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Tax Vista Your weekly tax recap Edn. 204 - 13th May 2024 By Dr. G. Gokul Kishore |
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Rejection of appeal ignoring Limitation Act, is not valid
All quasi-judicial authorities including the appellate authorities should be taught Limitation Act. Officers not trained law pass orders which reveal their complete ignorance compelling the taxpayers to spend resources and time before High Courts. Appeal against rejection of refund was rejected on the ground of limitation. Copy of order-in-original was contended by the department as not uploaded by the taxpayer but was physically submitted much later and this date was taken into account to hold that the appeal was filed after considerable delay. The taxpayer proved before the Court by logging into GST portal that the soft copy of the order was actually uploaded with the appeal. The department contended that due to technical glitch such order was not visible to the officers. Delay of one day was also cited after accepting such online filing of order. The Court noted the provisions of Limitation Act to hold that the day from which limitation is counted should be excluded while computing the time-limit and therefore, there was the order was held as erroneous in rejecting the appeal since there was no delay in this case. The Court directed the appellate authority to decide the appeal on merits. Obtaining refund is not an easy task, as everyone knows and any ground whatever be the merit, should be taken to somehow reject the refund. The second round will see litigation on proving that unjust enrichment is not attracted [2024-VIL-453-DEL].
Budgetary support claim using own formula by taxpayer is not valid
Claim under Budgetary Support Scheme providing for partial refund of GST to those units which faced axing of area-based exemption under Central Excise when GST was implemented was sanctioned for one period while the same was rejected for another period. The taxpayer was before the High Court. The department noted that the taxpayer had claimed an amount in the negative and therefore, the same was considered as zero. The scheme provided for quarterly filing of claims but the taxpayer had filed claims separately for two months (month-wise). The High Court noted that if the taxpayer had filed the application properly, authorities would not have directed re-submission of the same. The Court observed that the figure was in the negative and the support under the scheme was in the nature of grant and not refund of duty. The taxpayer was held as not having followed the prescribed procedure and grant of the support for three other quarters pointed to absence of any malice on the part of the department. The taxpayer was not successful but it appears that the Court let them off without any strictures [2024-VIL-458-SIK].
Attachment must pass test of "necessary to do so"- Possibility of default is not sufficient
The petitioner sought quashing of order which also read like a show cause notice, to attach all his bank accounts since the department believed that there was every chance that the petitioner would not pay tax, penalty and interest as determined. However, the order did not contain anything on how the officer came to believe so and why attachment was "necessary" as laid down in Section 83 of CGST Act. Following Radha Krishan Industries v. State of Himachal Pradesh & Ors. [2021-VIL-50-SC] the High Court held that attachment was not sustainable in the absence of any material to show that for protecting the interest of government revenue, it is necessary to attach the bank accounts. Despite judgments and circulars, the power to attach property is used to threaten taxpayers and mostly as a tool of harassment. It is a matter of grave concern that a power like attachment can be resorted even before adjudication and such provision has continued to remain in statute book without much debate [2024-VIL-463-BOM].
Absence of effective opportunity of rebuttal and cross examination vitiates order
Tax, interest and penalty were confirmed in the order against the petitioner who contended that he had not been provided copies of the statement of supplier and transporter and that no opportunity to cross examine them was provided. The High Court remanded the matter for fresh consideration and with directions to provide opportunity to cross examine the parties if requested by the petitioner-assessee. Cross-examination is generally not entertained or relished by adjudicating authorities merely for the reason they are not trained in law. Summary rejection of such request often results in orders being set aside by judiciary. Copy of statements is also not given to the person from the same is recorded though as a customary practice, acknowledgement of having received copy is obtained [2024-VIL-465-CAL].
Appeal filed beyond 4 months condonable as Limitation Act is not expressly excluded
The assessee filed appeal was filed beyond the period of limitation provided in Section 107 of the WBGST Act, 2017 but the same was accompanied by an application under Section 5 of the Limitation Act, 1963. The Commissioner refused to entertain the appeal stating that he did not have power to condone the delay. The High Court held that in the absence of specific exclusion of Section 5 of the Limitation Act, 1963, the appellate authority is not denuded of its power to condone the delay beyond one month from the prescribed period of limitation as provided for in Section 107 (4) of the said WBGST Act. The High Court directed the appeal to be accepted and adjudicated expeditiously since delay had been sufficiently explained and remand for consideration under Limitation Act would not be a remedy. This issue has been cropping up in recent times with divergent views by different High Courts. Either an amendment can be expected to expressly exclude Limitation Act or a circular is likely to clarify the intention [2024-VIL-440-CAL].
Provisional attachment allowed to continue beyond one year - High Court not pleased with avoidable litigation
The High Court held that when the statute was clear that provisional attachment cannot continue beyond one year, the practice of revenue authorities to not take action forcing the assessee to rush to Courts is highly undesirable. It stated that the litigation was avoidable and also directed that a copy of the order should be communicated to CBIC for corrective action. Many such orders are passed but the tax administration does not bother. If all such directions have been taken seriously, Indian tax administration would have become the best globally by now [2024-VIL-443-ALH]
Entry to exhibition, registered taxpayer who participated in the same liable to IGST
Petitioner was dealing with jewellery and he participated in exhibition which took place outside India. According to him, since as per Section 1 of Central Goods and Services Tax Act, 2017, the Act extends to whole of India and services received outside India were not taxable. This obviously does not appear to be a sound argument. Though as per Section 13(5) of the IGST Act, place of supply of services supplied by way of admission to exhibition etc., is outside India if event is held outside India, the same is subject to tax under reverse charge mechanism (RCM). The department contended that in terms of the notification under Section 5(3) of IGST Act the recipient of service is the person who is registered in the taxable territory and the petitioner would be liable to discharge tax. The High Court held in favour of the department. It is not known why such petition was filed when RCM notification is unambiguous. As the Court pointed out, it might have evoked some interest had the notification been put to challenge. The contention of the taxpayer appears to be that when services are received outside India, even RCM may not apply [2024-VIL-469-RAJ].
Classification by adjudicating authority beyond SCN is not valid
Good-specific or classification-centric orders are generally not discussed in this column. However, when the order by Court or Tribunal lays down or reiterates a proposition of law which is applicable to all, even if classification issue is the basis, such order may be worth analysing. Stainless steel coils were imported classifying them under tariff item 7220 90 22 and exemption was also claimed under relevant notification. Suspecting the nickel content, Customs authorities issued show cause notice proposing to re-classify the goods under tariff item 7220 90 90 / 7220 12 90 and reject the exemption claimed. The adjudicating authority rejected the exemption but after classifying the goods under a heading different from the one proposed in the SCN. The importer argued elaborately on the composition / ingredients etc. The Tribunal noted that the nickel content as advocated by the department was not in line with the IS specifications and reliance on various websites was also not a conclusive factor. The Tribunal held that if goods cannot be classified as proposed in the SCN, then even if the correct classification is different from the one claimed by the importer, the goods cannot be classified under the so-called correct heading. The order having travelled beyond the proposals in the SCN was held as not sustainable. On suppression also, the appeal by the importer was allowed [2024-VIL-473-CESTAT-AHM-CU].
(The author is an Advocate, Gokul & Subha Advocates, Chennai. The views expressed are personal. The author has published books on cross-border taxation and investigations & appeals under GST. He edits R.K. Jain's GST Law Manual. E-mail - gokulkishore@gmail.com)