets were distributed without any consideration by the Appellant. The Appellant approached the Authority for Advance Ruling, Punjab (AAR Punjab) to clarify the treatment of GST liability on the supply of complimentary tickets.

AAR Punjab held the act of Appellant of issuing complimentary tickets displayed an act of forbearance. Aggrieved with the judgment the Appellant filed an appeal under Section 99 of the Punjab GST Act and Central Good and Services Act, 2017 (CGST) before the Appellant Authority of Advance Ruling to seek advance ruling for the following:

  • Whether the activity of providing “Complimentary tickets” by the appellant falls within the definition of supply under the Punjab GST Act, 2017 /CGST Act, 2017?

  • Whether the appellant would be required to pay tax on such complimentary tickets?

Analysis and Decision

The Bench stated that the two key elements that are required to be present for any activity or transaction to fall within the ambit of supply are “consideration” as well as “furtherance of business”. Therefore, the Bench opined that if any activity or transaction mentioned in Schedule II of the CGST the same has to fulfill the two key parameters i.e., presence of “consideration” as well as “furtherance of business” for it to be treated as supply under the Act.

The Bench observed that even for the consideration in the form of payment in kind, it should not be vague or illusory and there should be an element of reciprocity, and the expression “exempt supply” as defined under the CGST means the supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under Section 11, or under Section 6 of the Integrated Goods and Services Tax Act, 2017 and includes the non-taxable supply.

Therefore, the Bench held that the activity of providing complimentary tickets is an exempt supply, and there shall be no availment of Input Tax Credit according to Section 17 (2) of the CGST.

Hence, complimentary tickets provided by the Appellant fall within the ambit of supply on account of Schedule I of the CGST, and the Appellant would be liable to pay tax on the same.

[KPH Dream Cricket Pvt. Ltd., 01/AAAR/CGST/KPH/2022, decided on 01-06-2022]

Advance RulingsCase Briefs

Kerala Authority for Advance Ruling: S. Anilkumar, Additional Commissioner of Central Tax & B.S. Thyagarajababu, Joint Commissioner of State Tax decided whether there will be any input tax credit on goods provided free of cost i.e as under CSR activity for flood-affected people.


In the present matter, the applicant was a dealer in electrical goods, cables of all kinds including winding wires, pipes, etc. Applicant had supplied electrical items to Kerala State Electricity Board through their distributors in connection with reinstating connectivity in the flood ridden areas as part of the “mission reconnect”.

The above-stated materials were supplied free of cost as a CSR activity. To ascertain the impact of GST on the stated goods supplied free of cost, the applicant required advance ruling on the following:

  • Determination of GST liability with respect to goods provided free of cost by the distributors and admissibility of input tax credit
  • Applicability of Section 17(5) of the CGST Act, 2018 on CSR expenses.


KSEB requested from the distributors of the applicant to supply electrical goods for the restoration of power supply at flood ridden areas. The said materials were supplied by the distributors free of cost being CSR activity for reinstating connectivity in flood ridden areas. Applicant also distributed items like switches, fan, cables, etc. to flood-affected people under CSR expenses on a free basis without collecting any money.

Further, it was noted that the distributors raised bill to M/S Polycab Wires Private Limited in relation to the materials supplied free of cost to KSEB. The tax invoices were issued to KSEB showing sale value, GST and total amount with 100% discount. However, the GST liability was paid to the Government.

Applicant stated that, since the GST liability was completely paid on free supply, they were eligible to avail full claim of input tax credit on the supplied items. M/s Polycab Wires Private Limited reimbursed the total amount to the distributors and account the same as donation in kind towards CSR Expenses for Kerala Flood Relief, 2018.

In the present case, after availing input tax credit, the applicant disposed of goods as a free supply for CSR activities. Hence, the applicant was liable to reverse the input tax credit already availed.

As per Rule 27 of GST Rules where the supply of goods or services is for a consideration not wholly in money, the value of the supply shall be the open market value of such goods. In case the open market value is not available, be the sum total of consideration in money and any such further amount in money as is equivalent to the consideration not in money, if such amount is known at the time of supply.

If the value of supply is not determinable, the value of supply of goods or service or both of like kind and quality.


  • Determination of GST liability with respect to goods provided free of cost by the distributors to KSEB for reinstating connectivity in flood ridden areas; and admissibility of input tax credit in relation to such goods.

To operationalize the commitment of the applicant to provide goods at free of cost to KSEB for flood renovation work, the applicant instructed its distributors to provide the goods. The distributors billed the goods to KSEB and paid GST to Government. In the invoice so issued, the distributor had valued the goods for the purpose of tax and value was shown as discount.

In the above-stated supply, since the consideration was not wholly in money, Rule 27 of the CGST/KSGST Rules would apply for valuation. Once the Goods were supplied to KSEB, the distributor would raise the claim to the applicant who would reimburse the value to the distributor.

In view of the above, the distributor would be entitled to input tax credit on the goods supplied to KSEB.

  • Applicability of Section 17(5) of the CGST Act, 2018 on CSR expenses

For the items like cables, fans, switches, etc. to flood-affected people under CSR expenses on free basis, input tax credit will not be available as per Section 17(5)(h) of the KSGST and CGST Act.[Polycab Wires (P) Ltd., In Re., 32AAACP6474E1ZM, decided on 2-3-2019]

Authorised Representative: P.J. Jhoney, FCA

Case BriefsHigh Courts

Karnataka High Court: S. Sunil Dutt Yadav J. disposed off the petition and reinstated an observation “If any money is due to the Government, the Government should take steps but not take extra steps or maneuver…”

Factual Background

The facts of the case are such that the petitioner operates an e commerce platform under the name ‘Swiggy’ and is registered under the Central Goods and Services tax Act, 2017. Due to spike in food orders during holidays and festive season, third party service providers i.e. Greenfich in the present case, are engaged who charge consideration for the same along with GST which is paid by the petitioner as Input Tax Credit. An investigation was conducted by the respondent Department on the ground that Greenfich was a non existent entity and ITC availed are fraudulent. The petitioner alleged that a sum of Rs. 27 crores was illegally collected from the petitioner during the investigation proceedings under threat of arrest and coercion. Hence the instant petition was filed seeking a writ of mandamus directing the respondents to refund the amount illegally collected.


Counsel for the petitioners Mr. Lakshmikumaran and Mr. Ravi Raghavan submitted that payment has been collected under duress and coercion which is clear from a letter presented before the Court dated 30-11-2019. It was further submitted that the manner in which the investigation was conducted and payments were made reflects an unfair and arbitrary treatment of a bonafide tax payer as petitioner’s credibility as tax payer could never have been doubt by presenting documents for the same.

Counsel for the respondents Mr. M B Naragund and Mr. Amit Despande submitted that according to letter dated 30-11-2019 it is clear that the payments were made as a goodwill gesture and are to be construed as payment of tax in furtherance of self ascertainment as contemplated under section 74(5) of the CGST Act. It was further submitted that the petitioner has exercised its statutory right of refund and is bound to follow the procedure to its logical end by invoking the remedies available under the statutory scheme of the Act, thus invoking writ jurisdiction is impermissible.


The Court observed that the mere fact that application has been made for refund does not in anyway take away the right of the petitioner to seek for appropriate direction in the present proceedings, as the application for refund has merely been deferred and in effect no decision is taken, even otherwise, the question of alternate remedy is of no significance, when the eventual direction in the present writ is only for consideration of the refund application.

The Court further observed that the letter dated 30-11-2019 is clear and unambiguous wherein it is stated that the amount is made in furtherance of their goodwill conduct and bonafide during the pendency of the inspection proceedings and seeking necessary refund should not be regarded as an admission of liability.

The Court observed that the scheme of self ascertainment as contained in sub sections (5) (6) (7) (8) of Section 74 of CGST Act does not call for making of payment and continuance of investigation. “Upon payment of tax after collection of the same with penalty, if the same is accepted even before the issuance of notice under Section 74 (1) during investigation, there ends the matter and there is nothing further to be proceeded with.”

The Court observed that while considering the time at which the amount was deposited and the date of the deposit, it would indicate that amounts were paid during times when there was no legal obligation to make payment. It was further observed that the matter regarding wrongful availment of input tax credit was pending investigation and the Department acted in undue haste to ensure that taxes are paid during the process of investigation instead of allowing the investigation to proceed and conclude in accordance with law.

The Court relied on judgment Dabur India Limited v. State of Uttar Pradesh, (1990) 4 SCC 113 and observed that This is unfortunate. We would not like to hear from a litigant in this country that the Government is coercing citizens of this country to make payment of duties which the litigant is contending not to be leviable. Government, of course, is entitled to enforce payment and for that purpose to take all legal steps but the Government, Central or State, cannot be permitted to play dirty games with the citizens of this country to coerce them in making payments which the citizens were not legally obliged to make.”

The Court further observed that it does not desire to place any sort of fetter on the power of investigation and it would be unwise to impose any kind of time limit, for it is the authority which should be permitted to complete its investigation in a manner as may be desired by it as is permissible.

The Court thus held “the consideration of right of refund in the present factual matrix would be independent of the process of investigation and two cannot be linked together”

“Accordingly refund applications are to be considered and suitable orders be passed within a period of four weeks from the date of the release of the order.

[Bundl Technologies Private Limited v. Union of India, 2021 SCC OnLine Kar 14702, decided on 14-09-2021]

Arunima Bose, Editorial Assistant has reported this brief.

Case BriefsHigh Courts

Delhi High Court: The Division Bench of Manmohan and Sanjeev Narula, JJ., upheld the validity of Sections 132 and 69 of the Central Goods and Services Tax Act, 2017, and refused any interim relief to the petitioner.

Petitioners submitted that Sections 69 and 132 of the Central Goods and Services Tax Act, 2017 are unconstitutional as being provisions of criminal nature, they could have been enacted under Article 246A of the Constitution of India, 1950.

Further, the petitioners emphasized that the power to arrest and prosecute are not ancillary and/or incidental to the power to levy and collect goods and services tax.

Adding to the above submissions, it was further stated that since the power to levy Goods and Services Tax is provided under Article 246A, power in relation thereto could not be traced to Article 246 or any of entries in 7th Schedule.

In the alternative, they submitted that Entry 93 of List 1 confers jurisdiction upon the Parliament to make criminal laws only with respect to matters in List I and CGST. Therefore, according to them, Sections 69 and 132 are beyond the legislative competence of the Parliament.

In the past, many cases occurred wherein an assessee had been arrested at the initial stage of the investigation but the department had subsequently failed to establish its case in adjudication proceedings and in the process, the assessee suffered an irreparable loss on account of the arrest.

In the present cases, no Show Cause Notice had been issued to the Petitioners either under Section 73 or Section 74 of the CGST Act by the Respondents for any unpaid tax, short paid tax, or erroneous refunds or where input tax credit had been wrongly availed or utilized.

Court’s Reasoning

  • There is always a presumption in favour of the constitutionality of an enactment or any part thereof and the burden to show that there has been a clear transgression of constitutional principles is upon the person who impugns such an enactment. Further, Laws are not to be declared unconstitutional on the fanciful theory that power would be exercised in an unrealistic fashion or in a vacuum or on the ground that there is a remote possibility of abuse of power.

Bench while analyzing several aspects of the matter stated that whenever constitutionality of a provision is challenged on the ground that it infringes a fundamental right, the direct and inevitable effect/consequence of the legislation has to be taken into account.

Court referred to the decision of Supreme Court in Namit Sharma v. Union of India, (2013) 1 SCC 745.

In the decision of the Court in Maganlal Chhanganlal (P) Ltd. v. Municipal Corporation of Great Bombay, (1974) 2 SCC 402, it was held that :

“Administrative officers, no less than the courts, do not function in a vacuum. It would be extremely unreal to hold that an administrative officer would in taking proceedings for eviction of unauthorised occupants of Government property or Municipal property resort to the procedure prescribed by the two Acts in one case and to the ordinary civil court in the other. The provisions of these two Acts cannot be struck down on the fanciful theory that power would be exercised in such an unrealistic fashion. In considering whether the officers would be discriminating between one set of persons and another, one has got to take into account normal human behaviour and not behaviour which is abnormal. It is not every fancied possibility of discrimination but the real risk of discrimination that we must take into account. This is not one of those cases where discrimination is writ large on the face of the statute. Discrimination may be possible but is very improbable.”

  • Goods and Service Tax is a Unique Tax, inasmuch as the power as well as field of legislation are to be found in a Single Article, i.e. Article 246-A. Scope of Article 246-A is significantly wide as it grants the power to make all laws ‘with respect to’ Goods and Service Tax.

Unless the Constitution itself expressly prohibits legislation on the subject either absolutely or conditionally, the power of a Legislature to enact legislation within its legislative competence is plenary.

Further, Court added that there is also no conflict between the operation of Article 246A and Article 246 as a non-obstante clause has been added to Article 246A to clarify that both Parliament and the State Legislatures have simultaneous powers in relation to Goods and Services Tax.

  • This Court is of the Prima facie opinion that the ‘Pith and Substance’ of the CGST Act is on a topic, upon which the parliament has power to legislate as the power to arrest and prosecute are ancillary and/or incidental to the power to levy collect goods and service tax.

When a law is challenged on the ground of being ultra vires to the powers of the legislature, the true character of the legislation as a whole has to be ascertained.

Bench opined that when a law dealing with a subject in one list is also touching on a subject in another list, what has to be ascertained. If on examination of the statute, it is found that the legislation is in substance on a matter assigned to the legislature enacting that statute, then it must be held valid, in its entirety even though it may trench upon matters beyond its competence. Incidental encroachment is not prohibited.

In light of the discussion of the above point, Court prima facie opined that the pith and substance of the CGST Act is on a topic, upon which the Parliament has power to legislate as the power to arrest and prosecute are ancillary and/or incidental to the power to levy and collect GST. 

  • Even if it is assumed that power to make offence in relation to evasion of GST is not to be found under Article 246A, then the same can be traced to Entry I of List III. The term ‘Criminal Law’ used in the aforesaid entry is significantly wide and includes all criminal laws except the exclusions.

Supreme Court’s decision in Kartar Singh v. State of Punjab, (1994) 3 SCC 569, has emphasized that the language used in the aforesaid entry is couched in very wide terms and the scope of the term ‘criminal law’ has been enlarged to include any matter that could be criminal in nature.

In view of the above, High Court prima facie opined that even if Sections 69 and 132 of the Act could not have been enacted in pursuance to power under Article 246A, they could have been enacted under Entry 1 of List III, as laying down of a crime and providing for its punishment is ‘criminal law’.

  • This Court, at the interim stage, cannot ignore the view taken by the Gujarat High Court with regard to application of Chapter XII CrPC to the CGST Act.

In Gujarat High Court’s decision in Vimal Yashwantgiri Goswami v. State of Gujarat, R/Special Civil Application No. 13679 of 2019, it was held as under:

♦ When any person is arrested by the authorised officer, in exercise of his powers under Section 69 of the CGST Act, the authorised officer effecting the arrest is not obliged in law to comply with the provisions of Sections 154 to 157 of the Code of Criminal Procedure, 1973. The authorised officer, after arresting such person, has to inform that person of the grounds for such arrest, and the person arrested will have to be taken to a Magistrate without unnecessary delay, if the offences are cognizable and non-bailable.

However, the provisions of Sections 154 to 157 of the Code will have no application at that point of time. Otherwise, Section 69 (3) provides for granting bail as the provision does not confer upon the GST officers, the powers of the officer in charge of a police station in respect of the investigation and report. Instead of defining the power to grant bail in detail, saying as to what they should do or what they should not do, the short and expedient way of referring to the powers of another officer when placed in somewhat similar circumstances, has been adopted. By its language, the sub-section (3) does not equate the officers of the GST with an officer in charge of a police station, nor does it make him one by implication. It only, therefore, means that he has got the powers as defined in the Code of Criminal Procedure for the purpose of releasing such person on bail or otherwise. This does not necessarily mean that a person alleged to have committed a non-cognizable and bailable offence cannot be arrested without a warrant issued by the Magistrate.

♦ The authorised officer exercising power to arrest under section 69 of the CGST Act, is not a Police Officer and, therefore, is not obliged in law to register FIR against the person arrested in respect of an offence under Sections 132 of the CGST Act.

♦ An authorised Officer is a ‘proper officer’ for the purposes of the CGST Act. As the authorised Officers are not Police Officers, the statements made before them in the course of inquiry are not inadmissible under Section 25 of the Evidence Act.

♦ Power to arrest a person by an authorized officer is statutory in character and should not be interfered with Section 69 of the CGST Act does not contemplate any magisterial intervention.

  • In view of the Supreme Court Judgment in Directorate of Enforcement v. Deepak Mahajan and the aforesaid Gujarat High Court Judgment, the arguments that prejudice is caused to the petitioners as they are not able to avail protection under Article 20(3) of the Constitution and/or the provisions of CrPC do not apply even when CGST Act is silent, are untenable in law.

Judicial Scrutiny

 When any person is arrested under Section 132(5) of the CGST Act, the said person has to be informed of the grounds of arrest and must necessarily be produced before a Magistrate under Section 69 (2) within a period of 24 hours.

 The above-stated would ensure judicial scrutiny over the acts of executive and it cannot be termed as unreasonable and/or excessive.

 Adding to its analysis, the Court stated that just because the CGST Act provides for both adjudications of civil liability and criminal prosecution doesn’t mean that the said Act is unfair or unreasonable.

  • Court prima facie finds force in the submission of the ASG that the Central Tax Officers are empowered to conduct intelligence-based enforcement action against taxpayers assigned to State Tax Administration under Section 6 of the CGST Act.
  • What emerges at the prima facie stage is that it is the case of the respondents that a tax collection mechanism has been converted into a disbursement mechanism as if it were a subsidy scheme.

To conclude the Court held that what emerges at the prima facie stage is that it is the case of the respondents that a tax collection mechanism has been converted into a disbursement mechanism as if it were a subsidy scheme.

Hence, in view of the serious allegations, the Court expressed that it is not inclined to interfere with the investigation at the present stage and that too in writ proceedings. At the same time, innocent persons cannot be arrested or harassed. Consequently, the applications for interim protection are dismissed with liberty to the parties to avail the statutory remedies.

It is settled law that though the powers of constitutional courts are wide and discretionary, yet there exist certain fetters in the exercise of such powers.

 In the Supreme Court decision of Hema Mishra v. State of U.P., (2014) 4 SCC 453, it was held that despite the fact that provision regarding pre-arrest bail, had been specifically omitted in Uttar Pradesh, the power under writ jurisdiction is to be exercised extremely sparingly.

Court’s view in the instant case is that the allegation that a tax collection mechanism has been converted into a disbursement mechanism most certainly requires investigation.

Bench stated that it has no doubt that the trial court, while considering the bail or remand or cancellation of bail application, ‘will separate the wheat from the chaff’ and will ensure that no innocent person against whom baseless allegations have been made is remanded to police/judicial custody.

Hence, the observations made herein are prima facie and shall not prejudice either of the parties at the stage of final arguments of the present writ petitions or in the proceedings for interim protection. [Dhruv Krishan Maggu v. Union of India, 2021 SCC OnLine Del 241, decided on 08-01-2021]

Advance RulingsCase Briefs

Authority for Advance Ruling, GST: A Division Bench of Dr Ravi Prasad M.P. (Additional Commissioner of Commercial Taxes) and MashhoodUr Rehman Farooqui (Joint Commissioner of Central Tax) addressed whether the input tax credit can be availed on the distribution of promotional products to distributors/dealer’s showrooms for the purpose of marketing the products and promoting the brand.

In the instant application, it has been stated that the applicant was engaged in the manufacture, distribution and marketing of Knitted and Woven Garments under the brand name of “Jockey”, swimwears and swimming equipment’s under the brand name “SPEEDO”.

Applicant sought advance ruling on the classification of goods and services as under:

“Whether in the facts and circumstances of the case, the promotional products/materials and Marketing Items used by the applicant in promoting their brand and marketing their products can be considered as “inputs” as defined under Section 2(59) of the CGST Act, 2017 and GST paid on the same can be availed as input tax credit in terms of Section 16 of the CGST Act, 2017?”

Applicant submitted that as per Section 16 of the CGST Act, every registered person subject to terms and conditions specified in Section 49 of CGST Act is entitled to avail the same as “Input Tax Credit” the GST paid by him on the supply of goods or service to him, which are used or intended to be used in the cause or in furtherance of his business and same will be transferred to his electronic credit ledger.

Adding to the above submissions, the applicant stated that promotional/marketing items using by them at point of purchase i.e. showrooms or to their distributor/dealer’s showrooms is to promote their brands and made known the range of products manufactured by them.

The said promotional/marketing items are distributed for free by the applicant to promote their brand, hence the same cannot be construed as “gift” and made applicable Section 17(5)(h) of CGST Act.

Applicant add that in respect of the promotional/marketing items to their own showrooms there was neither “supply” nor there was “gift” and hence applying the provisions of Section 17(5)(h) of CGST Act, 2017 and apportioning the input tax credit should not arise.

Analysis and Decision

Promotional/marketing items sent to showrooms and to distributor/dealer’s showrooms to use in promoting their brands and market their products will amount to use of said goods in business or furtherance of the applicant’s busniess. Therefore, the same would qualify as “input” in terms of Section 2(59) of CGST Act, 2017 and GST paid on the same is entitle to avail as “input tax credit” in terms of Section 16 of CGST Act, 2017.

Bench noted that the goods were not transferred out of the accounts of the applicant and remained in the accounts of the applicant as assets, which were returnable items but the applicant did not show any proof of the said being returned to the applicant and disposed at the end of the period of usage.

In light of the above-stated scenarios, the applicant uses the goods till the goods are usable for the promotion of his business and claims depreciation on the same.

In the applicant’s opinion, the above-stated goods are covered under “input”.

AAR expressed that,

Since the ownership of the material is being retained by the applicant, they could be treated as capital goods hence needs to be capitalized in his books of accounts. The said cannot be treated as “input” since the said term excludes capital goods.

Whether input tax credit can be availed on the capital goods?

Section 16 of the GST Act provides for the eligibility for taking/availing input tax credit.

Since the applicant used or intended to use the goods and services procured in the course or furtherance of business, the applicant was entitled to take the input tax credit, subject to other provisions of the Act and hence there was no blockage attributable to Section 17(1) as the applicant used the goods in the course or furtherance of business.


  • ITC on GST paid on procurement of the “distributable” products which are distributed to the distributors, franchisees is allowed as the said distribution amount to supply to related parties. The said distribution to the retailers for their use cannot be claimed as gifts to the retailers or to their customers free of cost and hence ITC of GST paid on such procurement is not allowed as per Section 17(5) of the GST Acts.
  • GST paid on the procurement of “non-distributable” products qualify as capital goods and not as “inputs” and the applicant is eligible to claim input tax credit on their procurement, but in case if they are disposed of by writing off or destroyed or lost, then the same needs to be reversed under Section 16 of CGST Act, 2017 read with Rule 43 of the CGST Rules, 2017.

[Page Industries Ltd., In Re., 2020 SCC OnLine Kar AAR-GST 7, decided on 15-12-2020]

Advance RulingsCase Briefs

Himachal Pradesh, Authority for Advance Rulings: The Division Bench of Rakesh Sharma, Additional Commissioner of State Taxes and Excise, Member (State Tax) and Abhay Gupta, Joint Commissioner of Central Tax, Member (Central Tax) held that input tax credit cannot be claimed for GST paid on hiring commercially licensed vehicles for transportation of employees if the service of providing the facility of transportation of employees is not obligatory under any law.

In the instant application, the applicant is a public service broadcaster, taxpayer availed services of hiring taxis for different purposes, such as:

  • To pick up/drop shift duty-staff in odd hours.
  • This facility is being provided in odd hours to lady-employees, handicapped & general employees.
  • Taxis are hired for tour/OB recordings, etc. within the State of Himachal Pradesh on different occasions.
  • Taxis are also hired to drop shift staff at High Power Transmitter during morning/evening & for office work during day time.

Question raised by the applicant was:

Whether input tax credit was available to the applicant on the services availed for the aforementioned items through contractors and what rate of GST will be applicable on the same?

Findings of the Authority

Bench noted that the applicant was a registered taxpayer and entered into an agreement for hiring commercially licensed vehicles for transportation of his employees.

As per Section 16 of the CGST/HPGST Act, 2017, every registered person shall be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business.

Availability of ITC as per the provision of the second proviso to Section 17(5)b is available only on the condition that such goods or service or both is obligatory for an employer to provide to its employees under any law for the time being in force.

Bench stated that since the applicant had not been able to cite any law under which the service of providing the facility of transportation to his employees was obligatory, hence ITC will not be available to him.


  • As per Notification No. 20/2017 dated 22-08-2017, the applicable tax rate on renting of Cabs is 5% with limited ITC and 12% with full ITC.
  • If the facility provided by a taxpayer for transportation of employees is not obligatory under any law, for the time being in force then no ITC will be available to such a taxpayer. The applicant will, however, be eligible to claim ITC for the service supplied at 12% GST Rate if the conditions laid down in the second proviso to Section 17(5) b are satisfied. [Prasar Bharti Broadcasting Corpn. of India (All India Radio), In Re., decided on 24-02-2020]
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]

Case BriefsHigh Courts

Interest under Section 50 of the CGST Act can be levied on belated cash component of tax and not on Input Tax Credit.

Madras High Court: Dr Anita Sumanth, J., while allowing the present petitions and setting aside the impugned notices, and referring to the decision of Telangana High Court in Megha Engineeering and Infrastructures Ltd. v. Commr. Of Central Tax, (2019-TIOL-893), with regard to the interpretation of Section 50 of CGST Act, wherein it was stated that,

“Amendment to Section 50(1), was only at the stage of press release by Ministry of Finance at the time when division bench passed its order and thus stated that ‘unfortunately, the recommendations of the GST Council are still on paper. Therefore, we cannot interpret Section 50 in light of the proposed amendment’.”

Bench, however, stated that now the amendment stands incorporated into the Statute and comes to the aid of assessee.

In the present case, petitioners had filed Returns of Income belatedly for the period of 2017-18. Respondent 2 had issued the delay in filing of returns and consequently the interest to be remitted on the tax accompanying returns. Further, the demand notices were issued seeking to recover arrears of interest.

Petitioners had objected to the above submitting that they had sufficient Input Tax Credit (ITC) available with the Department and thus interest could be demanded, if at all, only on the cash component of the tax remitted belatedly.

Thus proceedings for coercive recovery of the interest are impugned in the present writ petitions.

Only issue agitated was the legal issue as to whether interest would at all be payable on the component of ITC that was, admittedly, available with the Department throughout and that has been adjusted towards the tax demands for period of August, 2017 to March, 2018.

Analysis & Decision of the Court

Bench noted that, according to the petitioners, Section 50 of CGST Act provides for levy of interest on belated payments would apply to payments of tax by cash, belatedly, and would not stand triggered in the case of available ITC, since such ITC represents credit due to an assessee by the Department held as such.

Court considered it important to understand what Section 50 talks about in order to decide the legal issue raised by the petitioners. Thus, the said Section provides for interest on belated payment of tax and such levy is ‘automatic’ and is intended to compensate the revenue for the remittance of tax belatedly and beyond the time frames permitted under law.

Proceeding to conclude its decision, the bench stated that the word ‘delayed’ connotes a situation of deprival, where the State has been deprived of the funds representing tax component till such time the Return is filed accompanied by remittance of tax. Availability of ITC runs counter to this, as it connotes enrichment of the State, to this extent.

Thus, Section 50 which is specifically intended to apply to a state of deprival cannot apply in a situation where the State is possessed of sufficient funds to the credit of the assessee.

Hence in Court’s view,

Proper application of Section 50 is one where interest is levied on a belated cash payment but not on ITC available all the while with the Department to the credit of the assessee. The latter being available with the Department is, neither belated nor delayed.

Court also added that availment and utilization of ITC are two separate events as both are subject to satisfaction of statutory conditions and it is always possible for an officer to reverse the claim if they are found to be untenable or not in line with the statutory prescription. Credit will be valid till such time it is invalidated by recourse to the mechanisms provided under the Statute and Rules.

Hence, proviso inserted to Section 50(1) which states that interest shall be levied only on that part of the tax which is paid in cash, was inserted with effect from 01-08-2019 but that seeks to correct an anomaly in the provision as it existed prior to such insertion. [Refex Industries Ltd. v. Sherisha Technologies (P) Ltd., Writ Petition Nos. 23360 and 23361 of 2019 & WMP Nos. 23106 and 23108 of 2019, decided on 06-02-2020]

Legislation UpdatesNotifications

The Government has decided to extend the due dates of filing of Form GSTR-9 (Annual Return) and Form GSTR-9C (Reconciliation Statement) for Financial Year 2017-18 to 31-12-2019 and for Financial Year 2018-19 to 31-03-2020. The Government has also decided to simplify these forms by making various fields of these forms as optional.

Central Board of Indirect Taxes & Customs (CBIC) today notified the amendments regarding the simplification of GSTR-9 (Annual Return) and GSTR-9C (Reconciliation Statement) which inter-alia allow the taxpayers to not to provide split of input tax credit availed on inputs, input services and capital goods and to not to provide HSN level information of outputs or inputs, etc. for the financial year 2017-18 and 2018-19.

CBIC expects that with these changes and the extension of deadlines, all the GST taxpayers would be able to file their Annual Returns along with Reconciliation Statement for the financial years 2017-18 and 2018-19 in time. Various representations regarding challenges faced by taxpayers in filing of GSTR-9 and GSTR-9C were received on which by the Government has acted in a very responsive manner.

It may be noted that earlier the last date for filing of GSTR-9 and GSTR-9C for Financial Year 2017-18 was 30-11-2019 while that for Financial Year 2018-19 was 31-12-2019.

Ministry of Finance

[Press Release dt. 14-11-2019]

[Source: PIB]

Hot Off The PressNews

Directorate General of GST Intelligence (DGGI), Gurugram Zonal Unit (GZU), Haryana has arrested two persons who were found involved in fake invoices racket having a taxable value of Rs 931 crore and fraudulently passing/ availing Input Tax Credit (ITC) amounting to Rs 127 crore through a complex web chain of various entities.

Many of these entities were under their control and they also formed separate entities in the name of their employees/ dummy persons and generated fake invoices without actual movement of goods, namely ferrous/ non-ferrous scrap, ingots, nickel cathode, etc., thereby causing loss to exchequer by evasion of GST. They availed this fraudulent ITC to offset their GST liability and also passed on such fraudulent ITC to further buyers who availed the same to discharge their GST liability against their outward supplies with an ulterior motive to defraud the Government exchequer. During the course of the investigation, their employees/ dummy persons admitted to having no knowledge of the movement of the above-mentioned goods.

Thus, the said persons have committed offences under the provisions of Section 132(1)(b) & (c) of the Central Goods & Services Tax Act (CGST), 2017, which are cognizable and non-bailable offences and punishable under Section 132 of the CGST Act, 2017.

Consequently, the two were arrested on 07th October, 2019 under Section 69(1) of the CGST Act, 2017 and produced before Judicial Magistrate in Gurugram Court on 07th October, 2019. Court has sent them to judicial custody till 19th October, 2019. Further investigation in the matter is in progress.

Ministry of Finance

[Press Release dt. 09-10-2019]

Case BriefsHigh Courts

Delhi High Court: A Division Bench of S. Muralidhar and Talwant Singh, JJ. allowed a writ petition filed by a car dealer who sought directions authorities to allow them to filed GST TRAN-1 Form beyond the due date.

The petitioner was registered under Central Goods and Services Act, 2017. They prayed for a direction to the respondents to permit them to file the GST TRAN-1 manually and allow the credit of Input Tax Credit (“ITC”) as claimed in accordance with Section 140(3) of the CGST ACT, 2017, in its online electronic credit ledger for payment of its output liability under the GST Laws.

It was submitted that in terms of Rule 117 of the CGST Rules, 2017, the GST TRAN-1 Form was required to be filed by 30-09-2017. Later, this time limit was extended till 30-11-2017 and then till 27-11-2017. The petitioner stated that in view of the maze of compliance due dates, coupled with the time extended for filing the GSTR-1 Form to 31-12-2017, the accountant of the petitioner missed noticing that the time for filing GST TRAN-1 Form was extended only till 27-12-2017. The petitioner was accordingly not able to file the GST TRAN-1 declaration online within time and claim the ITC of the eligible amounts.

The petitioner was represented by Aseem Mehrotra and M.K. Gandhi, Advocates. Per contra, Anurag Ahluwalia, Central Government Standing Counsel, along with Kartikeya Rastogi and Abhigyan Siddhant, Advocates represented the Union of India. The Customs was represented by Harpreet Singh and Satyakam, Advocates.

The High Court noted that it has, in a series of the earlier order, recognised the difficulties faced by the tax payer in filing the GST TRAN-1 Form within 27-12-2017. In some of those cases, the inability was due to technical glitches.

In such view of the matter, the court issued a direction to the respondents to permit the petitioner to either submit the GST TRAN-1 Form electronically by opening the electronic portal for that purpose or allow the petitioner to tender the same manually on or before 15-10-2019, and thereafter, process the petitioner’s claim ITC in accordance with law.[Krish Automotors (P) Ltd. v. Union of India, 2019 SCC OnLine Del 10090, decided on 16-09-2019]

Jharkhand High Court
Case BriefsHigh Courts

Jharkhand High Court: A Division Bench of H.C. Mishra and Deepak Roshan, JJ., set aside the impugned orders and directed the Assessing Authority to re-examine the claim of the petitioner in view of original tax invoices.

The facts of the case were that the petitioner has claimed Input Tax Credit (ITC) to the tune of Rs 5,34,22,304.71. The assessing officer had allowed ITC only to the tune of Rs 3,40,37,182.46 and denied the balance ITC claim on the ground that for this amount, JVAT 404 form was not submitted by the petitioner.

The counsel for the petitioner submitted that as per provision of Section 18(6) of the JVAT Act, 2005, claim of ITC of the petitioner was required to be considered by the assessing officer on the strength of tax invoices in originally produced by the petitioner showing payment of tax. However, the said claim of the petitioner was denied by the Assessing Officer by relying upon Rule-35(2) of the JVAT Rules, 2006 which apart from prescribing the condition of original tax invoices also lays down additional condition of producing a declaration in Form JVAT 404. The contention of the petitioner is that Rule 35(2) of the JVAT Rules, 2006 provides for furnishing declaration Forms JVAT 404 for availing benefit of ITC to the extent that it cannot be treated to be mandatory in nature but as directory in nature, especially in view of fact that Section 18(6) of the JVAT Act, 2005 does not provide for furnishing of JVAT 404 forms for the purpose of claiming benefit of ITC and it only contemplates production of tax invoices in original.

In view of the above, the court held that the instant matter is squarely covered by the judgment of Brahmaputra Metallics Ltd. v. State of Jharkhand, 2019 SCC OnLine Jhar 816 allowed by this Court vide order dated 09-07-2019 and directed the respondent to re-examine the claim of the petitioner towards its claim of ITC in respect of which the petitioner has not submitted JVAT-404 Forms, by verifying the said claim from tax invoices in original containing particulars of sale evidencing the amount of input tax paid and if satisfied, extend the benefit of ITC to the petitioner.[Simplex Infrastructures Ltd., Ranchi v. State of Jharkhand, 2019 SCC OnLine Jhar 1059, decided on 20-08-2019]

Kerala High Court
Case BriefsHigh Courts

Kerala High Court: A Single Judge Bench of Dama Seshadri Naidu J., decided a writ petition wherein it directed the respondent nodal officer, GST department to facilitate the petitioner in uploading FORM GST TRAN 1 for claiming Input Tax Credit.

In the present case, petitioner a dealer registered under Kerala VAT Act had to upload FORM GST TRAN 1 so that he could claim the Input Tax Credit at the migration time of Kerala VAT Act but, due to a system error, the form could not be uploaded. Hence he had sought direction from the Court to enable him to take Input Tax Credit.

The High Court found that to address the issue of technical glitches faced by taxpayers at the GST Portal, Government of India has set up an IT Grievance Redressal Mechanism wherein taxpayers would approach the Nodal officers to address their grievances. Therefore, the Court held that the petitioner may apply to the respondent nodal officer to facilitate him in uploading the form. Further, the Court directed the tax authorities that, if the uploading is not possible then also the petitioner is allowed to take Input Tax Credit. The petition was accordingly disposed of.[B.M. Reeja v. State Tax Officer, GST,2018 SCC OnLine Ker 2743, dated 16-07-2018]

Hot Off The PressNews

Transition to GST provided for trust based transition of input tax credit of the existing taxpayers. A tax payer could file Form TRAN-1 and avail input tax credit on the basis of closing balance of the input tax credit declared in the last return under the pre GST regime. The last date for filing of Form TRAN-1 is 27th December, 2017. In keeping with the philosophy of voluntary compliance, revision of Form TRAN-1 has also been provided. The last date for revision of TRAN-1 is also 27th December, 2017.

It has been noted that some taxpayers have availed extraordinarily high transitional credit of CGST which is neither commensurate with the trend of input tax credit of the industry nor as maintained by the taxpayer himself in the past. Some of these high transitional credits may have a bonafide explanation or may be a case of bonafide mistake. However, it has been noted that high transitional credit has been claimed in many cases for which perhaps no bonafide explanation exists. Analysis to identify such units is underway. Such behaviour leads to breach of trust between the taxpayer and the tax-administration, which is the bed-rock of self-assessment regime in GST.

Taxpayers who have claimed transitional credit erroneously are advised to avail of the opportunity to revise Form TRAN-1 by 27th December, 2017 and ensure that only correct and bonafide credit is availed in transition, failing which the tax administration would be constrained to initiate audit and enforcement action against the identified units.

Ministry of Finance