Delve into the latest tax updates, breaking news, and profound insights with our GST Weekly Digest June 2023 Vol-6. Stay informed and empowered with key highlights from GST council meetings, updates on GST returns, revolutionary e-invoicing news, and more. Immerse yourself in this all-inclusive weekly digest to stay one step ahead in the world of taxation.
Digest Period: 04/06/2023 to 10/06/2023
GST – Sunday, 04th June, 2023
Table of Contents
Businessman Arrested in Ahmedabad for Rs 37 Crore GST Evasion through Fake Firms
A businessman has been arrested in Ahmedabad for allegedly availing fake input tax credit (ITC) amounting to Rs 7.22 crore. The Central Goods and Services Tax (CGST) commissionerate uncovered a web of ten non-existent firms involved in the evasion of Rs 36.95 crore in GST. The proprietor of Ashapura Traders, Vihol Viramji, was apprehended and sent to judicial custody. The CGST is conducting a nationwide drive to identify suspicious/fake GST registrations and crack down on fraudulent practices.
GST – Monday, 05th June, 2023
Clearing the Path: GST Council likely to approve Operational Framework for Appellate Tribunal
The upcoming GST Council meeting in June is poised to finalize the operational framework of the eagerly awaited GST appellate tribunal. This tribunal will streamline tax dispute resolutions and enhance efficiency in the process.
The finalized blueprint, including operational details, will be presented for approval, paving the way for the tribunal to become operational at both central and state levels by November. The groundwork has already been laid through amendments to the GST law during the Budget session.
The establishment of benches in each state and a national appellate tribunal are integral parts of the plan. The tribunal will consist of a Principal Bench in New Delhi, along with state benches based on state populations. While the national appellate bench will focus primarily on disputes related to the “place of supply,” it will not address appeals concerning divergent rulings from state appellate tribunals.
The GST Council has accepted a modified version of the panel report by state ministers, and changes required in the GST law will be shared with states for their input. Presently, taxpayers must approach the high court for grievance redressal, leading to lengthy resolution processes due to the absence of specialized benches.
CESTAT Ruling: No Service Tax on Reimbursed Spares during Warranty Period
In a significant verdict, the CESTAT Chennai, in the case of M/s. T.A.F.E Access Ltd. v. Commissioner of GST & Central Excise, has overturned the demand for service tax on the cost of spares and materials used for free services during the warranty period.
The appellate tribunal held that the assessee is not obligated to pay service tax on the manufacturer’s reimbursement for spares and accessories.
This ruling aligns with previous judgments, including the Supreme Court’s decision in Union of India v. Intercontinental Consultants and Technocrats Pvt Ltd. The CESTAT’s decision was based on consistent reasoning, considering both its earlier ruling in M/S. TAFE Access Ltd. v. Commissioner of GST & Central Excise and the case of M/s. ABT Ltd. and others v. Commissioner of Central Excise, Coimbatore.
This ruling sets aside the Impugned Order, providing clarity on the issue of service tax liability for reimbursed spares and accessories.
GST – Tuesday, 06th June, 2023
Farmer Shocked by ₹4.9 Crore GST Notice: A Tale of Misused Identity
In a surprising turn of events, Mehram Khan, a humble farmer from Lathi village in Jaisalmer district, found himself at the center of a bewildering situation.
Despite earning a meager monthly income of ₹5,000, he received a show cause notice from the GST department, demanding immediate payment of dues amounting to approximately ₹4.9 crore.
Perplexed, Khan filed a police complaint, revealing that his PAN number had been misused to create a firm that had failed to pay the GST. As investigations unfold, authorities suspect a potential scam behind this shocking incident.
Government Plans Appeal as Karnataka High Court Quashes Rs 21,000 Crore GST Notice Against GamesKraft
The central government is gearing up to challenge the Karnataka High Court’s ruling that dismissed a hefty GST notice of ₹21,000 crore against GamesKraft, a skill gaming operator.
CNBC reports indicate that the government is contemplating an appeal while the GST Council prepares to discuss the matter in an upcoming meeting. The High Court, in its landmark judgment, declared that offering online skill games, including rummy, did not constitute gambling.
GST – Wednesday, 07th June, 2023
Bombay High Court Validates IGST Provisions on Intermediary Services, But Challenges Remain
The Bombay High Court has settled the controversy surrounding Integrated Goods & Services Tax (IGST) on intermediary services. A division bench was divided on the issue, but a third judge upheld the constitutional validity of the relevant provisions, resulting in a 2:1 verdict in favor of validity. However, experts warn that the real challenge lies in determining who will levy the tax, which may require amendments to existing laws or rules.
The court upheld the legality and constitutionality of Section 13(8)(b) and Section 8(2) of the IGST Act, which pertain to the determination of the location of the supplier and intra-state supply, respectively.
The dispute originated from differing opinions among judges on a division bench in 2021, leading to a reference to a single judge and ultimately a division bench for the final judgment.
The case involved a proprietary firm engaged in marketing and promotion services for foreign customers selling goods in India. The petitioner argued that its transactions should be treated as exports and be exempt from CGST and MGST Acts.
The court’s decision validates the IGST provisions but raises ongoing concerns about the implementation and taxation of intermediary services.
Domestic Travel Agents Protest Against Tax Policy Favoring Overseas Companies
Domestic travel agents (DTAs) are expressing their discontent with the finance ministry, alleging an unfair advantage given to overseas travel companies.
The finance ministry had announced a sharp increase in tax collected at source (TCS) on foreign remittances, excluding an exemption for customers purchasing tour packages from DTAs. This discrepancy has created a non-level playing field, as customers who choose overseas players can avoid paying the increased TCS and goods and services tax (GST).
DTAs fear the viability of their businesses and are urging for pricing parity and customer payment methodology between DTAs and overseas service providers to be maintained.
GST – Thursday, 08th June, 2023
Supreme Court Denies Anticipatory Bail for Fabrication of GST Details
In a significant ruling, the Supreme Court addressed the issue of anticipatory bail in the case of Sheetal Mittal and Padam v. State of Rajasthan & Anr. The court held that if a taxpayer fabricates the firm name and GST number, anticipatory bail cannot be granted.
The accused-petitioners had argued that the case was a civil matter related to non-payment of dues, but the investigation revealed that the accused had submitted forged documents, including a non-existent GST number.
The High Court of Rajasthan had previously denied anticipatory bail, and the Supreme Court upheld this decision, dismissing the special leave petitions.
Kerala GST Department Streamlines Adjudication Process
The Kerala GST Department issued Circular No. 11/2023 on May 25, 2023, regarding the allocation of adjudication files to the DC (TPS) vertical and DC (Adjudication).
To streamline work distribution and improve efficiency:
– Adjudications of show cause notices under Sections 73 and 74 of the SGST Act, up to 5 crores, will be handled by the jurisdictional Deputy Commissioner, Taxpayer Services.
– Deputy Commissioner (Adjudication) posts have been sanctioned in several districts to enhance adjudication efficiency.
– In districts with Deputy Commissioner (Adjudication) posts, the Joint Commissioner of Taxpayer Services will determine the number of adjudications to be allocated, considering workload and pending cases.
– The Joint Commissioner will issue a formal order specifying the allocation, and taxpayers will be informed accordingly.
Simplifying E-Invoice Verification: Introducing the E-Invoice Verifier App
The Goods and Service Tax Network (GSTN) has recently released an Advisory on June 08, 2023, announcing the launch of the E-Invoice Verifier App. This innovative application developed by GSTN aims to revolutionize the e-invoice verification process, ensuring convenience and accuracy for users.
Key Features and Benefits of the E-Invoice Verifier App:
1. QR Code Verification: Users can easily scan the QR code on e-Invoices to authenticate and verify the embedded information, ensuring the accuracy and authenticity of the document.
2. User-Friendly Interface: The app boasts a user-friendly interface with intuitive navigation, simplifying the experience of accessing its features and functionalities.
3. Comprehensive Coverage: The app supports the verification of e-Invoices across all six Invoice Registration Portals (IRPs), ensuring comprehensive coverage and convenience.
4. Non-Login Based: No user login or authentication is required to use the app. This eliminates the need for creating accounts or providing personal information, making the process more convenient and hassle-free.
How to Use the E-Invoice Verifier App:
1. Download the App: Simply visit the Google Play Store and search for “E-Invoice QR Code Verifier.” Download and install the app on your mobile device free of charge. The iOS version will be available soon.
2. QR Code Scanning: Use the app to scan the QR codes on your e-Invoices. The app will authenticate the information embedded in the code, allowing you to compare it with the details printed on the invoice.
The E-Invoice Verifier App operates on a non-login basis, ensuring ease of use for everyone. For further guidance and clarification, the app includes a comprehensive FAQ section to address any queries users may have.
GST – Friday, 09th June, 2023
Calcutta High Court Protects Cash-Credit Facility from Provisional Attachment
In a landmark judgment, the Hon’ble Calcutta High Court, in the case of J. L. Enterprises v. Assistant Commissioner, State Tax [W.P.A. No. 12132 of 2023 dated May 25, 2023], ruled that cash-credit facility cannot be attached through a provisional attachment order as it is not considered a debt.
Case Summary:
M/s. J. L. Enterprises, a partnership firm, underwent an inspection by State Tax Department Officers on March 04, 2023, which revealed certain discrepancies in the records.
Subsequently, a show cause notice (SCN) was issued, disallowing the Input Tax Credit (ITC) and demanding interest and penalties. A provisional attachment order was also issued, targeting the cash-credit facility of the petitioner under Section 83 of the CGST Act.
The petitioner challenged the provisional attachment order, arguing that cash-credit facility is a banking facility provided to customers and does not qualify as a debt subject to attachment by the Revenue department.
Court’s Decision:
The Calcutta High Court, in W.P.A. No. 12132 of 2023, held that the cash-credit facility cannot be provisionally attached. It relied on the judgment of Manish Scrap Traders v. Pr. Commissioner, wherein the Gujarat High Court had concluded that cash-credit accounts of taxpayers cannot be provisionally attached under Section 83 of the CGST Act.
The court emphasized that the cash-credit facility does not fall under the category of a debt, thereby making it ineligible for attachment. It further stated that if there is an efficacious relief available in the statute itself, the petitioner should utilize such relief and file objections for the release of the cash-credit account before the appropriate authority.
This ruling by the Calcutta High Court clarifies the scope of provisional attachment orders and protects the cash-credit facility from being attached by the Revenue department.
GST – Saturday, 10th June, 2023
Tripura High Court Grants Input Tax Credit on Work Contract Services in Construction
In a significant ruling, the Hon’ble Tripura High Court, in the case of M/s. SR Constructions v. The Union of India and Ors. [W.P.(C) No. 399 of 2022 dated April 4, 2023], held that the assessee is eligible to claim Input Tax Credit (ITC) on taxable work contract services utilized for the construction of an immovable property.
Case Summary:
M/s. SR Constructions, a construction company, entered into a contract with M/s. Hotel Polo Pvt. Ltd. to construct a hotel. The petitioner received various goods and services as inward supplies and paid GST on them for providing works contract services.
The Revenue Department issued a Show Cause Notice, demanding ITC under Section 74(1) of the CGST Act, alleging a violation of Section 17(5)(c) of the CGST Act.
The petitioner responded to the notice, but the adjudicating authority upheld the demand in the Order in Original. The petitioner then appealed to the Appellate authority, which confirmed the demand in the Impugned Order.
Court’s Decision:
The Tripura High Court, in WP (C) 399 OF 2022, ruled as follows:
Noted that the petitioner fulfilled all the conditions of the works contract and provided construction services to the hotel owner, not for its own use.
Observed that the petitioner’s construction services to the building owner did not fall within the definition of Section 17(5)(c) of the CGST Act. Therefore, the petitioner was entitled to claim ITC on the goods and services utilized for the taxable work contract services.
Held that the demand raised by the Revenue Department through the Show Cause Notice was ultra vires and contrary to the law. Consequently, the Impugned Order was set aside and quashed.
This judgment by the Tripura High Court affirms the right of the petitioner to claim Input Tax Credit on work contract services used in the construction of an immovable property, providing clarity and relief to businesses in the construction sector.
Frequently Asked Questions (FAQ)
What is the purpose of the GST appellate tribunal?
The GST appellate tribunal aims to streamline tax dispute resolutions and enhance efficiency in the process. It will provide a specialized forum for taxpayers to appeal against GST-related decisions and rulings.
Why are domestic travel agents protesting against the tax policy?
Domestic travel agents are protesting against the tax policy due to an alleged unfair advantage given to overseas travel companies. The increased tax collected at source (TCS) on foreign remittances creates a non-level playing field, as customers can avoid paying the increased TCS and GST by choosing overseas service providers.
What is the purpose of the E-Invoice Verifier App released by GSTN?
The E-Invoice Verifier App, developed by GSTN, aims to simplify the e-invoice verification process. It allows users to scan the QR codes on e-invoices, verify the embedded information, and ensure the accuracy and authenticity of the document. The app provides a user-friendly interface, comprehensive coverage across different Invoice Registration Portals (IRPs), and operates on a non-login basis for convenience.
Disclaimer
We strive to provide you with accurate, reliable, and up-to-date information sourced from credible resources. We take utmost care in our research and presentation. However, it is important to note that information can evolve and change over time, and there is a possibility that some details may have been missed or altered since the time of publication.
We sincerely apologize for any errors or omissions that may have inadvertently occurred despite our best efforts. This article is intended for informational purposes only and should not be considered as professional advice. It is highly recommended that you seek professional assistance and conduct your own research before making any decisions based on the information presented here.
We appreciate your understanding and encourage you to stay informed through multiple sources for a comprehensive understanding of the subject matter.
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