133 MUST READ JUDGMENTS ON GST

2017-2020

Ruchir Bhatia, Advocate

Assisted by
Madhura MN Advocate & CA. Rupinder Shah
S.No. Section Name and Citation Summary of case
1. Section 2(68) In Re: JSW Energy Ltd. [2018] 95 taxmann.com 65 (AAAR-Maharashtra) Issue:-
Section 2(72) of ORDER NO. MAH/AAAR/SS-RJ/01/2018-19 JULY 2, 2018 Whether activity undertaken by assessee amounts to job work or
the not?
http://gstcouncil.gov.in/sites/default/files/appelate-authority/JSW-Order-
CGST Act
maharastra.pdf Held:-
From the above definition, it is clear that job work involves (i) two
“job work” / persons, (ii) goods and (iii) process/treatment on the goods. Also.
“manufacture” the procedure for job work is prescribed under section 143 of CGST
Act and Rule 45 of the CGST Rules. In terms of section 143(1)(a):
(1) A registered person (hereafter in this section referred to as
the "principal") may under intimation and subject to such
conditions as may be prescribed, send any inputs or capital
without payment of tax, to a job worker for job work and
from there subsequently mother job worker and likewise, and
shall,
(2) bring back inputs, after completion of job work or otherwise,
or capital goods, other than moulds and dies, jigs and
fixtures, or tools, within one year and three years,
respectively, of their being sent out, to any of his place of
business, without payment of tax.
On a harmonious reading of the definition of Job Work and the
procedure for the same, it is construed that the principal will send
the inputs to the job worker for conducting any treatment /process/
which may or may not amount to manufacture) and shall bring back
the same after completion of job work or otherwise. Therefore the
goods sent to the job worker should be the Inputs of the Principal.
M/s JSL are proposing to be the Principal, so the Inputs should
belong to them.

Thus what we see from the above observations is that, the Supreme
Court has held that additions or application of minor items is
permissible in job-work. But such is not the case here. Also, In the
E-flier published by the CBEC on 'job-work', it is mentioned that'
the whole ides in job-work is to make the principal responsible for
meeting compliances on behalf of the Job-worker o the goods
processed by him (job worker) considering the fact that typically the
Job-workers are small persons who are unable to comply with the
discrete provisions of the law. Therefore, we hold that job-work on
the scale as in this case before us could not have been envisaged
when the provisions were outlined.

Though it is not possible to ascertain the quantity and value of the

material being utilized by the job-worker in the conversion of coal
provided by the principal into electricity accurately in absence
define before us, it can nevertheless be seen from the details
provided by the appellant that coal is not the only input used for the
production of electricity. There is large quantity of water and air
being utilized in the process. The other materials being used by the
job-worker are not minor solutions to the Inputs and all inputs are
not provided by the principal. Accordingly It is seen that the process
cannot be considered as Job-work following the ratio of the above
judgment.

Hon'ble Supreme Court has here explained the spirit of the Job-
work. A process cannot be considered as job-work if principal sends
minor inputs to the job-worker and all other inputs/goods utilized in
the final product are being procured/purchased by the job-worker.
 This will defeat the very purpose and idea of job-work. For
example, the process where a principal sending only buttons and
thread to a job-worker to get the shirts manufactured by the job-
worker by utilizing the fabric purchased by the job-worker cannot
be considered as job-work in light of the above Judgment of Apex
Court, Similarly, in the Instant case If M/s JSL sent only water
tankers to M/s JEL and received back Electricity from them on
payment of job-charges and cost of other raw materials like coal and
air, had the process would have been called as a job-work process ?
We are of the firm opinion that the answer is negative in view of the
Apex Court judgment as only minor additions by the job-worker on
the inputs provided by the principal is envisaged in the law.

In light of above, we have no doubt to conclude that the activity

undertaken by M/s JEL to convert Coal, to be supplied by M/s JSL,
in electricity is not covered under the definition of Job-work in
terms of the CGST Act. Since goods supplied by M/s JSL will be
utilized by M/s JEL in manufacture of new commodity i.e.
electricity (though attracting nil rate of duty), the process is
manufacture and the same will be considered as supply of goods and
not service.
2. Section 2(68) of Crown Beers India (P.) Ltd., In re [2019] 107 taxmann.com 468 (AAAR- Issue:-
the CGST Act Maharashtra) ORDER NO. MAH/AAAR/SS-RJ/29/2018-19† APRIL 9, The appellant company, namely, Crown Beers has entered into an
“job work” 2019 agreement with PIL, whereby PIL is to to brew/manufacture,
package and supply beer, as specified under the agreement, from its
http://gstcouncil.gov.in/sites/default/files/appelate- bottling unit to buyers/distributors in the territory identified by the
authority/MAH_AAAR_SS-RJ_29_2018-19.pdf appellant. PIL has surplus manufacturing and licensed capacity at
its bottling unit and holds valid licenses, permits and permissions
necessary under the applicable laws for manufacture of beer at the
bottling unit.
The appellant incurs to PIL a fixed fee and costs specified in the
agreement as a consideration for supply of beer. Supply of beer,
being in the nature of alcoholic liquor for human consumption, is
excluded from the ambit of Central Goods and Services Tax Act,
2017/Maharashtra Goods and Services Tax Act, 2017/Integrated
Goods and Services Tax Act, 2017. Whether Central Goods and
Services Tax under section 9(1) of the CGST Act/Maharashtra
Goods and Services Tax under section 9(1) of the Maharashtra GST
Act/Integrated Goods and Services Tax under section 5(1) of the
IGST Act can be levied on the above mentioned consideration paid
for supply of beer.

Without prejudice to the submissions made elsewhere, if the supply

of beer is held to be a service by way of job work in relation to beer,
what shall be the rate of CGST/UTGST/IGST that shall be levied
on the said taxable supply.

Held:-
From the above, it is aptly clear that though PIL is undertaking the
purchase transaction of the raw materials and other ingredients used
in the manufacture of beers, it is the Appellant, who is deciding not
only the qualities and varieties of the materials, but also the
suppliers from whom these materials are to be purchased along with
the terms and conditions for the purchase transaction. PIL is
undertaking these purchase transaction simply as an agent or
representative of the Appellant as they do not enjoy any autonomy,
whatsoever, while performing these transaction. Further, it is
germane that the cost of the purchase of the entire raw materials and
other inputs is also incurred to the Appellant, as is submitted by the
Appellant. Further, it is observed that the Appellant bears the cost
of the insurance in respect of the materials, Products and work in
process and accordingly is the beneficiary of any insurance claims
which may arise and accrue in future. Further, it has been clearly
stipulated under entry 3 of the said agreement that the risks and
rewards arising from the business of sale of the Products under this
Agreement belong solely and exclusively to Crown, i.e. the
Appellant. All these abovementioned facts clearly establish that all
the goods, on which PIL is undertaking the manufacturing process,
belong to the Appellant and certainly not PIL. Thus, this contention
of the Appellant is not tenable and hence not considered.

Applying the above provision in the present case, it is abundantly

clear that the activities of PIL as contemplated under the said
Agreement are those of the "job worker" as they are carrying out
their entire activities of brewing, bottling and packaging on the
goods belonging to another registered person, in this case, the
Appellant. The final manufactured Products i.e. beer also belong to
and are owned by the Appellant, as the final products are delivered
by PIL to the buyers, which are identified by the Appellant and
entire sale consideration against the same is credited to the
designated bank account meant for manufacturing expenses and
sale proceeds of the Product i.e Deer. It has been stipulated in entry
3.5 of the said Agreement that " The costs incurred on purchase of
Materials, other expenses set out in Schedule II and the sale revenue
generated from the sale of products will always be incurred on
account of and inure to the benefit of Crown. It is therefore clearly
understood and acknowledged by the parties that any surplus arising
or recorded in the Manufacturing and Sales Account will always
belong to Crown and would be utilized by Crown at its sole
discretion."
All the above discussions and finding leads us to this fact that the
PIL is acting merely as the "Job Worker" for the Appellant. Now,
coming to the Appellant contention wherein they have argued that
any supply, whether of goods or of services, which are made in
relation to alcoholic liquor for human consumption, is beyond the
ambit of GST in accordance with the provision of the Entry 54 of
List II to the Seventh Schedule to the Constitution of India as
amended, which provides that ". Taxes on the sole of petroleum
crude, high speed diesel, motor spirit (commonly known as petrol),
natural gas, aviation turbine fuel and alcoholic liquor for human
consumption, but not including sale in the course of inter-State trade
or commerce or sale in the course of international trade or
commerce of such goods." It is observed that this provision clearly
proscribes to levy any tax on the sale of the alcoholic liquor for
human consumption by the authority other than the state Govt.
Authority as the same falls under the jurisdiction of the State Govt.
However, the said provision does not prohibit to levy the taxes on
the process leading to the manufacture of the alcoholic liquor for
human consumption, as the word mentioned therein is the "sale" and
not "in relation to" or the like, which would have given much wider
connotation which in that case would also have rendered the
processes involved in the manufacture of the alcoholic liquor
beyond the scope and ambit of GST.

This inference is also supported by the Article 366 (12A), which

was inserted in the constitution which defined "goods and services
tax" to mean "any tax on supply of goods, or services or both except
taxes on the supply of the alcoholic liquor for human consumption."
This provision again points out that only the supply of the alcoholic
liquor for human consumption is outside the purview of GST and
not the process involved in the manufacture of the same. Had it been
 the intention of legislature to keep the processes involved in the
manufacture of the alcoholic liquor, then the word having wider
connotation like "in relation to" or the similar words would have
been used which would have wider implication in so much that the
processes involved in the manufacture of alcoholic liquor would
have been kept out of the purview of the GST. However, that is not
the case. Therefore, it would not be proper and legal to interpret the
provision by adding, altering the words used by the legislature by
going against the well settled rule of literal construction of
interpretation even if the provision does not have any ambiguity.
In view of the above discussions and finding, we are of the opinion
that the activities performed by the PIL, on the goods of Appellant,
are in the nature of the Job work and accordingly attract 18% GST
3. Section 2(119) IN RE: M/S. ABB India Ltd. 2020 (3) TMI 895 Order Number Issue:-
of the CGST 47/WBAAR/2019-20 20 March 2020 Applicant submits that it is evident from the Technical Offer (refer
Act to Annexure D to the Application) that the supply involves
“works http://gstcouncil.gov.in/sites/default/files/ruling-new/WB_AAR_47_2019- designing, engineering, manufacturing, site installation, cable
contract” 20_20.03.20_ABBIL.pdf laying, erection, testing, commissioning etc. The contract, therefore,
involves supply of both goods and services. RVNL will release 30%
of the payment only after the erection and commissioning are
completed. Even the payment for freight and insurance will be made
after the erection work is completed. It is clear, therefore, that the
contracts for supply of goods and that of services are not divisible
and the entire contract for the supply of SCADA is a composite
supply of goods and services. he Applicant further submits that
erection and commissioning of RTUs at a specified location for a
metro project is a work of permanent nature. The cables laid cannot
be shifted without causing substantial damage. Such shifting will
render such cables incapable of further use. In short, SCADA
System installed is intended to be permanently attached to earth and
cannot be removed without causing substantial damage to the goods
attached to earth. Furthermore, the parts are so interlinked to
constitute a functioning SCADA System that none can be moved
separately. The composite supply, therefore, amounts to erection
and commissioning of an immovable property and classifiable as
works contract as defined under section 2(119) of the GST Act.

Held:-
In the present context, erection and commissioning of SCADA
System involves attaching cables and other electrical equipment to
the earth with no intention of removing or shifting them in
foreseeable future. Moreover, the parts are so interlinked to
constitute a functioning SCADA System that none can be moved
separately or without causing substantial damage to the goods
attached to earth. The moveable character of the goods like cables
and other equipment, therefore, becomes extinct. The Applicant’s
supply thus amounts to erection and commissioning of an
immovable property involving transfer of property in goods in its
execution and, therefore, works contract within the meaning of
section 2 (119) of the GST Act. It now needs to be ascertained
whether the Applicant’s supply is ‘original work’ within the
meaning of clause 2 (zs) of Notification No. 12/2017- Central Tax
(Rate) dated 28/06/2017, as amended.

SCADA, in the context of the Applicant’s supply to RVNL, is the

system that controls and monitors the electrical network of the
metro, enabling the operator to issue suitable commands to be
followed in the operation of the metro. Using the SCADA interface,
the operator sends instructions to the Remote Terminal Unit, which
accordingly controls the signals, lights and other electrical
equipment of the metro. It is, therefore, a power supply and
distribution network installed for the purpose of the operation of the
 metro. It, therefore, is a supply pertaining to railways, including
metro, as defined under section 2 (31) (c) of the Railways Act, 1989.
4. Section 2(91)- Ravi Agarwal v. Union of India [2019] 111 taxmann.com 455 (Chhattisgarh) Issue:-
“proper Writ Petition (T) NOS. 77 TO 81 OF 2019 November 20, 2019 The basic challenge is with reference to the alleged lack of power
officer” of the 2nd Respondent for issuing Annexure P-2 Notification
https://cg.nic.in/hcbspjudgement/judgements_web/WP(T)77_19(20.11.19). purported to be in exercise of Section 3(2), read with Section 5 of
Section 3 – pdf the CGST Act; as the said power is exclusively vested upon the
“Officers under Central Government and not the 2nd Respondent/Board. It is further
the Act” pointed out that, the appointment of 'Proper Officer' as envisaged
under the statute can be effected only by the 'Commissioner in the
Section 5 - Board' {as evident from sub-section (2) of Section 168 of the CGST
“Powers of Act} and further that, it can only be done by way of a Notification
Officers” in the official gazette as envisaged under Section 167 of the CGST
Act. Annexure P-1 is only a Circular and there is not a gazette
notification. It is the further case of the Petitioners, that the 2nd
Respondent/Board, as per Annexure P-2 has identified multiple
authorities to act as Central Tax Officers under the CGST Act and
they are exercising the powers of 'Proper Officer' with reference to
Annexure P-1 and P-2; by virtue of which the Petitioners are being
harassed and they have to appear before different Officers placed in
different states, which is totally alien to the scheme of the statute.
The Petitioners are required to have registration only in the 'place of
supply' as envisaged under Section 22 of the CGST Act and hence,
it can only be in Chhattisgarh, contend the Petitioners. It is also
pointed out that the scheme of the CGST Act is 'One Assessee, One
Subject Matter, One Officer' and not 'One Assessee, One Subject
Matter and Different Officers'; which otherwise would lead to chaos
and is contrary to the law declared by the Apex Court in
Commissioner of Customs v. Syed Ali [2011] 3 SCC 537.

Held:-
It is quite evident that the mistake which appeared in Annexure P-2
Notification dated 01.07.2017 and the previous notification dated
19.06.2017 showing them as issued by the 'Board' stands corrected,
as having issued by the "Government". The notification having
already been published in the official gazette as stated in Section
2(80) of the CGST Act read with Section 3(39) of the General
Clauses Act, 1897, the appointment effected in the said notification,
in exercise of powers under Section 3, read with Section 5 of the
CGST Act and Section 3 of the IGST Act, 2017 has been issued by
the 'Government', with whom the exclusive power is vested in this
regard. By virtue of the aforesaid notification issued by the
Government, all the officers in the Directorate General of Goods &
Services Tax Intelligence, Directorate General of Goods and
Services Tax and the Directorate General of Audit, as specified in
Column No. 2 of the table given therein, came to be appointed as
'Central Tax Officers', investing all the powers upon them under the
CGST Act, 2017, the IGST Act, 2017 and the Rules made
thereunder throughout the country of India, as are exercisable by the
Central Tax Officers of the corresponding rank as specified in
Column No. 3 of the said table. It was based on the said proceedings,
that Annexure P-1 Circular was issued by the Board, assigning the
functions of 'Proper Officer' upon the Officers mentioned in column
No. 2 of the table therein, with the functions as the 'Proper Officer'
in relation to the various Sections of the CGST Act, 2017 or the
Rules made thereunder given in the corresponding entry of Column
No. 3 of the table. It is relevant to note that the Petitioners have not
raised any challenge against the 'Corrigendum Notification' bearing
No. GSR 532 (E) and GSR 533(E), both dated 29.07.2019,
published in the Gazette of India the same day, nor have raised any
challenge with regard to any statutory provisions. The version of the
Respondents on all the points raised, including as to the necessity to
 appoint 'Proper Officers' conferring power through out the territory
of India for the specific purposes made out, stands upheld. The
contention/challenge raised by the Petitioners, to the contrary,
stands repelled.
5. Section 5 - M/S Mangal Commercial Pvt. Ltd v. UOI 2020 (2) TMI 743 - Chhattisgarh Held:-
“Powers of The contention raised by the Respondents as to the circumstances
High Court Petition No. 30 of 2020, Review Petition No. 32 of 2020
Officers” under which the appointment of Proper Officers in different parts of
Dated: - 11 February 2020 the country is necessitated; the contention that the scope and
applicability of Section 6 of the CGST Act is more with reference
to 'assessment', which is not the purpose of appointing Proper
Officers in different parts of the country conferring power to detect
mischief/foul-play (wherever that is committed by unscrupulous
assessees) and the specific contention that if at all there is initiation
of simultaneous proceedings by two different officers in respect of
the same cause of action, it will always be open for the assessee to
bring it to the notice of the officer who has taken parallel action to
avoid parallel proceedings, have been upheld. Since this Court has
upheld that above contentions of the Respondents, repelling the
contentions raised by the Writ Petitioners to the contrary, as
mentioned in paragraph 24 of the judgment, there is no error
apparent on the face of record, to invoke the power of review.

6. Section 5 - Lemon Tree Hotels Ltd. Versus Union Of India Held:-

“Powers of 2018 (9) TMI 853 - Delhi High Court
Officers” http://delhihighcourt.nic.in/dhcqrydisp_o.asp?pn=188636&yr=2018 It is evident from the above extracts that the nature of investigations
carried out in the M/s. Lemon Tree Hotels Ltd. resulted in material
and information gathering which are of a different kind. Although
the petitioner seeks general directions that common investigations
be carried out, the Court is of the opinion that grant of such relief at
this stage would not be expedient. Instead, the respondents shall, at
 a later stage of the investigation, nominate a senior officer or
Commissioner to review the evidence gathered in order to purely
discern if common approach is essential, after which the
investigations may be concluded and the Show Cause Notices
(SCNs) issued by appropriate competent authorities. Upon the
issuance of such SCNs, the Chief Commissioners of Central Goods
and Services Tax of the concerned Zones shall pass an order
centralizing the adjudication of such SCNs, which shall be by one
competent officer in Delhi. In other words all SCNs of all zones
shall be dealt with by one adjudicating Officer, in Delhi, empowered
to do so, by the competent authority.

7. Section 5 - Bhawani Textiles Versus Additional Director General 2020 (3) TMI 478 - Held:-
“Powers of It appears that by way of instructions, it is clarified that if an officer
Gujarat High Court Special Civil Application No. 5273 of 2020 4 March
Officers” of the Central tax authority initiates intelligence based enforcement
2020 action against a taxpayer administratively assigned to the State tax
authority, the officers of the Central tax authority would not transfer
the said case to its State tax counterpart and would themselves take
the case to its logical conclusions. In the case on hand, there is
nothing on record to indicate that the officer of the Central tax
authority has transferred the case of the writ applicant to any other
authority of the State. However, it appears that although the action
was undertaken under Section 67 of the Act by the DGGI, AZU, yet
the two summons came to be issued: one by the Deputy
Commissioner of State Tax and another by the DGGI, Surat.

We dispose of this writ application with a direction to the DGGI,

AZU, Ahmedabad to look into the matter and ensure that no undue
harassment is caused to the writ applicant by different authorities
 on the same subject matter. We clarify that we have otherwise not
expressed any opinion on the merits of the case
8. Section 5 - Sangtei Enterprise And Anr., Sri Zosangpuii Versus The State Of Assam Issue:-
“Powers of And 6 Ors., The Commissioner Of State Taxes Whether the state police has power to investigate and effect seizure
Officers” 2019 (11) Tmi 396 - Guwahati HighCourt WP(C) 7081/2019 of goods for alleged forgery of documents in connection with
October 25, 2019 certain transactions which can be relatable either to taxation statutes
or Customs Act?

Held:-
Since the Police initially intercepted and seized the trucks
suspecting evasion of tax under the GST regime, and as the Central
Goods and Services Act, 2017 and the corresponding State law i.e.
the Assam Goods and Services Tax Act, 2017 are also
comprehensive and self-contained Acts, these coercive actions
could have been done by the authorities under the CGST Act or the
AGST Act. The AGST Act empowers the proper officer not below
the rank of Joint Commissioner to authorise any officer of State Tax
to inspect, search, seize, and arrest persons as provided under
Chapter XIV of the State Act.
This Court is of the view that though the Customs Act or the Central
Goods and Services Act, 2017 or the Assam Goods and Services
Act, 2017 are self-contained Acts under which forgery or producing
false documents are also offences, it cannot be said that the
provisions of Indian Penal Code cannot be applicable as there is
nothing under the Customs Act or the AGST Act that the provisions
of the IPC cannot be invoked. There will be a bar only in respect of
offences that are specifically mentioned in the special acts.
Applicability of procedural law as contained in the Code of
Criminal Procedure
Section 4(2) CrPC provides that all offences under any other law
shall be investigated, inquired into, tried, and otherwise dealt with
according to the provisions of the CrPC, but shall be subject to any
enactment for the time being in force regulating the manner or place
of investigating, inquiring into, trying or otherwise dealing with
such offences. Section 5 of the CrPC further provides that nothing
contained in the Code shall, in the absence of a specific provision
to the contrary, affect any special or local law for the time being in
force, or any special jurisdiction or power conferred, or any special
form of procedure prescribed, by any other law for the time being
in force - What Sections 4 and 5 provide is that the Code shall
continue to be applicable to special laws also, subject to the
procedure prescribed under the special laws and if any special
procedure is laid down under the special laws, such procedure
would not be affected by the provisions of CrPC.
Thus, the provisions of CrPC would continue to be applicable to
proceedings under Customs Act or CGST Act/AGST Act, subject
to the special procedure provided therein. However, this has no
relation to the applicability of the provisions of IPC for offences
committed under the said Code.
This Court would hold that the Assam Police would have
jurisdiction to investigate certain offences under the Indian Penal
Code, if made out, even if these may be also offences under the
CGST Act, 2017 or AGST Act or the Customs Act,1962 - However,
as provided under Section 26 of the General Clauses Act, no one
will be liable to be punished twice for the same offence.
Whether the Police can conduct a roving enquiry?
The principal offence seems to be illegal activity of smuggling
covered by the Customs Act, 1962 and the offence of forgery of
documents as alleged is a part of the larger illegal activity of
smuggling. It is, therefore, apparent that if the petitioners are
accused of forging documents, these are ancillary acts to accomplish
the main illegal activity of smuggling areca nuts. It can, therefore,
be said that the principal criminal activity engaged by the petitioners
is smuggling of areca nuts from a foreign country, to accomplish
which they also committed certain other offences like forgery of
documents. Forgery of documents is thus an ancillary act to the
principal act of smuggling areca nuts. In such an event, the customs
authorities would be primarily responsible for investigation and
prosecution of the petitioners.
It would be appropriate for the police to hand over the investigation
to the customs authorities as they cannot continue the investigation
as far as the allegation of smuggling against the petitioners is
concerned. Similarly, for the same reasons, the police authorities
would have no jurisdiction and power to investigate as regards
violation of the provisions of the taxation laws as the same are
governed by the provisions of the CGST Act, 2017 or AGST Act,
2017 under which there are separate investigative agencies.
In the present case, unless the investigation already undertaken
throws up new leads to other offences under the Penal Code as
mentioned above, the Police ought not conduct a roving enquiry,
otherwise, it would be susceptible to the charge of misuse of the
criminal investigating power. As provided under Sections 154 and
155 of the Code of Criminal Procedure Code, the criminal justice
system can be set into motion by the police on getting information
as to cognisable/non cognisable offence and proceed accordingly,
and not otherwise.
This Court is accordingly, of the view that even if the different
statutes permit independent and separate investigations, if such
investigations involve coercive actions similar to as contemplated
under the CrPC, the investigations ought to be undertaken
simultaneously, otherwise, there would be a distinct possibility of
infraction of the precious rights of an accused as guaranteed under
Article 14, 21 and 22.
 This Court would hold that the initial seizure of areca nuts and the
trucks by the Assam Police cannot be said to be without authority.
But in view of the subsequent disclosures that these areca nuts were
smuggled and transported by the trucks, the Customs authorities
under the Customs Act, 1962 would now be the proper authorities
to investigate the alleged offences and accordingly the police should
hand over the seized areca nuts and the trucks to the Customs
authorities for further investigation. If the Customs authorities need
the help and assistance of the police, nothing prevents them from
doing so.

9. Section 7 – Issue:-
Builders Association of Navi Mumbai and Ors. v.Union of India and Ors.
“Scope of The petitioners are challenging an order levying/collecting the
[2018] 92 taxmann.com 134 (Bombay)Writ Petition No. 12194 Of 2017
Supply” Goods and Service Tax (GST) on the one-time lease premium.
March 28, 2018
Held:-
A perusal of sections 7, 8, 9, 10 and 11 falling in this Chapter leaves
us in no manner of doubt that the expression "supply" includes all
forms of supply of goods or services or both such as sale, transfer,
barter, exchange, licence, rental, lease or disposal made or agreed
to be made for a consideration by a person in the course or
furtherance of business. By sub-section (2) and which opens with a
non-obstante clause, such activities or transactions undertaken by
the Central Government, a State Government or any local authority
in which they are engaged as public authorities, as may be notified
by the Government on the recommendations of the Council, shall
be treated neither as a supply of goods nor a supply of services.
Equally, subject to the provisions of sub-sections (1) and (2), the
Government may, on the recommendation of the Council, specify,
by notification, the transactions that are to be treated as a supply of
goods and not as a supply of services or a supply of services and not
as a supply of goods. Pertinently, no notification and traceable to
sub-section (2) of section 7 has been brought to our notice.

On a plain reading of the GST Act, we do not see how we can agree
with Mr.Nankani. Mr.Nankani also relies upon Schedule II, which
is referable to section 7. These are the activities to be treated as
supply of goods or services. The substantive provision section 7 in
clearest terms says that the activities specified in Schedule I made
or agreed to be made without a consideration and the activities to be
treated as supply of goods or supply of services referred to in
Schedule II would be included in the expression "supply". However,
clause (a) of sub-section (1) of section 7 includes all forms of supply
of goods or services or both such as sale, transfer, barter, exchange,
licence, rental, lease or disposal made or agreed to be made for a
consideration by a person in the course or furtherance of business.
We referred to the definitions simply to reinforce our conclusion
that the CIDCO is a person and in the course or in furtherance of its
business, it disposes of lands by leasing them out for a consideration
styled as one-time premium. Therefore, if one refers to Schedule II,
section 7, then, Item No. 2 styled as land and building and any lease,
tenancy, licence to occupy land is a supply of service. Any lease or
letting out of a building, including commercial, industrial or
residential complex for business, either wholly or partly is a supply
of service. It is settled law that such provisions in a taxing statute
would have to be read together and harmoniously in order to
understand the nature of the levy, the object and purpose of its
imposition. No activity of the nature mentioned in the inclusive
provision can thus be left out of the net of the tax. Once this law, in
terms of the substantive provisions and the Schedule, treats the
activity as supply of goods or supply of services, particularly in
relation to land and building and includes a lease, then, the
 consideration therefor as a premium/one-time premium is a measure
on which the tax is levied, assessed and recovered. We cannot then
probe into the legislation any further.

We are, therefore, of the clear view that the demand for payment of
GST is in accordance with law.
10. Section 7 – In Re: Maharashtra State Power Generation Company Limited [2018] 97 Issue:-
“Scope of Whether CGST is applicable on liquidated damages?
taxmann.com 408 (AAAR-Maharashtra) Order No. MAH/AAAR/SS-
Supply”
RJ/09/2018-19† September 11, 2018 Held:-
We are in agreement with the AAR that as separate provisions have
http://gstcouncil.gov.in/sites/default/files/appelate-authority/Maharashtra-
been made for the payment of liquidated damages, the contract price
state-Power-Order.pdf and liquidated damages are two different aspects completely
separable from each other. It has been held by the ARA that
liquidated damages would be covered by the entry (e) of clause 5 of
Schedule II which reads as follows:— (e) Agreeing to the obligation
to refrain from an act or to tolerate an act or a situation or to do an
act. Entry No. 35 of Notification No. 11/2017-Central Tax (Rate),
dated 28-6-2017 would cover levy of GST on liquidated damages.
11. Section 7 – Gurdeep Singh Sachar v. Union of India [2019] 106 taxmann.com 290 Issue:-
“Scope of 1. Whether the activities of Online Fantasy Sports Gaming
(Bombay)Criminal Public Interest Litigation Stamp NO. 22 OF 2019 April
Supply” amount to 'Gambling' \ 'Betting' ?
30, 2019 2. Whether there is any merit in the allegation of violation of
Rule 31A(3) of CGST Rules, 2018 and erroneous
classification ?

Held:-
It is evident that the expressions 'betting' or 'gambling' were used
interchangeably in Section 65B(15) of the Finance Act, 1994. Again
the test applicable was whether it was a game of chance or game of
skill. Only if the result of the game/contest is determined merely by
chance or accident, any money put on stake with consciousness of
risk and hope to gain, would be 'gambling' or 'betting'. There is no
merit in the submission that the result of their fantasy game/contest
shall be considered as merely by chance or accident notwithstanding
involvement of substantial skill. The petitioner claims that the result
would depend largely on extraneous factors such as, who amongst
the players actually play better in the real game on a particular day,
which according to the petitioner would be a matter of chance,
howsoever skillful a participant player in the online fantasy game
may be. The petitioner has lost sight of the fact thatthe result of the
fantasy game contest on the platform of respondent No.3, is not at
all dependent on winning or losing of any particular team in the real
world game. Thus, no betting or gambling is involved in their
fantasy games. Their result is not dependent upon winning or losing
of any particular team in real world on any given day. In these
circumstances, there is no plausible reason to take a contrary view
than that taken by the Hon'ble Punjab and Haryana High court,
which judgment has already been upheld by the Hon'ble Supreme
Court in the SLP filed against the respondent No.3 itself. Moreover,
the said issue is also covered by a judgment of 3 Judge Bench of the
Hon'ble Supreme Court, to which detailed reference is made in the
order of the Hon'ble Punjab and Haryana High Court. It is thus clear
that the activity of the respondent No.3 do not amount to 'gambling'
or 'betting' or 'wagering' even if the definition contained in Finance
Act, 1994 is taken into consideration."

In the instant case, admittedly, there is no dispute that the amounts

pooled in the escrow account is an 'actionable claim', as the same is
to be distributed amongst the winning participating members as per
the outcome of a game. But, as held hereinabove since the activities
 of the respondent No.3 do not amount to lottery, betting and
gambling, the said actionable claim would fall under Entry 6 of the
Schedule III under Section 7(2) of CGST Act. Therefore, this
activity or transaction pertaining to such actionable claim can
neither be considered as supply of goods nor supply of services, and
is thus clearly exempted from levy of any GST.

The scope of definition of 'consideration' extends only in relation to

"the supply of goods or services or both". Since, the said activity or
transaction relating to the actionable claim qua the amounts of
participants pooled in escrow arrangement, for which only
acknowledgement is given, is neither supply of goods nor supply of
services, the same is clearly out of the purview of the expression
'consideration’.

Since the actionable claim in the Online Fantasy Sport Gaming of

the respondent No.3 are amongst such actionable claims as per
Schedule III and Section 7(2) of the Act, which are not considered
as 'supply of goods' or 'supply of services', Rule 31A has no
application. Moreover, actionable claim referred to in Rule 31A is
limited to only activities or transactions in the form of chance to win
in "lottery" or "betting" or "gambling" or "horse racing in a race
club". Thus, Rule 31A which is restricted only to such four supplies
of actionable claim, has no application in this case.
12. Section 7 – Caltech Polymers (P.) Ltd., In re [2018] 98 taxmann.com 355 (AAAR- Issue:-
“Scope of Whether recovery of food expenses from employees for the canteen
Kerala) Order NO. CT/7726/2018-C3 September 25, 2018
Supply” service provided by the company comes under the definition of
outward supplies and are taxable under Goods & Services Tax Act?

Held:-
 The appellant company has admitted that they are serving food to
the employees for cash, though there is no profit involved in the
transaction. In spite of the absence of any profit, the activity of
supplying food and charging price for the same from the employees
would surely come within the definition of "supply" as provided in
Section 7(l) (a) of the GST Act, 2017. Consequently, the appellant
would definitely come under the definition of "supplier" as provided
in subsection (105) of Section 2 of the GST Act, 2017. Moreover,
since the appellant recovers the cost of food items from their
employees, there is "consideration" as defined in Section 2(31) of
the GST Act, 2017. The decision of the Hon'ble High Court of
Telengana with respect to Bhimas Hotels case pertains to the
erstwhile Service Tax Law, when Service Tax and Value Added
Tax stood on separate and independent footing. The Hon'ble Court
in Para 12 of the said Order held that "the petitioner has paid the
value added tax on the value of the food supplied to its workers. In
respect of some assessment years, they have even been imposed
with a penalty under the Andhra Pradesh Value Added Tax Act,
2005. Therefore, once the State Authorities have treated the supply
of food to the workers of the petitioner as sale, it is not open to the
respondents to treat the same as service and impose a liability."

The supply of food items to the employees for consideration in the

canteen run by the appellant company would come under the
definition of 'supply' and would be taxable under GST. Therefore
the appeal fails and stands dismissed.
13. Section 7 – Assistant Commissioner, Central Tax v. Lions Club of Poona Kothrud Held:-
As per section 7 of the CGST Act, 2017, the expression "supply"
“Scope of [2020] 115 taxmann.com 168 (AAAR-Maharashtra)/ Order No.
includes all forms of supply of goods or services or both such as
Supply” MAH/AAAR/SS-RJ/32 /2018-19 APRIL 23, 2019 sale, transfer, barter, exchange, licence, rental, lease or disposal
made or agreed to be made for a consideration by a person in the
 http://gstcouncil.gov.in/sites/default/files/appelate- course or furtherance of business and includes activities specified in
Schedule II to the CGST Act, 2017. The business includes provision
authority/MAH_AAAR_SS-RJ_32and32A_2018-19_23.04.2019and14-08-
by a club, association, society, or any such body (for a subscription
2019.pdf or any other consideration) of the facilities or benefits to its
members.

Where Lions Club collects fee from its members in form of entrance
fee and annual membership fee and spends same for meeting
administrative expenses and towards organising leadership
programme for direct and indirect benefits of members, transaction
between Lions Club and its members is nothing but supply and
accordingly will attract GST.
14. Section 7 – Loyalty Solutions & Research (P.) Ltd., In re [2019] 102 taxmann.com 286 Issue:-
Whether the value of points forfeited of the applicant on which
“Scope of (AAAR-Haryana)Advance Ruling No. HAAAR/2018-19/01 October 23,
money had been paid by the issuer of points on account of failure of
Supply” 2018 the end customers to redeem the payback points within their validity
period would amount to consideration for 'actionable claim' other
http://gstcouncil.gov.in/sites/default/files/appelate-
than lottery, gambling or betting and therefore would not qualify as
authority/Loyalty%20Solutions%20and%20Research%20Private%20Limit supply of either goods or services in terms of Section 7 read with
schedule III of the Central Goods and Services Act, 2017, Haryana
ed-23-10-18.pdf
Goods and Services Act, 2017 or Integrated Goods and Services
Tax Act, 2017 and therefore would be outside the scope and levy of
GST.

Whether the value of points forfeited of the applicant on which

money has been paid by the issuer of points on account of failure of
the end customers to redeem the payback points within their validity
period can be treated as "supply of any other goods or services and
consequently be chargeable to GST under the CGST, HGST or
IGST Act?
 Held:-
The value of points forfeited of the applicant on which money had
been paid by the issue of points on account of failure of the end
customers to redeem the payback points within their validity period
would amount to consideration received in lieu of services being
provided by LSRPL to its clients and thus would be outside the
scope of being considered as 'actionable claim' other than lottery,
gambling or betting and therefore would qualify as supply of
services in terms of Section 7 of the Central Goods and Services
Act, 2017/Haryana Goods and Services Act, 2017 and therefore
would be within the scope of levy of GST.

The value of points forfeited of the applicant on which money has

been paid by the issue of points on account of failure of the end
customers to redeem the payback points within their validity period
is to be treated as "supply" of services and consequently be
chargeable to GST under the CGST, HGST or 1GST Act, as the
case may be.
15. Section 7 – Shrimad Rajchandra Adhyatmik Satsang Sadhana Kendra, In re [2019] 101 Issue:-
the contention of the appellant before the ARA that the main object
“Scope of taxmann.com 2 (AAAR-Maharashtra)/Order NO. MAH/AAAR/SS-
of the appellant's trust is to spread the knowledge of Jain Dharma
Supply” RJ/14/2018-19† December 24, 2018 and advancement of teaching of Paramkrupaludev -
ShrimadRajchandra. After hearing the appellant and going through
http://gstcouncil.gov.in/sites/default/files/appelate-
the objects of the trust, the ARA have held that the appellant which
authority/Mah.AAAR%20No.14-2018-19__24.12.18.pdf is a charitable trust is said to be in business and therefore their
activity attracts the provisions of the CGST Act, 2017. It was further
held by the ARA that the trust is liable to registration under the
provisions of CGST Act.

Held:-
 The definition of 'business' in the said Act is different from the
definition under CGST Act. The definition under the CGST Act is
wider than the one under the BST Act. Also the background of the
Act and the structure of the statute which includes not just the Act
but also the Rules, schedule and notification have to be considered.
We have already discussed the various aspects of the charitable
institutions with reference to the definition as well as the
notification. This was not the case under the BST Act. Therefore,
the judgment given by the Supreme Court is on different context.
Under the BST Act, there were no notification providing specific
exemption to charitable trusts which is very much thereunder the
CGST Act. The rule of 'harmonious interpretation' says that that
every statute has been made for a purpose and specific intent as per
law and it should be read as a whole and interpreted accordingly.
The aim of the courts are to make an interpretation which makes the
enactment consistent and a construction which avoids inconsistency
or repugnancy between the various sections or parts of the statute.
In the present case, a reading of the GST
Act/rules/notifications/exemptions show that the intent is to
consider 'charitable/religious trusts' as taxable persons effecting
taxable supply of goods/services and they have been given specific
exemptions in some areas. As said earlier, the BST law had no such
exemption provisions. Therefore, we say that the judgment is not
applicable here nor the other judgments cited by the appellant which
are also given under the provisions of the BST Act.
16. Section 7 – Bai Mamubai Trust and Ors. v. Suchitra [2019] 109 taxmann.com 200 Issues:-
i. Whether GST is liable to be paid on services or assistance
“Scope of (Bombay) Commercial Suit (L) NO. 236 OF 2017 SEPTEMBER 13, 2019
rendered by the Court Receiver appointed by this Court
Supply” under Order XL of the CPC ?
 ii. Whether GST is liable to be paid on royalty or payments
under a different head paid by a defendant (or in a given
case by the plaintiff or third party) to the Court Receiver
in respect of properties over which a Court Receiver has
been appointed ?

iii. Specifically, in the facts of the present Suit, where the

Plaintiff alleges that the Defendant is in illegal
occupation of the Suit Premises: Whether there is any
'supply' within the meaning of the CGST Act? Whether
payment of royalty for remaining in possession of the
Suit Premises, either during the pendency of the Suit, or
at the time of passing of the decree, falls within the
definition of 'consideration' for a 'supply' chargeable to
payment of GST under Section 9 of the CGST Act?

iv. If in any circumstance GST is payable or applicable to

payments made to the Court Receiver, how is that
statutory liability to be discharged? Is it to be paid by the
Defendant/party in occupation directly, or by the Court
Receiver ?

Held:-
I am also inclined to accept the Learned Amicus Curiae’s
submission that fees of the Court Receiver fall under Item 2 of
Schedule III to the CGST Act, as it is for a service provided by an
officer of the Court. Accordingly, this service is not treated as a
supply of goods or services within the meaning of the CGST Act.
The Court Receiver implements orders of the Court and functions
under the supervision and direction of the Court.

It is thus clear that services of the Court Receiver are activities or

transactions which shall be treated neither as a supply of goods nor
a supply of services. Accordingly, the fees or charges paid to the
Court Receiver are not liable to GST. The answer to Issue No. (i)
i.e. Whether GST is liable to be paid on services rendered by the
Court Receiver appointed by this Court under Order XL of the CPC
is answered in the negative. It is clarified that this Court has not
considered this issue in the context of a private receiver who maybe
appointed by the Court under Order XL of the CPC.

For these reasons, GST cannot be levied or recovered on services

provided by the Court Receiver. Rule 591 of the Bombay High
Court (Original Side) Rules prescribes the fees of the Court
Receiver. Therefore, GST should not be levied on amounts directed
to be paid by litigants to the office of the Court Receiver.
On issue (ii) and (iii)
I am of the view that the Learned Amicus Curiae is correct in
submitting that the legislature has, in Section 92 of the CGST Act,
provided that a receiver would be a convenient point for the revenue
to determine and collect GST. If Section 92 of the CGST Act, is
applicable in a given case, GST maybe determined and recovered
from the Court Receiver by reason of the Court Receiver being akin
to a 'representative assessee'. However, whether or not GST is
applicable depends on the nature of the cause of action pleaded by
the Plaintiff or the order of the Court directing payment and which
sets out the terms of receivership. This is because the cause of action
and finding thereon will determine the character of the payments
made. All or some of these would have to be considered to
determine if a 'taxable event' within the four corners of the CGST
Act, have taken place to attract liability for GST.

The requirement of a 'supply' is essential. It is the taxable event

under the CGST Act. If there is no supply, there can be no liability
for payment of tax (or any interest or penalty thereon). This is clear
from Article 246A, of the Constitution of India which deals with the
legislative competence of the Union and the States to make laws
with respect to goods and services tax imposed by the Union or such
State and Article 366(12A) of the Constitution of India which
defines 'goods and services tax' as 'any tax on Supply of Goods or
Services or both except taxes on the supply of the alcoholic liquor
for human consumption'. This is also evident from the charging
provision i.e. Section 9 of the CGST Act.

I am in agreement with the submissions of the learned Amicus

Curiae that where a dispute concerns price/payment for a taxable
supply, any amount paid under a court's order/decree is taxable if,
and to the extent that, it is consideration for the said supply or a
payment that partakes that character. In such cases, the happening
of the taxable event of 'supply' is not disputed, but the dispute maybe
in regard to payment for supplies already made. This could be, for
example, where the defendant denies the liability to pay the price
forming consideration for the supply. The order/decree of the court
links the payment to the taxable supply and the requisite element of
reciprocity between supply and consideration is present.

However, where no reciprocal relationship exists, and the plaintiff

alleges violation of a legal right and seeks damages or compensation
from a Court to make good the said violation (in closest possible
monetary terms) it cannot be said that a 'supply' has taken place.
I am of the view that although the quantification of royalty towards
a claim of damages involves ascertaining the market rent payable
with respect to the property alleged to be illegally occupied, the
compensation liable to be paid does not acquire the character of
consideration so as to make the transaction a supply.

I am also unable to accept the State of Maharashtra's submission

that the Defendant's occupation of the Suit Premises is a 'supply'
since it falls within the definition of 'renting in relation to
immovable property' i.e. Item No. 5(a) of Schedule II to the CGST
Act.

The width of the inclusive definitions of 'business' and 'supply' do

not further the submission of the State of Maharashtra or the Union
of India. The definition of 'business' includes, inter alia, any trade,
commerce, manufacture, profession, vocation, adventure, wager or
any other similar activity, whether or not it is for a pecuniary
benefit. This is irrespective of whether or not there is volume,
frequency, continuity or regularity of such transaction. "Business"
also includes the admission, for a consideration, of persons to any
premises. But as discussed above, no positive act of admission into
premises for a consideration can be said to have taken place where
the plaintiff's allegation is that of illegal occupation.

On a perusal of Section 7, of the CGST Act, it is clear that for a

supply to fall under Section 7(a), 7(b) or 7(d) of the CGST Act, there
must be a contemplated consideration. Only activities specified in
Schedule I to the CGST Act, are considered a supply, even if made
without consideration. It is not the contention of any of the parties
before the Court that the occupation of the Defendant of the Suit
Premises in the present case falls within Schedule I to the CGST
Act. On a perusal of Schedule I to the CGST Act, it does not appear
that the present activity would fall within the ambit of Section 7(c),
of the Act, read with Schedule I thereto. Therefore, it must be seen
whether the activity in question falls within Section 7(a), 7(b) or
7(d) of the CGST Act.

There maybe instances where payments received by the Court

Receiver may attract GST. For instance: (i) Where the Court
Receiver is appointed to run the business of a partnership firm in
dissolution, the business of the firm under the control of
receivership may generate taxable revenues, (ii) Where the Court
authorises the Court Receiver to let out the suit property on leave
and license, the license fees paid may attract GST. (iii) Where the
Court Receiver collects rents or profits from occupants of properties
under receivership, the same will be liable to payment of GST. (iv)
Consideration received for assignment, license or permitted use of
intellectual property.

In light of the preceding discussion, Issue No. (ii) viz. Whether

GST, is liable to be paid on royalty or payments under a different
head paid by a defendant (or in a given case by the plaintiff or third
party) to the Court Receiver in respect of properties over which a
Court Receiver has been appointed, is answered in the affirmative,
subject to the payment towards royalty or the payment to the Court
Receiver (described by whatever name) is towards or in relation to
a 'supply' within the meaning of the CGST Act.

In light of the preceding discussion, Issue No. (iii) i.e. Specifically,

in the facts of the present Suit, where the Plaintiff alleges that the
Defendant is in illegal occupation of the Suit Premises: Whether
 there is any 'supply' of services within the meaning of the CGST
Act? Whether payment of royalty for remaining in possession of the
Suit Premises, either during the pendency of the Suit, or at the time
of passing of the decree, falls within the definition of 'consideration'
for a 'supply' chargeable to payment of GST under Section 9 of the
CGST Act, is answered in the negative.

On issue (iv):-
In conclusion, I am of the view that in the facts of the present case,
no GST, is payable on the royalty amount paid by the Defendant to
the Court Receiver as a condition for remaining in possession of the
Suit Premises.

17. Section 7 – Columbia Asia Hospitals (P.) Ltd., In re [2018] 100 taxmann.com 501 Issue:-
Whether the activities performed by the employees at the Corporate
“Scope of (AAAR-Karnataka) Order NO. KAR/AAAR/05/2018-19 December 12,
Office in the course of or in relation to employment, such as
Supply” 2018 accounting, other administrative and IT System Maintenance for the
units located in the other states as well i.e distinct persons as per
http://gstcouncil.gov.in/sites/default/files/appelate-
Section 25(4) of the Central Goods and Services Tax Act, 2017
authority/ColumbiaAsiaAppealOrder.pdf (CGST Act) shall be treated as supply as per Entry 2 of Schedule I
of the CGST Act or it shall not be treated as supply of Services as
per Entry I of Schedule III of the CGST Act?

Held:-
Schedule I of the CGST Act describes the activities to be treated as
supply even if made without consideration. As per entry 2 of the
said Schedule, supply of goods or services or both between related
persons or between distinct persons as specified in section 25, when
made in the course or furtherance of business is to be treated as a
'supply'.

Section 7(2) of the CGST Act states that notwithstanding anything

contained in sub-section (1), activities or transactions specified in
Schedule III shall be treated neither as a supply of goods or supply
of service. As per entry I of the said Schedule III, services by an
employee to the employer in the course of or in relation to his
employment is not a supply of service.

In the light of the above legal provisions, let us understand the

activities of the Appellant and determine the applicability of the
above provisions of law. The Appellant is an international
healthcare group operating a chain of modem hospitals across Asia.
The hospitals owned by the Company are engaged in providing
secondary and tertiary healthcare services. The Appellant is
currently operating across 6 different States having 11 hospitals out
of which 6 hospitals are in the State of Karnataka. In terms of
Section 22 of the CGST Act, the Appellant is registered in each of
the 6 states. Each GSTIN is a distinct person in terms of Section
25(4) of the said Act. The management operations of the 11
hospitals in India are centralized in the Head Office of the India
Management Office (IMO), at Bangalore.

The Head Office or the IMO handles certain operations such as

Accounting. Administrative work and maintenance of IT systems in
respect of all the units in India. The IMO is part of the registered
person in Karnataka. The IMO incurs certain expenditure in the
course of its operation which includes rent paid on immovable
property and other equipments, travel expenses, consultancy
services, communication expenses etc. Since the IMO operations
are for the benefit of all the 11 units of the Company in India, the
expenses incurred in operating the IMO are allocated to other
registered units for the purpose of determining the profit of each
cost center. The allocation of costs to each of the registered units in
India is based on the turnover of the respective unit. On such
allocated cost, the Appellant is raising a tax invoice on the other
registered units and paying GST on such allocated cost. However,
the Appellant is not allocating the cost of employees at the IMO to
their other units since, in their understanding, the services rendered
by the employee to the employer in the course of or in relation to
his employment shall be treated as neither a supply of goods nor
supply of service in terms of entry 1 to Schedule III of the CGST
Act.

In the instant case, the issue is not regarding the distribution of ITC
by the IMO. During the personal hearing, the Advocate had stated
that as on date, the Appellant had not obtained an ISD registration
and they were in the process of doing so. We will not dwell on this
aspect as it is not relevant to the issue at hand. The question that
emerges in this appeal is whether the IMO is providing a service to
its other distinct units by way of carrying out activities such as
accounting, administrative work, etc with the use of the services of
the personnel working in the IMO, the outcome of which, benefits
all the other units and whether such activity is to be treated as a
taxable supply in terms of the entry 2 of Schedule I read with
Section 7 of the CGST Act. In view of our findings and discussions
above, we clearly answer the question in the affirmative. The cost
of the employees working in the IMO is an integral part of the cost
of the services rendered by the IMO to its other distinct units. The
services of the employees at the IMO in so far as they are benefitting
the other registered units of the Appellant, will not be termed as
 'employeeemployer relationship' and will therefore not fall within
the purview of entry 1 to Schedule III.

The India Management Office (IMO) of the Appellant is providing

a service to its other distinct units by way of carrying out activities
such as accounting, administrative work, etc with the use of the
services of the employees working in the IMO, the outcome of
which benefits all the other units and such activity is to be treated
as a taxable supply in terms of the entry 2 of Schedule I read with
Section 7 of the CGST Act.

18. Section 7 – In Re: M/S. Tata Coffee Limited Issue:-

“scope of
supply” 2020 (5) Tmi 389 - Appellate Authority For Advance Ruling, Whether activity of depositing the timber by the Appellant to the
Karnataka KAR/AAAR/Appeal-18/2019-20 Government Timber Depot is ‘supply’ in terms of Section 7 of the
CGST Act or not?
Dated.- March 19, 2020
Held:-

https://gst.kar.nic.in/Documents/General/AAAR_18_TataCoffeeLtd.pdf In the instant case, there is a transaction in goods in as much as

timber is being deposited by the Appellant to the GTD. This
transaction is mandated by a statute i.e the Karnataka Forest Act,
1963 whereby the purchase and sale of timber is restricted to only
the State Government. Further, the activity of felling the timber
trees is part of the shade management policy of the Appellant in the
course of their business of Coffee/Tea/Pepper plantations.
However, the activity of depositing the timber into the GTD does
not result in realisation of consideration immediately. The timber is
deposited at GTD for which a Deposit Receipt is given by GTD.
Where the consideration is not extant in a transaction, such a
transaction does not fall within the ambit of supply.

Whether the Government Timer Depot is an agent of the

Appellant?

Held:-

As per Section 182 of the Indian Contract Act, 1872, an “agent” is

a person employed to do any act for another, or to represent another
in dealings with third person. The person for whom such act is done,
or who is so represented, is called the “principal” - In this case the
Depots are set up by the State Government in terms of Section 104-
A(5) of the Karnataka Forest Act for the purchase and sale of timber
since the Act mandates that timber can only be purchased and sold
by the State Government. The sale of the timber by the Depot is
done by way of auction. The proceeds of the sale are remitted to the
Appellant. Therefore, notwithstanding the fact that the Depot is set
up under the aegis of a statute, it functions in the capacity of an
agent.

CBIC Circular No 57/2018 dated 4-09-2018 defines the scope of

principal-agent relationship was explained. In terms of the said
Circular, the key ingredient for determining the principal-agent
relationship under GST would be whether the invoice for the further
supply of goods on behalf of the principal is being issued by the
agent or not. Where the invoice for further supply is being issued by
the agent in his name then, any provision of goods from the
principal to the agent would fall within the fold of the said entry -
In the instant case, once a lot of timber is sold to a successful bidder
in the auction, the purchaser is required to pay 114th value of the
timber purchased along with applicable taxes to the Principal Chief
Conservator of Forests (PCCF). On receipt of the amount, the forest
department will send a sale confirmation letter to the Purchaser at
which time the purchaser will pay the balance dues. Once the
material is lifted by the Purchaser after payment of the sale value
plus taxes, the concerned Range Forest Officer will raise a bill
which will be forwarded to the Deputy Conservator of Forest
(DCF). The DCF will prepare a separate bill and send the same to
the Chief Conservator of Forests (CCF) who will issue the letter of
credit (LOC). The LOC will be forwarded to the treasury who will
issue the cheque to the DCF and the DCF will issue the same to the
Appellant. Therefore, it is observed that the sale of timber happens
through the GTD and not to the GTD as claimed by the Appellant.
The proceeds of the timber sold through the auction process by the
GTD is given to the Appellant on completion of the auction process.
As such, the GTD acts in the capacity of agent of the Appellant and
this transaction of depositing of timber by the Appellant in the GTD
amounts to a supply in terms of clause 3 of Schedule I of the CGST
Act.

What will be the value of supply if the activity of depositing

timber to the GTD is held to be a ‘supply’?

Held:-

The act of depositing the timber at GTD is a supply in terms of

clause 3 of Schedule I of the CGST Act. It is a supply of goods that
is made without consideration by the Appellant as a principal to his
agent. The Depot acting as an agent, renders a service of being the
 custodian of the timber at the depot till such time the timber is sold
by the Depot in the auction process. Further, the depot also does the
measurement and classification of the timber received from the
Appellant since the Depot also stores the timber belonging to the
Govt and other private parties - The Depot officials also give lot
numbers to the timber logs according to the classification. It is for
this service that the Depot charges ‘supervision charges’. This
service rendered is outside the scope of clause 3 of Schedule I and
hence the consideration received by the depot in the form of
supervisions charges are liable to tax as a supply of service.

19. Section 7 – In Re: M/S. Kalyan Jewellers India Limited Issue:-

“scope of 2020 (1) TMI 30 - Authority For Advance Ruling, Tamil Nadu
supply” Whether the issue of Own Closed PPIs by the ‘Applicant’ to
TN/52/ARA/2019 customers be treated as supply of goods or supply of services as
defined under the provisions of the CGST / SGST Act 2017 and
Dated.- November 25, 2019 rules, notifications there on?

If yes, is the time of issue of Own Closed PPIs by the ‘Applicant’

http://gstcouncil.gov.in/sites/default/files/ruling-new/TN-52-ARA- to customers is the time of supply of goods or services warranting
2019.PDF tax liability?

If yes, what is rate of taxes applicable for such supply of goods or

services as the case may be?

Held:-

In the case at hand, it is stated that the gift cards / vouchers are
purchased by the customers on paying a value in money specified
on the gift card / voucher. When the money is paid by the customer,
such a value is loaded onto the card electronically. PPIs issued by
the applicant can be redeemed against purchase of any jewellery in
any of the outlets of KJIL across India. This means that when the
customer of bearer of the gift card wants to pay for some jewellery
in KJIL’s stores, they can pay with either cash or with gift voucher
- In this case, the gift voucher/ gift card is an instrument squarely
covered under the definition of “payment instrument” under
Payment and Settlement Act 2007. It is not a claim to a debt nor
does it give a beneficial interest in any movable property to the
bearer of the instrument. In fact, if the holder of the gift card/
voucher loses or misplaces it and is unable to produce it before the
applicants stores before the time limit specified on the card/
voucher, the instrument itself becomes invalid. Then the customer
cannot use it to pay for any goods. Thus it is not an actionable claim
as defined under Transfer Of Property Act. It is only an instrument
accepted as consideration / part consideration while purchasing the
goods from the issuer and the identity of the supplier is established
in the PPI.

Thus, those instruments which satisfy the conditions of being

accepted as consideration/ part consideration against purchase of
specified goods and the identities of the potential suppliers are
indicated in the instruments are to be considered as Vouchers’ for
the purposes of GST - Applying the above, the PPIs under
consideration are ‘Vouchers’ for the purposes of GST. Further,
these PPIs are gift cards supplied by the applicant either directly
through to customer or through various distribution channels.

In the case of paper based gift vouchers classifiable under CTH

4911 the applicable rate is 6% CGST as per Sl.No. 132 of Schedule
II of the Notification No. 1/2017-C.T.(Rate) dated 28.06.2017 and
 6% SGST as per Sl.No. 132 of Schedule II of Notification Ms. No.
II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017
as amended - In the case of gift cards, the same are classifiable under
CTH 8523 and the applicable rate is 9% CGST as per Sl.No. 382 of
Schedule III of the Notification No. 1/2017-C.T.(Rate) dated
28.06.2017 and 9% SGST as per Sl.No. 382 of Schedule III of
Notification Ms. No. II(2)/CTR/532(d-4)/2017 vide G.o. (Ms) No.
62 dated 29.06.2017.

20. Section 8 –“Tax In Re: Switching AVO Electro Power Limited [2018] 96 taxmann.com 106 Issue:-
Liability on The supply of UPS and Battery is to be considered as Mixed Supply
(AAAR-West Bengal) Appeal Case No. 04/WBAAAR/2018 July 25, 2018
Composite and within the meaning of Section 2(74) of the GST Act, as they are
Mixed http://gstcouncil.gov.in/sites/default/files/appelate-authority/WBAAAR- supplied under a single contract at a combined single price.
Supplies”
Appeal_NO-04-%202018_dt_25-07-2018.pdf
Held:-
The core issue involved in this appeal is whether UPS supplied with
external storage battery is naturally bundled and hence a composite
supply under the GST Act, or a mixed supply, as held by the West
Bengal Authority for Advance Ruling.

There is no denying of the fact that an in-built battery of static

converter (UPS) is part and parcel of the uninterrupted power supply
system and is covered under Tariff Head 8504 and intra-State
supply thereof attracts tax under GST Act as per rate applicable to
goods enumerated under Schedule III of TaxRate Notification(s),
vide serial No. 375, but the situation changes when storage battery
or electric accumulator is supplied separately irrespective of
whether under a single contract or a separate contract.
 We fully agree with the Authority for Advance Ruling's observation
that... "The UPS serves no purpose if the battery is not supplied or
removed. It cannot function as a UPS unless the battery is attached.
However, what needs to be considered is whether or not these two
items are "naturally bundled". The stated Illustration to Section
2(30) of the GST Act refers to a supply where the ancillary supplies
are inseparable from the principal supply and form an integral part
of the composite supply. Note 3 also refers to a composite machine
as the one consisting of two or more machines fitted together to
form a whole. When a UPS is supplied with built-in batteries so that
supply of the battery is inseparable from supply of the UPS, it
should be treated as a composite supply and as a composite machine
in terms of Note 3. The UPS being the principal supply, the relevant
tariff head for the composite supply will be 8504 under serial No.
375 of Schedule III in terms of Notification No. 01/2017-Central
Tax (Rate) dated 28/06/2017 (1125-FT dated 28/06/2017 of the
State tax)."

The Appellant in fact submitted that strength of the battery, make

of a battery or number of batteries is not unique to UPS but it varies
as per power requirement of the customer.

The storage battery has multiple uses and can be put to different
uses and when supplied separately with static converter (UPS) it
cannot be considered as a composite supply or a naturally bundled
supply.
21. Section 8 –“Tax Abbott Healthcare (P.) Ltd. v.Commissioner of State Tax [2020] 113 Issue:-
Liability on It is the case of the petitioner in the writ petition that as per the
taxmann.com 181 (Kerala) W.P. (C) NO. 17012 OF 2019(B) January 7,
Composite and business model operated by it in the State of Kerala, it places its
Mixed 2020 diagnostic instruments at the premises of unrelated hospitals,
Supplies” laboratories etc. for their use for a specified period without any
consideration. The petitioner also enters into Reagent Supply and
Instrument Use Agreements with various hospitals, laboratories etc,
whereunder, the arrangement between the parties is for the supply
of medical instruments to the hospital/laboratory concerned, for
their use, without any consideration for a specified period and for
the supply of specified quantities of reagents, calibrators,
disposables etc. at the prices specified in the agreement, through its
distributors on payment of applicable GST. It is stated that, as per
the agreement, while the supply of instruments is by the petitioner,
the supply of reagents, calibrators and disposables are effected by
its distributor, who purchases the said products from the petitioner
on principal to principal basis. When the distributor supplies the
reagents, calibrators and disposables to the hospitals/laboratories
concerned, the distributor discharges the applicable GST on the
price charged for supply of the said products. In other words, there
is no direct sale/supply of the reagents, calibrators and disposables
by the petitioner to the hospitals/laboratories in question.

the petitioner thought it appropriate to obtain an Advance Ruling

from the Authority for Advance Ruling [hereinafter referred to as
the "AAR"], the 5th respondent herein, on the following question:
"Whether in the facts of the present case, the provision of specified
medical instruments by the Applicant to unrelated parties like
hospital(s), Lab (s), for use without any consideration, constitutes a
"supply" or whether it constitutes "movement of goods otherwise
than by way of supply" as per provisions of the CGST/SGST Act,
2017?"

The AAR, by Ext.P2 order dated 26.09.2018, held that the

placement of specified medical instruments to unrelated customers
like hospitals, laboratories etc., for their use without any
consideration, in the backdrop of an agreement containing
minimum purchase obligation of products like reagents, calibrators,
disposables etc. for a specified period constituted a "composite
supply". It thereafter found that the principal supply in the said
composite supply was of the transfer of right to use goods for any
purpose which was liable to GST under Sl.No.17(iii) - Heading
9973 of Notification No.11/2017 Central Tax (Rate) dated
28.06.2017. As a consequence of the said Ruling, the supply of
reagents, calibrators, disposables etc., which is otherwise taxable @
5% [2.5% CGST + 2.5% SGST], became taxable at the rate of tax
applicable to the instruments, namely, 18% [9% CGST + 9%
SGST].

Held:-
Many aspects of the transactions envisaged under the agreement
entered into between the petitioner and its customer
hospitals/laboratories militate against viewing them as a composite
supply as defined above. Firstly, the supplies are made by two
different taxable persons; the supply of instrument being by the
petitioner and the supply of the reagents, calibrators and disposables
being by his distributor, who purchases it from him on principal to
principal basis. Although it could be argued that there is a
relationship between the said persons that influences the valuation
of the supply, the same does not take away from the fact that the
supplies are, in reality, made by two different taxable persons.

Secondly, the two supplies do not answer to the description of being

"naturally bundled and supplied in conjunction with each other in
the ordinary course of business". While they were not bundled
together as a matter of fact, in the instant case, there is also no
material to suggest that they are so bundled and supplied in
 conjunction with each other in "the ordinary course of business". In
fact, the business model followed by the petitioner appears to have
held the field for a considerable period of time and would show that
in the ordinary course of business, the supplies are not bundled.

In my view, a finding as regards composite supply must take into

account supplies as effected at a given point in time on "as is where
is" basis. In particular instances where the same taxable person
effects a continuous supply of services coupled with periodic
supplies of goods/services to be used in conjunction therewith, one
could possibly view the periodic supply of goods/services as
composite supplies along with the service that is continuously
supplied over a period of time. These, however, are matters that will
have to be decided based on the facts in a given case and not in the
abstract as was done by the AAR. I therefore allow the writ petition,
by quashing Exts.P1 and P2 orders, and remit the matter back to the
AAR for a fresh decision on the query raised before it by the
petitioner company.

22. Section 8 –“Tax In Re: Giriraj Renewables Pvt. Ltd [2018] 97 taxmann.com 510 (AAAR- Issue:-
Liability on a. Whether supply of turnkey Engineering, Procurement &
Karnataka)Order No. KAR/AAAR/02/2018-19 September 5, 2018
Composite and Construction (EPC) Contract for construction of a solar
Mixed http://gstcouncil.gov.in/sites/default/files/appelate- power plant wherein both goods and services are supplied
Supplies” can be construed to be a composite supply in terms of Section
authority/KAR_AAAR_02-2018-19-GRPL.pdf
2(30) of the CGST Act,2017
b. If yes, whether the principal supply in such case can be said
to be of "Solar Power Generating System", which is taxable
at 5% GST.
 c. Whether, benefit or concessional rate of 5% on Solar Power
Generation System and parts thereof would also be available
to subcontractors.

Held:-
In the instant case there is no dispute that the contract in question
involves a supply of both goods and services. However in order for
the supply to be termed as a 'composite supply', what is required is
that the supply of the goods and the services should at least be
bundled, more specifically be 'naturally bundled', and supplied in
conjugation with each other. The term 'naturally bundled' has not
been defined in the GST Act. We note that the concept of composite
supply under the GST law is similar to the concept of naturally
bundled services that prevailed under the service tax regime, and
the same was understood to refer to those transactions involving an
element of provision of service and an element of transfer of title in
goods in which various elements are so inextricably linked that they
essentially form one composite transaction.

The second transaction which happens thereafter, is the free supply

of the PV module by the Project owner to the Appellant for setting
up the Solar Power plant. This supply without consideration is not
within the fold of the definition of 'supply' as stated in Section 7 of
the CGST Act. Other than the exceptions spelt out in Schedule I,
any supply without a consideration is not a 'supply' and hence does
not attract GST. What crystallizes from the above is that, the supply
of the PV module which is the major component of the contract is
not coupled at all with the supply of the other parts of the Solar
Power Plant and the services for setting up the Solar Power Plant.
In fact, the supply of the PV module in the situation is separated
both in time and intent and is distinct and never coupled with supply
of other items/services within the impugned contract (and which, it
is the responsibility of the owner to procure and make available to
the contractor). The transaction of supply of PV module in itself is
abstracted from the rest of the elements of the EPC contract. It is
clearly a separate instance of sale/delivery from the rest of the
agreement of work or service and the sale of other items, and just
because the contractor may have arranged the procurement of it for
the owner, does not take away from the distinct and separate nature
of the supply. The distinction is observed by the contracting parties
too in having separately received the consideration for this element
of supply from the rest of the supplies made under the contract.
Transfer of property of goods for a price is the linchpin of the
definition of sale. Clearly, the thing to be delivered (PV modules, in
this case) has an individual existence before the delivery as the sole
property of the party who is to deliver it and for that reason, this
then is a sale. If 'A' may transfer property for a price in a thing in
which 'B' had no previous property then the contract is a contract
for sale. On the other hand where the main object of work
undertaken by the payee of the price is not the transfer of a chattel
qua chattel, the contract is one for work and labour. The intention
in the two different transactions is different on the matter of PV
module sold on high seas, it is sale; and thereafter other transactions
in goods and services are to follow.

Therefore, in view of the above, we find that the supply of PV

module is a distinct transaction by itself and cannot be said to be
naturally bundled with the supply of the remaining parts required
for setting up the Solar Power Plant. The contract itself makes it
abundantly clear that the term "equipments" does not cover "free
issue equipment". Therefore, the contract itself recognises the
supply by the owner as a distinct transaction which is separate from
the supply of the other equipments and components by the
contractor. To this extent the AAR was right in the impugned order
in holding that the concept of natural bundling does not apply to the
instant envisaged supply of the PV module in terms of the draft
contract in question.

(a) The supply of the PV module which is the major component of

the Solar Power Plant is not naturally bundled with the supply of the
remaining components & parts of the Solar Power Plant and the
supply of the services of Erection, Installation and Commissioning
of the Solar Power Plant.
(b) The supply of PV module is a distinct transaction from the
supplies in contract in question as it is the owner whose
responsibility it is to procure and supply the PV module. This PV
module is to be supplied as free issue material over and above the
plant being supplied by the contractor. The owner is responsible for
transportation of the PV module from the point of origin till plant
site and he bears the other risks and rewards of ownership. The PV
module which is procured by the Project owner on High Sea Sale
basis and imported by availing Customs duty exemptions and later
supplied to the Appellant as a free issue for use in the setting up of
the Solar Power Plant.
(c) The supply of the remaining portion of the contract in question
by the Appellant which involves the supply of the balance
components and parts of the Solar Power Plant and the supply of
services of Erection, Installation and Commissioning of the Solar
Power Plant is viewed as a 'composite supply' as the supply of goods
and services are naturally bundled.
(d) The tax liability on this portion of the contract in question (other
than PV module) which is termed as a 'composite supply' will be
 determined in terms of Section 8 of the CGST Act, 2017 wherein
the rate applicable to the dominant nature of the supply will prevail.
23. Section 8 –“Tax In Re: Fermi Solar Farms Pvt. Ltd. [2018] 97 taxmann.com 425 (AAAR- Issue:-
Liability on Whether in case of separate contracts for supply of goods and
Maharashtra) Order No. MAH/AAAR/SS-RJ/07/2018-19 September 4,
Composite and services for a solar power plant, there would be separate taxability
Mixed 2018 of goods as 'solar power generating system' at 5% and services at
Supplies” 18%?
http://gstcouncil.gov.in/sites/default/files/appelate-authority/Fermi-Solar-
Order-Scanned.pdf Held:-
Concept and taxability of composite supply
This is clearly a case of composite supply of goods and installation
thereof. The entire transaction of providing the goods and the
services are naturally bundled- it is natural and also a practice to
expect that a contractor who will supply the goods may also supply
the services along with it. Thus, what the Supreme Court says above
is that the form of the agreement is not important, it is rather the
substance which has to be seen. The parties may use any words they
like to suit their intention and it is therefore imperative that the
agreement may not be taken as it is but its nature/substance has to
be seen to arrive at the correct conclusions. Thus, what can be seen
from the above is that when machines are embedded with no visible
intention to dismantle them and they are intended to be used for a
fairly long period of time, they are 'immovable property'. Hence, the
clear legislative intent is that at all levels, from part to system, GST
will be payable at 5%. In fact, the effective rate for such contracts
even prior to GST was approx. 3%, and an application of the
"equivalence principle" also affirms that the intent of the
Government was never to tax the entirety of the goods and services
in relation to setting up an SPGS at a significantly higher rate of
18%. After going through the entire contract/agreement we have
come to the conclusion that the agreement leads to an erection of a
 'solar power generating system' which is immovable property.
Therefore, merely because a schedule entry is provided for the same
does not mean that the product would be classified in the same.
The agreements tendered in support of this question are for setting
up and operation of a solar photovoltaic plant and are in the nature
of a 'works contract' in terms of clause (119) of section (2) of the
GST Act.

24. Section 8 –“Tax IN RE :Keysight Technologies International India Pvt. Ltd. 2020 (1) TMI Held:-
Liability on Having ruled that electricity is goods, we come to the question
633 - Authority For Advance Ruling – Haryana Advance Ruling No.
Composite and whether supply of electricity via DG sets is a goods or service. The
Mixed HAR/HAAR/R/2018-19/39 in Application No. 39/2018-19 Dated: - 09 power backup provided by the Agilent Technologies i.e., the lessee
Supplies” is in the form of a service. The charges for this supply are
September 2019
determined by the lessee as per its convenience. The DG set belongs
to the Agilent Technologies, the maintenance charges are also borne
by the Agilent Technologies, the expenses record pertaining to the
DG set is also maintained by Agilent Technologies. Therefore, the
authority has no hesitation in concluding that the provision of
electricity supply/ power back-up via DG set is in the form of a
service and not goods.
25. Section 8 –“Tax Kailash Chandra. In re* [2019] 108 taxmann.com 406 (AAAR-Rajasthan)/ Held:-
Liability on Activities of supply, design, installation, commissioning and testing
Order No. RAJ/AAAR/02/2019-20 May 15, 2019
Composite and of solar energy based pumping systems are both supply of goods
Mixed and services under GST
Supplies”
http://gstcouncil.gov.in/sites/default/files/appelate-authority/AAAR-RAJ-
2-2019-20%20-
%28Kailash%20Chandra%29%20Mali%20Construction.pdf
26. Section 8 –“Tax Bharat Electronics Ltd., In re [2019] 109 taxmann.com 364 (AAR - Issue:-
Liability on "Whether the various systems, sub-systems and onboard spares
Karnataka) Advance Ruling No. KAR ADRG 21/2019 August 26, 2019
Composite and supplied by the applicant for use in the Warships, Vessels and
Mixed Submarines meant for Indian Navy and Shipbuilders, attracts 5%
Supplies” GST?"
http://gstcouncil.gov.in/sites/default/files/ruling-
new/KAR_AAR_21_2019_BEL_26.08.19.pdf Held:-
It is seen that the price is inclusive of the packing charges, freight
charges and transit insurance charges and are includible in the price.
The contract includes services like Installation and Commissioning,
Training and rehosting test programmes. Hence the entire contract
is a composite supply of supply, installation, commissioning,
training and rehosting the test programmes with the principal supply
being the supply of Fire Control Systems. It also includes the service
to be provided during the warranty period. In the instant case the
Applicant supplies the goods such as Fire Control Systems, Radar
Systems etc., and also provides the services of the installation,
commissioning, Training etc. The equipments/systems supplied by
the applicant are custom made for warships and hence the applicant
alone is qualified to install and commission them and also to train
the recipients. Therefore the two supplies that of supply of goods
and supply of related services, are taxable as well as naturally
bundled and hence qualify as a Composite Supply. The principal
supply is undoubtedly that of goods i.e. the systems.

In view of the above, since the principal supply is supply of goods

i.e. fire control systems, the entire composite supply need to be
treated as the supply of goods fire control systems.

Therefore, it is clearly evident from the above that the warships are
required to be fitted with certain systems/sub-systems such as radar,
 sonar etc.,. In the instant case, the applicant claims that they are
supplying the systems such as Color Tactical Display system, Radar
system (for surveillance and threat alert, Navigation and attack,
Weather surveillance), Missile system, Electro Optical Fire Control
system, Gun Fire Control system, Optical Director system etc.,
meant for use "On Board Ships' of the India Navy, under agreement.
In view of the above these systems are meant for Ships and vessels
more specifically warships covered under chapter 8906 1000,
without which the warships cannot function in required, proper and
effective manner. Therefore it can be considered that these systems
are essential parts/accessories for effective functioning of the
warship. Therefore these systems, parts of the said systems as
described in the sample contract and the purchase order become
parts of warships covered under the Heading 8906.
27. Section 8 –“Tax Kundan Mishthan Bhandar, In re [2019] 105 taxmann.com 364 (AAAR- Issue:-
Liability on a. Whether supply of pure food items such as sweetmeats,
Uttarakhand) Appeal Nos. UK/GST ARA 02/10 & UK/GST ARA 03/08
Composite and namkeens, cold drink and other edible items from a
Mixed February 27, 2019 sweetshop which also runs a restaurant is a transaction of
Supplies” supply of goods or a supply of service?
b. What is the nature and rate of tax applicable to the following
items supplied from ground floor of a sweetshop in which
restaurant is also located on the first floor and whether the
applicant is entitled to claim benefit of input tax credit with
respect to the same: (i) Sweetmeats, namkeens, dhokla, etc.,
commonly known as snacks, cold drinks, ice creams and
other edible items; (ii) Ready to eat (partially or fully pre-
cooked/packed) items supplied from live counters such as
jalebi, cholabhatura and other edible items; (iii) Takeaway
order of sweetmeats or namkeens by a person sitting in the
restaurant of sweetshop when such products are not
 consumed within the premises or the applicant but are
takeaway.
Held:-
'Composite supply' is defined as "composite supply" means a supply
made by a taxable person to a recipient consisting of two or more
taxable supplies of goods or services or both, or any combination
thereof, which are naturally bundled and supplied in conjunction
with each other in the ordinary course of business, one of which is
a principal supply. Thus when the goods such sweets, namkeens,
cold drinks and other edible items are supplied to customers in the
restaurant or as takeaway from the restaurant counter and which are
being billed under restaurant sales head should fall under 'composite
supply' with restaurant service being the principal supply. Since
supply of food in this case, is naturally bundled with the restaurant
service. The taxability of all such goods supplied to or through the
restaurant will be governed by the principal service i.e. restaurant
service and GST rate with applicable conditions will also be
applicable to all such goods also. Input credit will not be allowed in
this case.

All goods which are supplied to customers through sweetshop

counter have no direct or indirect nexus with restaurant service.
Anyone can come and purchase any item of any quantity from the
counter without visiting the restaurant. The billings of such sales are
also done separately. Thus such sales, by no stretch of imagination,
can be clubbed with restaurant service. These sales do not satisfy
the basic requirement of 'composite supply' i.e. 'being naturally
bundled and supplied in conjunction with each other'. These sales
are completely independent of restaurant activity and will continue
even when the restaurant is closed, either temporarily or
 permanently. Hence such sales will be treated as supply of goods
with applicable GST rates on the items sold. Input credit will be
allowed on such supply.

Sale of sweets, namkeens, cold drinks and other edible items

through restaurant will be treated as 'composite supply' with
restaurant supply being the principal service. Existing GST rates on
restaurant service will also be applicable on all such sales and no
input credit will be allowed.

Sale of sweets, namkeens, cold drinks and other edible items from
sweetshop counter will be treated as supply of goods with applicable
GST rates of the items being sold and input credit will be allowed
on such supply.

The applicant should maintain separate records for restaurant and

sweetshop with respect to input and output and billings as well as
other accounting records should also be separately maintained.
28. Section 8 –“Tax HP India Sales (P.) Ltd., In re [2019] 107 taxmann.com 470 (AAAR- Held:-
Liability on Maharashtra)/ Order No. MAH/AAAR/SS-RJ/21/2018-19 February 17, Where all imaging products i.e. Electroink and others like
Composite and 2019 developers and plates supplied by appellant, are equally important
Mixed to complete supply and no one of them is principal supply, supply
Supplies” http://gstcouncil.gov.in/sites/default/files/appelate- of Electroink and other consumables is a mixed supply and not a
authority/MAH_AAAR_SS-RJ_21_2018-19.pdf composite supply

29. Section 8 –“Tax IN RE : Harmilap Media (P) Ltd 2020 (3) TMI 293 - Authority For Advance Issue:-
Liability on Ruling – Uttarakhand Ruling No. 03/2019-20, Application No. 02/2019-20 (a) applicability of GST rate on selling of space/ time for
Composite and Dated: - 12 June 2019 advertisement in print media in case of advertising
Mixed companies; (b) applicability of GST rate if advertising
Supplies” company/ agency sells unit of Space in print media to client
https://taxguru.in/wp-content/uploads/2020/03/In-re-Harmilap-Media-P- and designing/ composing is being done by advertising
Ltd.-GST-AAR-Uttarakhand.pdf company/agency without charging separately in the bill for
designing, etc., to client; (c) selling of space/ time for
advertisement in print media by advertising companies is a
pure service or otherwise. If yes, whether said pure service is
exempted from payment of GST vide Notification No.
12/2017-Central Tax (Rate), dated 28th June, 2017 when
advertising agency is raising bill to Local Authority or
otherwise; and (d) if exemption is available to local authority
then said exemption is also available to advertising
companies or not.

Held:-
(i) Selling of space for advertisement in print media by advertising
company/ agency shall attract GST @ 5% [2.5% CGST + 2.5%
SGST] in case of advertising companies/ agencies in all cases.
However Volume incentives/ value incentives are part of
commission and cannot be treated as sale of space in print media
and therefore incentive will be charged @ 18%. (ii) Composite
supply comprises of selling of space in print media and
designing/composing of the advertisement, shall attract GST @ 5%
[2.5% CGST + 2.5% SGST] inasmuch as "selling of space in print
media" is a principal supply which attract GST @ 5% [2.5% CGST
+ 2.5% SGST] as on date. Advertisement company/agency sells unit
of space in print media to client and designing/composing is being
done by advertising company /agency without charging separately
in the bill for designing, etc., to client. Such case is a case of
composite supply and in such case "selling of space in print media"
is a principal supply. Hence it will attract GST @ 5% [2.5% CGST
 + 2.5% SGST] as on date. (iii) Supply of service viz. "Sale of Space
for Advertisement in Print Media" is not a "Pure Service" and the
exemption to said services are not admissible in terms of
Notification No. 12/2017-CentraI Tax (Rate), dated 28-6-2017 (as
amended from time to time). (iv) The exemption from GST is also
not available to the applicant in terms of Notification No. 12/2017-
CentraI Tax (Rate), dated 28-6-2017 (as amended from time to
time).
30. Section 8 –“Tax Ernakulam Medical Centre (P.) Ltd., In re [2019] 103 taxmann.com 182 Held:-
Liability on (AAAR-Kerala) Order No. AAR/03/2018 December 14, 2018 The supply of medicines and allied items provided by the hospital
Composite and https://keralataxes.gov.in/wp-content/uploads/2018/04/EMC-1.pdf through the pharmacy to the in-patients is part of composite supply
Mixed of health care treatment and hence not separately taxable.
Supplies”
The supply of medicines and allied items provided by the hospital
through the pharmacy to the out-patients is taxable.
31. Section 8 –“Tax Five Star Shipping, In re dated 23.10.2018 Issue:-
Liability on The service by the Appellant essentially includes collecting market
Composite and http://gstcouncil.gov.in/sites/default/files/appellate- intelligence information and updates which is directed to the ship
Mixed order/Mah.AAAR%20No.11-2018-19__23.10.18.pdf owners engaging the Appellant. This is the principal service of the
Supplies” Appellant and is known as Consultancy Service. Separately, service
provided by the Appellant also includes providing Support Service
to Indian/ foreign ship owners so as to identify charterers who are
seeking to optimise revenue for their vessels and monitoring voyage
execution, which is the ancillary service offering of the Appellant.
Consultancy Service and the consequential Support Service
provided by the Appellant are generically referred to as Marine
Consultancy Service ("MCS") together by the Appellant.

MCS is provided by the Appellant in terms of a typical Consultancy

Agreement executed by and between the Appellant and the ship
owners. Details of service provided by the Appellants are provided
in the Annexure attached to the agreement entered with FSO.

This appeal (as also the Application for Advance Ruling) concerns
only supplies made to overseas clients known as Foreign Ship
Owners ("FSO") and is accordingly limited and worded.

The Appellant is providing MCS to both Indian and FSO. There is

clarity regarding the GST implication on service provided to Indian
ship owner as both provider and recipient of service are located in
India however, there is inadequate clarity regarding the GST
implication on services provided to FSO (located outside India).
Therefore, the Appellant approached the Authority for Advance
Ruling ('the Authority") by filing an application requesting Advance
Ruling on January 19, 2018 regarding MCS provided by the
Appellant to FSO. The Appellant sought an Advance Ruling from
this Hon'ble Authority in respect of the composite supplies of MCS
by the Appellant to FSO. Specifically, the advance ruling is sought
on the following questions:

Whether MCS provided to FSO constitutes "composite supply" with

the principal supply of consultancy service?

Whether MCS provided to FSO will qualify as an export of service

in terms of Section 2(6) of the IGST Act as the place of supply of
MCS (as a composite supply) will be determined in terms of Section
13(2)(a) of the IGST Act, i.e. the 'location of recipient of service'?

Held:-
Now, the moot issue is to decide whether the said activity of the
introduction of their clients, in this case the FSO, with the potential
charterers of their vessels would be considered as intermediary
services as pronounced by the Advance Ruling Authority or the
Consultancy Services as being pleaded by the Appellant.

In view of the above, it is conspicuously evident that the Appellant

is acting as an intermediary for the FSO. Though the Appellant is
insisting that they are not having formal contracts with any of the
potential charterers of the vessels, this is not the requirement or
criterion for supply of the intermediary services, as can be seen from
the definition of the intermediary, as reproduced above.

Thus, on perusal of the market/industry practices as mentioned

above, it is prominently noticed that the appellant have made
agreement keeping all the clauses related to the necessity or the
requirement of the services being offered to the FSO similar to the
practices observed in the vessels chartering industry, which include
(a) the arrangement for the employment of the principals'
ships/vessels by way of the study and analysis of the various market
reports/trends and intelligence gathered from the other reliable data
resulting into the shortlisting of the potential charterers; (b)
facilitating the main supply of services i.e. the Renting of the water
vessels with or without operator agreed between the FSO, the
provider and their clients i.e. the vessels charterers by undertaking
the activity in the form of monitoring of the voyage execution (c)
undertaking various other administrative services like examination
of lay time calculation and reconciliation of the voyage related
accounts for eventual settlement with the vessel charterers; which
are the essential requirements for receiving the payment from the
FSO. This brokerage or commission amount is a fixed percentage
of the gross amount received from the charterers as consideration
for this vessel chartering services.
 In view of the above discussion, we hold that the entire gamut of
services performed by the Appellant are in fact of the composite
supply of the intermediary services, classified under the Service
Accounting Code 999799, which is other miscellaneous services,
and the accounting services under the SAC 998222, of which the
intermediary service is the principal supply.

we treat the entire gamut of services as a composite supply of

intermediary services and Accounting services of which the
intermediary services is the principal supply.
32. Section 8 –“Tax Sarj Educational Centre, In re* [2019] 107 taxmann.com 117 (AAAR-West Held:-
Liability on Bengal) Appeal Case NO. 05/WBAAAR/APPEAL/2019† June 25, 2019 Where appellant is offering several individual services like
Composite and supplying food, laundry service, housekeeping service etc. in
Mixed http://gstcouncil.gov.in/sites/default/files/appelate- different combination which are not naturally bundled with lodging
Supplies” authority/WBAAAR%20Appeal%20No.%2005- service, none of combinations of services being offered is a
2019%20dated%2029.03.2019.pdf composite supply, as defined under section 2(30) but are mixed
supplies within meaning of section 2(74) and, therefore, taxable in
accordance with section 8(b) GST : Where appellant-boarding
house is providing services of lodging and food exclusively to
students of secondary school, it does not come under definition of
'Educational Institution' as envisaged in clause 2(y) of Exemption
Notification and, thus, serial No. 66 of Exemption Notification is
not applicable
33. Section 8 –“Tax SPFL Securities Ltd., In re [2019] 109 taxmann.com 109 (AAAR-Uttar Issue:-
Liability on Pradesh) Order NO. 06/AAAR/18/4/2019† April 18, 2019 The applicant/appellant is engaged primarily in the business of
Composite and providing services of stock broking, i.e., purchasing and selling of
Mixed shares on behalf of the clients on exchange platform by virtue of
Supplies” being a recognized BSE/NSE appointed stock broker.
The applicant sought advance ruling in respect of the following
question: Taxability on Delayed Payment Charges on
reimbursement of amount by client to applicant, where client failed
to pay amount paid to Stock Exchanges for purchase of securities
with T+1 (trading day plus one day) under SEBI Regulation norms
and deducted by Stock Exchange from applicant account being
purchase consideration of securities which are neither goods nor
service under GST.

Authority for Advance Ruling ruled that the applicant is liable to

pay GST on the delayed payment of charges which are overdue
from the client towards trading of securities and reimbursed to the
applicant.

Held:-
It is purely a deferment of liability only which arose since the
payment was not made within the stipulated period of time by the
client to the Stock Exchange for purchase of Securities.

Therefore, since the service of buying and selling of securities

which is exempted under GST, as per the definitions of 'goods' and
'services' under the Section 2(52) and 2(102) of CGST Act, 2017

FAQ on the Banking, Insurance, Stock amended by the C.B.I & C.

on 27-12-2018, needs to be taken into consideration, which clarified
that the GST shall not be applicable on delayed payment charges.
"(Q. 80) Is GST leviable on interest/delayed payment charges
charged to clients for debit for settlement obligations/margin
trading facility? (Ans) Any interest/delayed payment charges
charged for delay in payment of brokerage amount/settlement
obligations/margin trading facility shall not be leviable to GST
 since settlement obligations/margin trading facilities are
transactions which are in the nature of extending loans or advances
and are covered by Entry No. 27 of Notification No. 12/2017-
Central Tax (Rate), dated 28th June, 2017." (Underlined portion
added on 27-12-2018)

Applicant is not liable to pay GST on the delayed payment charges

on reimbursement of amount by client to Applicant, where client
failed to pay amount paid to Stock Exchange for purchase of
securities with T+1 (trading day plus one day) under SEBI
Regulation norms and deducted by Stock Exchange from Applicant
account being purchase consideration of securities which are neither
goods nor services under GST.

34. Section 9- Bajaj Finance Ltd., In re [2019] 108 taxmann.com 1 (AAAR-Maharashtra) Issue:-
“Levy and Order No. MAH/AAAR/SS-RJ/24/2018-19March 14, 2019 In the present case, the Appellant is primarily engaged in the
Collection” business of lending/financing. As a consideration for
http://gstcouncil.gov.in/sites/default/files/appelate- lending/financing, the Appellant charges interest from the
authority/MAH_AAAR_SS-RJ_24_2018-19.pdf customers at a particular rate, for the period for which such loan is
granted. The principal and interest amount on such loan is repaid by
the customers by way of equated monthly instalments (hereinafter
referred to as 'EMI') over the tenure of loan. Accordingly, while
computing the EMI, the Appellant charges and factors pro rata
interest payable on each due date, on the underlying assumption that
the customers would not default in payment of the EMI on the due
dates. However, in case of any default, the Appellant charges
additional interest for the number of days of default. This interest is
commonly known as penal/default interest.
AAR in its order has held that the penal interest is not interest on
loans. In this regard, the AAR has recorded a finding that the penal
interest has been termed as 'penalty' in the loan agreements entered
into by the Appellant.

Held:-
On perusal of the above, the issue before us, to decide, is whether
the penal charges / penalty collected by the Appellant from their
borrower customers who have defaulted EMI and delayed the
payment of EMI, is for tolerating any act as envisaged under the
entry 5 (e) of the schedule II to the CGST Act, 2017, or is in the
nature of additional interest, and therefore, covered under the entry
27 of the Notification No. 12/2017-Central Tax (Rate) dated
28.06.2017 and not subjected to GST levy.

A perusal of the method of calculation furnished by appellant shows

that it is calculated on the entire due amount of EMI, including
interest already included therein EMI. But, as claimed the interest
cannot be levied on interest, but only penalty can be levied on the
interest not paid within the due date prescribed for it. The real
substance of the transaction is that the payment of penalty / penal
charges is on account of the failure of the customer to adhere to the
conditions of repayment of EMI as stipulated in the Agreement.
Thus, the nomenclature provided in the agreement is not the only
deciding factor to construe it as penalty / penal charges, but the
nature of it as defined in agreement is important- the nature being
that the appellant is entitled to recover and the borrower agreed to
pay it. One of the important test to determine whether the levy is
penal in nature is to see whether it is for the non-compliance of
provisions and if any criminal liability or prosecution is provided,
the levy is surely penal in nature. The said test is surely passed by
the penalty / penal charges in the present case as consequences
provided therein agreement for non-compliance of it may be
prosecution under the Negotiable Instruments Act. Hence, the
penalty levied by the appellant cannot be termed as 'additional
interest' but are penal charges.

The Appellant have, inter alia, contended on the ground that, in view
of clause (d) of sub-section (2) of Section 15 of the CGST Act, any
interest or late fee or penalty charged/levied or collected for delayed
payment of any consideration for a supply, shall be includible in the
value of the said supply. Therefore, the penal charges / penalty so
levied by the Appellant would be treated at par with interest, and
any treatment given to the main consideration (i.e. interest) shall
also be equally applicable to such amount (i.e. penal interest).
Hence, the penal interest would be exempt from GST under Serial
No. 27 of the Notification No. 12/2017-Central Tax (Rate) dated
28.06.2017. In this regard we are of view that what is exempted vide
above notification is the interest as construed under definition
provided in the said notification. By abiding to the correct
interpretation of term 'interest' as discussed herein above, the penal
charges / penalty being not construed as interest, will not qualify for
such exemption. The provisions of clause (d) of sub-section (2) of
Section 15 of the CGST Act would apply in these cases where
interest is not defined separately anywhere else in a specific context.
A separate carving out of the word 'interest' in the notification in the
context of this case sets it apart from drawing a general meaning
from Section 15. 96. Having rejected the above contention of the
appellant, the true nature of the issue has to be seen now in the light
of the entry 5 (e) of the schedule II to the CGST Act, 2017.
Therefore, we will go through the entry 5 (e) of the schedule II to
the CGST Act, 2017.
 From the above referred clause 25 of the agreement it is clear that
the default in payment of EMIs is hereby deemed to be default under
the provisions of agreement entered between appellant and
customers. From the above referred clause 26, on any default or
breach of the agreement the remedies available with the appellant
are either to recall loan or cancellation of agreement, initiation of
legal proceedings under Negotiable Instruments Act or as the case
may be under Payments and Settlement Act, taking possession of
the product, etc. However, the appellant instead of taking recourse
to the remedial provisions in the agreement itself is tolerating the
act or the situation of delay in payment of EMI by customers, by
imposing / recovering penalty as envisaged under the terms of the
agreement. Hence, such an activity of tolerance of situation of delay
in payment of EMI is adequately covered in the second expression
provided therein above said clause 5 (e) of Schedule II. Such a
tolerance of an activity of delay in payment is against the agreed
consideration and it is in the form of penal charges / penalty as
discussed herein before para 4. It is agreed between appellant and
borrower/ customer that in case any delay has occurred, the
Appellant is entitled to recover the penal charges /penalty from such
defaulting borrowers. Thus, from the language of the above
mentioned clause, it is adequately clear that there is mutual
agreement between the Appellant and the borrower. Thus, here it
can be said that the Appellant have tolerated an act or situation of
default by the borrowers, for which they are recovering some
amount in the name of the penal charges / penalty. Hence, such
activity of tolerance is against consideration.
35. Section 9- United Breweries Ltd., In re [2018] 99 taxmann.com 107 (AAAR- Facts:-
“Levy and Karnataka) Order No. KAR/AAAR/03/2018-19 October 23, 2018 The appellant is registered under GST with GSTIN No.
Collection” 29AAACU6053CIZH and is engaged in manufacture and supply of
http://gstcouncil.gov.in/sites/default/files/appelate- beer under various brand names. The appellant, apart from
authority/KAR_AAAR_03-2018-19-UBL.pdf manufacturing beer on its own. also has an arrangement with
contract brewing/bottling units (hereinafter referred to as the 'CBU')
who make the brands of beer belonging to the appellant and supply
such beer to market. CBUs in making the beer brands owned by the
Appellant, procure the raw materials, packaging materials, incur
overheads and other manufacturing costs etc, on their own; and the
beer they make is sold by them directly to Government
Corporations/in wholesale depending on the state market
regulation.

The CBUs, upon the sale of such goods, pay the statutory levies and
taxes. The CBUs further account for all the manufacturing cost and
distribution overheads in their books of account since it is they who
procured all resources for the manufacture of the beer. Further.
CBUs retain a certain amount of profit. After accounting all these
revenues and deducting the part of their share from the total
turnover that is had from the sale of such beer in each period, the
CBUs transfer the balance of amount from the total turnover to the
Appellant.

Issue:-
a. Whether, beer bearing brand/s owned by the Appellant
manufactured by Contract Brewing Units out of the raw
materials, packaging materials and other input materials
procured by it and accounted by it and thereafter selling such
beer to various parties under its invoicing would be
considered as supply of services?
b. Whether GST is payable by the CBUs on the profit earned
out of such manufacturing activity?
 c. Whether, GST is payable by the Brand Owner on the
"Surplus Profit" transferred by the CBU to Brand Owner out
of such manufacturing activity?

Held:-
After considering the entire gamut of activities performed by the
Appellant, it may be difficult to arrive at any nomenclature for the
services delivered by the Appellant to the CBU. While the Brand
fee and the reimbursed expenses, are received by the Appellant in
(direct) consideration for permitting the CBUs the use of the
representational right to make and sell their branded beer, the
service supplied can at times have the colour and character of being
an erstwhile ''franchise' service or/and "IPR service' in terms of the
Finance Act 1994. On the other hand, the so termed 'surplus profit'
amounts received have the characteristics of being a consideration
received for a 'mixed supply'.

While in overall terms, at times the service supplied assumes the

character of permitting the use of intellectual property rights, or of
being a franchise service, at other times it takes on the colour and
character of being secondment of personnel. The varied nature in
the character of the services supplied by the Appellant, makes it
difficult to determine the predominancy in terms of characterisation
since the consideration for some elements of the supply is being
received in terms of a variable amount "W". We do acknowledge
and recognise that in each tax period, the manner of determination
of' 'W' as it has been laid down in the contract with CBUs would
likely make it a variable for each tax period. Since, the activity
which the Appellant engages in with respect to contract does not
essentially change, but the volume of consideration can change in
each tax period, it does pose a challenge in terms of giving one
particular nomenclature to the activities of the Appellant that would
remain unchanged over all tax periods. However, this aspect is
limited the issue of the SAC alone and that too when one proposes
to generalise the classification across all tax periods within one
particular tax period, it may still be possible to have a determinate
'W' which could help in applying the predominancy test. At the
moment though, we note that there is a standard rate of 18% which
applies across the whole range of services that are taxed under GST.
However, this fact of having one predominant supply that may be
constant across tax periods, does not do anything to negate
exigibility of the service supplied. The framework of the Service
Tariff Codes under GST still provides a possible solution by
categorising such services under Service Code 999799 as "Other
Miscellaneous services". The sub-heading under this service code is
999799 which is "'other services nowhere else classified'. The GST
applicable under this category of service is 18%.

(a) The activity engaged in by the Appellant by way of granting the

contracting brewing units the representational right to manufacture
and supply beer bearing its brand name, in return for a
consideration, is a supply of service as mandated in Section 7 of the
CGST Act, read with clause 5(c) of the Schedule II of the said Act;
(b) The supply of service by the Appellant is taxable to GST in terms
of Section 9 of the CGST Act; (c) The service supplied by the
Appellant is classified under the Service Code 999799 as "other
services nowhere else classified". (d) The amounts received by the
Appellant from the contracting units under the Agreement, in the
nature of Brand Fee and reimbursement of expenses, is termed as a
consideration for the supply of service and is chargeable to GST at
the applicable rate of 18%.
36. Section 9- Association of Inner Wheel Clubs of India, In re [2019] 104 taxmann.com Held:-
“Levy and 87 (AAAR-WEST Bengal) Appeal Case NO. 11/WBAAAR/2018MARCH Inner Wheel Club membership can only be availed against payment
Collection” 20, 2019 of annual membership fees, renewable annually. Only the members
are granted various facilities and/or benefits, enabling them to
http://gstcouncil.gov.in/sites/default/files/appelate- attend conventions/meetings for the furtherance of the objectives of
authority/WBAAAR%20Appeal%20NO.11- the Organisation. Such facilities/benefits are not available to the
%202018%20dt.%2021.12.18.pdf non-members of the Organisation. 13. Goods and Services Tax is
levied on intra-State and inter-State supply of goods and services.
According to Section 7 of GST Act, the expression "supply"
includes all forms of supply of goods or services or both such as
sale, transfer, barter, exchange, license, rental, lease or disposal
made or agreed to be made for a consideration by a person in the
course or furtherance of business, and includes activities specified
in Schedule II to the GST Act. The definition of "business" in
section 2(17) of GST Act states that "business" includes provision
by a club, association, society, or any such body (for a subscription
or any other consideration) of the facilities or benefits to its
members. The term 'person' as defined in section 2(84) of the GST
Act includes an association of persons or a body of individuals,
whether incorporated or not, in India or outside India. Further,
Schedule II of GST Act enumerates activities which are to be treated
as supply of goods or as supply of services. It states in para 7 that
supply of goods by any unincorporated association or body of
persons to a member thereof for cash, deferred payment or other
valuable consideration shall be treated as supply of goods. A
conjoint reading of the above provisions of the law implies that
supply of services by an unincorporated association or body of
persons to a member thereof for cash, deferred payment or other
valuable consideration shall be treated as supply of services.
37. Section 9- OPTA Cabs (P.) Ltd., In re [2018] 100 taxmann.com 250 (AAAR- Held:-
“Levy and Karnataka) Order No. KAR/AAAR/04/2018-19 December 4, 2018 We have gone through the records of the case and taken into account
Collection” the submissions made by the Appellant in their written submissions
http://gstcouncil.gov.in/sites/default/files/appelate- as well as at the time of personal hearing. Briefly stated the facts are
authority/OPTACABS.pdf that the Appellant is in the business of operating taxi aggregation
service wherein the Appellant provides an IT platform whereby
services of information technology is provided to both the
customers and the taxi operators for the usage of service. The
business model of the Appellant is that a potential customer would
book the taxi by using the IT platform provided by the Appellant
and the taxi operator would be intimated about the potential
customer through the same IT platform. On completion of the
journey, the Appellant sends an invoice to the customer using the
IT platform and the charges for the taxi ride are paid by the customer
directly to the taxi driver by way of cash, mobile wallets or online
payment. The Appellant does not charge any commission from the
taxi driver for the trip. For providing this digital platform, the
Appellant collects a prepaid monthly subscription from the taxi
operators to whom the IT service is provided. On this subscription
amount GST is paid by the Appellant and there is no dispute on this.

In this factual background, the short point for determination is

whether the Appellant is an ecommerce operator and if so whether
he is liable to pay tax on the service supplied through it in terms of
Section 9(5) of the CGST Act. To examine this question. let us first
look at what constitutes "e-commerce" and who is an "e-commerce
operator" as per the CGST Act.

In the instant case the transportation of passenger service is

provided by the taxi drivers by using a software application.
Transportation of passengers is a taxable service liable to GST. The
provision of this service by the taxi driver to the passenger is a
'supply' within the scope of supply given in Section 7 of the CGST
Act since the service is provided for a consideration. The Appellant
on the other hand has developed a digital platform which aggregates
the taxi drivers on one common platform. The service of
transportation of passengers is supplied by the taxi drivers using the
digital application developed by the Appellant. The Appellant
manages the digital application which facilitates the supply of the
service of transportation of passengers.

Further, the appellant owns and operates the IT platform for the
supply of service of transportation of passengers over the digital
network. Using this digital network facility the Appellant provides
the taxi aggregation service wherein they connect both the customer
as well as the taxi operator. The customer would book the taxi by
using the IT platform provided by the Appellant and the taxi
operator would be intimated about the potential customer through
the same IT platform. Finally on completion of the service
Appellant sends an invoice to the customer through the digital
network facility which is payable by the consumer to the taxi driver.
Therefore the appellant M/s. OPTA Cabs Pvt Ltd is an "electronic
commerce operator" in terms of the definition given in Section
2(45) of the CGST Act.

Section 9(5) of the CGST Act shifts the liability to pay the tax from
the actual supplier of the notified services to the e-commerce
operator. The provisions of Section 9(5) of the CGST Act do not in
any way imply that the supplier of the service is the e-commerce
operator. Only the liability to pay the tax is now cast upon the e-
commerce operator. The supply of the service of transportation of
passengers continues to be the taxi operators. However, since the
service is supplied by them through the e-commerce platform, the
liability to pay the tax is cast upon the e-commerce operator by
virtue of Notification No 17/2017 CT(R) dt 28.06.2017. The
Appellant in his arguments has greatly stressed upon the fact that
the service is merely 'booked' through his digital platform and not
supplied through it. This is a feeble attempt at circumventing the
provisions of law. A booking for a taxi ride done on the Appellant's
digital application is the first step towards the supply of the service.
Without the booking which is done on the digital application, no
service can be provided by the taxi operator. The nature of e-
commerce activity is such that the supply of goods or service or both
happens through the electronic mode. In this case, booking for a taxi
ride on the digital application is a part of the activity of the supply
of the service of transportation of passengers. Without the booking
no service can be supplied. Every supply begins with a request for
the supply. The request can be in the form of a written request like
a purchase order, a verbal request or a request made on the digital
application which is in the nature of 'booking'. Honouring such
requests by the supplier of the goods or services, in return for a
consideration, is the taxable event of 'supply'. Therefore, booking
for a service is also an integral part of the supply chain and hence
there is no merit in the argument of the Appellant that the service
has merely been 'booked' on their platform and not 'supplied through
it'. We reiterate here that the supply of the service of transportation
of passengers has been provided 'through' the digital platform and
by virtue of the provisions of Section 9(5) of the CGST Act, the e-
commerce operator (the one who manages and operates the digital
platform) is the person who is liable to pay the tax on all intra-state
supplies as if he is the supplier.
 In view of the above, the services of transportation of passengers
supplied through the Appellant's electronic platform and digital
network would be liable to tax at the hands of the Appellant.
38. Section 15 – IN RE: M/S. Attica Gold Pvt. Limited 2020 (4) TMI 690 KAR ADRG Issue:-
“Value of 15/2020 23 March 2020 a) Whether applicant dealing in second hand goods and tax is
Taxable to be paid on the difference between the selling price and
Supply” http://gstcouncil.gov.in/sites/default/files/ruling- purchase price as stipulated in Rule 32(5) of CGST Rules,
new/KAR_AAR_15_2020_23.03.2020_AGPL.pdf 2017 if dealer purchases used / second hand gold jewellery
from individuals who are not dealers under the GST and at
the time of sale there is no change in the form/ nature of
goods?
b) Whether ITC is allowed to be claimed if purchases are made
from the dealer from whom marginal scheme if applicable?
Held:-
In the case of applicant dealing in second hand goods and invoicing
his supplies as “second hand goods”, the valuation of supply of
second hand gold jewellery which are purchased from individuals
who are not registered under GST and there is no change in the form
and nature of such goods, can be made as prescribed under sub-rule
(5) of rule 32 of the Central Goods and Service Tax Rules.

In case the applicant purchases second hand jewellery from

registered person, the applicant is eligible to claim input tax credit
on such inward supplies but if he claims the input tax credit against
such inward supplies he would not be eligible for the margin scheme
of valuation as prescribed in sub-rule (5) of rule 32 of the Central
Goods and Services Tax Rules for the outward supplies of such
second hand jewellery.
39. Section 10 – IN RE: Sri. GhalibIqbal Sheriff M/S. Emphatic Trading Centre Issue:-
“Composition 2020 (4) TMI 874 - Authority For Advance Ruling, Karnataka
Levy” Benefit Composition Scheme available or not - Supply of services
KAR ADRG 28/2020 and goods - appellant engaged in the business of supplying goods
under the trade name “Empathic Trading Centre” and is also a
Dated.- April 23, 2020 supplier of service of renting of immovable

http://gstcouncil.gov.in/sites/default/files/ruling- Held:-
new/KAR_AAR_28_2020_23.04.2020_SGIS.pdf
The applicant admittedly is supplying services and hence the
eligibility for composition scheme is dependent on the satisfaction
of the condition stipulated in the second proviso to sub-section (1)
of section 10. If the turnover of services of the applicant exceeds ten
per cent of turnover in a State or Union territory in the preceding
financial year or five lakh rupees, whichever is higher, then he shall
not be eligible to composition scheme. Even if the applicant obtains
separate registration, one for the goods and other for the services,
he would not be eligible for composition for both the lines of
business. Hence the applicant is not eligible for composition under
section 10 of the CGST Act if the turnover of services of the
applicant exceeds ₹ 5 Lakhs or ten percent of turnover is the state,
whichever is higher.

If the applicant opts out of the Composition levy and he obtains

separate registrations for the two lines of business, as per second
condition, he shall be liable to pay tax at 3% CGST and 3% SGST
on the each of the turnovers of the registrations. The tax is on the
entire aggregate turnover i.e all the “first supplies of goods or
services or both upto an aggregate turnover of ₹ 50 Lakhs”. Hence
the applicant is liable to pay tax under CGST Act at 3% and at 3%
under KGST Act, if he opts to pay tax under the said Notification
 after opting out of Composition levy on the entire value of supplies
made and he cannot apply different schemes for different types of
transactions.

Thus, the applicant is eligible to be in the composition scheme under

section 10 of the CGST Act, 2017 if the turnover of services of the
applicant does not exceed ten per cent of turnover in a State or
Union territory in the preceding financial year or five lakh rupees,
whichever is higher.

40. Section 10 – Ice Cream Manufacturers Association Versus Union Of India 2020 (1) Issue:-
“Composition TMI 878 - Allahabad High Court
Levy” Turnover limit for Composition Levy under GST - treatment of Ice
Cream equally with Pan Masala

MISC. BENCH No. - 29816 of 2019 Held:-

Dated.- October 24, 2019 It is well settled that a legislative provision cannot be struck down
as being arbitrary, irrational or unreasonable. No enactment can be
http://elegalix.allahabadhighcourt.in/elegalix/WebShowJudgment.do struck down by just saying that it is arbitrary or unreasonable.

While dealing with constitutional validity of a taxation law enacted

by Parliament or State Legislature, the court must have regard to the
following principles: (i), there is always presumption in favour of
constitutionality of a law made by Parliament or a State Legislature
(ii), no enactment can be struck down by just saying that it is
arbitrary or unreasonable or irrational but some constitutional
infirmity has to be found (iii), the court is not concerned with the
wisdom or unwisdom, the justice or injustice of the law as the
Parliament and State Legislatures are supposed to be alive to the
 needs of the people whom they represent and they are the best judge
of the community by whose suffrage they come into existence (iv),
hardship is not relevant in pronouncing on the constitutional validity
of a fiscal statute or economic law and (v), in the field of taxation,
the Legislature enjoys greater latitude for classification.

The classification cannot be said to be without any rationale -

petition dismissed.

41. Section 13- In Re: M/S. Chennai Port Trust Issue:-

“Time of
supply of 2019 (10) TMI 1204 - Authority For Advance Ruling, Tamil Nadu Order Time of supply of services - continuous supply of services
services” No. 44/AAR/2019
Held:-
Dated.- September 26, 2019
In respect of renting of immovable property there is no real
http://gstcouncil.gov.in/sites/default/files/ruling- completion of supply of service, except what is specified in the
new/TN_AAR_44_2019_CPT_26.09.2019_0.PDF contract. The lessee receives the service of renting throughout their
stay on a continuous basis. The payments are periodic as determined
by the lease agreement usually monthly or annually. Therefore, for
contracts for renting of immovable properties where the period of
the lease/ actual stay is more than three months, as is the case here,
the service is a continuous supply of service.

When the license is expired and there are provisions made in the
lease agreement regarding continued supply of service as in the case
of the lease agreement with Customs, the supply of service is a
‘continuous Supply of Service’ as defined in Section 2(33).
However, if there is no such provision made in the agreement it can
be said that the supply is not ‘under a contract’ and therefore, in
such cases, the supply no longer qualifies under the definition of
continuous supply.

In respect of continuous supply of service, as per Section 31(5), the

tax invoice should be raised on or before due date of payment if said
due date is ascertainable from the contract. It is seen that in all cases
the Rent Claim Advice issued by the applicant contains a due date
of payment of the demand raised in the same - in case where the
contract contains provisions for continued supply of service even
after expiry, it is a ‘continuous supply of service’ - Accordingly, in
cases where there is a provision in contract for continued supply of
services after expiry or termination of the contract, the invoice is
issued with the period prescribed in Section 31 (5) and the Time of
supply is determined by Section 13(2) (a), as the earliest of the date
of issue of invoice or Rent Claim Advice by the supplier and the
date of receipt of payment.

In respect of cases where there is no such provision regarding

continued supply of service after expiry of contract, it can be said
that no such contract exists. However, there is still a supply of
service of renting of the immovable property. As per Rule 47 of the
CGST/TNGST Rules, the invoice should be issued within thirty
days from date of supply of service - In the instant case the applicant
issues RCA on monthly basis for the rent/ fee pertaining to a specific
month. If such RCAs are issued within thirty days after the end of
recurrent period specified in the agreement after which the
rent/license fee is to be paid ,for which the rent is being sought, it
can be said that they are issued within the prescribed period as per
Section 31 (2) and the Time of supply is determined by Section
13(2) (a), as the earliest of the date of issue of invoice or Rent Claim
 Advice by the supplier and the date of receipt of payment as the
invoice is issued within the period prescribed. If the RCAs are
issued more than thirty days after the end of the month for which
the rent is being sought, it can be said that they are not issued within
the prescribed period and the Time of supply is determined by
Section 13(2) (b), as the earliest of the date of provision of service,
which is the end of recurrent period specified in the agreement after
which the rent/license fee is to be paid and the date of receipt of
payment, whichever is earlier.

If the invoice is issued after such due date of payment, the Time of
supply is determined by Section 13(2)(b), as the earliest of the date
of provision of service which is the end of the period
(monthly/annual etc. ) specified in the contract and the date of
receipt of payment, whichever is earlier. If payment is not received,
the time of supply shall be the date of provision of service which is
the end of recurrent period specified in the agreement after which
the rent/license fee is to be paid.

42. Section 15 – TP Ajmer Distribution Ltd., In re [2019] 103 taxmann.com 227 (AAAR- Issue:-
“Value of Rajasthan) Order No. RAJ/AAAR/02/2018-19 October 18, 2018 In respect of the cheque dishonour fees, the AAR has held that the
Taxable said fee is a consideration for 'tolerating an act', which is supply in
Supply” http://gstcouncil.gov.in/sites/default/files/appelate-authority/AAAR-RAJ- terms of Clause 5(e) of Schedule II to CGST Act, and hence leviable
2-2018%20dtd.%2018.10.18%20-TP%20AJMER.pdf to GST. ii. In respect of the Delayed payment charges, the AAR has
held that the said charges are includible in the value of 'supply'
under Section 15(2)(d) and hence taxable under GST. iii. In respect
of other non-tariff charges, the Ld. AAR has relied on the
Department Circular No. 34/8/2018-GST dated 1.3.2018 and held
that such charges are leviable to GST.
Held:-
We find that the value of supply is the consideration charged by the
appellants from the consumers of electricity on account of
consumption of electricity by them. Coming to the taxability of the
supply of electricity, we find that electrical energy has been
classified under tariff item No. 27160000 under Customs Tariff Act,
1975 and value of its supply has been exempted vide entry No. 104
of the notification No. 02/2017- Central Tax (Rate) dated
28.06.2017. As per Section 15(2) ibid, delayed payment charges
should form part of the value of supply of electricity. When value
of supply of electricity itself stands exempted by virtue of the above
exemption notification dated 28.06.2017, incremental value i.e.
consideration for delayed payment of the electricity bills as
discussed above) would also remain exempted. Thus we do not
endorse the ruling given by the AAR that GST is applicable on the
delayed payment charges received by the Appellants.

Where applicant/appellant is engaged in making supply of

Electrical energy to customers and it recovers electricity charges
from customers as per tariff rates fixed by Rajasthan Electricity
Regulatory Commission and also recovers delayed payment charges
from customers in cases where customers fail to make payment by
due date, no GST is chargeable on delayed payment charges.

Going by the above clause 5(e), it is evident that if any person

tolerates any act or a situation and recovers a certain amount for
such tolerance then it is supply of service. In the instant case , the
appellants is tolerating the situation of dishonour of cheques,
tendered by the consumers of electricity for payment of electricity
bill, by charging certain amount from the consumers, hence, it is a
 supply of service in terms of the above clause 5(e). Needless to
mention that Banks are also paying GST on the charges (by
whatever name) received from customers when their cheques gets
dishonoured. Therefore, cheque dishonour charges, being a supply
of service and not exempted anywhere, appropriate GST is
chargeable on the value of its supply.

Where applicant/appellant is engaged in making supply of

Electrical energy to customers and it recovers electricity charges
from customers as per tariff rates fixed by Rajasthan Electricity
Regulatory Commission and also recovers cheque dishonour fee
from customers in cases where cheques given by them are
dishonoured, cheque dishonour fee is a consideration for 'tolerating
an act', which is supply in terms of clause 5(e) of Schedule II to
Central Goods and Services Tax Act and hence leviable to GST
42. Section 16 – Garden Silk Mills Ltd. Union of India [2019] 106 taxmann.com 357 Held:-
“Eligibility and (Gujarat)/Special Civil Application No. 7397 OF 2018 APRIL 11, 2019 Where assessee filed refund claims under provisions of section
Conditions for 54(3) and Competent Authority issued on assessee deficiency
taking Input memo under Form GST RFD03 pointing out several deficiencies,
Tax Credit” assessee was entitled to re-credit of refund amount on basis of Form
GST RFD-03 issued by Competent Authority in its Electronic
Credit Ledger
43. Section 16 – GGL Hotel and Resort Company Ltd., In re [2019] 105 taxmann.com 248 Issue:-
“Eligibility and (AAAR-West Bengal) Appeal Case NO. 01/WBAAAR/APPEAL/2019 Whether credit is available on input tax paid on lease rent during
Conditions for May 3, 2019 pre-operative period for the leasehold land on which the resort is
taking Input being constructed to be used for furtherance of business, when the
Tax Credit” http://wbcomtax.nic.in/GST/GST_Advance_Ruling_AA/0l_WBAAAR_20 same is capitalized and treated as capital expenditure
190503.pdf
Held:-
The Appellant acquired land from the WBHIDCL on lease paying
an upfront amount as premium and a yearly lease rental @10% on
 the premium with an escalation clause from the third year of lease.
The premium paid by the Appellant is exempted under Sl. No. 41
(SAC 9972) of Notification No. 12/2017CT(Rate) dated
28.06.2017, as amended vide Notification No. 32/2017-CT (Rate)
dated 13.10.2017 and Notification No. 23/2018-CT (Rate) dated
20.09.2018. Whereas lease rental paid by the Appellant is taxable
under SI. No. 16 (iii) (SAC 9972) of Notification No. 11/2017-
CT(Rate) dated 28.06.2017, as amended vide Notification No.
1/2018-CT (Rate) dated 25.01.2018. Lease premium and lease
rental both are parts of the project cost, the former being one-time
fixed amount and the latter being a variable cost. Both lease
premium and lease rental are classified under SAC 9972 being Real
Estate Services. As the lease premium paid by the Appellant is
exempted under Sl. No. 41 of the Rate Notification under GST Act
on satisfaction of stipulated criteria the question of availing input
tax credit does not arise. So the moot question is whether input tax
credit on lease rental paid is available in the pre-operative period. It
transpires from the above discussion that the Appellant is
constructing the Eco Resort on his own account in course of
furtherance of its business of providing hospitality service, for
which one of the input service availed is lease rental service. The
ambit of the blocked credit as per clause (d) of sub-section (5) of
section 17 is broad as it includes such goods or services or both
when used in the course of furtherance of business. So clause (d) of
sub-section (5) of section 17 restricts the Appellant from availing
input tax credit on lease rental paid.
44. Section 16 – In Re: Assistant Commissioner, CGST & CX (2018) 69 GST 783 Appeal Issue:-
“Eligibility and Case No. 05/WBAAAR/APPEAL/2018 Decided On: 27.09.2018 (a) whether the transfer of goods (optical lenses and frames for
Conditions for spectacles and accessories) from Head Office in West Bengal to its
taking Input branches in other states, can be done at cost price, by applying the
Tax Credit” Second Proviso to Rule 28 of CGST Rules, 2017 (instead of 90% of
 http://gstcouncil.gov.in/sites/default/files/appelate- MRP as required under the First Proviso to Rule 28 of CGST Rules,
authority/WBAAAR%20Appeal%20NO.05- 2017, and
%202018%20dt.%2027%2009%202018.pdf (b) what is meant by the expression "where the recipient is eligible
for full input tax credit" as used in the Second Proviso to Rule 28 of
CGST Rules, 2017.

Held:-
From a plain reading of law laid down under section 16 of the GST
Act, it is clear that, inter alia, input tax credit is available only when
the recipient is in possession of a tax or debit note issued by the
supplier registered under the GST Act, and in case of a supply
between distinct and/or related persons, as between Head Office and
Branches, the value declared in the invoice shall be deemed to be
the open market value of the goods or services supplied. It is
therefore clear that if the value declared in such invoice is zero no
input tax credit is available to the recipient. It is seen that the
question raised by M/s. GKB Lens Pvt. Ltd. was correctly answered
by the Authority of Advance Ruling. However, it may be clarified
that no input tax credit is available to the recipient of goods/service
if the value declared by the supplier in the invoice/debit note is zero.
In the facts and circumstances discussed above the Ruling of the
West Bengal Authority of Advance Ruling is modified to the extent
that at the end of the second paragraph of the said ruling the
following sentence will be added: "No input tax credit, however,
would be available for supply of goods/services at Zero Value."
45. Section 16 – IMF Cognitive Technology (P.) Ltd., In re [2019] 108 taxmann.com 412 Held:-
“Eligibility and (AAAR-Rajasthan)/ Order No. RAJ/AAAR/01/2019-20 May 8, 2019 we find that credit of input tax is admissible to a registered person,
Conditions for subject to conditions and restrictions, and input tax inter alia is
taking Input http://gstcouncil.gov.in/sites/default/files/appelate-authority/AAAR-RAJ- Central tax charged on inward supply of a registered person. Going
Tax Credit” 1-2019-20%20-IMF%20CTPL_0.pdf further, Central tax is Central GST levied under Section 9 of the
CGST Act. After going through the Section 9(1) above, we find that
 the Central GST is a tax levied on all intra-State supplies of goods
or services or both. Going ahead, Intra-State supply of service, as
per Section 8(2) of the Integrated GST Act, 2017 means supply of
services where the location of the supplier and place of supply of
services are in the same State. Thus crux of the matter is that for a
person registered in Rajasthan, Central GST or Central tax is a tax
levied under Section 9 ibid on supplies having both location of the
supplier and place of supply in Rajasthan. At this point it becomes
absolutely clear that ITC of the Central GST or Central tax would
be available to a person registered in Rajasthan if the location of the
supplier and place of supply of the services are in Rajasthan. In
other words, ITC of the Central tax charged from the Appellant in
Haryana is not available to them as in this case both the location of
the supplier and place of supply of the services are in the State of
Haryana.
46. Section 16 – Commercial Steel Engineering Corporation v. State of Bihar [2019] 108 Issue:-
“Eligibility and taxmann.com 377 (Patna) Civil Writ Jurisdiction Case No. 2125 OF 2019 Whether, the credit reflected in the electronic credit ledger of the
Conditions for June 27, 2019 petitioner amounts to either availment or utilization of the credit?
taking Input
Tax Credit” Held:-
The legislative intent present in these provisions is eloquent and I
am in no confusion to hold that be it a charge of wrong availment
or utilization, each is a positive act and it is only when such act is
substantiated that it makes the dealer concerned, liable for recovery
of such amount of tax as availed from the input tax credit or utilized
by him but in each of the two circumstances, the tax available at the
credit of the dealer concerned must have been brought into use by
him thus, reducing the credit balance.

Had it been a case where the credit shown in electronic ledger, was
availed or utilized for meeting any tax liability for any year, there
 would be no error found in the action complained but it would be
stretching the term 'availment' beyond prudence to treat the mere
reflection of the transitional credit in the electronic credit ledger as
an act of availment, for drawing a proceeding under section 73(1)
of 'the BGST Act'. The provisions underlying Section 73 is self
eloquent and it is only if such availment is for reducing a tax liability
that it vests jurisdiction in the assessing authority to recover such
tax together with levy of interest and penalty under section 50 but
until such time that the statutory authority is able to demonstrate
that any tax was recoverable from the petitioner, a reflection in the
electronic credit ledger cannot be treated as an 'availment'.

The legislative intent reflected from a purposeful reading of the

provisions underlying section 140 alongside the provisions of
section 73 and Rules 117 and 121 is that even a wrongly reflected
transitional credit in an electronic ledger on its own is not sufficient
to draw penal proceedings until the same or any portion thereof, is
put to use so as to become recoverable.
47. Section 16 – C.M.S. Info Systems Ltd. v. Commissioner, CGST, Mumbai [2019] 108 Issue:-
“Eligibility and taxmann.com 26 (Bombay)Writ Petition No. 5801 OF 2019 July 9, 2019 (i) Whether supply of such motor vehicles as scrap after its
Conditions for usage can be treated as supply in the course of furtherance
taking Input https://bombayhighcourt.nic.in/generatenewauth.php?bhcpar=cGF0aD0uL of business and whether such transaction would attract
Tax Credit” 3dyaXRlcmVhZGRhdGEvZGF0YS9jaXZpbC8yMDE5LyZmbmFtZT1X GST? If yes, please provide the rate of GST and/or
UDI3NTYxOTA5MDcxOS5wZGYmc21mbGFnPU4mcmp1ZGRhdGU9J Compensation Cess.
nVwbG9hZGR0PTExLzA3LzIwMTkmc3Bhc3NwaHJhc2U9MDMwODI (ii) If answer to question (i) is in affirmative, whether Input
wMTY1NjI0
Tax Credit is available to CMS Info Systems Ltd. on
purchase of motor vehicles i.e. cash carry vans which are
purchased, used for cash management business and
supplied post usage as scrap.
So far as question no.(i) is concerned, the ARA by order dated 19th
March, 2018 answered the question no.(i) in the affirmative i.e.
motor vehicles sold after usage as scrap would be chargeable to
Goods and Services Tax. question no.(ii) as referred to the AARA
that the impugned order dated 6th August, 2018 held that the input
tax credit would not be available on purchase of motor vehicles i.e.
cash carry vans. This particularly on the ground that money is
excluded from the definition of goods as provided under the GST
Act, 2017. Thus, not entitled to input tax credit in view of Section
17(5) of the GST Act.

Held:-
We find that the fundamental submission of the petitioner before the
AARA was the fact that money would stand covered by the
definition of 'goods' under Section 2(52) of the GST Act so long as
the same is not used as legal tender. This on the basis of the
definition of money provided in Section 2(75) of the GST Act. The
aforesaid principal submission though recorded, has not been dealt
with at all in the impugned order. Reliance placed in the impugned
order upon the press note issued subsequent to a GST Council
recommending to allow of input tax credit in respect of the motor
vehicles used for transportation of money, would not by itself lead
to the conclusion that prior thereto, money was not included within
the definition of goods. This has to examined in terms of the
definition of 'goods' and 'money' found in GST Act. The entire issue
before the AARA as raised by the petitioner was whether the
vans/motor vehicles in which the petitioners were transporting cash,
would be money for the purpose of Section 2(52) of the GST Act.
This aspect has not been dealt with in the impugned order dated 6th
August, 2018 of the AARA.
 In the light of the above, we note that the decision making process
has not been complied with by the Authority. It is necessary for the
Authority to consider the submissions made by the parties before it
and give its findings in the context of the submissions made.
Ignoring a submission would render the order vulnerable to judicial
review by this Court.
Therefore, we set aside the impugned order dated 6th August, 2018
of the AARA and restore the question no. (ii) above to the AARA
for fresh disposal in accordance with law. Needless to state that the
AARA would consider the submissions made by the appellant and
give its conclusion thereon duly supported by the reasons.

48. Section 17 – Nagaur Mukundgarh Highways (P.) Ltd., In re [2019] 103 taxmann.com 212 Held:-
“Apportionmen (AAAR-Rajasthan) Order No. RAJ/AAAR/06/2018-19 February 12, 2019 Where Government of Rajasthan has awarded to applicant a works
t of Credit and contract for construction of road on DBOT basis and State
Blocked http://gstcouncil.gov.in/sites/default/files/appelate-authority/AAAR-RAJ- Government has also awarded work of Operation and Maintenance
Credits” 6-2018%20dtd.%2012.02.19-NMHPL.pdf (O & M) of said road for a period of 10 years, only 50 per cent ITC
of GST paid on Input and Input service used in construction phase
and full ITC of GST paid on inputs and input services used in O&M
phase is available to appellant subject to provisions of section 17(5)
49. Section 17 – Safari Retreats Private Limited and Ors. v. Chief Commissioner of Central Facts:-
“Apportionmen Goods & Service Tax and Ors. [2019] 105 taxmann.com 324 (Orissa) It is an undisputed fact that the activity of letting out the units of the
t of Credit and W.P.(C) No.20463 OF 2018 April 17, 2019 shopping mall attracts CGST and OGST on the amount of rent
Blocked received by the petitioner No.1 because the activity of letting out
Credits” the Units in the said Mall amounts to supply of service under the
GGST Act/OGST Act. The petitioner No.1 having accumulated
input Credit of GST amounting to Rs 34,40,18,028/-(Rupees thirty
four crores forty lacs eighteen thousand twenty eight only) in
respect of purchases of inputs in the form of goods and services is
desirous of availing of the credit of input tax charged on the
purchase/supply of goods and services which are consumed and
used in the construction of the said shopping mall in order to utilise
the said input credits to discharge and pay the CGST and OGST
payable on the rentals received by the petitioner no. 1 from , the
tenants of the said shopping mall and approached the revenue
authorities in this regard. However, the petitioner no. 1 was advised
to deposit the CGST and OGST collected without taking input credit
in view of restrictions placed as per Section 17(5)(d) and was
warned of penal consequences if it did not do so.

Held:-
The very purpose of the Act is to make the uniform provision for
levy collection of tax, intra state supply of goods and services both
central or State and to prevent multi taxation. Therefore, the
contention which has been raised by the learned counsel for the
petitioners keeping in mind the provisions of Section 16 (1)(2)
where restriction has been put forward by the legislation for
claiming eligibility for input credit has been described in Section
16(1) and the benefit of apportionment is subject to Section 17(1)
and (2). While considering the provisions of Section 17(5)(d), the
narrow construction of interpretation put forward by the
Department is frustrating the very objective of the Act, inasmuch as
the petitioner in that case has to pay huge amount without any basis.
Further, the petitioner would have paid GST if it disposed of the
property after the completion certificate is granted and in case the
property is sold prior to completion certificate, he would not be
required to pay GST. But here he is retaining the property and is not
using for his own purpose but he is letting out the property on which
he is covered under the GST, but still he has to pay huge amount of
GST, to which he is not liable.
 In that view, of the matter, in our considered opinion the provision
of Section 17(5)(d) is to be read down and the narrow restriction as
imposed, reading of the provision by the Department, is not required
to be accepted, inasmuch as keeping in mind the language used in
[1999] 2 SCC 361 (supra), the very purpose of the credit is to give
benefit to the assessee. In that view of the matter, if the assessee is
required to pay GST on the rental income arising out of the
investment on which he has paid GST, it is required to have the
input credit on the GST, which is required to pay under Section
17(5)(d) of the CGST Act.
50. Section 17 – In Re: M/S. Ykk India Private Limited Issue:-
“Apportionmen 2019 (4) TMI 1824 - Appellate Authority For Advance Ruling, Haryana
t of Credit and Restriction on “Rent a Cab” service specified in Section 17 (5)
Blocked HAR/AAAR/ 2018-19/03 (b)(iii) as applicable to input tax credit
Credits”
Dated.- April 3, 2019 Held:-

http://gstcouncil.gov.in/sites/default/files/appelate- The contentions of the applicant that hiring of buses which can carry
authority/Haryana_AAAR_YKK_2019_06.2019.pdf large number of passengers would not qualify under “rent-a-cab” is
found to be untenable and the activity of the contractor in the instant
case, providing buses or cars on hire to the applicant, is specifically
covered under the meaning of “rent-a-cab” which makes the
impugned supply as ineligible for ITC in terms of Section 17 (5) of
the CGST/HGST Act, 2017 - further, the appellant had not
challenged that the cars and buses hired by them do not fall under
the definition of cab.

Whether renting of vehicle is different from hiring?

 It is seen that the taxing statute, do not make any distinction between
renting or hiring. Further, irrespective of possession and control of
the vehicle, the service so rendered falls within the taxable service.
Thus the contention of appellant that hiring of vehicle is different
from renting is untenable.

Whether input tax credit on GST charged by the contractors for

hiring of buses and cars for transportation of employees is
admissible when there is a restriction on admissibility of input tax
credit on Rent-a-Cab service as provided in section 17(5)(b)(iii) of
CGST Act, 2017 and HSGST Act, 2017?

Section 17 of the Central Goods and Services Tax Act, 2017 and
HSGST, Act, 2017 provides certain restrictions and according to
which input tax credit on certain goods or services or both are not
admissible - the appellant are fulfilling the conditions as prescribed
under Section 16 of CGST Act, 2017 and HSGST Act, 2017. We
further find that after amendment, benefit of Input Tax Credit has
been extended to the motor vehicles having approved seating
capacity of more than thirteen persons when they are used for
making taxable supplies of transportation of passengers. Therefore,
the appellant is eligible to input tax credit of the GST charged by
the Contractor for hiring of buses only having approved seating
capacity of more than thirteen persons for transportation of
employees after amendment of the Act, ibid with effect from
30.08.2018.

51. Section 22 – IN RE: M/S. T And D Electricals 2020 (4) TMI 693 - Authority For Advance Issue:-
“Persons liable Requirement of separate registration - Execution of contract in
Ruling, Karnataka KAR ADRG 18/2020
different state - whether agreement would suffice as address proof
 for Dated.- March 31, 2020 since nothing else is with the assesse and service recipient will not
registration” provide any other proof? - What documents would be required with
http://gstcouncil.gov.in/sites/default/files/ruling-
transporter to transit/ ship material at Karnataka site from dealer/
new/KAR_AAR_18_2020_31.03.2020_T%26DE.pdf supplier of Rajasthan and in case of dealer/ supplier is of Karnataka.
Advance ruling may kindly be issued in case of registration is
required or not required in both the situation?

Held:-
Whether separate registration is required to execute the
aforesaid contract in Karnataka State or not?–
Section 22 of the CGST Act 2017 is relevant to registration and
stipulates that every supplier shall be liable to be registered in the
state from where the said supplier makes the taxable supply of
goods or services or both, subject to the threshold limit of the
aggregate turnover in a financial year - In the instant case, the
applicant intends to supply goods or services or both from their
principle place of business, which is located in Rajasthan. The
applicant has only one principle place of business, for which
registration has been obtained and does not have any other fixed
establishment other than the principle place of business, as admitted
by the applicant. Therefore the location of the supplier is nothing
but the principle place of business which is in Rajasthan. Thus there
is no requirement for a separate registration in Karnataka for
execution of the contract.
If registration is not required in Karnataka state and if we purchase
goods from dealer of Rajasthan and want to ship goods directly from
the premises of dealer of Rajasthan to township at Karnataka then
whether CGST & SGST would be charged from us or IGST by the
dealer of Rajasthan? - If registration is not required in Karnataka
state and if we purchase goods from dealer of Karnataka to use the
 goods at township at Karnataka then whether IGST would be
charged from us or CGST & SGST by the dealer of Karnataka?
In this situation the supplier i.e. dealer is situated in Karnataka &
the recipient of goods i.e. the applicant, is situated in the state of
Rajasthan and hence the impugned supply becomes inter-state
supply, in terms of Section 7(1) of the IGST Act 2017. Further the
said supply gets covered under Bill to - Ship to transaction, in terms
of Section 10(1)(b) of the IGST Act 2017. Thus IGST has to be
charged by the dealer in the relevant invoice. However, the
applicant also has to charge IGST in their invoice addressed to M/s.
Karnataka Cement Project (a unit of Shree Cement Ltd.,).
What documents would be required with transporter to transit/ ship
material at Karnataka site from dealer/ supplier of Rajasthan and in
case of dealer/ supplier is of Karnataka. Advance ruling may kindly
be issued in case of registration is required or not required in both
the situation?
The impugned question does not gets covered under the issue/s on
which the advance ruling can be sought under CGST Act 2017, in
terms of Section 97 (2) of the said Act. Therefore no ruling is given
to this question.

52. Section 22 – IN RE: M/S. Anil Kumar Agrawal 2020 (5) TMI 221 - Authority For Issue:-
“Persons liable Advance Ruling, Karnataka KAR ADRG 30/2020 Computation of aggregate turnover for the purpose of GST
for Dated.- May 4, 2020 registration. Interest income received from different sources -
registration” https://gst.kar.nic.in/Documents/General/AAR_Anil_30.pdf Partner’s salary, received as partner, from applicant’s partnership
firm - Salary received as Director from a Private Limited Company
- Rental income on Commercial Property - Rental income on
Residential Property.

Held:-
The interest earned by the applicant, out of the
deposits/loans/advances extended, amounts to consideration and is
exempted. Therefore in the instant case extending the
deposits/loans/advances by the applicant is nothing but exempted
service and the actual amounts of deposits/loans/advances become
the value of the service. Thus these amounts are to be included in
the aggregate turnover for registration, under the provisions of GST
Act.
Partner’s salary, received as partner, from applicant’s
partnership firm
The applicant has not furnished any documents relevant to the issue,
such as copy of agreement, appointment order etc., so as to decide
whether the applicant is an employee of the partnership firm or not.
In case. if the applicant is a working partner and is getting salary
then the said salary is neither supply of goods nor supply of service
in terms of clause 1 of Schedule III of CGST Act 2017. Further, in
case if the applicant is in receipt of the amount towards his share of
profit from the said partnership firm, then also the said income is
not under the purview of GST as the share of profit is nothing but
application of money and hence the said salary is not required to be
included in the aggregate turnover for registration under the
provisions of GST Act.
Salary received as Director from a Private Limited Company -
The remuneration received by the applicant as Executive Director
is not includable in the aggregate turnover, as it is the value of the
services supplied by the applicant being an employee. Further if the
applicant receives the remuneration as a Non-Executive Director,
such remuneration is liable to tax under reverse charge mechanism
under section 9 (3) of the CGST Act 2017, in the hands of the
company, under entry no. 6 of Notification No. 13/2017-Central
Tax (Rate) dated 28.06.2017. Thus the value of the said services of
the applicant being a Non-Executive Director are includable in the
aggregate turnover, as it is the value of the taxable services supplied
by the applicant, though the tax is discharged by the private limited
company, under reverse charge mechanism.
Rental income on Commercial Property –
The transaction of rental/lease of commercial property amounts to
supply; applicant receives periodical income towards the impugned
supply of service 86 the same is in the course or furtherance of
business and hence the said transaction amounts to supply in terms
of Section 7(1)(a) of the CGST Act 2017. Thus it is a taxable supply
of service having SAC 997212 and therefore the value of such
supply is to be included in the aggregate turnover, for registration.
Rental income on Residential Property –
“Services by way of renting of residential dwelling for use as
residence, classified under SAC 997211” are exempted from the tax
(GST) in terms of entry number 12 of the Notification No. 12/2017
dated 28.06.2017. Thus the impugned supply of service of renting
of residential property becomes an exempted supply. Aggregate
Turnover includes the value of the exempted supplies also.
Therefore the income received by the applicant towards rent of
residential property is to be included in the aggregate turnover.
Receipt of income out of maturity proceeds of life insurance
policies, dividend on shares and capital gain/loss on sale of
shares –
In the instant case the dividend on shares, capital gains/losses on
sale of shares are relevant to the shares (securities) and the income
earned in this relation is nothing but application of money.
Therefore this income earned out of shares, which are excluded
from the definition of goods or services, also gets excluded from the
said definition old goods / services. Therefore they are not relevant
to the aggregate turnover and hence are not required to be added to
 the aggregate turnover for registration under the provisions of GST
Act.
Receipt of income out of maturity proceeds of life insurance
policies –
The insurance premium of policies is taxable under GST, being the
consideration for the services provided by the insurance companies.
Therefore on completion of the said contract / maturity of the policy,
there would not be any service involved between the policy holder
and the insurance company. Therefore the amounts received on
maturity of the insurance policies are not relevant to the aggregate
turnover and hence are not required to be added to the aggregate
turnover for registration under the provisions of GST Act.
Thus, the incomes received towards (i) salary/remuneration as a
Non-Executive Director of a private limited company, (ii) renting
of commercial property and (iii) renting of residential property and
(iv) the values of amounts extended as deposits/loans/advances out
of which interest is being received are to be included in the
aggregate turnover, for registration - the income received from
renting of residential property is to be included in the aggregate
turnover, though it is an exempted supply.

53. Section 23 – IN RE: M/S. All India Disaster Mitigation Institute. 2020 (4) TMI 599 In Held:-
“Persons not We find that the activities of the applicant relating to disaster
Application No. Advance Ruling/SGST&CGST/2018/AR/10 11 September
liable for prevention, disaster mitigation and disaster management are
registration” 2019 activities relating to “preservation of environment”. Thus, the
activities of the applicant are considered as charitable activities and
http://gstcouncil.gov.in/sites/default/files/ruling-
hence, activities of the applicant, being registered under Section
new/GUJ_AAR_20_2019_11.09.2019_AIDMI.pdf 12AA of the Income Tax Act, 1961, exempt from tax under the GST
Acts, by virtue of Entry No. 1 of the Notification No.12/2017-
Central Tax (Rate) dated 28.06.2017 as mentioned above.
Consequently, the applicant is not liable to registration in respect of
 charitable activities relating to preservation of environment which
attracts nil rate of GST, by virtue of Section 23(1) (a) of the Central
Goods and Services Tax Act, 2017.
The Applicant is not liable to registration under the CGST/GGST
Acts, if he is engaged exclusively in supplying goods or services or
both that are not liable to tax or wholly exempt from tax whether
they be supply of services by way of “charitable activities” as
defined in clause 2(r) of the exemption Notification No. 12/2017
issued under CGST/GGST Acts or otherwise exempted under GST
law.
54. Section 29 – Phoenix Rubbers Versus The Commercial Tax Officer 2020 (3) TMI Issue:-
“Cancellation Cancellation of registration of petitioner firm - failure to file GST
477 - Kerala High Court WP (C). No. 35159 Of 2019 February 3, 2020
of returns for 6 months continuously at time of issuing SCN but, return
Registration” for one month filed as on the date of order passed for cancellation
of registration - therefore continuous default remains for 5 months
only - Scope of 29(2)(c) of the CGST Act

Held:-
Sec. 29(2)(c) mandates that power for the cancellation of
registration in a case where there is continuous six months' default
on the part of the assessee in filing the returns. Since the competent
official is obliged to issue a notice in the nature of Ext.P-1 before
he passes final orders, it goes without saying that the requirement
of 6 months' continuous period should be fulfilled both at the time
of issuance of the abovesaid notice in terms of the proviso to Sec.
29(2) of the CGST Act read with Rule 22 of the CGST Act, but also
at the stage of passing the final order cancelling the registration as
per Sec. 29(2)(c). In the instant case, the jurisdictional fact
regarding the six months' continuous default on the part of the
assessee is certainly fulfilled at the time of issuance of Ext.P-1 show
cause notice dated 13.11.2019. Whereas, the said vital requirement
 of jurisdictional fact is non-existent as on the date of issuance of the
impugned Ext.P-3 cancellation order dated 10.12.2019. If that be
so, it is only to be held that the impugned order as per Ext.P-3 is
illegal and ultra vires and is liable to be interdicted by this Court.
Accordingly, it is ordered that the impugned Ext.P-3 order will
stand quashed.
55. Section 39 – AAP and Co., Chartered Accounts v.Union of India and Ors. [2019] 107 Issue:-
“Furnishing of Whether the return in Form GSTR-3B is a return required to be filed
taxmann.com 125 (Gujarat) Special Civil Application No. 18962 OF 2018
returns” under Section 39 of the CGST Act/GGST Act?
June 24, 2019
Held:-
Section 39(1) of the CGST/GGST Act provides that every taxpayer,
except a few special categories of persons, shall furnish a monthly
return in such form and manner as may be prescribed. Rule 61 of
the CGST Rules/GGST Rules prescribes the form and manner of
submission of monthly return. Sub-rule 1 of Rule 61 of the CGST
Rules/GGST Rules provides that the return required to be filed in
terms of Section 39(1) of the CGST/GGST Act is to be furnished in
Form GSTR-3.

It would be apposite to state that initially it was decided to have

three returns in a month, i.e. return for outward supplies i.e. GSTR-
1 in terms of Section 37, return for inward supplies in terms of
Section 38, i.e. GSTR-2 and a combined return in Form GSTR-3.
However, considering technical glitches in the GSTN portal as well
as difficulty faced by the tax payers it was decided to keep filing of
GSTR-2 and GSTR-3 in abeyance. Therefore, in order to ease the
burden of the taxpayer for some time, it was decided in the 18th
GST Council meeting to allow filing of a shorter return in Form
GSTR-3B for initial period. It was not introduced as a return in lieu
of return required to be filed in Form GSTR-3. The return in Form
 GSTR-3B is only a temporary stop gap arrangement till due date of
filing the return in Form GSTR-3 is notified. Notifications are being
issued from time to time extending the due date of filing of the
return in Form GST-3, i.e. return required to be filed under Section
39 of the CGST Act/GGST Act. It was notified vide Notification
No.44/2018 Central Tax dated 10th September 2018 that the due
date of filing the return under Section 39 of the Act, for the months
of July 2017 to March 2019 shall be subsequently notified in the
Official Gazette.

It would also be apposite to point out that the Notification

No.10/2017 Central Tax dated 28th June 2017 which introduced
mandatory filing of the return in Form GSTR-3B stated that it is a
return in lieu of Form GSTR-3. However, the Government, on
realising its mistake that the return in Form GSTR-3B is not
intended to be in lieu of Form GSTR-3, rectified its mistake
retrospectively vide Notification No.17/2017 Central Tax dated
27th July 2017 and omitted the reference to return in Form GSTR-
3B being return in lieu of Form GSTR-3.

In view of the above, the impugned press release dated 18th October
2018 could be said to be illegal to the extent that its para-3 purports
to clarify that the last date for availing input tax credit relating to
the invoices issued during the period from July 2017 to March 2018
is the last date for the filing of return in Form GSTR-3B.
56. Section 49 – Kn Murthy Versus Surender Bantia Premraj Surender Bantia 2020 (3) TMI Held:-
“Payment of The liability of the tenants to pay GST when the rents exceed ₹ 20
724 - Telangana High Court Civil Revision Petition No. 263 of 2020
tax, interest, Lakhs per annum is settled law and it cannot be disputed that when
penalty and Dated: - 12 March 2020 the admitted monthly rent is ₹ 3,50,462/-, the total annual rent
other amounts” would exceed the said figure of ₹ 20 Lakhs and that the said liability
http://tshcstatus.nic.in/hcorders/2020/crp/crp_263_2020.pdf
 is fastened by the provisions of the GST Act, 2017 on the tenant
only.

Therefore, there shall be a direction to the respondents/tenants to

pay every month to the Competent Authority under the GST Act,
2017, tax @ 18% on the rent of ₹ 3,50,462/- payable every month
to petitioners. The arrears of GST on the rent for the period from
November 2018 till date shall be deposited to the credit of
OS.No.230 of 2019 by the respondents within four (4) weeks from
the date of receipt of a copy of this order along with the rent for the
month of November 2018. In default of payment of the same, the
defence of the respondents is liable to be struck off. It is needless to
state that the petitioners shall issue an invoice mentioning the rents
and the GST thereon to the respondents for the arrears which the
respondent would have to pay and in future also petitioners should
continue to do so. The amounts deposited towards rent for the month
of November 2018 and the amounts deposited towards GST by the
respondents are permitted to be withdrawn by the petitioners, who
shall transmit the same to the competent authority under the GST
Act, 2017.
57. Section 50 – Refex Industries Limited and Ors.V. The Assistant Commissioner of Issue:-
‘Interest on Whether interest would at all be payable on the component of ITC?
CGST & Central Excise
delayed
payment of WP 23360 and 23361 / 2019 Held:-
tax” Section 50 provides for interest on belated payment of tax and as
Dated 06.01.2020
held by the third Judge, such levy is 'automatic', and is intended to
http://164.100.79.153/judis/chennai/index.php/casestatus/viewpdf/520089 compensate the revenue for the remittance of tax belatedly and
beyond the time frames permitted under law. Though in the context
of the Income-tax Act, 1961, the question of whether remittance of
interest under sections 234 A, 234B and 234C of the Income-tax
Act, 1961 for belated filing of return, belated remittances of advance
tax and deferment of advance tax are mandatory came to be
considered by the Supreme Court in the case of Commissioner Of
Income Tax, Mumbai v AnjumM.H.Ghaswala&Ors (252 ITR 1),
and held to be compensatory and hence mandatory. The principle of
the said judgment applies on all fours to the present case.

The specific question for resolution before me is as to whether in a

case such as the present, where credit is due to an assessee, payment
by way of adjustment can still be termed 'belated' or 'delayed'. The
use of 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 the remittance of tax.
The availability of ITC runs counter to this, as it connotes the
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. In my considered view, the 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, in my view, neither belated nor delayed.

The argument that ITC is liable to be reversed if it is found to have

been erroneously claimed, and that it may be invalidated in some
situations, does not militate with my conclusion as aforesaid. The
availment and utilization of ITC are two separate events. Both are
subject to the satisfaction of statutory conditions and it is always
possible for an Officer to reverse the claim (of availment or
utilization) if they are found 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.

The above proviso, as per which interest shall be levied only on that
part of the tax which is paid in cash, has been inserted with effect
from 01-8-2019, but clearly seeks to correct an anomaly in the
provision as it existed prior to such insertion. It should thus, in my
view, be read as clarificatory and operative retrospectively.
58. Section 50 – Godavari Commodities Ltd. V. UOI [2020] 114 taxmann.com 563 Held:-
‘Interest on Where assessee had not paid tax within due date and paid tax and
(Jharkhand) W.P. (T) NO. 1786 OF 2019 December 5, 2019
delayed interest thereon beyond prescribed date of payment and Competent
payment of Authority issued on assessee a letter demanding short paid interest
tax” amount, show cause notice under section 73(1) was required to be
given to assessee prior to issuance of such letter
59. Section 50 – G Nxt Power Corp. v. UOI [2019] 109 taxmann.com 305 (Kerala)/ WP (C) The learned Standing Counsel appearing for respondents does not
‘Interest on dispute the fact that the subject transaction in fact is with effect from
NOS. 2457 & 2981 OF 2019 AUGUST 29, 2019
delayed 01.07.2017, come under Section 16 of IGST Act and are zero-rated.
payment of It is also not disputed that the voluntary or erroneous payment of
tax” IGST is required to be refunded to petitioner. The objection pointed
out by Sri Sreejith is that the petitioner has already drawn or availed
the higher rate of duty drawback and therefore while ordering
refund of IGST the petitioner is required to refund the higher rate of
duty drawback already availed by the petitioner with interest. Adv.
John Varrghese by way of reply submits that the respondents if
insist upon refund of higher rate of duty drawback by the petitioner
with interest, the respondents are also required to pay interest to
petitioner from the date on which the petitioner requested for refund
of IGST. After hearing the counsel on the adjustment, the Court has
suggested refund of IGST after adjusting the higher rate of duty
drawback availed by the petitioner without refunding IGST amount.
 The counsel have consented to disposing of the writ petition by this
order:
(a) The respondents are given liberty to adjust the amount
already availed by the petitioner on account of higher rate of
duty drawback and pay the balance of IGST payable to
petitioner within six weeks from the date of receipt of a copy
of this judgment.
(b) (b) The respondents are directed to pay the balance amount
i.e., IGST minus higher rate of duty drawback already
availed by the petitioner within the time granted by this
Court and avoid the additional burden of interest payment on
IGST refund. The respondents, if commit default in payment
of balance amount as directed by this judgment, the
respondents will be obligated to pay interest @ 7% together
with balance amount payable from the date on which a
request for refund is made by the petitioner till the date of
payment.
60. Section 50 – Mahadeo Construction Co. Versus The Union Of India, Assistant Held:-
‘Interest on This Court, while interpreting the term "tax not paid" has held that
Commissioner, Central Goods & Services Tax And Central Excise,
delayed if a tax has not been paid within the prescribed period, the same
payment of Superintendent, Central Goods & Services Tax And Central Excise 2020 would fall with the expression "tax not paid" as mentioned under
tax” Section 73 of the CGST Act. The aforesaid interpretation further
(4) TMI 666 - Jharkhand High Court W. P. ( T ) No. 3517 of 2019 Dated: -
finds support from other sub- sections of Section 73, particularly
21 April 2020 sub-sections (5), (6) and (7) of Section 73. A bare reading of the
aforesaid sub-sections (5), (6) and (7) of Section 73 would reveal
that a person chargeable with tax, if before service of notice pays
the amount of tax along with interest payable thereon under Section
50 of the Act on the basis of his own ascertainment, then the
Assessing Officer, if satisfied that correct tax along with interest has
been paid by the said assesse, shall not issue any notice under
Section 73(1) of the Act. However, Section 73(7) of the Act
provides that if an assesse, who has itself on his own ascertainment,
deposited the tax along with interest, but if in the opinion of the
Proper Officer, the amount paid on own ascertainment falls short of
the amount actually payable, then a notice would be issued by the
said Proper Officer under Section 73 (1) of the Act for recovery of
the actual amount payable. Thus, from a conjoint reading of the
aforesaid provisions, it would be evident that even in a case where
an assesse files his return as per his own ascertainment, pays the tax
and even pays interest, but if the said amount paid by the assesse is
falling short of the amount actually payable, the Proper Officer is
required to initiate proceedings under Section 73(1) for recovery of
the said amount of tax and interest. The natural corollary of the
above interpretation is that if an assesse has allegedly delayed in
filing his return, but discharges the liability of only tax on his own
ascertainment and does not discharge the liability of interest, the
only recourse available to the Proper Officer would be to initiate
proceedings under Section 73(1) of the CGST Act for recovery of
the amount of "short paid" or "not paid" interest on the tax amount.

It is not a true that liability of interest under Section 50 of the CGST

Act is automatic, but the said amount of interest is required to be
calculated and intimated to an assesse. If an assesse disputes the
liability of interest i.e. either disputes its calculation or even the
leviability of interest, then the only option left for the Assessing
Officer is to initiate proceedings either under Section 73 or 74 of the
Act for adjudication of the liability of interest. Recently, the Hon'ble
Madras High Court, in its decision dated 19th December, 2019
rendered in Writ Appeals in the case of The Assistant Commissioner
of CGST & Central Excise and others Vs. DaejungMopartsPvt. Ltd.
 and ors, has taken similar view. The said Writ Appeals were initially
decided by a Two Judges Bench of the Hon'ble Madras High Court
and divergent views were taken by the Hon'ble Judges on the issue
of initiation of adjudication proceedings before imposing liability
of interest under Section 50 of the Act.
61. Section 50 – Megha Engineering & Infrastructures Ltd. v.The Commissioner of Central Issue:-
‘Interest on Whether the liability to pay interest under Section 50 of the CGST
Tax, Hyderabad and Ors. [2019]104 taxmann.com 393 (Telangana) Writ
delayed Act, 2017 is confined only to the net tax liability or whether interest
payment of Petition NO. 44517 OF 2018 April 18, 2019 is payable on the total tax liability including a portion of which is
tax” liable to be set-off against ITC?

Held:-
The scheme of the Act makes a distinction between (i) the
entitlement to take credit which comes first; (ii) the actual entry of
credit in the electronic credit ledger, which comes next; and (iii) the
actual payment from out of the credit, which comes last.

There can be no doubt about the fact that even in respect of the input
tax credit available in the electronic credit ledger, there is a
necessity to make payment. Section 41(2) talks about utilization of
the credit available in the electronic credit ledger, for payment of
the self- assessed output tax. Section 49(2) also confirms the stage
at which a credit entry is made and Section 49(4) enables a
registered person to make payment from out of the credit so
available in the electronic credit ledger. Therefore, for finding an
answer to the dispute on hand, one must find out (i) when a credit
entry is entered in the electronic credit ledger of the registered
person; and (ii) when payment out of the same is made in lieu of
cash. Once it is statutorily prescribed that payment can be made
either by way of cash or from out of the credit available in the
electronic credit ledger, the date of payment in respect of both
assumes significance for determining the liability to pay interest.

In the entire scheme of the Act three things are of importance. They
are; (i) the entitlement of a person to take credit of eligible in-put
tax, as assessed in his return; (ii) the credit of such eligible input tax
in his electronic credit ledger on a provisional basis under Section
41 (1) and on a regular basis under Section 49 (2); and (iii) the
utilization of credit so available in the electronic credit ledger for
making payment of tax, interest and penalty etc., under Section 49
(3).

In other words, until a return is filed as self-assessed, no entitlement

to credit and no actual entry of credit in the electronic credit ledger
takes place. As a consequence, no payment can be made from out
of such a credit entry. It is true that the tax paid on the inputs charged
on any supply of goods and/services, is always available. But, it is
available in the air or cloud. Just as information is available in the
server and it gets displayed on the screens of our computers only
after connectivity is established, the tax already paid on the inputs,
is available in the cloud. Such tax becomes an input tax credit only
when a claim is made in the returns filed as self-assessed. It is only
after a claim is made in the return that the same gets credited in the
electronic credit ledger. It is only after a credit is entered in the
electronic credit ledger that payment could be made, even though
the payment is only by way of paper entries.

If we take a common example of banking transactions, this can be

illustrated much better. An amount available in the account of a
person, though available with the bank itself, is not taken to be the
money available for the benefit of the bank. Money available with
 the bank is different from money available for the bank till the bank
is allowed to appropriate it to itself. Similarly, the tax already paid
on the in-puts of supplies of goods or services, available somewhere
in the air, should be tapped and brought in the form of a credit entry
into the electronic credit ledger and payment has to be made from
out of the same. If no payment is made, the mere availability of the
same, there in the cloud, will not tantamount to actual payment.

Admittedly, the petitioner filed returns belatedly, for whatever

reasons. As a consequence, the payment of the tax liability, partly
in cash and partly in the form of claim for ITC was made beyond
the period prescribed. Therefore, the liability to pay interest under
Section 50 (1) arose automatically. The petitioner cannot, therefore,
escape from this liability.
62. Section 50 – Union of India v. LC Infra Projects (P.) Ltd. [2020] 116 taxmann.com 205 Held:-
‘Interest on (Karnataka)WritAppeal NO. 188 (T-RES) OF 2020 March 3, 2020 Issuance of show Cause Notice is sine qua non to proceed with the
delayed recovery of interest payable in accordance with sub section (1) of
payment of http://judgmenthck.kar.nic.in/judgmentsdsp/bitstream/123456789/326048/ Section 50 of the GST Act.
tax” 1/WA188-20-03-03-2020.pdf
63. Section 50 – The Assistant Commissioner Of Cgst & Central Excise, The Commissioner Held:-
‘Interest on Of Cgst & Central Excise, The Superintendent Of Central Taxes Versus A careful perusal of sub Sections (2) and (3) of Section 50 thus
delayed M/S. DaejungMoparts Pvt Ltd., Indian Overseas Bank 2020 (2) TMI 668 - would show that though the liability to pay interest under Section
payment of Madras High Court 50 is an automatic liability, still the quantification of such liability,
tax” Dated 19.12.2019 certainly, cannot be by way of an unilateral action, more
particularly, when the assessee disputes with regard to the period
http://164.100.79.153/judis/chennai/index.php/casestatus/viewpdf/510633 for which the tax alleged to have not been paid or quantum of tax
allegedly remains unpaid. Likewise, whether an undue or excess
claim of input tax credit or reduction in output tax liability was
made, is also a question of fact which needs to be considered and
decided after hearing the objections of the assessee, if any.
Therefore, in my considered view, though the liability fastened on
 the assessee to pay interest is an automatic liability, quantification
of such liability certainly needs an arithmetic exercise after
considering the objections if any, raised by the assessee. It is to be
noted that the term "automatic" does not mean or to be construed as
excluding "the arithmetic exercise". In other words, though liability
to pay interest arises under section 50 of the said Act, it does not
mean that fixing the quantum of such liability can be unilateral,
especially, when the assessee disputes the quantum as well as the
period of liability. Therefore, in my considered view, though the
liability of interest under section 50 is automatic, quantification of
such liability shall have to be made by doing the arithmetic exercise,
after considering the objections of the assessee. Thus, I answer the
first issue accordingly.
64. Section 54 – Amit Cotton Industries v. Principal Commissioner of Customs [2019] 107 Case of Assessee:-
“Refund of taxmann.com 167 (Gujarat) Special Civil Application NO. 20126 OF 2018 The writ-applicant had exported goods in July 2017. It is the case of
Tax” June 27, 2019 the writ-applicant that it is eligible to seek refund of the IGST in
accordance with the provisions of the IGST Act, 2017. There is no
legal embargo on availing the drawback at the rate of 1% higher rate
on one hand and availing refund of the IGST paid in regard to the
'Zero Rated Supply', i.e. the goods exported out of India, on the
other. It is submitted that the refund ought to have been sanctioned
immediately irrespective of the fact, whether the drawback was
claimed at the rate of 1% (higher rate) or at the rate of 0.15% (lower
rate).

Case of Department:-
The writ-applicant is not entitled to claim refund as the writ-
applicant had availed drawback at the higher rate in regard to the
finished goods exported out of India.

Held:-
Section 16 of the IGST Act, 2017, referred to above provides for
zero rating of certain supplies, namely exports, and supplies made
to the Special Economic Zone Unit or Special Economic Zone
Developer and the manner of zero rating. It is not in dispute that the
goods in question are one of zero rated supplies. A registered person
making zero rated supplies is eligible to claim refund under the
options as provided in sub-clauses (a) and (b) to clause (3) of
Section 16 referred to above. Section 54 of the CGST Act, 2017,
provides that any person claiming refund of any tax and interest, if
any, paid on such tax or any other amount paid by him, shall make
an application before the expiry of two years from the relevant date
in such form and manner as may be prescribed. Rule 96 of the CGST
Rules provides for a deeming fiction. The shipping bill that the
exporter of goods may file is deemed to be an application for refund
of the integrated tax paid on the goods exported out of India. Section
54 referred to above should be read along with Rule 96 of the Rules.
Rule 96(4) makes it abundantly clear that the claim for refund can
be withheld only in two circumstances as provided in sub-clauses
(a) and (b) respectively of clause (4) of Rule 96 of the Rules, 2017.
We are not impressed by the stance of the respondents that although
the writ-applicant might have returned the differential drawback
amount, yet as there is no option available in the system to consider
the claim, the writ-applicant is not entitled to the refund of the IGST.
First, the circular upon which reliance has been placed, in our
opinion, cannot be said to have any legal force. The circular cannot
run contrary to the statutory rules, more particularly, Rule 96
referred to above. Over and above the same, the circular explains
the provisions of the drawback and it has nothing to do with the
IGST refund. Thus, the circular will not save the situation for the
respondents. We are of the view that Rule 96 of the Rules, 2017, is
 very clear. In view of the same, the writ-applicant is entitled to claim
the refund of the IGST.
65. Section 54 – Shabnam Petrofils (P.) Ltd. v. Union of India [2019] 108 taxmann.com 15 Case of Assessee:-
“Refund of (Gujarat) Special Civil Application NoS. 16213 & 20626 OF 2018 July 17, The members of the writ applicants are engaged in the supply of
Tax” 2019 [SLP Pending] textiles and textile articles of Chapters 52 to 63 of the First Schedule
to the Customs Tariff Act, 1975. Petitioners have challenged
Notification No.20/2018-central Tax (Rate) dated 26.07.2018 by
which it is resolved that, the accumulated input tax credit lying
unutilised in balance in respect of the specified textile and textile
goods after payment of tax for and upto the month of July, 2018, on
the inward supplies received upto 31st day of July, 2018, shall lapse.
It is contended that power under section 54(3)(ii) of the CGST Act
is limited to notify the supplies not entitled to refund of input tax
credit accumulated on account of the inverted rate structure.

Case of Department:-
In terms of the GST Council decision, Notification No. 5/2017-
Central Tax (Rate) dated 28th June, 2017 was amended vide
Notification No. 20/2018-Central Tax (Rate) dated 26th July. 2018
to allow refund or no on purchases made alter 1st August. 2018 and
to lapse the input tax credit on account of inverted duty structure
lying in balance after payment of GST for the month of July. 2018
(on purchases made on or before the 31' July, 2018). The power to
lapse the input tax credit flows inherently from the power deny
refund of accumulated input tax credit on account of inverted duty
structure. It is contended that the petitioners even prior to the date
of coming into force of the notification were not able to take the
benefit of this credit as refund on account of inverted duty structure
was blocked. It is contended that allowing the utilization of the
credit would have led to allowance of the blocked credit and thus in
a way would negate the earlier position of blockage of input tax
credit refund.

Held:-
The provisions of section 54(3(ii), which empowers the respondents
– revenue to frame the rules, does not empower the respondents –
Central Government to frame rule providing for lapsing of the input
tax credit. The CGST Act itself provides for the lapsing of the ITC
at Sections 17(4) and 18(4) respectively of the CGST Act. Thus,
where the legislature wanted the ITC to lapse, it has been expressly
provided for in the Act itself. No such express provision has been
made in Section 54(3) of the CGST Act. No inherent power can be
inferred from the provision of Section 54(3) of the CGST Act
empowering the Central Government to provide for the lapsing of
the unutilised ITC accumulated on account of the rate of tax on
inputs being higher than the rate of tax on output supplies (inverted
rate structure). The members of the writ applicants have a vested
right to unutilised ITC accumulated on account of rate of tax on
inputs being higher than the rate of tax on the output supplies. It is
a well settled principle that the delegated legislation has to be in
conformity with the provisions of the parent statute. By prescribing
for lapsing of ITC, the Notification No.05/2017C.T. (Rate) dated
28.06.2017, as amended by Notification No.20/2018-C.T. (Rate)
dated 26.07.2018, has exceeded the power delegated under Section
54(3)(ii) of the CGST Act. Proviso (ii) of the opening paragraph of
the Notification No.05/2017-C.T. (Rate) dated 28.06.2017, inserted
vide Notification No.20/2018-C.T. (Rate) dated 26.07.2018, is ex-
facie invalid and liable to be strike down as being without any
authority of law.
66. Section 54 – JIAN INTERNATIONAL v. COMMISSIONER OF DELHI GOODS Issue:-
“Refund of Writ petition seeking a direction to respondent to grant refund of
AND SERVICES TAX
Tax” Rs.9,12,893/- claimed under Section 54 of the Delhi Goods and
W.P. (C) 4205/2020 Services Tax Act, 2017 (hereinafter referred to as „DGST Act‟)for
the month of August, 2019 as well as the grant of interest in
Dated 22.07.2020
accordance with Section 56 of DGST/CGST Act.

Held:-
To allow the respondent to issue a deficiency memo today would
amount to enabling the Respondent to process the refund
application beyond the statutory timelines as provided under Rule
90 of the CGST Rules, referred above. This could then also be
construed as rejection of the petitioner‟s initial application for
refund as the petitioner would thereafter have to file a fresh refund
application after rectifying the alleged deficiencies. This would not
only delay the petitioner‟s right to seek refund, but also impair
petitioner‟s right to claim interest from the relevant date of filing of
the original application for refund as provided under the Rules.
Held-Court directs the respondent to pay to the petitioner the refund
along with interest in accordance with law within two weeks.
67. Section 54 – Vasu Clothing Private Limited v. The Union of India and Ors [2018] 97 Issue:-
“Refund of taxmann.com 467 (Madhya Pradesh) W.P. NO. 17999 OF 2018 August 23, The petitioner's contention is that after enactment of Central Goods
Tax” 2018 and Service Tax Act, 2017 and the Rules framed thereunder, the
read with petitioner is entitled to supply goods and services to Duty Free
Section 15 https://mphc.gov.in/upload/indore/MPHCIND/2018/WP/17999/WP_17999 Shops without payment of taxes and similar supplies from all over
IGST _2018_FinalOrder_17-Dec-2018.pdf the world except India are permitted without payment of taxes.

The petitioner's contention is that the goods are sold to international

passengers at the departure terminal Duty Free Shops and the
operator has cleared the goods only for export under Section 69 of
the Act. It has been further contended that duty free purchases made
from Duty Free Shops at international airports in India are generally
paid for in approved currency including foreign currency and this
uniqueness brings in valuable foreign currency reserves into the
country and there is a significant growth in such sale.

The petitioner has further stated that prior to implementation of GST

legislation, the duty free operations in India were exempted from
payment of Customs Duty, Countervailing Duty (CVD), Special
Additional Customs Duty (SACD), Excise Duty, VAT / Sales Tax,
OCTROI, etc. The petitioner's contention is that principle for
exemption from payment of VAT / Sales Tax by an Indian Duty
Free Shop was evolved pursuant to the judgment delivered by the
Hon'ble Supreme Court in the case of M/s. Hotel Ashoka (Indian
Tourism Development Corporation Limited) Vs. Assistant
Commissioner of Commercial Taxes and Another (Civil Appeal
No.2560/2010, decided on 03/02/2012).

Held:-
Undisputedly, the petitioner is supplying goods to Duty Free Shops
and as per Section 2(5) of IGST Act, 2017 export of goods takes
place only when goods are taken out to a place outside India. India
is defined under Section 2(27) of Customs Act,1962 as “India
includes territorial waters of India”. Similarly under the CGST Act,
2017 under Section 2(56) “India” means the territory of India
including its territorial waters and the air-space above its territory
and territorial waters and therefore, the goods can be said to be
exported only when they cross territorial waters of India and the
goods cannot be called to be exported merely on crossing customs
frontier of India.
Undisputedly, in light of the definition as contained under the IGST
Act, 2017 a Duty Free Shop situated at the airport cannot be treated
as territory out of India. The petitioner is not exporting the goods
out of India. He is selling to a supplier, who is within India and the
point of sale is also at Indore as the petitioner is receiving price of
goods at Indore.

As per Section 2(5) of the Integrated Goods and Services Tax Act,
2017, “export of goods” with its grammatical variations and cognate
expressions, means taking out of India to a place outside India.
Further, as per Section 2(56) of Central Goods and Services Tax
Act, 2017 “India” means the territory of India as referred to in
Article 1 of the Constitution, its Territorial Waters, Seabed and Sub-
oil underlying such waters, Continental Shelf, Exclusive Economic
Zone (EEZ) or any other maritime zone as referred to in the
Territorial Waters, Continental Shelf, Exclusive Economic Zone
and other Maritime Zones Act, 1976, and the air space above its
territory and territorial waters. For the purpose of CGST Act, India
extends upto the Exclusive Economic Zone upto 200 nautical miles
from baseline. The location of the DFS, whether within customs
frontier or beyond, shall be within India as long as it is not beyond
EEZ (200 nautical miles). Therefore, DFS cannot be said to be
located outside India. Instead, the DFS is located within India. As
the supply to a DFS by an Indian supplier is not to 'a place outside
India', therefore, such supplies do not qualify as 'export of goods'
under GST. Consequently, such supplies cannot be made without
payment of duty by furnishing a bond/letter of undertaking (LUT)
under rule 96-A of the CGST Rules, 2017. Also, he cannot claim
refund of unutilized input tax credit (ITC) under Section 54 of the
CGST Act, 2017.
 In light of the above, the petitioner is liable to pay GST on supply
of indigenous goods to DFS. Whether, transaction under taken at a
DFS (i.e. sale of goods to outgoing passengers) are to be treated as
export of goods or services does not form part of the instant writ
petition.

Similarly the judgment delivered by the Bombay High Court in the

case of A-1 Cuisines Pvt. Ltd (Supra) does not deal with the subject
involved in the present writ petition. It was a case of a person
seeking issuance of writ of mandamus directing the respondents
therein to exempt the petitioner from charging applicable taxes
under the GST legislations on sale of cosmetic products in respect
of retail outlet which he intended to setup at Domestic Security Area
at Dr.BabasahebAmbedkar International Airport. Again the
judgment is distinguishable on facts and does not help the petitioner
in any manner.
68. Section 54 – VKC FOOTSTEPS INDIA PVT LTD v. UNION OF INDIA AND 2 Issue:-
“Refund of Petitioner is engaged in the business of manufacture and supply of
OTHER(S)
Tax” footwear which attracts GST @5% and the majority of the inputs
read with R/Special Civil Application No. 2792 of 2019 and input services procured by them attract GST @12% or 18% -
Section 16 inspite of utilisation of credit for payment of GST on outward
Dated 24.07.2020
IGST supply, there is accumulation of unutilized credit in electronic credit
http://gujarathc-casestatus.nic.in/gujarathc/# ledger - Respondents are allowing refund of accumulated credit of
tax paid on inputs such as synthetic leather, PU polyol etc. but
refund of accumulated credit of tax paid on procurement of ‘input
services' such as job work service, goods transport agency service
etc. is being denied - petitioners have, therefore, challenged validity
of amended rule 89(5) of the CGST Rules, 2017 to the extent it
denies refund of input tax credit relatable to Input services.

Held:-
It appears that rule 89(5) of the Rules and more particularly the
explanation (a) thereof, provides that Net Input Tax Credit shall
mean “input tax credit” availed on “inputs” during the relevant
period other than the “input tax credit” availed for which refund is
claimed under sub-rule (4A) or (4B) or both - therefore, the
grievance of the petitioner is that only the “inputs” is referred to in
Explanation (a) to sub-rule (5) of Rule 89 of the CGST Rules, 2017
and, therefore, “Input Tax Credit” on “Input services” are not
eligible for calculation of the amount of refund by applying rule
89(5) - Thus, it results in violation of provisions of sub-section 3 of
Section 54 of the CGST Act, 2017 which entitles any registered
person to claim refund of “any” unutilized input tax credit - section
7 of the Act provides that “scope of supply” includes all forms of
supply of goods or services, therefore, for the purpose of calculation
of refund of accumulated “input tax credit” of “input services” and
“capital goods” arising on account of inverted duty structure is not
included into “inputs” which is explained by the Circular
79/53/2018-GST dated 31.12.2018 wherein it isstated that the intent
of law is not to allow refund of tax paid on “input services” as part
of unutilised “input tax credit” - Delhi High Court in the case of
Intercontinental Consultants & Technocrats P Ltd. -2012-TIOL-
966-HC-DEL-ST has held that the rule which goes beyond the
statute is ultra vires and thus liable to be struck down - From the
conjoint reading of the provisions of Act and Rules, it appears that
by prescribing the formula in sub-rule 5 of Rule 89 of the CGST
Rules, 2017, to exclude refund of tax paid on “input services” as
part of the refund of unutilised input tax credit is contrary to the
provisions of sub-section 3 of section 54 of the Act which provides
for claim of refund of “any unutilised input tax credit” - the word
“Input Tax credit” is defined in section 2(63) of the Act meaning
the credit of Input tax and the word ‘input tax' is defined in section
2(62) as the central tax, state tax, integrated tax or union territory
tax charged on any supply of goods or services or both made to a
registered person whereas the word “input” is defined in section
2(59) means any goods other than capital goods and “input service”
as per section 2(60) means any service used or intended to be used
by a supplier - thus “input” and “input service” are both part of the
“input tax” and “input tax credit”, therefore, as per the provisions of
sub-section 3 of section 54 of the Act, 2017, the legislature has
provided that registered person may claim refund of “any unutilised
input tax”, therefore, by way of rule 89(5) of the Rules, such claim
of the refund cannot be restricted only to “input” excluding the
“input services” from the purview of “input tax credit” - moreover,
clause (ii) of proviso to sub-section 3 of section 54 also refers to
both supply of goods or services and not only supply of goods as
per amended rule 89(5) of the CGST Rules, 2017 - keeping in mind
the scheme and the object of the Act, 2017, the intent of the
government by framing the rule restricting the statutory provision
cannot be the intent of law as interpreted in Circular 79/53/2018-
GST dated 31.12.2018 to deny the registered person refund of tax
paid on “input services” as part of refund of unutilised input tax
credit - Explanation (a) to rule 89(5) which denies refund of
“unutilised input tax” paid on “input services” as part of the “input
tax credit” accumulated on account of inverted duty structure is ultra
vires the provisions of section 54(3) of the Act - Explanation (a) to
the rule 89(5) is read down to the extent that Explanation (a) which
defines “Net Input Tax credit” means “Input Tax credit” only - the
said Explanation (a) of Rule 89(5) of the Rules is held to be contrary
to the provisions of section 54(3) of the Act - Net ITC should mean
“input tax credit” availed on “inputs” and “input services” as
defined under the Act - Respondents are directed to allow the claim
of the refund made by the petitioners considering the unutilised
 input tax credit of “input services” as part of the “net input tax
credit” (Net ITC) for the purpose of calculation of the refund of the
claim as per rule 89(5) of the Rules for claiming refund under sub-
section 3 of section 54 of the Act - Petitions are allowed - Request
of the Counsel for Revenue to stay the operation, implementation
and execution of the judgment is rejected: High Court [para 20, 21,
23 to 28]
69. Section 54 – TMA International (P.) Ltd. v. Union of India [2020] 113 taxmann.com 22 Issue:-
“Refund of (Delhi) W.P. (C). 2694 OF 2019 November 26, 2019 The collective grievance of the Petitioners for filing the present
Tax” petition is the denial of IGST refund in accordance with Section
read with 16(3) of the IGST Act, 2017, paid by them on goods exported during
Section 16 the transitional period after introduction of GST Regime i.e. from
IGST 01.07.2017 to 30.09.2017. The factual narrative in the petition is
that, export of goods from India is "zero rated" i.e. the Petitioners
are exempted from payment of tax on the goods exported from
India. The government provides various types of export incentives
and refund mechanisms to ensure that exports are made duty and
tax free. Prior to the introduction of GST regime in India, Petitioners
were governed by Customs Act, 1962 read with Central Excise
Duties and Service Tax Drawback Rules, 1995; Central Excise
Rules, 2002; and Central Sales Tax Act, 1956 read with Central
Sales Tax rules, 1957. Under the pre-GST regime, Petitioners used
to issue FORM CT-1 and FORM ARE-1, for procuring excisable
goods without payment of excise duty; and H FORM to avail
exemption from payment of Sales Tax; Pertinently, a duty drawback
scheme was available to them to neutralize the customs duty, central
excise duty and service tax charged on any imported materials or
excisable materials used as input services in the manufacture of
export goods. Post introduction of the GST, Central Excise and
Service Tax were replaced by GST, however, customs remained an
indirect tax separate and independent from GST and was not
subsumed under the GST mechanism. Thus, post introduction of the
GST regime, the drawback scheme was meant only to claim
exemption of the customs component of the exported goods and
simultaneously, Petitioners could claim refund of the IGST paid on
export of goods, in lieu of the excise duty and service tax paid on
such goods, since these were integrated into a single tax i.e. IGST.

Petitioners exported goods falling under various tariff items

mentioned in the drawback schedule, on due payment of IGST. It is
claimed that since the drawback schedule prescribed identical tariff
rates under Column A as well as Column B , in respect of goods
exported and further since there were no guidelines from the GST
or Customs department in respect of procedure to be followed in
such cases, petitioners inadvertently claimed drawback under
Column A, which was mostly between 1.5-4%

Held:-
Though, the challenge in the present petition is also to the vires of
the circulars enumerated above, however, Petitioners are primarily
concerned with the refund of IGST paid on goods exported by them
during the transitional period. The Respondents' concern is well
founded that the Petitioners should not take undue advantage of the
drawback scheme. The purpose behind impugned circular is to
ensure that the exporters do not claim AIRs of duty drawback and
simultaneously avail tax neutralization under GST as this would
amount to exporter availing double benefits of neutralization of
taxes. However, the fact remains that at no point of time, the
petitioners declared that they would forego the claim of IGST
refund. During the transitional period, Petitioners have
inadvertently claimed benefit under a wrong provision, since there
was lack of clarity with respect to the refund of IGST. Should we
deny the benefit simply for this mistake when the cardinal rule is
that taxes should not exported? The concept of zero-rated exports
envisaged under GST is designed to achieve this objective. In the
current scenario, exporters pay IGST and apply for refund. Thus,
for wrong input given at the time of claiming drawback should not
deprive them of this valuable right. We can't be immune to the fact
that taxpayers have faced difficulties in understanding the
complexity of GST procedures. Its implementation has not been
smooth and the Government itself has faced huge challenges. The
model of matching of invoices for purchase, as originally
envisioned could not be implemented and a truncated version of
returns had to be introduced. This also entailed frequent issuance of
innumerable circulars and notifications in quick succession,
extending deadlines, introduction of fresh procedures and such
other measures. As a result taxpayers were reeling under confusion
which continues until this day implying that much needs to be done
despite the efforts and measures taken by the Government. The
situation is not a happy one and has adverse impact on the taxpayers.
There has been influx of cases relating to such issues. We are also
witnessing many cases relating to transitional provisions. Revenue
needs to realise the inefficient implementation of the law has had
adverse fallout on the taxpayer. Government would have to embrace
initiatives that would help the taxpayers in the transformation to the
new regime. This would require understanding the difficulties faced
by the industry which would be crucial step for success of GST law.
Instant case is one such example where Petitioners have been victim
of technical glitches on account of confusion during transitional
phase. We are thus of the view that taxpayers like the Petitioners
should not be denied the substantive benefit of the IGST paid by
them on exports.
We find merit in the submission of Mr.Bansal that the exporters
would not voluntarily opt for the claim of drawback under Column
A at the cost of foregoing IGST paid on exports, where the duty
drawback rates under Column A and B were same, the exporters
would have received the same amount of drawback even if they
would have mentioned "B" in their shipping bills instead of "A" for
claiming drawback. Since the condition for not claiming IGST
refund is not applicable to cases where duty drawback has been
claimed under Column B, exporters would have received IGST
refund also on mentioning "B". Therefore, exporters did not have
any benefit in claiming drawback under Column A. It is not pointed
out by the Respondents that the Petitioners derived any undue
advantage by their aforesaid mistake. On the contrary, it would
result in causing loss for the value of the IGST paid on exports. By
way of illustration, we take note of one such instance as pointed out
by Mr.Bansal that if Steel Strips (HSN7211) are exported then
whether duty drawback is claimed under Column A or Column B,
the rate is 2%. However, rate of IGST on the said export is 18%. In
such a situation under no circumstances it can be assumed that the
exporters intentionally decided to claim duty drawback should
forego IGST refund. Besides, if the petitioners have claimed and
received only the customs duty portion of the drawback and element
of IGST (earlier Central Excise Duty and Service Tax) was not
included in the drawback rate, granting of IGST refund would not
result in double neutralisation of input taxes. Respondents have
also, infact, never intended to deny refund of IGST paid on export
in cases where only custom component was claimed as drawback.

The Petitioners have enclosed the cost analysis which captures the
denial of IGST refund causing severe financial crunch to the
exporters business. The impact is significant. To us such an error,
 that is purely inadvertent and not intentional, should not come in the
way of calming refund of IGST. We have also noticed that the
respondents have also been alive to the situation and in matters
relating to technical glitches, they have constituted IT Redressal
Grievance Committees to address the grievances of the taxpayers.
Therefore, we do not see any reason as to why the Petitioners should
not be extended similar benefit. Since the Respondents have
expressed their apprehension about double benefit of neutralisation
of taxes, it would be appropriate that before issuing final directions,
Respondents verify the extent of the duty drawback availed by the
Petitioners and also whether they have availed duty
drawback/CENVAT credit of Central Excise and Service Tax
component in respect of the exports made by them.
70. Section 54 – Saraf Natural Stone v. Union of India [2019] 107 taxmann.com 352 Issue:-
“Refund of (Gujarat) Special Civil ApplicationNo. 15925 OF 2018 July 10, 2019 Interest payment on delay in grant of refund.
Tax”
read with Held:-
Section 16 The position of law appears to be well-settled. The provisions
IGST relating to an interest of delayed payment of refund have been
consistently held as beneficial and nondiscriminatory. It is true that
in the taxing statute the principles of equity may have little role to
play, but at the same time, any statute in taxation matter should also
meet with the test of constitutional provision.

In the overall view of the matter, we are inclined to hold the

respondents liable to pay simple interest on the delayed payment at
the rate of 9% per annum. The authority concerned shall look into
the chart provided by the writ-applicants, which is at Page-30,
Annexure-D to the writ-application and calculate the aggregate
amount of refund. On the aggregate amount of refund, the writ-
 applicants are entitled to 9% per annum interest from the date of
filing of the GSTR-03.
71. Section 54 – Vasu Clothing Private Limited v. The Union of India and Ors [2018] 97 Issue:-
“Refund of taxmann.com 467 (Madhya Pradesh) W.P. NO. 17999 OF 2018 August 23, The petitioner's contention is that after enactment of Central Goods
Tax” 2018 and Service Tax Act, 2017 and the Rules framed thereunder, the
read with https://mphc.gov.in/upload/indore/MPHCIND/2018/WP/17999/WP_17999 petitioner is entitled to supply goods and services to Duty Free
Section 15 _2018_Order_23-Aug-2018.pdf Shops without payment of taxes and similar supplies from all over
IGST the world except India are permitted without payment of taxes.

The petitioner's contention is that the goods are sold to international

passengers at the departure terminal Duty Free Shops and the
operator has cleared the goods only for export under Section 69 of
the Act. It has been further contended that duty free purchases made
from Duty Free Shops at international airports in India are generally
paid for in approved currency including foreign currency and this
uniqueness brings in valuable foreign currency reserves into the
country and there is a significant growth in such sale.

The petitioner has further stated that prior to implementation of GST

legislation, the duty free operations in India were exempted from
payment of Customs Duty, Countervailing Duty (CVD), Special
Additional Customs Duty (SACD), Excise Duty, VAT / Sales Tax,
OCTROI, etc. The petitioner's contention is that principle for
exemption from payment of VAT / Sales Tax by an Indian Duty
Free Shop was evolved pursuant to the judgment delivered by the
Hon'ble Supreme Court in the case of M/s. Hotel Ashoka (Indian
Tourism Development Corporation Limited) Vs. Assistant
Commissioner of Commercial Taxes and Another (Civil Appeal
No.2560/2010, decided on 03/02/2012).

Held:-
Undisputedly, the petitioner is supplying goods to Duty Free Shops
and as per Section 2(5) of IGST Act, 2017 export of goods takes
place only when goods are taken out to a place outside India. India
is defined under Section 2(27) of Customs Act,1962 as “India
includes territorial waters of India”. Similarly under the CGST Act,
2017 under Section 2(56) “India” means the territory of India
including its territorial waters and the air-space above its territory
and territorial waters and therefore, the goods can be said to be
exported only when they cross territorial waters of India and the
goods cannot be called to be exported merely on crossing customs
frontier of India.

Undisputedly, in light of the definition as contained under the IGST

Act, 2017 a Duty Free Shop situated at the airport cannot be treated
as territory out of India. The petitioner is not exporting the goods
out of India. He is selling to a supplier, who is within India and the
point of sale is also at Indore as the petitioner is receiving price of
goods at Indore.

As per Section 2(5) of the Integrated Goods and Services Tax Act,
2017, “export of goods” with its grammatical variations and cognate
expressions, means taking out of India to a place outside India.
Further, as per Section 2(56) of Central Goods and Services Tax
Act, 2017 “India” means the territory of India as referred to in
Article 1 of the Constitution, its Territorial Waters, Seabed and Sub-
oil underlying such waters, Continental Shelf, Exclusive Economic
Zone (EEZ) or any other maritime zone as referred to in the
Territorial Waters, Continental Shelf, Exclusive Economic Zone
and other Maritime Zones Act, 1976, and the air space above its
territory and territorial waters. For the purpose of CGST Act, India
extends upto the Exclusive Economic Zone upto 200 nautical miles
 from baseline. The location of the DFS, whether within customs
frontier or beyond, shall be within India as long as it is not beyond
EEZ (200 nautical miles). Therefore, DFS cannot be said to be
located outside India. Instead, the DFS is located within India. As
the supply to a DFS by an Indian supplier is not to 'a place outside
India', therefore, such supplies do not qualify as 'export of goods'
under GST. Consequently, such supplies cannot be made without
payment of duty by furnishing a bond/letter of undertaking (LUT)
under rule 96-A of the CGST Rules, 2017. Also, he cannot claim
refund of unutilized input tax credit (ITC) under Section 54 of the
CGST Act, 2017.

In light of the above, the petitioner is liable to pay GST on supply

of indigenous goods to DFS. Whether, transaction under taken at a
DFS (i.e. sale of goods to outgoing passengers) are to be treated as
export of goods or services does not form part of the instant writ
petition.

Similarly the judgment delivered by the Bombay High Court in the

case of A-1 Cuisines Pvt. Ltd (Supra) does not deal with the subject
involved in the present writ petition. It was a case of a person
seeking issuance of writ of mandamus directing the respondents
therein to exempt the petitioner from charging applicable taxes
under the GST legislations on sale of cosmetic products in respect
of retail outlet which he intended to setup at Domestic Security Area
at Dr.BabasahebAmbedkar International Airport. Again the
judgment is distinguishable on facts and does not help the petitioner
in any manner.
71. Section 54 – Pitambra Books P. Ltd. V. Union of India & Ors. Issue:-
“Refund of Present petition inter-alia impugns Circular No.37/11/2018-GST
Writ Petition (C). No. 627/2020 Order dated September 21, 2020
Tax” dated 15.03. 2018 and Circular No. 125/44/19-GST dated
http://delhihighcourt.nic.in/dhcqrydisp_o.asp?pn=16272&yr=2020 18.11.2019. the problem stems from paragraph 8 of impugned
circular no. 125/44/2013/GST dated 18th November, 2019, which
inhibits refund claims for a period of two separate (not successive)
financial years . The current position is that by virtue of the
circulars, the petitioner is not able to claim the refund as the option
of selecting the tax period which lies with the petitioner in terms of
the aforesaid provisions, has been denied. Petitioner has been trying
to file the refund application for the unutilised input tax credit
claimed in the respective months of production; however the
impugned circulars have denied the petitioner the statutory rights.

Held:-

We are of the prima facie view that by way of the impugned

circulars, though the respondents recognise the difficulties faced
by the exporters and have permitted them to file refund claim for
one calendar month/quarter or by clubbing successive calendar
months/quarters, yet the restriction pertaining to the spread of
refund claim across different financial years is arbitrary. There is
no rationale or justification for such a constraint. In the instant
case, where exports are not made in the same financial year,
question arises as to whether Respondents can restrict the filing of
the refund for tax periods spread across two financial years and
deprive the petitioner of its valuable right accrued in his favour. In
exports, availability of the rotation of funds is essential for the
business to thrive. Moreover, businesses do not run according to
the whims of the executive authorities. The business world cannot
be told when to place orders for exports; when to manufacture the
goods for export; and; when to actually undertake the exports. The
entire concept of refund of ITC relating to zero rated supply would
 be obliterated in case the respondents are permitted to put any
limitation and condition that takes away petitioner’s right to claim
refund of all the taxes paid on the domestic purchases used for the
purpose of zero rated supplies. The incentive given to the
exporters would lose its meaning and this would cause grave
hardship to the exporters who are earning valuable foreign
exchange for the country. The Respondents cannot, artificially by
acting contrary to the fundamental spirit and object of the law,
contrive ways to deny the benefit, which the substantive
provisions of the law confer on the tax payers. Thus, in our
considered opinion, the petitioner has a strong prima facie case,
and we cannot deny the petitioner of its right to claim refund
which is visible from the mechanism provided under the Act. The
impugned circulars take away the vested right of the taxpayer that
has accrued in the relevant period.

72. Section 67 – Golden Cotton Industries v. Union of India [2019] 107 taxmann.com 128 Case of Assessee:-
“Power of The submission is that the goods were found to have been stored in
(Gujarat) Special Civil Application NO. 2132 OF 2019 June 19, 2019
Inspection, the godown owned by the writ applicant. The books of account were
Search and also seized from the office premises. Neither the goods nor the
Seizure” books could be said to have been secreted at some unknown place
with the intention to hide or conceal them. Such satisfaction is a
condition precedent, according to Mr.Sheth, for the purpose of
exercising powers under section 67 of the Act.

Case of Department:-
No error of law could be said to have been committed by the
authority concerned in passing the order of prohibition.

Held:-
The office of the Commissioner of State Tax (Enforcement) vide
letter dated 3/12/2018 issued under Form GST INS-1, authorised
the Assistant Commissioner of State Tax to inspect and carry out
the search under section 67 of the Act, 2017. This is suggestive of
the fact that the proper officer not below the rank of Joint
Commissioner had reasons to believe that the writ applicant had
indulged in contravention of the provisions of the Act to evade tax.
Secondly, it could be said that the proper officer had reasons to
believe that the goods were liable to confiscation and such goods
were likely to be secreted at a particular place. In such
circumstances, the proper officer authorised the Assistant
Commissioner of Sales Tax (Enforcement), Division-3,
Gandhinagar to carry out the search and seize such goods,
documents or books or things. One another aspect of which we take
note of is that the confiscation proceedings have been initiated
against the writ application by issuing notice under section 73 and
section 74 of the Act. This is suggestive of the fact that pending the
confiscation proceedings, action has been taken under section 67 of
the Act with regard to the search, seizure and prohibition.

The statutory requirement of reasonable belief, rooted in the

information in possession of Proper Officer under the Act, is to
safeguard the citizen from vexatious proceedings. 'Belief' is a
mental operation of accepting a fact as true, so, without any fact, no
belief can be formed. It is true that it is not necessary for the Proper
Officer under the Act to state reasons for his belief. But if it is
challenged that he had no reasons to believe, in that case, he must
disclose the materials upon which his belief was formed, as it has
been held by the Supreme Court in SheoNath Singh v. Appellate
Asstt. CIT AIR 1971 SC 2451, that the Court can examine the
materials to find out whether an honest and reasonable person can
 base his reasonable belief upon such materials although the
sufficiency of the reasons for the belief cannot be investigated by
the Court.

We are not impressed by the submission of Mr.Sheth, that pending

the confiscation proceedings, there could not have been any seizure
or prohibition of the goods or documents or books of accounts or
other things. The argument of Mr.Sheth runs contrary to the Scheme
of the Act. The whole object is to preserve and protect the goods or
books or documents pending the determination of the tax liability.
73. Section 67 – Anopsinh Kiritsinh Sarvaiyav v. State of Gujarat [2020] 116 taxmann.com Case of assessee:-
“Power of It is the case of the writ applicant that if the five dealers, referred to
36 (Gujarat) Special Civil Application No. 2705 OF 2020 February 6, 2020
Inspection, above, have contravened any of the provisions of the Act or the
Search and Rules, then it is always open for the authorities to proceed against
Seizure” them in accordance with law. However, the grievance of the writ
applicant is that he, being the owner of the godown, the seal which
has been affixed, cannot be for an indefinite period of time.
According to the writ applicant, if the five dealers, referred to above,
have stored anything in the godown in the form of goods or other
documents, then they may be liable to confiscation, but being the
owner of the godown, he has nothing to do with the alleged
contravention of the provisions of the Act or the Rules

Held:-
The plain reading of the aforesaid two provisions of law makes it
clear that if the proper officer, not below the rank of Joint
Commissioner, either pursuant to a search carried out under sub-
section (1) or otherwise has reasons to believe that any goods liable
to confiscation or any documents or books, which in the opinion of
the proper officer, may be useful or relevant to any proceedings
which may be undertaken or such goods are liable to be secreted to
 any place, then the proper officer may authorize in writing any other
officer of the State Tax to search and seize the goods, documents or
books or things. clause (4), referred to above, empowers the
authorized officer to seal or break open the door of any premises
where access to such premise is denied.

if it is the case of the Department that the five dealers have stored
goods or other articles which are liable to confiscation, then the
authorities could have seized such goods and documents long time
back. Once the goods and other articles are seized from the
premises, then there could be no good reason to keep the godown in
a sealed condition.
74. Section 67 – Paresh Nathalal Chauhan v. State of Gujarat [2020] 113 taxmann.com 462 Facts:-
“Power of In this case, pursuant to an authorisation issued under sub-section
(Gujarat) Special Civil Application No. 18463 OF 2019 December 24,
Inspection, (2) of section 67 of the Central Goods and Services Tax Act,
Search and 2019 2017/Gujarat Goods and Services Tax Act, 2017 (hereinafter
Seizure” referred to as "the GST Acts"), a search came to be conducted at the
residential premises of the petitioner herein, which went on from
11.10.2019 to 18.10.2019. The manner in which the search has
taken place, whereby a search for any goods liable to confiscation
or any documents or books or things, has literally been converted to
a search for the taxable person and the search party has camped in
the residential premises of the petitioner for in all eight days, during
which period the family members of the petitioner were at the mercy
of the authorised officer and were confined to the searched premises
and kept under surveillance and were not permitted to leave the
premises without the permission of the authorised officer, has
shocked the conscience of this court. This court is, therefore, of the
view that it would be failing in its duty as a sentinel on the qui vive
if it were to turn a blind eye to the violation of the legal and
fundamental rights of citizens by authoritarianism and remain a
mute spectator. It is, in these circumstances, that the court has
thought it fit to comment upon the validity and nature of the search
proceedings.

Held:-
Sub-section (2) of section 67 of the GST Acts makes provision for
search of such place where the proper officer, not below the rank of
Joint Commissioner, has reason to believe that any goods liable to
confiscation or any documents or books or things, which, in his
opinion, shall be useful for or relevant to any proceedings under the
Act, are secreted. On forming such belief, the proper officer may
authorise in writing any other officer of central tax/state tax to
search and seize or may himself search and seize such goods,
documents or books or things. Under sub-section (2) of section 67,
the proper officer authorises an officer of central tax/state tax to
search the premises and seize goods, documents, books or things.
Sub-section (4) of section 67 empowers the officer so authorised to
seal or break open the door of any premises or to break open any
almirah, electronic devices, box, receptacle in which any goods,
accounts, registers or documents of the person are suspected to be
concealed. Sub-section (10) of section 67 makes the provisions of
the Code of Criminal Procedure, 1973, relating to search and
seizure, so far as may be, applicable to search and seizure under that
section subject to the modification that sub-section (5) of section
165 of the Code shall have effect as if for the word "Magistrate",
wherever it occurs, the word "Commissioner" were substituted.

Considering the provisions referred to hereinabove, it is apparent

that the officer who is armed with a search warrant is authorised to
search the premises referred to in the warrant of authorisation and
to seize goods, documents, articles or things, which are useful for
or relevant to any proceedings under the GST Acts. The provisions
nowhere arm the officer, in whose favour the authorisation is issued,
to search for any person or to remain in the premises after the search
is over, or to monitor what the persons residing in the premises are
doing and to reside in the premises. In fact, no provision under the
Code permits even the Investigating Officer to continuously stay
inside the residential premises to apprehend an accused as and when
he returns home. The powers vested in the officer armed with a
search warrant are limited to searching the entire premises. Once
the premises are searched, the search party would have to leave the
premises and cannot wait there indefinitely for days on end under
the expectation that the person whom they are searching for may
return home or may contact his family members.

It is abundantly clear that while the authorisation issued to the

officer concerned was to search the premises mentioned in the
authorisation, the entire search was converted to a search for the
dealer, namely the petitioner herein. One relevant fact which is to
be kept in mind in this context is that, admittedly, no summons was
issued to the petitioner under section 70 of the GST Acts nor is it
the case of the respondents that he was summoned, but had not
remained present. While the petitioner was not present at the
premises when searched, there could be a reasonable explanation
for his absence. Moreover, even if the petitioner may have been
intentionally avoiding the authorities, the same is not a valid ground
for converting the search proceedings to a search for the petitioner,
more so, when no such power is vested in the authorities.

As is evident from the contents of the panchnama, the members of

the petitioner's family were literally under house arrest and were not
permitted to leave the premises without the permission of the
authorised officer and at times without being escorted by a member
of the search party. It may be noted that there is no provision under
the GST Acts which empowers the authorised officer to confine
family members of a dealer in this manner and to interrogate them
at all times of the day and even late at night as has been done in this
case.
The GST Acts are new enactments. Officers acting under the
relevant provisions are required to study the scope of their powers
under the statutory provisions under which they are acting and
cannot act on the basis of presumptions or past precedents under a
previous enactment. If the common man is supposed to know the
law and face penalty for any infraction thereof, the officers
enforcing such provisions are required to be well versed with the
statutory provisions and the scope and limits of their power and
cannot take shelter behind ignorance of law to justify their illegal
actions.

In the facts of the present case, the family members of the petitioner
have been deprived of their personal liberty not only by being
confined in the residential premises and being permitted to leave
only with the consent of the authorised officer, and that too, at times
with an escort; but also by an intrusion on their right to privacy by
several strangers residing in their residential premises for eight
days, that too, without any authority of law. One shudders to think
of the plight of one's own grown up unmarried daughter if she were
in the place of the petitioner's daughter. But unfortunately, the
respondents have no regrets! All that is stated is that longer stay at
the residential premise of the tax payer is not desirable and requires
to be avoided as far as possible.
 Sub-section (2) of section 157 of the GST Acts says that no suit,
prosecution or other legal proceedings shall lie against any officer
appointed or authorised under the Act for anything which is done or
intended to be done in good faith under the Act or the rules made
thereunder. An action like the present one which is not
contemplated under any statutory provision and which infringes the
fundamental rights of citizens under article 21 of the Constitution
of India may not be protected under this section. An action taken
may be said to be in good faith if the officer is otherwise so
empowered and he exceeds the scope of his authority. However, in
a case like the present one where the authorisation was for search
and seizure of goods liable to confiscation, documents, books or
things and the concerned officer converted it into a search for a
person and an investigation, which is not otherwise backed by any
statutory provision, it may be difficult to accept that such action was
in good faith. Protection of such action under section 157 of the
GST Acts may unleash a regime of terror insofar as the taxable
persons are concerned.
75. Section 67 – High Ground Enterprises Ltd., Versus Union Of India Issue:-
“Power of 2019 (8) TMI 1136 - Bombay High Court
Inspection, Refusal by the Officers of the Director-General of GST Intelligence,
Search and WRIT PETITION NO. 8075 OF 2019 Mumbai to supply documents to the Petitioner seized by the officers
Seizure” - handing over copies of the documents seized - input tax credit -
Dated.- August 14, 2019 affirmation and utilization of input tax credit by various firms on
the strength of invoices allegedly issued by non-existing entities -
power of the authorities to carry out an investigation, search and
seizure - section 67 of CGST Act.

Held:-
There are two facets of the opinion of the Proper Officer as
contemplated under section 67(5) of the Act. Firstly, the opinion,
which would be a decision, should be reflected in the record. The
opinion cannot be a mere ipsi-dixit of the Proper Officer. There
must be cogent reasons to withhold giving of copies to the person.
A mere statement that it will prejudicially affect the investigation
would be only chanting the language of the section.

An offer is made by the Respondents that the Chartered Accountant

of the Petitioner can visit the office of the Respondents, and there is
no need to give such copies. Section 67(5) of the Act creates a right
to receive the copies by a person from whose custody the documents
are seized. The said person need not give justification why he needs
the copies of the documents seized. Therefore, the argument that the
Petitioner must show a cogent reason why the Petitioner needs
copies and only an inspection by the Chartered Accountant will
suffice has to be rejected.

Tampering of evidence - HELD THAT:- It is not explained how,

when the originals are with the respondent-authorities, the said
documents will be tampered by the Petitioner. Second, if the soft
copies are available with the Petitioner, the argument that if the
copies are given, now the Petitioner will alert its associates is also
not explained - The Note states that giving of copies would prevent
investigation. This is only a reproduction of the language of the
section. Further, the Note is prepared on 7 August 2019, i.e. one
month after the present writ petition was filed. Therefore, first, no
reasons are given in the said note as to how giving of copies will
prejudice the investigation and second, the record is created
subsequently.
 In the light of the provision of section 67(5) of the Act creating right
in the person, the denial of copies must be a reasonable action. The
legislative intent is clear that the documents or books seized must
not be kept in the custody of the officer for more than the period
necessary for its examination and copies thereof need to be given to
the person from whose custody the said documents or books are
seized. The reasonableness of the action depends on the facts of
each case. If the right to get copies of the documents and the power
of the authorities to refuse the same has to be balanced, then the
balance may shift by the passage of time and continuing
withholding of copies can become unreasonable assuming it is
justified at the inception. The documents were seized in January
2019, and the petition is being heard in the middle of August 2019.
The prejudice to the Petitioner has been demonstrated.

The refusal by the respondent- authorities to give copies of the

documents to the Petitioner which are seized under Panchanama
dated 9/10 January 2019 is not justifiable and the Petitioner is
entitled to the mandatory direction as prayed for - petition disposed
off.

76. Section 67 – State of Uttar Pradesh v. Kay Pan Fragrance Pvt. Ltd. [2019] 112 Facts:-
“Power of Interim orders were passed by the High Court directing the State to
taxmann.com 81 (SC) Civil Appeal NOS. 8941, 8942 and 8944 OF 2019
Inspection, release the seized goods, subject to deposit of security other than
Search and November 22, 2019 cash or bank guarantee or in the alternative, indemnity bond equal
Seizure” to the value of tax and penalty to the satisfaction of the Assessing
Authority. Thereafter, the petitions were disposed of as infructuous
https://main.sci.gov.in/supremecourt/2019/35304/35304_2019_7_299_184 as the goods stood released by the appropriate authority. The State
challenged the orders passed by the High Court.
24_Order_22-Nov-2019.pdf
Held:-
On appeal by the Department, the Supreme Court held that we have
no hesitation in observing that the High Court in all such cases ought
to have relegated the assessees before the appropriate Authority for
complying with the procedure prescribed in Section 67 of the Act
read with Rules as applicable for release (including provisional
release) of seized goods.

There is no reason why any other indulgence need be shown to the

assessees, who happen to be the owners of the seized goods. They
must take recourse to the mechanism already provided for in the Act
and the Rules for release, on a provisional basis, upon execution of
a bond and furnishing of a security, in such manner and of such
quantum (even upto the total value of goods involved), respectively,
as may be prescribed or on payment of applicable taxes, interest and
penalty payable, as the case may be, as predicated in Section 67 (6)
of the Act. In the interim orders passed by the High Court which are
subject tmatter of assail before this Court, the High Court has
erroneously extricated the assessees concerned from paying the
applicable tax amount in cash, which is contrary to the said
provision.

In our opinion, therefore, the orders passed by the High Court which
are contrary to the stated provisions shall not be given effect to by
the authorities. Instead, the authorities shall process the claims of
the concerned assessee afresh as per the express stipulations in
Section 67 of the Act read with the relevant rules in that regard.
77. Section 67 – Enprocon Enterprise Ltd. v. The Assistant Commissioner of State Tax Facts:-
“Power of It appears that the office premises of the writ applicant situated at
[2020] 113 taxmann.com 367 (Gujarat) Special Civil Application No.
Inspection, Ahmedabad and Baroda were raided by the respondent-Authorities,
Search and 14129 OF 2019 January 8, 2020 in exercise of their powers, under Section 67 of the CGST Act,
Seizure” 2017. In other words, search and seizure was undertaken by the
Authorities some time in the months of March and April, 2019. It
further appears that later an order of provisional attachment of the
immovable property situated at B-705, Mondeal Heights, near Wide
Angle, S.G.Highway, Ahmedabad, came to be passed by the
Assistant Commissioner of State Tax in exercise of powers, under
Section 83 of the Act, 2017. Being dissatisfied with the order of
provisional attachment, the writ applicant is here before this Court,
with the present Writ Application.

Held:-
What is lacking in the present case is the credible material, in its
true sense, for the purpose of arriving at the subjective satisfaction
that the order of provisional attachment is necessary for the purpose
of protecting the interest of the Revenue. In the case of Valerius
Industries (Supra), we have taken the view that the Commissioner
ought not to have delegated his powers of provisional attachment
under Section 83 of the Act to the Assistant Commissioner.
Therefore, in the case on hand, the order of provisional attachment
as well as the order of prohibition are not sustainable on two counts,
i.e. (i) the order has been passed by the Assistant Commissioner,
and (ii) the order has been passed without any credible materials,
available for the purpose of passing such order of provisional
attachment.
78. Section 67 – Napin Impex Private Ltd. v. Commissioner of DGST, Delhi and Ors Facts:-
“Power of The petitioner alleges that its premises were visited by the Revenue
W.P. (C) No. 10287 of 2018
Inspection, authorities on 29.08.2018 when the DGST officials directed
Search and Dated 28.09.2018 Delhi High Court production of books of account and other documents. Since the
Seizure” petitioner was not in possession of those, it sought 24 hours time for
the same. Apparently a temporary sealing of the premises was
http://delhihighcourt.nic.in/dhcqrydisp_o.asp?pn=225248&yr=2018 ordered. On the next date i.e. 30.08.2018, the premises were
completely sealed. It is contended that the DGST lacks statutory
power and authorization to indefinitely seal the premises in a
manner it has proceeded to do so. Learned counsel for the DGST,
appearing on advance notice, submitted that till date the petitioner
has not cooperated as it has neither produced the books of account
nor other materials. It is further submitted that according to the
instructions available to them, the premises can be immediately de-
sealed provided the petitioner cooperates.

Held:-
It is claimed that the authorization does not name the assessee; it
only lists the two premises i.e. the business premises at
NetajiSubhash Place and the DSIDC Unit at Narela. Given the plain
text of the statute i.e. especially Section 69(4) which merely
authorizes the concerned officials to search the premises and if
resistance is offered, break-open the lock or any other almirah,
electrical device, box, etc. containing books and documents, the
complete sealing of the premises, in the opinion of the court is per
se illegal. Even if it were assumed that the respondents temporarily
restrained the petitioner from using its premises, for a few hours, till
the books of account are made available in order to secure the
evidence available in the premises, that could not have assumed the
life on "its own", at least indefinitely. In these given circumstances,
this petition has to succeed.
79. Section 67 – Prakashsinh Hathisinh Udavat v. State of Gujarat [2019] 112 taxmann.com Held:-
“Power of It may be pertinent to note that in the order dated 27.09.2019,
124 (Gujarat) Special Civil Application No. 15365 OF 2019 October 16,
Inspection, whereby the respondent No.4 was made a party respondent by
Search and 2019 name, it was specifically recorded that the learned Assistant
Seizure” Government Pleader, upon perusal of the record of the case is not
in a position to point out any authorisation having been issued by a
person not below the rank of Joint Commissioner for carrying out
search in accordance with the provisions of sub-section (2) of
section 67 of the CGST/GGST Act, 2017. Therefore, the respondent
No.4 was required to show as to whether he had passed the seizure
order on the basis of any authorisation given to him by the proper
officer as envisaged in sub-section (2) of section 67 of the GGST
Act. However, in the affidavit-in-reply filed by the respondent No.4
or even on the basis of the record, no material has been produced
before this court to show that respondent No.4 was authorised by
the proper officer to search any premises or seize any goods,
documents, books or things under sub-section (2) of section 67 of
the GGST Act in the case of the petitioner. Thus, it is an admitted
position that the respondent No.4 Assistant Commissioner was not
conferred any power under sub-section (2) of section 67 of the
GGST Act to carry out any search or inspection as stated in the order
of seizure dated 25.10.2018. The impugned order has therefore,
been passed without any authority of law. Consequently, the seizure
of the car and the mobile phones belonging to the petitioner is
illegal, arbitrary and is not backed by any authority of law.

Thus, not only has the order of seizure been made without any
authority of law, the order of seizure also suffers from various
deficiencies as referred to hereinabove. It is, therefore, apparent that
the entire exercise of seizing the car and the mobile phones of the
petitioner is nothing but a farce under the guise of exercise of
statutory powers without obtaining the necessary authorisation, and
a blatant show of brute force by a high ranking officer in gross abuse
of powers. The explanation given in the affidavit-in-reply as regards
the illegalities alleged to have been committed by the petitioner,
does not give the fourth respondent a licence to act in excess of the
powers vested in him. Such action on the part of the respondent
No.4 cannot be countenanced even for a moment.
In this regard, it may be noted that the powers to attach the property
to protect the interest of the revenue are conferred by section 83 of
the GGST Act. However, a condition precedent for exercise of
powers under section 83 of the GGST Act is that any proceeding
should be pending under section 62 or section 63 or section 64 or
section 67 or section 73 or section 74 thereof. In the present case,
no proceeding under any of the above sections is stated to have been
pending against the petitioner at the time when the order of seizure
came to be made. The only proceeding which finds reference in the
affidavit-in-reply is under section 71 of the GGST Act which relates
to access to business premises. As is apparent of a plain reading of
section 83 of the GGST Act, the same does not empower the
Commissioner to take action thereunder during the pendency of
proceedings under section 71 of the GGST Act. Therefore, the
impugned order of seizure made by the respondent No.4 is not
relatable to any provision of the GGST Act. Therefore, it is not even
possible to say that the provision referred to in the impugned order
is incorrect but that the respondent No.4 was otherwise vested with
such powers. Under the circumstances, the inescapable conclusion
is that the respondent No.4 has acted without any authority of law
and in gross abuse of powers, which renders the impugned order of
seizure, unsustainable.
80. Section 69 – P.V. Ramana Reddy andOrs.v. Union of India and Ors. [2019] 104 Held:-
It can be seen from the language employed in sub-Sections (1), (2)
“Power to taxmann.com 407 (Telangana) WP NOS. 4764, 4769, 4892, 5074, 5130,
and (3) of Section 69, that there are some incongruities. Under sub-
Arrest” and 5329, 6952 and 7583 of 2019 April 18, 2019 Section (1) of Section 69, the power to order arrest is available only
in cases where the Commissioner has reasons to believe that a
Section 70 – http://tshcstatus.nic.in/hcorders/2019/wp/wp_4764_2019.pdf
person has committed any offence specified in clauses (a) to (d) of
“Power to sub-Section (1) of Section 132 CGST Act, 2017. The offences
specified in clauses (a) to (d) of sub-Section (1) of Section 132
summon
CGST Act, 2017 are made cognizable and non-bailable under
persons to give Section 132(5) of the CGST Act, 2017.
Evidence/Prod
Therefore, it is clear from sub-Section (1) of Section 69 of the
uce CGST Act that the power of the Commissioner to order the arrest
of a person, can be exercised only in cases where such a person is
Documents”
believed to have committed a cognizable and non-bailable offence.
As we have pointed out elsewhere, Section 132(1) of CGST Act,
2017 lists out 12 different types of offences from clauses (a) to (l).
The offences specified in clauses (a) to (d) of sub-Section (1) of
Section 132 are declared cognizable and nonbailable under sub-
Section (5) of Section 132 CGST Act, 2017. All the other offences
specified in clauses (f) to (l) of sub-Section (1) of Section 132 of the
CGST, 2017 Act are declared as non-cognizable and bailable under
sub-Section (4) of Section 132 of CGST Act, 2017.
But the incongruity between Section 69(1) and sub-Sections (4) and
(5) of Section 132 of CGST Act, 2017 is that when the very power
to order arrest under Section 69(1) is confined only to congnizable
and non-bailable offences, we do not know how an order for arrest
can be passed under Section 69(1) in respect of offences which are
declared non-cognizable and bailable under sub-Section (4) of
Section 132 of CGST Act.
If CGST Act, 2017 is a complete code in itself in respect of (1) the
acts that constitute offences, (2) the procedure for prosecution and
(3) the punishment upon conviction, then the power of
Commissioner, who is not a Police Officer, to order the arrest of a
person should also emanate from prescription contained in the Act
itself. Section 69(1) of CGST Act, 2017 very clearly delineates the
power of the Commissioner to order the arrest of a person whom he
has reasons to believe, to have committed an offence which is
cognizable and non-bailable. Therefore, we do not know how a
person whom the Commissioner believes to have committed an
offence specified in clauses (f) to (l) of sub-Section (1) of Section
132 of CGST Act, which are non-cognizable and bailable, could be
arrested at all, since Section 69(1) of the CGST Act, 2017 does not
confer power of arrest in such cases.

In other words, even though Section 69(1) of the CGST Act, 2017
does not confer any power upon the Commissioner to order the
arrest of a person, who has committed an offence which is non-
cognizable and bailable, sub-Section (3) of Section 69 of the CGST
Act, 2017 deals with the grant of bail, remand to custody and the
procedure for grant of bail to a person accused of the commission
of non-cognizable and bailable offences. Thus, there is some
incongruity between sub-Sections (1) and (3) of Section 69 read
with section 132 of the CGST Act, 2017.

It is important to note that under sub-Section (4) of Section 132 of

the CGST Act, 2017, all offences under the Act except those under
clauses (a) to (d) of Section 132 (1), are made non-cognizable and
bailable, notwithstanding anything contained in Cr.P.C. In addition,
Section 67(10) of the CGST Act, 2017 makes the provisions of
Cr.P.C. relating to search and seizure, apply to searches and seizures
under this Act, subject to the modification that the word
"Commissioner" shall substitute the word "Magistrate" appearing in
Section 165 (5) of Cr.P.C., in its application to CGST Act, 2017.
If reasons to believe are recorded in the files, we do not think it is
necessary to record those reasons in the authorization for arrest
under Section 69(1) of the CGST Act. Since Section 69(1) of the
CGST Act, 2017 specifically uses the words "reasons to believe",
in contrast to the words "reasons to be recorded" appearing in
Section 41A(3) of Cr.P.C., we think that it is enough if the reasons
are found in the file, though not disclosed in the order authorizing
the arrest.

It is true that CGST Act, 2017 provides for (i) self assessment, under
Section 59, (ii) provisional assessment, under Section 60, (iii)
scrutiny of returns, under Section 61, (iv) assessment of persons
who do not file returns, under Section 62, (v) assessment of
unregistered persons, under Section 63, (vi) summary assessment in
special cases, under Section 64 and (vii) audit under Sections 65 and
66.

But, to say that a prosecution can be launched only after the

completion of the assessment, goes contrary to Section 132 of the
CGST Act, 2017. The list of offences included in sub-Section (1) of
Section 132 of CGST Act, 2017 have no co-relation to assessment.
Issue of invoices or bills without supply of goods and the availing
of ITC by using such invoices or bills, are made offences under
clauses (b) and (c) of sub-Section (1) of Section 132 of the CGST
Act. The prosecutions for these offences do not depend upon the
completion of assessment. Therefore, the argument that there
cannot be an arrest even before adjudication or assessment, does not
appeal to us.
 In view of the above, despite our finding that the writ petitions are
maintainable and despite our finding that the protection under
Sections 41 and 41-A of Cr.P.C., may be available to persons said
to have committed cognizable and non-bailable offences under this
Act and despite our finding that there are incongruities within
Section 69 and between Sections 69 and 132 of the CGST Act,
2017, we do not wish to grant relief to the petitioners against arrest,
in view of the special circumstances which we have indicated
above.
81. Section 69 – SRI HANUMANTHAPPA PATHRERA LAKSHMANA v.STATE Issue:-
“Power to BY SENIOR INTELLIGENCE OFFICER, DIRECTORATE GENERAL Petitioner is a dealer in ferrous and non-ferrous scrap and has
Arrest” and OF GOODSAND SERVICE TAX INTELLIGENCE, BENGALURU purchased goods from various registered and unregistered dealers
Section 70 – ZONAL UNIT and issued tax invoices as per law - Petitioner has been issued
“Power to Criminal Petition No. 2419 Of 2020 notice/summons to appear before the Authorized Officer on
summon Dated 11.06.2020 12.05.2020; that before filing the petition and after filing the
persons to give http://judgmenthck.kar.nic.in/judgmentsdsp/bitstream/123456789/332764/ petition, another summon has been issued - Petitioner has filed
Evidence/Prod 1/CRLP2419-20-11-06-2020.pdf petition u/s 438 of the CrPC for grant of anticipatory bail - Petitioner
uce submits that in case he is arrested and sent to judicial custody, he
Documents” will be put into hardship and irreparable loss as
he is having a old age mother and also a daughter and due to
COVID-19 lockdown situation, his health may affect; that even
though, he has not committed any offence, there is likelihood of his
arrest for the non-bailable offence; that he is ready to abide by any
condition imposed by this Court and he is ready to offer any surety
- Counsel for Revenue submits that if the bail is granted to the
petitioner, he will destroy the evidentiary material and other
documents; that the anticipatory bail is not maintainable and it is
pre-mature; that in similar cases, the Telangana High Court has
dismissed the petitions in P.V.Ramana Reddy -2019-TIOL-873-
HC-TELANGANA-GSTwhich was upheld by the Supreme Court
by dismissing the SLP and the Supreme Court has reaffirmed
P.V.Ramana Reddy's case in the caseof Union of India vs. Sapna
Jain and Others - 2019-TIOL-217-SC-GST and hence the bail
petition be dismissed.

Held:-

Telangana High Court in P.V.Ramana Reddy (supra) has held that

writ petition under Article 226 of the Constitution of India in the
matter of pre-arrest bail is maintainable, but on the merits, the writ
petitions were dismissed as huge amount of tax evaluation was
involved in the said case - Even otherwise, the Telangana High
Court has not held that Section 438 of the Cr.P.C. bail application
is not maintainable in the case of the offence which is punishable
under the CGST Act - It is relevant to mention that as per the
provisions of Section 70 of the CGST Act, the Officer has power to
summon any person whose attendance is considered as necessary
either to give evidence or to produce document or any other thing
in any inquiry in the same manner as provided in the case of Civil
Court under the provisions of the Code of Civil Procedure,1908, and
every such inquiry referred to subsection (1) shall deemed to be
"judicial proceedings" within the meaning of Section 193 and
Section 228 of the Indian Penal Code - Special Public Prosecutor
for the respondent fairly admits that there is no statutory bar in the
CGST Act either expressly or impliedly for entertaining the bail
petition under section 438 of the Cr.P.C - Once a person apprehends
his arrest in the hands of the Commissioner under Section 69 of the
CGST Act, the assessee has a statutory right to seek anticipatory
bail under Section 438of the Cr.P.C - Therefore, the petition under
Section 438 of the Cr.P.C. is maintainable for the offences
committed under the CGST Act and there is no statutory bar for
 invoking or exercising power under section 438 of the Cr.P.C. for
the offence committed under the provisions of the CGST Act - It is
alleged by the prosecution that the petitioner is said to have involved
in fraudulent input tax credit on the basis of invoices without actual
supply of goods in contravention of Section 16 of the CGST Act
and caused loss to the exchequer for Rs.9.05 crore approximately -
Therefore, summons have been issued by the authorized officer
under Section 70 of the CGST Act which clearly goes to show that
the petitioner is reasoned to believe that he is apprehending his
arrest in the hands of the respondent in case after his appearance
before the authorized officer as per Section 69 of the CGST Act - In
case the petitioner is arrested, he is likely to be remanded to judicial
custody after his production before the Magistrate and by looking
to the present COVID-19 situation, if he is remanded to the judicial
custody, he will be put to hardship and definitely, his health would
likely be affected - The offences are not punishable with death or
imprisonment for life - There is no statutory bar in the CGST Act
for granting anticipatory bail by exercising power under Section 438
of the Cr.P.C - Merely, there were number of notices/summons
issued by the respondent during the lockdown for COVID-19 that
itself is not a ground to reject the bail petition - if an anticipatory
bail is granted, no prejudice would be caused to the respondent -
petitioner is ordered to be enlarged on bail in the event of his arrest
under Section 69 of the CGST Act subject to conditions laid down
in the order.
82. Section 70 – Pramod Agarwal and Ors. v. Union of India and Ors. W.P. (Cr.) Nos. 415, Issue:-
Primary apprehension expressed by the petitioners is that in the garb
“Power to 416, 417, 418 and 419 of 2018
of notice under section 70 of the Central Goods and Services Tax
summon December 21, 2019 Act, 2017 they may be arrested.
persons to give
Held:-
 Evidence/Prod When the summons are examined on a conjoint reading of section
69 and section 70 of the CGST Act, 2017, it becomes apparent that
uce
under section 69 it is the Commissioner who, if he has reasons to
Documents” believe, can by an order authorize any officer of Central Tax to
arrest an assessee. Therefore, the Senior Intelligence Officer who
has issued summons to the petitioners cannot arrest the assessee
before the Commissioner records his satisfaction on "reasons to
believe" and pass an order authorizing him to affect arrest of the
assessee. Direction to the petitioners to appear before the Senior
Intelligence Officer who has issued summons to them as and when
called and, of course, they shall not be arrested on the first day when
they appear before him.
83. Section 72 – Teesta Distributors and Ors.v. Union of India and Ors. [2018] 99 Issue:-
Lotteries are exempt from tax under Sl. No. 6 of Schedule III read
“Officers to taxmann.com 162 (Calcutta) W.P. NO. 18424 (W) OF 2017 October 10,
with Section 72 of the Central Goods and Services Tax Act, 2017
Assist Proper 2018
Held:-
Officers”
Sunrise Associates (supra) has held that, the distinction drawn in H.
Anraj (supra) between the chance to win and the right to participate
in the draw was unwarranted. It has held that, a lottery is in essential
a chance for a prize, the sale of a lottery ticket can only be a sale of
that chance. It has held that, there was no distinction between the
two rights. The right to participate being an inseparable part of the
chance to win, is therefore part of an 'actionable claim'. It goes on
to hold that, the sale of a lottery ticket does not necessarily involve
the sale of goods. It is nothing other than a contract of carriage. The
actual ticket is merely evidence of the right to transfer. A contract
is not a property but only a promise supported by consideration,
upon breach of which either a claim for specific performance or
damages would lie. Like railway tickets, a ticket to see a cinema or
a pawnbroker's ticket are memoranda or contracts between the
vendors of the ticket and the purchasers. Tickets are themselves
normally evidence of and in some cases the contract between the
buyer of the ticket and its seller.

Therefore, a lottery ticket can be held to be goods if at all only

because it evidences the transfer of a right. It has examined the
question as to what right a lottery ticket represents. It has held that,
on purchasing a lottery ticket, the purchaser would have a claim to
a conditional interest in the prize money which is not in the
purchaser's possession. The right would fall squarely within the
definition of 'actionable claim' and, would therefore be excluded
from the definition of goods under the Sale of Goods Act and the
sales tax statute.

On the strength of Sunrise Associates (supra) therefore, the first

issue has to be answered by holding that, a lottery is an 'actionable
claim' and goods or moveable property. The first issue is answered
accordingly.

The Constitution (One hundred and first Amendment) Act, 2016

introduced the Goods and Services Tax regime in India. It sought to
replace all indirect taxes levied on goods and services by the Union
as well as the State Governments. It came to be a comprehensive
indirect tax levy on manufacture, sale or consumption of goods and
services.

Schedule III under Section 7 of the CGST Act, 2017 deals with
activities or transactions which shall be treated neither as a supply
of goods nor as a supply of services. Entry 6 of Schedule III of
CGST Act, 2017 takes out 'actionable claims' other than lottery,
betting and gambling from the scope of such Act. Consequently,
 since lotteries are generally speaking 'goods' and come within the
definition of 'actionable claims', and since, lotteries are kept out of
the purview of 'actionable claims' which do not attract the CGST
Act, 2017, lottery can therefore be charged to tax under the CGST
Act, 2017. On the parity of the same reasoning, lottery is chargeable
to tax under WB GST Act, 2017 also.

The Goods and Services Tax Council established under Article

279A of the Constitution of India at its 17th meeting deliberated
extensively with regard to the rate of tax to be imposed on lotteries.
Differential rate of tax was introduced in the 17th Goods and
Services Tax Council Meeting held on June 18, 2017. The States
before the Court were present in such meeting. It was after extensive
deliberations that, the GST Council had approved the rates as
presently obtaining in respect of lottery. It is within the domain of
such Council to decide the rate of tax. In such circumstances, the
third issue is answered by holding that differential levy of tax is
permissible.
84. Section 73 – Serajuddin& Co. v. UOI [2020] 114 taxmann.com 480 (Orissa) W.P. (C). Held:-
“Determination Where Competent Authority had passed order under section 73 on
NO. 386 OF 2020 January 9, 2020
of tax not paid assessee without granting time to file reply to show cause notice and
or short paid or without giving an opportunity of personal hearing, impugned order
erroneously had been passed in violation of statutory requirements as indicated
refunded or in section 75(4)
input tax credit
wrongly
availed or
utilised for any
reason other
than fraud or
any willful
 misstatement
or suppression
of facts”

85. S. 73 and 74 – RISHI BANSAL PROPERTOR OF BANSAL SALES CORPORATION v. Issue:-

“Determination UNION OF INDIA THROUGH SECRETARY MINISTRY OF FINANCE Present writ petition has been filed challenging the letter dated 11th
of tax not paid & ORS June, 2020 and summon dated 06th July, 2020 issued by respondent
W.P. (C) 4409/2020 No.3 whereby the petitioner has been asked to deposit
or short paid or
Dated 22.07.2020 Rs.2,69,21,228/- being alleged as inadmissible input tax credit and
erroneously http://delhihighcourt.nic.in/dhcqrydisp_o.asp?pn=110328&yr=2020 file DRC-03 challan without initiating any adjudication process
refunded or either under Section 73 or Section 74 of Central Goods and Services
input tax credit Tax Act, 2017 (for short “CGST Act”)
wrongly availed Learned counsel for respondent nos. 2 and 3 states that the intent
or utilised for behind issuing the impugned letter dated 11th June, 2020 was to
any reason give an opportunity to the petitioner to come forward and either
explain the transaction or deposit the tax with minimum interest and
other than
penalty under Section 74(5) of the CGST Act without going through
fraud or any the adjudication procedure. He clarifies that if after the investigation
willful the respondent is not satisfied with the petitioner’s response, it shall
misstatement or follow the adjudication process for recovery. Statements made were
suppression of admitted
facts”
Held:-
It is clarified, as a matter of abundant caution, that as the demand is
disputed by the petitioner, no coercive steps shall be taken for
recovery of the said demand without following the adjudication
process.
86. Section 75- M.R.Hitech Engineers (P) Ltd., v. The State Tax Officer, Office of the Issue:-
“General Petitions filed under Article 226 of the Constitution of India to issue
Deputy Commissioner (ST) (Intelligence),
provisions a Writ of Certiorarified Mandamus, to call for the records of the
 relating to W.P.(MD)Nos.7589, 7590 and 7591 of 2020 and W.M.P.(MD)Nos.7079, respondent in the impugned and quash the same as it is violative of
determination Sections 75(4) and 75(6) of TamilNadu Goods and Service Tax Act,
7080, 7081, 7082, 7083 and 7084 of 2020 dated
of tax” 2017 and against the principles of natural justice and further direct
http://164.100.79.153/judis/chennai/index.php/casestatus/viewpdf/744223 the respondent to look into the documents and details furnished by
the petitioner and thereafter direct the respondent to grant a
reasonable opportunity of being heard.

Held:-
It is not in dispute that individual and separate personal hearing
notice was not issued to the petitioner. On the ground of violation
of statutory mandate under Section 75(4) of Tamil Nadu Goods and
Service Tax Act, 2017, the impugned orders have to be necessarily
quashed. They are accordingly quashed. The matters are remitted to
the file of the respondent to pass orders afresh in accordance with
law.
87. Section 79 – Mohd. Yunushv v. State of U.P. [2018] 94 taxmann.com 171 (Allahabad) Held:-
The only dispute is to the mode and manner of recovery of G.S.T.
“Recovery of WRIT-C NO. 6392 OF 2018 APRIL 13, 2018
for which Sri Parekh has drawn the attention of the Court to Section
Tax” 79 of the Act, 2017. In particular he has drawn the attention of the
Court to Section 79(a), (b) and (e), to contend that liability of tax
can be recovered from the person concerned, payable by him in
terms of the aforesaid provisions and in default "Proper Officer" as
defined under Section 2(9) can prepare the certificate and send it to
the Collector of the District for realisation thereof as arrears of land
revenue. It is therefore, clear from a perusal of these provisions that
recovery of GST can be make as arrears of land revenue by the
Collector of the District on a requisition by the "Proper Officer".
88. Section 83 – Bindal Smelting (P.) Ltd. v. Additional Director General, Directorate Held:-
Applying the above quoted provisions of CGST Act, 2017 and
“Provisional General of GST Intelligence [2020] 116 taxmann.com 28 (Punjab &
taking cue from afore-cited judgments of Gujarat High Court, which
Attachment to Haryana) CWP NO. 31382 OF 2019 (O&M) December 20, 2019 has noticed consistent judicial pronouncement and Bombay High
Court, we find that in the present case attached account is Over Cash
protect revenue
Credit account and Petitioner had debit balance of Rs. 6.42 Crore,
in certain thus question arises that whether continuation of attachment would
protect interest of revenue or not. The Petitioner is running unit and
cases”
more than 100 families are dependent upon Petitioner. Till date no
proceedings under section 74 of CGST Act are pending which
would start as soon as show cause notice is issued. The Respondent
has seized record of the Petitioner who has further supplied various
documents as well put personal appearance through Directors and
employees

The object and intention of legislature to endow Commissioner with

power of attachment under Section 83 is very clear. It is drastic and
far-reaching power which must be used sparingly and only on
substantive weighty grounds and reasons. The power should be
exercised only to protect interest of revenue and not to ruin business
of any taxable person. Primarily section 83 permits to attach
property. Property means an asset which may be movable,
immovable, tangible, intangible or in the form of some instrument.
Cash in hand as well bank account is property, in the form of
liquidity which is better than immovable property and directly
affects working in the form of working capital of a dealer. A dealer
may be having cash in hand or in account in the form of fixed
deposit or saving account. The mandate of Section 83 in our
considered opinion is to attach amount lying in an account in the
form of FDR or saving and it cannot be intention or purport of
section 83 to attach an account having debit balance. No purpose
 leaving aside securing interest of revenue is going to be achieved
except closure of business which cannot be permitted unless and
until running of business itself is prohibited by law. The contention
of Respondent that they have power to attach bank account
irrespective of nature of account cannot be countenanced.

We are of the opinion that Respondent can attach an account only if

there is some balance in the form of FDR or savings. The power of
attachment of bank account cannot be exercised as per whims and
caprices of the Authority. The Commissioner is bound to ensure that
by attachment of property or bank account, interest of revenue is
going to be protected. In case a property is mortgaged with bank and
value of property is less than outstanding dues of bank, provisional
attachment is meaningless and action remains only on paper. In the
absence of record showing that interest of revenue is protected by
attaching property or bank account, action deserves to be declared
as taken without application of mind and formation of opinion on
the basis of cogent material. Thus, attachment of current account
having debit balance does not protect interest of revenue, instead
merely ruins the business of a dealer. Such an action of attachment
of "over cash credit" account for the sake of recovery of confirmed
demand, may in some peculiar case, may be still permitted but not
at the stage of pending investigation.
89. Section 83 – Pranit Hem Desai Versus Additional Director General Held:-
2019 (9) TMI 741 - Gujarat High Court
“Provisional
Special Civil Application No. 9392 of 201 Section 83 of the State GST Act empowers the Assessing Authority
Attachment to August 28, 2019 to make a provisional attachment of any property of the assessee
during the pendency of any proceeding for the assessment or
protect revenue reassessment of any turnover, even though there is no demand
outstanding against the assessee, if he is of the opinion that it is
necessary to do so to protect the interest of the revenue. This
in certain provision has been made, in our opinion, in order to protect the
interest of the revenue in cases where the raising of demand is likely
cases”
to take time because of the investigations and there is apprehension
that the assessee may default the ultimate collection of the demand.
In other words, Section 83 gives a power to be exercised during the
pendency of any proceeding for assessment or reassessment, so that
the assessee may not fritter away or secrete his resources out of the
reach of the Commercial Tax department when the assessment or
reassessment is completed. The expression "for the purpose of
protecting the interest of the revenue" occurring in Section 83 of the
Act is very wide in its meaning. Further, the orders of provisional
attachment must be in writing. There must be some material on
record to indicate that the Assessing Authority had formed an
opinion on the basis thereof that it was necessary to attach the
property in order to protect the interest of the revenue. The
provisional attachment provided under section 83 is more like an
attachment before judgment under the Code of Civil Procedure. It
is a liability on the property. However, the power conferred upon
the Assessing Authority under Section 83 is very drastic,
farreaching power and that power has to be used sparingly and only
on substantive weighty grounds and for valid reasons. To ensure
that this power is not misused, no safeguards have been provided in
the Section 83. One thing is clear that this power should be
exercised by the Authority only if there is a reasonable apprehension
that the assessee may default the ultimate collection of the demand
that is likely to be raised on completion of the assessment. It should,
therefore, be exercised with extreme care and circumspection. It
should not be exercised unless there is sufficient material on record
to justify the satisfaction that the assessee is about to dispose of the
whole or any part of his property with a view to thwarting the
ultimate collection of the demand. Moreover, attachment should be
 made of the properties and to the extent it is required to achieve the
above object. It should neither be used as a tool to harass the
assessee nor should it be used in a manner which may have an
irreversible detrimental effect on the business of the assessee.

The Bombay High Court in Gandhi Trading v. Asst. CIT

3 reported in (1999) 239 ITR 337 Bom. has opined that the
attachment should be made, as far as possible, of the immovable
properties if that can protect the Revenue. The attachment of bank
accounts and trading assets should be resorted to only as a last resort
because, the attachment of the bank accounts of the assessee would
paralyse the functions and business of the assessee. The Authority,
therefore, should exercise the power conferred upon him under
Section 83 of the Act with circumspection and fairly and
reasonably. No hard and fast rule can be laid down as to how and
under what circumstances the power under Section 83 can be
invoked by the Authority. The discretion conferred on the Authority
shall be brought to bear having regard to the facts and circumstances
of each case. It is not permissible for the Authority to equate the
provisional attachment envisaged under Section 83 of the Act with
attachment in the course of the recovery proceedings.

90. Section 83 – Gehna Trading LLP v. Union of India [2020] 114 taxmann.com 566 Held:-
the order does not refer to any provision of law, the learned Counsel
“Provisional (Bombay) Writ Petition No. 167 OF 2020 January 30, 2020
for the Petitioner points out that the power for provisionally
Attachment to attaching the bank account is under section 83 of the Central Goods
and Services Tax (CGST) Act, 2017. The learned Counsel for the
protect revenue
Petitioner submitted that there are no proceedings under sections 62,
63, 64, 67, 73 and 74 against the Petitioner as mentioned under
section 83 of CGST Act, which is necessary if attachment under
 in certain section 83 is to be levied. The learned Counsel for the Petitioner
relies upon the decision of this Court dated 17 January 2020 in Writ
cases”
Petition No. 3145 of 2019 KaishImpex (P.) Ltd. v. Union of India
wherein this Court has observed thus :—

“Power to provisionally attach bank accounts is a drastic power.

Considering the consequences that ensue from provisional
attachment of bank accounts, the Courts have repeatedly
emphasized that this power is not to be routinely exercised. Under
section 83, the legislature has no doubt conferred power on the
authorities to provisionally attach bank accounts to safeguard
government revenue, but the same is within well-defined ambit.
Only upon contingencies provided therein that the power under
section 83 can be exercised. This power is to be used in only limited
circumstances and it is not an omnibus power.”
91. Section 83 – Kushal Ltd. V. Union of India [2020] 113 taxmann.com 622 (Gujarat) Case of Assessee:-
It is the case of the petitioners that after the arrest of the second
“Provisional Special Civil Application No. 19533 OF 2019 December 17, 2019
petitioner on 1.4.2019, no notice had been issued to the petitioners
Attachment to with regard to the issue in question and no show-cause notice had
been issued under section 73 or 74 of the GST Acts. It is the further
protect revenue
case of the petitioners that despite the fact that no proceedings were
in certain pending under sections 62, 63, 64, 67, 73 or 74 of the GST Acts, the
second respondent proceeded to provisionally attach the bank
cases”
accounts of the petitioners in exercise of powers under section 83 of
the GST Acts. According to the petitioners, the provisional
attachment of their bank accounts under section 83 of the GST Acts
is wholly without jurisdiction and illegal and hence, they have filed
the present petition seeking the reliefs noted hereinabove.

Case of Department:-
It was submitted that in view of the fact that the proceedings under
section 67 of the GST Acts are not yet completed, the action of
making provisional attachment under section 83 of the GST Acts is
in accordance with law.

Held:-
From the facts and contentions noted hereinabove, it emerges that a
search came to be conducted under section 67 of the GST Acts on
27.9.2018, whereupon it was discovered that the petitioners had
purchased goods and availed input tax credit thereon and had passed
on input tax credit to various buyers by raising GST invoices
without there being any actual movement of goods at their end
either as recipient or as supplier. During the course of investigation,
it was found that the petitioners were engaged in business of trading
of paper and electronics and had availed GST on the basis of only
invoices and no goods were actually received by them. It appears
that according to the respondents, investigation pursuant to the
search conducted under section 67 of the GST Acts is still going on
and therefore, according to the respondents, the proceedings under
section 67 of the GST Acts are not yet completed.

In the present case, since the premises of the petitioners came to be

searched, the provisions of subsection (2) of section 67 of the GST
Acts would be attracted. In terms thereof, pursuant to an
authorisation issued in this behalf, the proper officer may search the
premises in respect of which the search is authorised and seize
goods, documents or books or things and retain the documents or
books or things so long as may be necessary for any inquiry or
proceedings under the Act. In the present case, search proceedings
were conducted at the premises of the petitioners on 27.9.2018.
Thereafter, there was a visit by the respondents on 1.4.2019 which
 led to the arrest of the second petitioner. Thereafter, no search has
been conducted at the premises of the petitioners. The search
proceedings have, therefore, ended. It is the case of the respondents
that proceedings under section 67 of the GST Acts are not yet
completed and the matter is still under investigation. In the opinion
of this court, it may be that pursuant to the search, inquiry or other
proceedings under the Act may have been undertaken; however,
such inquiry or other proceedings are not under section 67 of the
GST Acts and hence, it cannot be said that any proceedings are
pending under section 67 of the GST Acts.

On a plain reading of section 83 of the GST Acts, it is clear that a

sine qua non for exercise of powers thereunder is that proceedings
should be pending under section 62 or section 63 or section 64 or
section 67 or section 73 or section 74 of the GST Acts. In the present
case, the proceedings under section 67 of the GST Acts are no
longer pending and pursuant to the search, proceedings under any
of the other sections mentioned in section 83 have not been initiated.
Under the circumstances, on the date when the orders of provisional
attachment came to be made, the basic requirement for exercise of
powers under section 83 of the GST Acts was not satisfied. The
provisional attachment of the bank accounts of the petitioners under
section 83 of the GST Acts is, therefore, not in consonance with the
provisions thereof and cannot be sustained.
92. Section 83 – Valerius Industries v. Union of India [2019] 109 taxmann.com 218 Scope of power u/s 83 of the CGST Act.
Held:-
“Provisional (Gujarat) Special Civil Application NO. 13132 OF2019 August 28, 2019
[1] The order of provisional attachment before the assessment order
Attachment to is made, may be justified if the assessing authority or any other
authority empowered in law is of the opinion that it is necessary to
protect revenue
protect the interest of revenue. However, the subjective satisfaction
should be based on some credible materials or information and also
in certain should be supported by supervening factor. It is not any and every
material, howsoever vague and indefinite or distant remote or
cases”
farfetching, which would warrant the formation of the belief.
[2] The power conferred upon the authority under Section 83 of the
Act for provisional attachment could be termed as a very drastic and
far-reaching power. Such power should be used sparingly and only
on substantive weighty grounds and reasons.
[3] The power of provisional attachment under Section 83 of the Act
should be exercised by the authority only if there is a reasonable
apprehension that the assessee may default the ultimate collection
of the demand that is likely to be raised on completion of the
assessment. It should, therefore, be exercised with extreme care and
caution.
[4] The power under Section 83 of the Act for provisional
attachment should be exercised only if there is sufficient material
on record to justify the satisfaction that the assessee is about to
dispose of wholly or any part of his/her property with a view to
thwarting the ultimate collection of demand and in order to achieve
the said objective, the attachment should be of the properties and to
that extent, it is required to achieve this objective.
[5] The power under Section 83 of the Act should neither be used
as a tool to harass the assessee nor should it be used in a manner
which may have an irreversible detrimental effect on the business
of the assessee.
[6] The attachment of bank account and trading assets should be
resorted to only as a last resort or measure. The provisional
attachment under Section 83 of the Act should not be equated with
the attachment in the course of the recovery proceedings.
[7] The authority before exercising power under Section 83 of the
Act for provisional attachment should take into consideration two
things: (i) whether it is a revenue neutral situation (ii) the statement
 of "output liability or input credit". Having regard to the amount
paid by reversing the input tax credit if the interest of the revenue is
sufficiently secured, then the authority may not be justified in
invoking its power under Section 83 of the Act for the purpose of
provisional attachment.
93. Section 109 – Revenue Bar Association and Ors.V.Union of India and Ors. Issue:-
(i) Whether the exclusion of advocates from being
“Constitution [2019] 109 taxmann.com 375 (Madras) [2019] 109 taxmann.com 375
considered for appointment as a Judicial Member in GST
of Appellate (Madras) September 20, 2019 Appellate Tribunal, is violative of Article 14 of the
Tribunal and Constitution of India.
(ii) Whether Section 110 (b)(iii) which makes a member of
Benches the Indian Legal Service, eligible to be appointed as a
thereof” Judicial Member of the appellate tribunal, contrary to the
law laid down by the Hon'ble Supreme Court in
R.Gandhi's case(supra).
(iii) 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 Hon'ble Supreme Court of India.
Held:-

(i) 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.
(ii) 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. However, we recommend that the 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."
94. Section 122 – M/s MAHAVIR ENTERPRISE Vs ASSISTANT COMMISSIONER OF Issue:-
“Penalty for STATE TAX It is the case of the department that the writ applicant is involved in
certain R/Special Civil Application No. 7613 Of 2020 dated 22.06.2020 Gujrat HC bogus billing transactions without any physical movement of the
offences” goods - Writ application filed praying to declare the Rule 142(1)(a)
of CGST/GGST Rules, being ultra vires and dehors the Act and
violative of Articles 14 and 19(1)(g) of the Constitution of India, to
the extent it says notice issued under section 122 - Writ applicant
seeks to challenge the legality and validity of the show cause notice
dated 30th November 2019 issued by the respondent No.1 under
Section 122(1) of the Act calling upon the writ applicant to show
cause why an amount of Rs.6,87,68,821/- should not be recovered
for the alleged contravention of the provisions of the Act and the
Rules.

Held:-
SCN is yet to be adjudicated - It also needs to be stated at this stage
that there is also a challenge to the constitutional validity of Rule
142(1)(a) of the CGST Rules on the ground that the same travels
beyond the provisions of the Act and is a result of excessive
delegation of powers -Bench does not propose to enter into the
merits of the allegations levelled against the writ applicant as
regards bogus billing transactions without there being any physical
movement of the goods as the matter is at the stage of a show cause
notice - Bench only proposes to consider whether the impugned
show cause could be termed as per se without jurisdiction and a
nullity and the validity of Rule 142(1)(a) of the Rules - Insofar as
scope of judicial review, against the show cause notice, is
concerned, in the case of Standard Chartered Bank and others vs.
Directorate of Enforcement and others, it is held that ordinarily the
Court should be reluctant to interfere with the show cause notice
unless the notice is shown to have been issued apparently without
any authority of law - High Court can interfere under Article 226 of
the Constitution of India against a show cause notice where the
same is issued by an authority in exercise of the power which is
absent; the facts does not lead to commission of any offence; the
show cause notice is otherwise without jurisdiction; it suffers from
incurable infirmity; against the settled judicial decisions or the
decisions of the Tribunal and bereft of material particulars justifying
commission of offence - A rule under delegated legislation can be
held to be ultra vires the statutory provisions of the Act if it is shown
(i) that it is beyond the scope of or in excess of the rulemaking
power of the delegate conferred under the Act, or (ii) that it is in
conflict with or repugnant to any enactment in the Act - It may be
noted that Section 164 of the Act confers power on the Central
Government to frame the rules - Under Section 164 of the Act, the
 Central Government has the power to make rules generally to carry
out all or any of the purposes of the Act - In the opinion of the
Bench, Rule 142(1)(a) of the Rules, 2017 is valid and is in no
manner conflict with any of the provisions of the Act - The
challenge to the legality and validity of the show cause should fail
having regard to the scope of judicial review and the challenge to
the validity of Rule 142(1)(a) of the Rules should also fail - Writ
application fails and is hereby rejected: High Court [para 19, 20, 22,
25, 28 to 31]
95. Section 129 – Ashok Kumar Bhatia State of U.P. v. State of U.P.* [2019] 104 Held:-
“Detention, For application of sections 129 and 130 of CGST Act/Uttar Pradesh
taxmann.com 453 (Allahabad)/ WRIT TAX NOS. 1645, 1660, 1661, 1676,
Seizure and GST Act, it is immaterial that person proceeded against is not a
Release of 1697 OF 2018 MARCH 14, 2019 registered person or a supplier or a taxable person or is not doing
Goods and any business; if such person is a transporter of goods and goods are
Conveyances in being transported and have been seized in transit and if charge is
Transit” made out against transporter, revenue can proceed to seize such
goods including conveyance
96. Section 129 – Synergy Fertichem Pvt. Ltd. v. State of Gujarat [2019] 112 taxmann.com Issue:-
“Detention, Scope of sections 129 and 130 of the CGST Act analysed and
370 (Gujarat) Special Civil Application Nos. 4730, 6118, 6125 OF 2019
Seizure and discussed in depth.
Release of &Oths. December 23, 2019
Goods and Held:-
Conveyances in • Section 129 of the Act talks about detention, seizure and
Transit” release of goods and conveyances in transit. On the other
hand, Section 130 talks about confiscation of goods or
conveyance and levy of tax, penalty and fine thereof.
Although, both the sections start with a non-obstante clause,
yet, the harmonious reading of the two sections, keeping in
mind the object and purpose behind the enactment thereof,
 would indicate that they are independent of each other.
Section 130 of the Act, which provides for confiscation of
the goods or conveyance is not, in any manner, dependent or
subject to Section 129 of the Act. Both the sections are
mutually exclusive.
• The phrase “with an intent to evade the payment of tax” in
Section 130 of the Act assumes importance. When the law
requires an intention to evade payment of tax, then it is not
mere failure to pay tax. It must be something more. The word
“evade” in the context means defeating the provisions of law
of paying tax. It is made more stringent by use of the word
“intent”. The assessee must deliberately avoid the payment
of tax which is payable in accordance with law. However,
the element of mensrea cannot be read into Section 130 of
the Act.
• For the purpose of issuing a notice of confiscation under
Section 130 of the Act at the threshold, i.e., at the stage of
detention and seizure of the goods and conveyance, the case
has to be of such a nature that on the face of the entire
transaction, the authority concerned should be convinced
that the contravention was with a definite intent to evade
payment of tax. The action, in such circumstances, should be
in good faith and not be a mere pretence. In other words, the
authorities need to make out a very strong case. Mere
suspicion may not be sufficient to invoke Section 130 of the
Act straightway.
• If the authorities are of the view that the case is one of
invoking Section 130 of the Act at the very threshold, then
 they need to record their reasons for such belief in writing,
and such reasons recorded in writing should, thereafter, be
looked into by the superior authority so that the superior
authority can take an appropriate decision whether the case
is one of straightway invoking Section 130 of the Act.
• Even if the goods or the conveyance is released upon
payment of the tax and penalty under Section 129 of the Act,
later, if the authorities find something incriminating against
the owner of the goods in the course of the inquiry, if any,
then it would be permissible to them to initiate the
confiscation proceedings under Section 130 of the Act.
• Section 130 of the Act is not dependent on clause (6) of
Section 129 of the Act.
• Sections 129 and 130 respectively of the Act are mutually
exclusive and independent of each other. If the amount of tax
and penalty, as determined under Section 129 of the Act for
the purpose of release of the goods and the conveyance, is
not deposited within the statutory time period, then the
consequence of the same would be forfeiture of the goods
and the vehicle with the Government. This does not
necessarily imply that the confiscation proceedings can be
initiated only in the event of the failure on the part of the
owner of the goods or the conveyance in depositing the
amount towards the tax and liability determined under
Section 129 of the Act.
• For the purpose of Section 129(6) of the Act, it would not be
necessary for the department to establish any intention to
evade payment of tax. If the tax and penalty, as determined
 under Section 129, is not deposited within the statutory time
period, then the goods and the conveyance shall be liable to
be put to auction and the sale proceeds shall be deposited
with the Government.
• Similarly, the reference to Sections 73 and 74 respectively of
the Act is not warranted for the purpose of interpreting
Sections 129 and 130 of the Act, more particularly, when
they all are independent of each other. The provisions of
Sections 73 and 74 of the Act are similar to the provisions of
Section 11A of the Central Excise Act and Section 28 of the
Customs Act, which deal with the adjudication proceedings.
Despite this, Section 110 is present in the Customs Act,
which speaks about seizure and similarly, Section 129 is
present in the Act for detention/seizure. Therefore, Sections
129 and 130 of the Act have non-obstante clauses, whereby
they can be operated upon in spite of Sections 73 and 74 of
the Act.
• The provisions of sections 73 and 74 respectively of the Act
deal with the 'demands and recovery' to be made by the
assessing officer based upon the assessment, whereas the
provisions of Section 129 of the Act deal with the 'detention/
seizure'. While assessing the returns, if the assessing officer
finds that the amount of tax has not been paid or erroneously
refunded, or where the input tax credit has been wrongly
availed or utilized for any reason, either with mala fide
intention or without the same, as the case may be, the
provisions of Section 73/74 of the Act would be invoked.
However, the provisions of Section 129 of the Act deal with
 situation where the evasion of tax/contravention of the
Act/Rules is detected during transit itself, requiring the
adoption of summary like proceedings. Therefore, the said
provisions operate in different spheres.
• The goods are not liable to be detained on the ground that the
tax paid on the product was less. In such circumstances, the
Inspecting Authority is expected to alert the Assessing
Authority to initiate appropriate proceedings “for assessment
of any allege sale at which the dealer will have his
opportunities to put forward his pleas on law and on fact.
The process of detention of the goods cannot be resorted to
when the dispute is bona fide, especially concerning the
exigibility of tax and, more particularly, the rate of that tax.
• Even in the absence of the physical availability of the goods
or the conveyance, the authority can proceed to pass an order
of confiscation and also pass an order of redemption fine in
lieu of the confiscation. In other words, even if the goods or
the conveyance has been released under Section 129 of the
Act and, later, confiscation proceedings are initiated, then
even in the absence of the goods or the conveyance, the
payment of redemption fine in lieu of confiscation can be
passed.
97. Section 129 – Om Disposals and Ors. v. State of U.P. and Ors. [2018] 93 taxmann.com Issue:-
“Detention, Whether the State Authorities have jurisdiction and authority to
117 (Allahabad) Writ Tax Nos. 41& 645 of 2018 April 30, 2018
Seizure and prescribe any documentation in respect of transaction which is
Release of covered under IGST Act and carry out proceedings of detention and
Goods and seizure in respect of inter-State movement of goods?
Conveyances in Held:-
Transit” The issue came up for consideration before Kerala, Madras and
Telangana and Andhra Pradesh High Courts which have
categorically held that the State Legislature or the State Government
has no power to make law/rules to govern interstate movement of
goods and cannot even detain a consignment for not carrying
documents prescribed by them for transporting goods in the course
of interstate trade. Reference may be made to the judgment of the
Hon'ble Madras High Court in Ascis Trading Co. v. Asstt. S.T
Oficer 2017 (71) STJ 143.

Prima facie, ld. Counsel for the Petitioner appears to be correct in

submitting that Section 20 (xx) and Section (xv) of the IGST Act,
when read along with the Rule 2(53) of the CGST Rules and Rule
138 of the GST Rules, provide authority to the Central Government
to specify, by notification, the documents that the person in-charge
of a conveyance carrying any consignment of goods shall carry
while the goods are in movement or in transit storage. The
temporary arrangement contemplated under Rule 138 of the CGST
Rules (till such time as E-Way Bill system is developed and
approved by the GST Council) contemplate the Central
Government to specify the documents by issuing the notification.
These provisions have been appropriately referred to by the
judgments of the Madras High Court, the Kerala High Court and the
Lucknow Bench in Satyendra Goods Transport Corpn. (supra).

In our considered opinion, in such a situation, it would not be

appropriate for us to comment on the correctness of either of the two
judgments delivered by co-ordinate Benches of this Court or
embark on a third independent course of our own. Judicial propriety
requires us to refer the matter to a larger Bench for an affirmative
 pronouncement on the validity of the notification dated 21.07.2017
and the Circulars issued thereunder (as modified from time to time)
in so far as it pertains to the requirement of form E-way bill-01 to
be carried for import of consignment valued not more than
Rs.50,000/- in a case of inter-State transaction and the legality of
seizure/penalty proceedings undertaken by the authorities of the
State of U.P. for violation thereof.
98. Section 129 – The Assistant State Tax Officer, Squad No. VII, Ernakulam-16 Issue:-
“Detention, Whether in the case of a transport, wherein there is no tax liability
and Ors. v. Indus Towers Limited [2018] 95 taxmann.com 160 (Kerala)
Seizure and on the goods, there could be a detention and seizure effected under
Release of W.A. NOS. 371 & 699 OF 2018 July 13, 2018 Section 129 of the Central Goods and Services Tax Act, 2017 [for
Goods and brevity "CGST Act"] and Kerala State Goods and Services Tax Act,
Conveyances in 2017 [for brevity "SGST Act"] and a release ordered as provided
Transit” under sub-section (1) or order passed under subsection (3) of
Section 129.

Held:-
In both the instances, the assessee had known that the transport was
one where there was no tax liability to the goods and had also issued
a delivery challan under Rule 55. When a delivery challan is issued
under Rule 55, it is a mandate under sub-rule (3) of Rule 55 that
there should be a declaration as specified in Rule 138. The fact that
there was no such declaration uploaded in the site as an intimation
to the Department of the transport of such goods raises a reasonable
presumption of asttempt to evade tax, against the respondents
herein. We cannot agree with the learned Single Judge that merely
because there was no suspicion raised against the delivery challan
there is an admission of non-taxability of the goods transported. The
finding that the transaction would not fall within the scope of
taxable supply under the statute, cannot be sustained for reason of
there being no declaration made under Rule 138. The resultant
 finding that mere infraction of the procedural rules cannot result in
detention of goods though they may result in imposition of penalty
cannot also be sustained. If the conditions under the Act and Rules
are not complied with, definitely Section 129 operates and
confiscation would be attracted. The respondents are entitled to an
adjudication, but they would have to prove that in fact there was a
declaration made under Rule 138 before the transport commenced.
If they do prove that aspect, they would be absolved of the liability;
otherwise, they would definitely be required to satisfy the tax and
penalty as available under Section 129. We, hence, vacate the
judgment of the learned Single Judge and allow the appeal. The
vehicle and the goods having been already released unconditionally,
further notice shall be issued and the adjudication under sub-section
(3) completed; upon which if penalty is imposed, definitely the
respondents would have to satisfy the same.

99. Section 129 – K.P. Sugandh Ltd. and Ors. V. State of Chhattisgarh and Ors. WPT Nos. Issue:-
“Detention, Under valuation of goods cannot lead to seizure of goods u/s 129 of
36 and 49 of 2020 March 16, 2020
Seizure and the CGST Act.
Release of https://cg.nic.in/hcbspjudgement/judgements_web/WP(T)36_20(16.03.20).
Goods and Held:-
pdf
Conveyances in Given the said facts and circumstances of the case, this Court is of
Transit” the opinion that under valuation of a good in the invoice cannot be
a ground for detention of the goods and vehicle for a proceeding to
be drawn under Section 129 of the Central Goods and Service Tax
Act, 2017 read with Rule 138 of the Central Goods and Service Tax
Rules, 2017. In view of the aforesaid the impugned order Annexure
P/1 i.e. the order passed under Section 129 and the order of demand
of tax and penalty both being unsustainable deserves to be and is
accordingly set-aside/quashed
100. Section 129 – Rivigo Services Pvt. Ltd.v.State of U.P. and Ors. [2018] 94 taxmann.com 8 Held:-
“Detention, The aforesaid clarification issued by the Government of India,
(Allahabad) Writ Tax No. 689 Of 2018 April 24, 2018
Seizure and Ministry of Finance stipulates the functioning of use of e-way bill
Release of system. In this clarification, it is clearly provided that on reaching
Goods and city Y , transporter A will assign the said e-way bill to the
Conveyances in transporter B. Thereafter the transporter B will be able to update the
Transit” details of 'Part-B' of Form GST e-way bill-01 and transporter B will
fill details of his vehicle and will move the goods thereafter. In the
instant case, there is no dispute with regard to downloading of e-
way bill, which was downloaded on 15.04.2018. The vehicle
proceeded from consignors place of business to the transporter's
godown and from there the goods were supposed to reload in other
vehicles and then to proceed to its ultimate destination namely
Telangana and Deharadun. Until and unless the goods/vehicle
reached at the place of transport company from where it was
required to be transported to its ultimate destination, how can one
fill up the details of vehicle when admittedly the details are not
known or available to the consignor or the Driver.

In view of the aforesaid facts, since the consignor and consignee

both are registered dealers as well as the present petitioner who is a
transport company, there is no basis or reason not to accept the
contention of the learned counsel for the petitioner and further once
the Government itself has clarified the situation by allowing the
transporter/dealer to fill up 'Part B' of the e-way bill when the goods
are reloaded in a vehicle which is meant for delivery to the
consignee, there remain no reasons to seized the goods and the
vehicle.

101. Section 129 – Hindustan Coca Cola Private Limited Versus Assistant State Tax Officer, Held:-
“Detention, Commissioner Of Commercial Taxes
 Seizure and 2020 (3) TMI 1125 - Kerala High Court From the perusal of the aforementioned findings, it is irresistibly
Release of WP (C). No. 5384 OF 2020 concluded that in case of a bonafide dispute with regard to the
Goods and classification between a transitor of the goods and the squad officer,
Conveyances in the squad officer may intercept the goods and detain them for the
Transit” purpose of preparing the relevant papers for effective transmission
to the judicial assessing officers and nothing beyond. In the present
case, it is a case of bonafide miscalculation as to whether the goods
would be exigible to 12% or 28%. The judgment cited in N.V.K
Mohammed SulthanRawtger's case (supra) was also a case where
the petitioner firm was a manufacturer of 'Ground Betel Nuts
(Arecanuts)' and registered with the Tamil Nadu under the Goods
and Service Tax Act. The goods were intercepted by the inspecting
authority to be in contravention of the misbranding. By relying upon
the decision in J.K Synthetics Limited V. Commercial Taxes
Officer, 1994 (4) SCC 276, it was held that the charging provisions
must be construed strictly but not the machinery provisions which
would be construed like any other statute.

102. Section 129 – Godrej &Boyce Manufacturing Co. Ltd. v. State of U.P. [2018] 97 Held:-
“Detention, We have already discussed relevant provisions of various Statutes
taxmann.com 552 (Allahabad) Writ Tax Nos. 87, 454, 455, 458, 462, 464,
Seizure and and it is evident that the provisions are parimateria. Officers of State
Release of 478, 551, 559, 560 & 587 Of 2018 September 18, 2018 are also competent for search, seizure and imposition of penalty in
Goods and respect of violation of Central Enactments. Moreover, provisions
Conveyances in relating to search and seizure are not for the purpose of imposition
Transit” of a new liability but to regulate fiscal statutory provisions in order
to avoid evasion of tax. Nothing has been placed on record to show
that similar requirement of relevant documents was not provided by
Central Government also in respect of inter-state transactions. There
is also a principle that mere mention of a wrong provision will not
make an order bad, if otherwise, power exists in the Statute. In the
circumstances, we are not satisfied that the provisions made by
 Governor vide Rule 138 read with Government's Notification dated
21.07.2017 and Commissioner's Circulars dated 22.07.2017 and
09.08.2017 are ultra vires of any Statute. The argument otherwise is
rejected. Submission that nonobservance is not intentional or
deliberate, needs an investigation into facts. We find that only a
showcause notice has been issued which is under challenge.
Petitioner has remedy of submitting reply to the same before
authority concerned and if final order is passed even thereafter there
is remedy of appeal. We therefore find no reason to interfere with
the seizure order and show-cause notice impugned in writ petition
no. 87 of 2018. Instead we relegate petitioner to avail remedy
provided under the Statute.
103. Section 129 – F.S. Enterprise v. State of Gujarat [2019] 111 taxmann.com 179 Special Held:-
“Detention, Though the person in charge of the conveyance had produced the
Civil Application Nos. 7061 To 7064 Of 2019
Seizure and documents which were statutorily required to be kept with him
Release of October 11, 2019 during the course of transportation of the goods, the vehicle in
Goods and question was detained on extraneous grounds namely that the lorry
Conveyances in receipt issued by the transporter was a photocopy without
Transit” computerised serial number and contact number details.

In terms of the instructions contained in the above circular dated 13"

April, 2018, the proper officer, empowered to intercept and inspect
a conveyance, may intercept any conveyance for verification of
documents and/or inspection of goods. In the present case, since no
FORM GST MOV-02 has been issued, no Part A of Form GST
EWB-03 has been uploaded on the common portal, no FORM GST
MOV-04 has been issued and no Part B of Form GST EWB-03 has
been uploaded on the common portal, it is clear that the conveyance
has been intercepted for verification of documents and not for
physical verification inasmuch as, if the officer intended to
undertake an inspection he was required to issue an order for
physical verification/inspection of the conveyance, goods and
documents in FORM GST MOV-02 and thereafter upload Part A of
Form GST EWB-03 on the common portal, prepare a report in
FORM GST MOV-04 and furnish the same to the petitioner and to
upload the final report of the inspection in Part B of Form GST
EWB-03 on the common portal. On a perusal of FORM GST MOV-
01, it is abundantly clear that both the documents prescribed under
rule 138A of the CGST Rules, viz. the invoice and the e-way bill,
were produced by the person in-charge of the conveyance. The
proper officer, upon verification of these two documents has not
found any discrepancies therein. Hence, in terms of the instructions
contained in paragraph 2(b) of the above circular, the proper officer
was required to allow the conveyance to move further. However,
the proper officer has issued an order of detention under section
129(1) of the CGST Act on the ground that the lorry receipt was a
photocopy and did not bear a computerised serial number or contact
number details. Thus, the impugned order has been passed contrary
to the statutory requirements which do not require production of a
lorry receipt by the person in-charge of a conveyance as well as
contrary to the instructions issued by the Board in the above referred
circular.

Under sub-rule (4) of rule 8 of the CGST Rules, the person seeking
registration is required to submit an application in Part-B of FORM
GST REG-01, reference may, therefore, be made to Part-B of the
said form. A perusal of Part B of FORM GST REG-01 shows that
column 18 thereof requires the person seeking registration to give
details of the goods supplied in the business and requires him to
specify the top five goods with description of the goods and
corresponding HSN Code (four digits). Thus, a person is required
to specify the top five goods which he wants to supply, but is not
prohibited from supplying goods other than those mentioned in the
form. Therefore, merely because the petitioner had specified goods
like waste, parings and scrap of plastic (HSN Code 3915 taxable at
5%) and the vehicle was carrying TMT Bars and MS Angles, round
bars and square bars (HSN Code 7214 taxable at 18%) is no ground
to detain such goods, more so, when the goods are correctly
described in the invoice and GST payable is computed at 18%. It
would have been a different matter if the above goods were shown
in the invoice to be waste, parings and plastic scrap taxable at 5%,
but when the goods are correctly described at the appropriate
taxable rate, there is no violation of any provision of law merely
because such goods are not specified in Part B of FORM GST REG-
01, inasmuch as the person who seeks registration is required to
specify only the top five goods and not all the goods which he seeks
to supply. Indubitably, many suppliers would be dealing with more
than five goods; however, in terms of column 18 of the prescribed
form, a supplier is required to specify only the top five goods with
description of the goods and corresponding HSN Code, therefore,
the contention that as the petitioner was not registered qua the goods
which were being transported there was breach of any provision of
law, does not merit acceptance. Moreover, the learned Assistant
Government Pleader is not in a position to pinpoint the provision
which has been contravened by the petitioner by transporting goods
other than those specified in the registration form.

Change in specification of goods is a non-core field and, therefore,

does not require the approval of the proper officer while making
amendment in the registration form. The respondents in the
affidavit-in-reply rely upon the fact that on 8.4.2019, the petitioner,
by way of an amendment, added the commodity which was being
transported, to submit that the disclosure of the commodity in the
 registration was mandatory on the ground that had it not been
mandatory, the petitioner was not required to carry out the
amendment. Such submission on the part of the respondents who
are responsible officers of the State Government is quite perturbing,
inasmuch as, the officers under the Act are required to make
submissions based upon the legal provisions and not on the conduct
of the party. Merely because the petitioner subsequently amended
the registration cannot be a ground to submit that reflecting such
goods in the registration was mandatory, without referring to the
statutory provision which mandates such requirement.
104. Section 129 – Advantage India Logistics (P.) Ltd. V. UOI [2018] 98 taxmann.com 120 Held:-
“Detention, On due consideration of the arguments of the learned counsel for
(Madhya Pradesh)Writ Petition No. 16266 Of 2018 August 23, 2018
Seizure and the parties so also the provisions of Section 4 of the IGST Act, we
Release of are of the view that officers appointed under the MPGST Act are
Goods and authorized to be proper officers for the purpose of IGST and,
https://mphc.gov.in/upload/indore/MPHCIND/2018/WP/16266/WP_16266
Conveyances in therefore, the contention of the petitioner that no notification was
Transit” _2018_FinalOrder_23-Aug-2018.pdf issued and in absence of any notification under Section 4 of the
IGST Act has no force, we cannot accept the contention of the
petitioner that the action of the respondent No.4 is wholly without
jurisdiction.
105. Section 140 – Willowood Chemicals Pvt.Ltd.v. Union of India [2018] 98 taxmann.com Issue:-
“Transitional Rules 117 of the CGST Rules and GGST Rules which prescribe the
100 (Gujarat) Special Civil Application No. 4252 Of 2018 September 19,
Arrangements time for making a declaration of available tax credits as on 30th June
for input tax 2018 2017 are ultra vires the Act and the rule making powers of the
credit” authority. Such time limit in any case should be read as directory
and not mandatory.

Held:-
Section 140 of the Act envisages certain benefits to be carried
forward during the regime change. As is well-settled, the reduced
rate of duty or concession in payment of duty are in the nature of an
 exemption and is always open for the legislature to grant as well as
to withdraw such exemption. As noted in case of Jayam& Company
[Supra], the Supreme Court had observed that input tax credit is a
form of concession provided by the legislature and can be made
available subject to conditions. Likewise, in the case of Reliance
Industries Ltd. [Supra], it was held and observed that how much tax
credit has to be given and under what circumstances is a domain of
the legislature. In case of Godrej & Boyce Mfg. Co. Pvt. Ltd.
[Supra], the Supreme Court had upheld a rule which restricts
availment of MODVAT credit to six months from the date of
issuance of the documents specified in the proviso. The contention
that such amendment would take away an existing right was
rejected.

In the economic matters of such vast scale, the wider considerations

of the State exchequer, while interpreting a statutory provisions
cannot be kept out of purview. Quite apart from independently
finding that the time limit provisions contained in sub-rule (1) of
Rule 117 of the CGST Rules is not ultra vires the Act or the powers
of the rule making authority, interpreting such powers as merely
directory would give rise to unending claims of transfer of credit of
tax on inputs and such other claims from old to the new regime.

Under the circumstances, we do not find any substance in the

petitioners' challenge to rule 117 (1) of the CGST Rules as well as
GGST Rules.
106. Section 140 – Siddharth Enterprises v. The Nodal Officer [2019] 109 taxmann.com 62 Issue:-
“Transitional It is the case of the writ-applicants that the declaration in the form
(Gujarat) Special Civil Application Nos. 5758 To 5762 Of 2019
Arrangements GST TRAN-1 could not be filed on account of the technical glitches
for input tax September 6, 2019 in terms of poor net connectivity and other technical difficulties on
credit” the common portal. The writ-applicants, in the alternative, have
prayed for a declaration that the due date contemplated under Rule
117 of the Rules to claim transitional credit is procedural in nature,
and thus, merely directory and not a mandatory provision.

Held:-
In our opinion, it is arbitrary, irrational and unreasonable to
discriminate in terms of the time-limit to allow the availment of the
input tax credit with respect to the purchase of goods and services
made in the pre-GST regime and post-GST regime and, therefore, it
is violative of Article 14 of the Constitution.

Section 16 of the CGST Act allows the entitlement to take input tax
credit in respect of the post-GST purchase of goods or services
within return to be filed under Section 39 for the month of
September following the end of financial year to such purchase or
furnishing of the relevant annual return, whichever is earlier.
Whereas, Rule 117 allows time-limit only up to 27th December
2017 to claim transitional credit on pre-GST purchases. Therefore,
it is arbitrary and unreasonable to discriminate in terms of the time
limit to allow the availment of the input tax credit with respect to
the purchase of goods and services made in pre-GST regime and
post-GST regime. This discrimination does not have any rationale
and, therefore, it is violative of Article 14 of the Constitution.

By not allowing the right to carry forward the CENVAT credit for
not being able to file the form GST Tran-1 within the due date may
severely dent the writ-applicants working capital and may diminish
their ability to continue with the business. Such action violates the
mandate of Article 19(1)(g) of the Constitution of India.
 Article 300A provides that no person shall be deprived of property
saved by authority of law. While right to the property is no longer a
fundamental right but it is still a constitutional right. CENVAT
credit earned under the erstwhile Central Excise Law is the property
of the writ-applicants and it cannot be appropriated for merely
failing to file a declaration in the absence of Law in this respect. It
could have been appropriated by the government by providing for
the same in the CGST Act but it cannot be taken away by virtue of
merely framing Rules in this regard.
107. Section 140 – Sutherland Global Services Private Limited v. Assistant Commissioner Issue:-
“Transitional Whether after introduction of GST, assessee is entitled to utilise
CGST and Central Excise and Ors. [2019] 111 taxmann.com 264 (Madras)
Arrangements accumulated credit pertaining to Education Cess (in short 'EC'),
for input tax Writ Petition No. 4773 Of 2018 Secondary and Higher Education Cess (in short 'SHEC') and Krishi
credit” Kalyan Cess (in short KKC').
September 5, 2019
Held:-
This issue can be clinched in favour of the petitioners for two
reasons. The impugned order proceeds on the basis that the
petitioner has no entitlement to claim set off of credit and thus
denies it. However, such credit continues to be available till such
time it is expressly stated to have lapsed. Lapsing is not a concept
unknown to the respondents. In fact, there are multiple instances
where the Board/Government provides for specified credits to lapse
mentioning the exact point in time when the lapsing would
commence and/or stipulating other conditions in this regard.

In the present case, admittedly, there is no

notification/circular/instruction that has expressly provided that the
credit accumulated would lapse. Not only this, the credit has been
carried forward manually and reflected in the returns from time to
time and such accumulated credits stare the Revenue in the face.
 Having permitted the assessee to carry forward the credit, the
authorities cannot now take a stand that such credit is unavailable
for use. The provisions of sub-section (1) read with sub-section (8)
of section 140, and the Explanation thereunder make it more than
clear that all available credit as on the date of transition would be
available to an assessee for set off.
108. Section 140 – Shree Motors vs Union Of India Civil Writ Petition No. 440/2020 Held:-
“Transitional 18 March, 2020(Rajasthan HC) The theory of vested rights and the implication of limitation on the
Arrangements said aspect of vested right has been considered by Hon'ble Supreme
for input tax Court in the case of Osram Surya (P) Ltd. (supra), wherein, while
credit” considering the proviso II to Rule 57G of the Act of 1944 it was laid
down that by providing limitation the statute has not taken away any
of the vested rights, which accrue to the manufacturers and what is
restricted is the time, within which, the manufacturer has to enforce
that right and, therefore, once the(12 of 12) provisions of Rule 117
of the CGST Rules, which prescribe limitation has been upheld, the
plea raised pertaining to the denial of vested right on account of
petitioners failing to submit/file Form GST Tran-1 in time cannot
be countenanced.
In the judgments of various High Courts cited by learned counsel
for the petitioners, in none of the cases the petitioners therein were
given specific directions to place material with regard to the
technical glitches and attempt on their part to file/submit the Form
by the High Court in petitions filed by them and finding of fact had
been recorded pertaining to failure on part of the petitioners therein
to file/submit Form GST Tran-1 by the GST Council.
In view thereof, the directions given in the judgments relied on by
leaned counsel for the petitioners cannot come to the rescue of the
petitioners now, once under the directions of this Court a finding
with regard to the same has come on record
109. Section 140 – Nelco Limited v. UOI WRIT PETITION NO. 6998 OF 2018 Held:-
“Transitional 20 March, 2020 We do not find that the time limit in the impugned rule is arbitrary
Arrangements Bombay HC or unreasonable. To plan to allocate resources, it is necessary to
for input tax know the amount of taxes available by a particular time. For an
credit” efficient administration of a tax system, certainty, especially in
terms of time, is important. Calculations of the tax liability dictated
by subjective conditions can lead to uncertainty. Such uncertainty
makes it difficult to budget and ensure that funds are allocated
where they are most required. The time limit for availing of input
tax credit in the transitionary provisions is thus rooted in the larger
public interest of having certainty in allocation and planning. The
time limit under Rule 117 is thus not irrelevant.
54. Section 140 read with Rule 117 under Chapter XX 55 WP
6998.2018 final.doc deals with transitional provisions for availment
of CENVAT credit. It permits availment of CENVAT credit,
however within a stipulated transitional period. This availment is
not absolute and is with a time limit. Upholding only the right to
carry forward the credit and ignoring the time limit would make the
transitional provision unworkable. The credit under the transitional
provision is not a right to be exercised in perpetuity. By the very
nature of the transitional provision, it has to be for a limited period.
The input tax credit in the transitional provision is a concession to
be utilised in a time-bound manner, and further extension is given
if the GST Council finds that there was a technical difficulty at its
end. If there is no technical difficulty on the common portal for the
registered user, this additional concession is not extended. Whether
to grant further concession as Rule 117(1A) will be determined from
examination the system logs from the portal. Exercise of equity
jurisdiction in some cases and not in other cases would cause an
anomalous situation, particularly when a time limit has been placed
in a taxing statute for achieving certainty and finality.
 To conclude, the time limit stipulated under Rule 117 of the Rules
is not ultra vires of the Act. This Rule is traceable to the power
conferred under section 164(2) of the Act. The time limit stipulated
in Rule 117 is in consonance with the transitional nature of the
enactment, and it is neither arbitrary nor unreasonable. Availment
of input tax credit under section 140(1) is a concession attached with
conditions of its exercise within the time limit. The IT Grievance
Redressal Cell is set up by the GST Council to examine the
existence of technical difficulties on the common portal. Sufficient
guidance is provided in the definition of technical difficulty in Rule
117(1A). Examining the system log to ascertain the existence of
technical difficulties on the common portal for registered persons,
is not arbitrary, nor does it lead to a fettering of discretion by the
authorities. Those registered persons who could not submit the
declaration by the due date because of technical difficulties on the
common portal as can be evidenced from the system logs are given
an extension on the recommendation of the Council. Where no such
evidence is forthcoming, no recommendation is made. In the
Petitioner's case, no such proof emerges and, therefore, no direction
as sought for can be issued.
110. Section 140 – Filco Trade Centre Pvt. Ltd. v.Union of India [2018] 97 taxmann.com 314 Issue:-
“Transitional Section 140 contains provisions for transitional arrangements for
(Gujarat) Special Civil Application Nos. 18433 And 20185 Of 2017
Arrangements input tax credit. Sub-section(3) of section 140 allows several classes
for input tax September 5, 2018 [Judgment stayed and SLP pending] of persons including first stage dealers to take credit of the eligible
credit” duties of the finished goods held in stock on the appointed day
subject to conditions prescribed therein. Clause(iv) of sub-
section(3) of section 140 imposes a condition that such invoices or
other prescribed documents were issued not earlier than twelve
months immediately preceding the appointed day. It is this
condition which has aggrieved the petitioners and the constitutional
validity thereof is challenged before the Court.

Held:-
We may now come to the nature of the right enjoyed by the
petitioner as a first stage dealer prior to introduction of GST and the
changes made by the new law concerning the petitioner's right to
enjoy such benefits. As already recorded, the statutory provisions
till enactment of goods and service tax statutes recognized the right
of the petitioner to pass on credit of the duty on manufactured goods
purchased from manufacturers. In some form or the other the burden
of duty element of the goods so purchased or the CVD value of the
imported goods would be shifted from the petitioner-company as
first stage dealer. Duty element suffered on the goods purchased
from manufacturers would be neutralized at the time of sale of such
goods by the dealer.

To sum up we are of the opinion that the benefit of credit of eligible

duties on the purchases made by the first stage dealer as per the then
existing CENVAT credit rules was a vested right. By virtue of
clause (iv) of sub-section (3) of section 140A such right has been
taken away with retrospective effect in relation to goods which were
purchased prior to one year from the appointed day. This
retrospectivity given to the provision has no rational or reasonable
basis for imposition of the condition. The reasons cited in limiting
the exercise of rights have no co-relation with the advent of GST
regime. Same factors, parameters and considerations of "in order to
co-relate the goods or administrative convenience" prevailed even
under the Central Excise Act and the CENVAT Credit Rules when
no such restriction was imposed on enjoyment of CENVAT credit
in relation to goods purchased prior to one year. In the conclusion
 we hold that though the impugned provision does not make hostile
discrimination between similarly situated persons, the same does
impose a burden with retrospective effect without any justification..
For all these reasons we find that clause (iv) of sub section (3) of
section 140 is unconstitutional.
111. Section 140 – Vision Distribution Pvt. Ltd. v. Commissioner, State Goods & Services Issue:-
“Transitional The grievance of the Petitioner is that due to the inaction of the
Tax and Ors. [2020] 114 taxmann.com 160 (Delhi) W.P. (C) NO. 8317 OF
Arrangements Respondents and their failure to allow smooth migration of the
for input tax 2019 December 12, 2019 credit standing in the Petitioner's account of unutilized input tax, the
credit” Petitioner could not use and exploit the Input Tax Credit while
making exports in the months of July and August, 2017 and was
forced to shell out the amount of Rs. 1,37,37,029/-, which would
not have been the case, had the Petitioner been able to utilize its
Income tax Credit which had accumulated even prior to the
enforcement of the GST regime.

Held:-
Having heard learned counsels, we are inclined to direct partial
refund of the amount claimed by the Petitioner. We are of the view
that the Petitioner cannot be made to suffer on account of failure on
the part of the Respondents in devising smooth transition to GST
regime w.e.f. 01.07.2017, from the erstwhile indirect taxation
structure. The Petitioner, being an exporter under the GST regime
is entitled to undertake zero rated supplies. The Petitioner claims to
have undertaken exports in the months of July and August, 2017
and since its unutilized Input Tax Credit - to the tune of Rs.
3,13,06,050/-, which was accumulated up to June, 2017, was not
reflected in its ITC ledger as on 01.07.2017, it could not utilize the
same w.e.f. 01.07.2017. The same resulted in the Petitioner having
to shell out, in cash, Rs. 1,37,37,029/- which would not have been
required, had the Respondents taken care to ensure that the
 Petitioner was able to utilize its accumulated Input Tax Credit in the
said months. Even the Form GST TRAN-1 was made available on
the portal of the Respondents only from 25.08.2017. The business
activity in the country could not be expected to come to a standstill,
only to await the Respondents making the GST system workable.
The failure of the Respondents in first putting a workable system in
place, before implementing the GST regime, reflects poorly on the
concern that the Respondents have shown to the difficulties that the
trade faced throughout the length and breadth of the country.
Unfortunately, even after passage of over two years, the
Respondents have not remedied their omissions and failures by
taking corrective steps. They continue to take shelter of the
limitations in, and the inability of their software systems to grant
refund, despite the same being justified. The rights of the parties
cannot be subjugated to the poor and inefficient software systems
adopted by the Respondents. The software systems adopted by the
Respondents have to be in tune with the law, and not vice versa. The
system limitations cannot be a justification to deny the relief, to
which the Petitioner is legally entitled. We, therefore, reject the
hyper technical objections sought to be raised by the Respondents -
to the effect, that no refund can be granted, because the system did
not reflect any credit lying in the ITC ledger of the Petitioner for the
months of July and August, 2017. If that is so, it is entirely the
Respondents making. In fact, to permit the Respondents to get away
with such an argument would be putting premium on inefficiency.
We therefore, reject the submission.
112. Section 140 – M/s P R MANI ELECTRONICS v. UNION OF INDIA and ors Issue:-
“Transitional Validity of Rule 117 of the CGST Rules, 2017 is under challenge
Writ Petition No.8890 of 2020 WMP.No.10803 of 2020
Arrangements on the grounds that it is ultra vires Section 140 of the CGST Act and
for input tax Dated 13.07.2020 infringes Articles 14 and 300A of the Constitution - Petitioner
credit” further prays that the Respondents should be directed to permit the
http://164.100.79.153/judis/chennai/index.php/casestatus/viewpdf/535330 Petitioner to file Form GST TRAN-1 either electronically or
manually to claim the transitional input tax credit of Rs.4,70,008/-.

Held:-
Section 140 of the CGST Act read with Rule 117 of the CGST Rules
enables a registered person to carry forward the accumulated ITC
under erstwhile tax legislations and claim the same under the CGST
Act - In effect, it is a transitional provision as is evident both from
Section 140 and Rule 117 - It is evident that ITC cannot be availed
of without complying with the conditions prescribed in relation
thereto - Prior to the amendment to Section 140 of the CGST Act,
the power to frame rules fixing a time limit was arguably not
traceable to the un-amended Section 140 of the CGST Act, which
contained the words "in such manner as may be prescribed",
because such words have been construed by the Supreme Court in
cases such as Sales Tax Officer Ponkuppam v. K.I. Abraham
[(1967) 3 SCR 518] as not conferring the power to prescribe a time
limit - Nevertheless, Bench views that it was and continues to be
traceable to Section 164, which is widely worded and imposes no
fetters on rule making powers except that such rules should be for
the purpose of giving effect to the provisions of the CGST Act - A
fortiori , upon amendment of Section 140 by introducing the words
"within such time", the power to frame rules fixing time limits to
avail Transitional ITC is settled conclusively - In SKH Sheet Metals
[2020-TIOL-1031-HC-DEL-GST] , the Delhi High Court
concluded, in paragraph 26, that the statute had not fixed a time limit
for transitioning credit by also referring to the repeated extensions
of time - Given the fact that the power to prescribe a time limit is
expressly incorporated in Section 140, which deals with
Transitional ITC, and Rule 117 fixes such a time limit, Bench is
unable to subscribe to this [ SKH Sheet Metals ] view - The fact that
such time limit may be extended under circumstances specified in
Rule 117, including Rule 117A, does not lead to the sequitur that
there is no time limit for transitioning credit - Section 16(4) of the
Act is indicative of the legislative intent to impose time limits for
availing ITC - Keeping the above statutory backdrop in mind, in the
context of Transitional ITC, the case for a time limit is compelling
and disregarding the time limit and permitting a party to avail
Transitional ITC, in perpetuity, would render the provision
unworkable - Bench concurs with the conclusion of the Bombay
High Court in Nelco [2020-TIOL-641-HC-MUM-GST] that both
ITC and Transitional ITC cannot be availed of except within the
stipulated time limit - There can be no quarrel with conceptual
position stated in in SKH Sheet Metals by the Delhi High Court that
ITC is the heart and soul of GST legislations inasmuch as such
legislations are designed to prevent the cascading of taxes; however,
it is not a logical corollary thereof that time limits for availing ITC
and, in particular, Transitional ITC, are inimical to the object and
purpose of the statute - Division Bench of this Court in C. Bright v.
The District Collector, [2019 SCC Online Mad 2460] captured the
relevant factors to determine whether a provision is directory or
mandatory, illustratively, in paragraph 20 - Those factors are - the
use of peremptory or negative language, which raises a rebuttable
presumption that the provision is mandatory; the object and purpose
of the statute and the provision concerned; the stipulation or
otherwise of the consequences of non-compliance; whether
substantive rights are affected by non-compliance; whether the time
limits are in relation to the exercise of rights or availing of
concessions; or whether they relate to the performance of statutory
duties - In this case, the peremptory word "shall" is used - The
relevant rule deals with the time limit for availing Transitional ITC
 by carrying it forward from the credit balance under tax legislations
which have been repealed and replaced by the CGST Act - Thus,
the object and purpose of Section 140 clearly warrants the necessity
to be finite - ITC has been held to be a concession and not a vested
right - In effect, it is a time limit relating to the availing of a
concession or benefit - If construed as mandatory, the substantive
rights of the assessees would be impacted; equally, if construed as
directory, it would adversely impact the Government's revenue
interest, including the predictability thereof - On weighing all the
relevant factors, which may be not be conclusive in isolation, in the
balance, Bench concludes that the time limit is mandatory and not
directory.
113. Section 140 – M/s DHAMTARI KRISHI KENDRA v. UNION OF INDIA and ors Issue:-
“Transitional Writ Petition (T) No. 70 of 2019 Grievance of the petitioner is in respect of his being unable to
Arrangements Dated 17.07.2020 upload GST TRAN-1 and TRAN-2returns on the GST web portal
for input tax by the last date prescribed i.e. 27.12.2017 – representation made
credit” before the authorities concerned was categorically rejected on the
ground of the petitioner failing to produce any material/evidence to
show that he had tried to submit the TRAN-1 and TRAN-2 within
the stipulated period but they could not due to technical glitch.

Held:-
In Annexure P/3 there is no reference whatsoever by the
Commissioner in respect of Annexure P/7 dated 26.02.2017
submitted by the petitioner in respect of his complaint regarding the
technical glitch that was faced by him - There is also no reference
of the attempt made by the petitioner to submit TRAN-1 form
manually as well as having sent it by post through registered AD -
In the light of the document Annexure P/7, so also the documents
by which the petitioner claims to have submitted TRAN-1 manually
on 18.01.2018, the finding of the Commissioner in Annexure P/3
 dated 14.09.2018 prima facie seems to be incorrect - All these
aspects have not been considered or decided by the Commissioner
in his order dated 14.09.2018 - in the absence of any reasons and
discussion by the Commissioner to the contentions and submissions
of the petitioner, Court is of the view that the said order dated
14.09.2018 needs to be reconsidered – court, therefore, remits the
matter back to the Commissioner, Commercial Tax for a
reconsideration and for passing of a fresh order - Considering the
element of time which has been consumed in the course of litigation,
it is expected that the Commissioner, Commercial Tax shall take a
decision at the earliest preferably within an outer limit of 60 days -
If required, the Commissioner can refer the matter to the GST
Council with its report for taking appropriate
sanction/recommendations from the GST Council (rule 117(1A)
refers) - In the event, if the Commissioner, Commercial Tax makes
a reference to the GST Council, it is expected that the Council also,
in turn, takes an early decision on the reference made by the
Commissioner preferably within a period of 90 days from the date
of receipt of reference by the Commissioner.
114. Section 174 – Sheen Golden Jewels (India) (P.) Ltd v. State Tax Officer(IB)-1, Held:-
“Repeal and The Constitution Amendment Act is in itself an amending act as
Thiruvananthapuram* [2019] 102 taxmann.com 208 (Kerala) WP (C) NO.
Saving” well as a repealing enactment. Of that Act, Section 19 is the
11335 OF 2018 & OTHS. January 11, 2019 transitional provision, as also the saving one. But Article 367 does
not apply because repealing enactment itself specifically provides
for transition and savings. Only in the absence of the repeal or
saving, is the General Clauses is attracted; here the General Clauses
Act does not apply;
Article 367 does not apply to constitutional amendments; the
General Clauses Act is only for understanding and for interpreting
words not defined and specifically available in the Constitution
including Article 366 (12);
 Specific repeal and saving under KSGST and also the application
of the General Clauses Act as per S.174 (3) is self-contradicting. In
any view, S.174 (2) and 174 (3) are by themselves self
contradicting;
Section 24 of the General Clauses Act is the saving of subordinate
legislation and applies when there are repeal and re-enactment. The
present is not a case of repeal and re-enactment. So Section 24 is
not attracted. In other words, machinery provisions are not saved.
Then, there can be no tax without machinery provisions.
115. Section 174 – Hero Motocorp Ltd. v. Union of India and Ors. [2020] 115 taxmann.com Facts:-
“Repeal and Central Government issued Exemption Notification dated 10-6-
128 (Delhi) W.P. (C). 505 OF 2020March 2, 2020
Saving” 2003 providing 100 per cent exemption from payment of excise
duty to industrial units located in State of Uttarakhand for a period
not exceeding 10 years and assessee in pursuance of said
Notification established a new unit in Uttarakhand in year 2008 and
after coming into force of GST regime Central Government issued
another Notification dated 18-7-2017 rescinding Exemption
Notification with effect from 1-7-2017.

Issue:-
The Petitioner had acted upon the assurance given by the
Respondent and incurred liability by mobilizing resources and
making substantial investments which, in turn, led to economic
growth and development in the State of Uttarakhand. Now, with the
change in the indirect tax laws, Petitioner's submission is that State
could not resile from the promise or alter its position, and withdraw
the exemptions which would negatively impact the financial
position of the Petitioner. Petitioner wants this court to hold the first
Respondent to the promise it had demonstrably made by way of the
exemption notification. The central question that arises for our
consideration in the present petition is as to whether the
Respondents can be compelled to grant exemption from payment of
GST and IGST to the petitioner w.e.f from 1-7-2017 for the balance
residual period of 10 years.

Held:-
Article 246A empowered both Centre and State to legislate and
introduce the goods and services tax. Another crucial amendment is
the insertion of Article 269A which fundamentally alters the scheme
of "Finance" provided in Chapter -I of part -XXII of the
Constitution. This is in fact, linked to clause (2) of 246A and
provides for levy and collection of tax in the course of inter-state
trade and its appropriation between the Union and States. After the
amendment of the Constitution, and along the lines of the
recommendation of the GST Council, the Parliament in exercise of
the powers conferred under the newly introduced articles, enacted
the Central Goods and Services Goods Act, 2017, Union Territories
Goods and Service Tax, Act, 2017 and Integrated Goods and
Services Act, 2017. Likewise, exercising powers under clause (1)
of Article 246A of the Constitution, the State Legislatures also
enacted their respective State Goods and Service Tax Legislations.
Thus, Article 246A can be termed as the most significant
amendment carried out by the Constitutional Amendment Act, as a
result whereof, now both Parliament and State legislatures are
competent to concurrently legislate with respect to Goods and
Services Tax. The dual GST structure which empowers the Centre
and the States to levy and collect taxes through appropriate
legislations is in conformity with the constitutional schemes.

Under the new taxing scheme, various central indirect taxes

including the Central Excise Duty and several State indirect taxes
have been subsumed in GST. It is a destination-based tax, - i.e.
Goods and Services are taxed at the point where they are consumed,
and not at the point of origin. Under GST law, the place of supply
of goods and services assumes significance. There are several
noticeable differences between the GST regime and the previous
one pertaining to levies, taxes, exemptions etc. Once such area is
the "exemptions". The Legislature has sought to prune the
exemptions that were provided by the Government in the previous
regime. The GST predicates on the fact that there would be
minimum exemptions. This was necessary in order to ensure that
cascading of taxes is minimized and there is seamless transfer of the
Input Tax Credit, which is one of the main cornerstones of the GST
law. In this changed scenario, the Parliament being conscious of the
exemptions that were granted as incentives against investments
through a notification, while repealing the earlier legislations,
specifically provided that such incentives shall not continue as
privileges, if the notifications are rescinded on or after the appointed
date provided under the Act.

Even otherwise, the Respondents acknowledgment cannot vest a

right in favour of the Petitioner, if they did not have such right in
law. We also do not perceive that the Petitioners have acquired
vested right in terms of the policy. The fiscal benefits promised in
return for making investments in the State of Uttarakhand were
privileges which were granted under law that no longer holds the
field. The rights and the obligations that were flowing under the tax
regime originated from the tax structure that existed when the policy
was framed. Such obligations cannot stay alive, if the legislation
itself has undergone a complete overhaul by advent of introduction
of GST legislations. Therefore, the Budgetary Support Scheme
cannot said to be in contravention of the fiscal incentive policies or
promise made by Respondent No. 1 at the time of introducing area-
 based exemptions. In the previous tax regime, taxes were being
levied on different incidents, such as 'manufacturing' in the case of
the levy of excise duty. This is no longer a relevant consideration.
GST is a destination based tax, the area based exemptions, under
the GST regime have entirely different dimensions and therefore,
for this reason, there are no area-based exemptions envisaged under
the GST regime. Government has, instead, provided the necessary
support to the industry for its economic development and has
grandfathered the incentive Scheme.

Thus, what clearly emerges from the decisions taken note of

hereinabove is that the plea of promissory estoppel cannot be
enforced against an act done in accordance with the statutory
provisions of law. Under Section 174(2)(c) of the CGST Act,
express provision has been made by the Parliament to provide that
any tax exemption granted as an incentive against investment
through a notification under, inter alia, the erstwhile Central Excise
Act, shall not continue as a privilege if the said notification is
rescinded, and in the present case, the notification which granted
100% excise duty exemption was, in fact, rescinded. Thus, in the
absence of any challenge by the Petitioner to the rescission of the
said notification which granted exemption or to the vires of the
proviso to section 174 (2)(c) of the CGST Act, no plea of
promissory estoppel is maintainable. The language used in the
proviso to section 174 (2)(c) is clear and unequivocal, and leaves no
room for a different interpretation.

116. Section 174 – Aargus Global Logistics (P.) Ltd.v. Union of India [2020] 116 taxmann.com Issue:-
“Repeal and Petitioner has preferred the present petition to seek directions
381 (Delhi) W.P.(C) 2580 OF 2020 March 6, 2020
Saving” quashing Rule 5A of the Service Tax Rules, 1994 by declaring that
it is in conflict with various provisions of the Finance Act, 1994,
and it is beyond the rule- making power of Respondent No. 1 and
ultra vires the Finance Act, 1994.

Held:-
Turning to Rule 5A, we notice all that it does is to empower an
Authorized Officer - as authorized by the Commissioner, to have
access to any premises registered under Service Tax Rules for the
purpose of carrying out scrutiny, verification and checks as may be
necessary to safeguard the interest of Revenue. It also obliges every
assessee to, on demand, make available to the officer empowered
under Sub Rule (1), or the audit party deputed by the Commissioner,
or the Comptroller and Auditor General of India, or Cost
Accountant or Chartered Accountant nominated under Section 72
(A) of the Finance Act, 1994 to produce the enumerated records and
documents for scrutiny of the officer or audit party, or Cost
Accountant or Chartered Accountant within the specified time limit.
Without such power in the Authorized Officer, and corresponding
obligation on the assessee, it goes without saying that it would be
practically impossible for the officers charged with the
responsibility of enforcing the Finance Act, 1994, to effectively
enforce the provisions of the said Act. The power vested in the
Competent Authorities to recover service tax not levied or paid, or
short levied or short paid, or erroneously refunded [under Section
73 of the Finance Act, 1994] would remain a dead letter, if the
Competent Authority under the Act is not empowered in terms of
the Rule 5A. The said Rule 5A is, even otherwise, relatable to
Clause (k) of Section 94 (2), since the said Rule - while casting an
obligation on the assessee to produce the records, he is obliged to
maintain under the Finance Act, 1994, simultaneously empowers
the Competent Authorities to ensure compliance of the said
obligation. Thus, we reject the submission of learned senior counsel
for the Petitioner that the Central Government lacked the authority
and competence to frame Rule 5A.

The submission of learned Senior Counsel for the Petitioner is that

Chapter V of the Finance Act, 1994 - which brought in the service
tax regime, stands omitted. Thus, the provisions of Chapter V of the
Finance Act, 1994 do not survive the enactment of the CGST Act.
He further submits that Clauses (d) and (e) of Sub Section (2) of
Section 174 have to be read in conjunction. Therefore, what is not
affected by the omission of Chapter V of the Finance Act, 1994, is
the "duty, tax, surcharge, fine, penalty, interest" which were due, or
may become due even after the enactment of the CGST Act and the
omission of Chapter V of the Finance Act, 1994. He submits that
such "duty, tax, surcharge, fine, penalty, interest" could be only in
respect of, and arising out of proceedings already initiated, and
ongoing proceedings on the date of enactment of the CGST Act. In
this regard, learned Senior Counsel for the Petitioner has laid special
emphasis on the use of the words "in respect of the any such duty,
tax, surcharge, penalty, fine, interest, right, privilege, obligation,
liability, forfeiture or punishment, as aforesaid" contained in Clause
(e), as also the words "and any such investigation, inquiry,
verification……" used in the same clause. We cannot agree with
this submission of learned Senior Counsel for the Petitioner. Clause
(e) expressly empowers the Competent Authorities to initiate and
institute even fresh proceedings under the omitted chapter V of the
Finance Act, 1994 and the rules framed thereunder, despite the said
omission by Section 173 of CGST Act. This is clear from the use of
the expression "may be instituted, continued or enforced………" in
Clause (e) of Section 174 (2) of the Act. Clause (d) of Section 174
(2) saves "any duty, tax, surcharge …….. as are due or may become
due……". There is nothing to suggest that the "duty, tax, surcharge"
etc. should relate to proceedings initiated under, inter alia, Chapter
V of the Finance Act, 1994 before the coming into force of the
CGST Act, and not to proceedings initiated under the enactments
after the coming into force of the CGST Act. If this submission of
the Petitioner were to be accepted, it would mean that all evasions
of, inter alia, service tax and all infractions of the provisions of the
Finance Act, 1994 which remained suppressed and un-investigated
up to the point of time when, inter alia, the said Chapter V of the
Finance Act was omitted and CGST Act was enacted, would go un-
investigated without the violators of the law being brought to
justice. That, in our view, was clearly not the intent and there is
nothing to show that the Parliament intended to grant blanket
immunity to all assessees whose past acts and omissions may,
otherwise, fall foul of the provisions of, inter alia, Chapter V of
Finance Act, 1994. On the contrary, it is clear to us that the intention
of the Parliament was clearly to save not only ongoing investigation,
inquiry, verification etc. but also to specifically enable the initiation
of fresh investigation, inquiry verification etc. in respect of acts and
omissions relating to inter alia, the erstwhile service tax regime.

From the above, it would be seen that the repeal of the Central Act,
unless a different convention appears, shall not, inter alia, affect any
investigation, legal proceeding or remedy in respect of any such
right, privilege, obligation, liability or penalty, forfeiture or
punishment and any such investigation, legal proceeding or remedy
maybe instituted, continued or enforced and any such penalty,
forfeiture or punishment may be imposed as if the repealing Act or
regulation have not been passed. Far from exhibiting a different
intention, Section 174 of the CGST Act expressly seeks to preserve
the powers of the Competent Authorities to, inter alia, institute
 investigation, inquiry etc. In fact, even if Section 174 (2) of the
CGST Act were not to expressly so provide, the said power of the
Competent Authorities stood preserved by virtue of Section 6 of the
General Clauses Act
117. Section 174 – Intertek India Pvt. Ltd. V. Central Board Of Indirect Taxes And Customs Held:-
“Repeal and Having heard learned counsel for the petitioner and Mr. Singh, who
(CBIC) & ANR. W.P.(C) 13350 of 2019, December 18,2019
Saving” appears on advance notice, we find no merit in this petition.
Reliance placed by the petitioner on Mega Cabs (supra) is
misplaced, firstly, on account of the fact that the said decision has
been stayed by the Supreme Court; and, secondly, on account of the
fact that the Division Bench only declared that Rule 5A(2) as
amended, to the extent that it authorized the officers of the Service
Tax Department, the audit party deputed by a Commissioner or the
CAG to seek production of documents therein on demand as ultra
vires the Finance Act. It does not interfere with the power of the
authorities vested by Sub-Rule (1) of Rule 5A and the power of the
respondents to conduct investigation and inquiry. To us, it appears
to be incomprehensible that in respect of any breach or violation of
the service tax laws, whereby the assessee may have taken any
undue advantage, inter alia, by non-reversing the CENVAT credit,
should get away without the same being investigated or inquired
into.
118. Section 174 – Laxmi Narayan Sahu v. UOI [2018] 98 taxmann.com 281 (Gauhati)/Case Held:-
“Repeal and In other words, the proposition laid down in paragraph 37 of
NO. WP (C) 2059 OF 2018 October 12, 2018
Saving” Kolhapur Canesugar Works Ltd. (supra) is that the continuance of
a further proceeding under an omitted Act depends upon as to
whether a savings clause is provided in the enactment by which the
https://taxguru.in/wp-content/uploads/2018/10/Sri-Laxmi-Narayan-Sahu-
earlier enactment was omitted. In the instant case, it is taken note of
Vs-The-Union-of-India-Others-Gauhati-high-court.pdf that the provisions of Chapter V of the Finance Act of 1994 were
omitted by Section 173 of the CGST Act of 2017, where Section
173 is under the heading of 'Amendment of Act 32 of 1994'. Section
174 of the said Act which is under the heading of 'Repeal and
Saving' in Sub-Section 1 provides that save and otherwise provided
in the Act, on and from the date of commencement, the portion of
the Central Act of 1994, the Medicinal and Toilet Preparation
(Excise Duties) Act 1955, the Additional Duties of Excise (Goods
of Special Importance) Act 1957, the Additional Duties of Excise
(Textiles and Textile Articles) Act and the Central Excise Tariff
Act, 1985 stood repealed. But Section 174(2) of the CGST Act of
2017 provides that the repeal of the said Acts and the amendment
of the Finance Act of 1994 (Act 32 of 1994) to the extent mentioned
in Section 174(1) or 173, as the case may be, shall not, amongst
others, effect any investigation, enquiry or verification (including
scrutiny and audit), assessment proceedings, adjudication or any
other legal proceeding or recovery of arrears etc., and all such
proceedings may be instituted, continued or enforced as if the Act
had not been so amended or repealed.
As the provisions of Section 174(2) also is clearly applicable in
respect of an omission of the enactment under Section 173,
therefore, any such investigation, enquiry, etc., that was instituted,
continued or enforced under Chapter V of the Finance Act of 1994,
continues to remain in place inspite of such omission of Chapter V
of the Finance Act. In other words, Section 174(2)(e) is a savings
clause in respect of any investigation, enquiry etc., that was/to be
instituted under Chapter V of the Finance Act of 1994. A conjoint
reading of Sections 173 and 174(2)(e) would show that while
bringing an omission to the provision of Chapter V of the Finance
Act of 1994, a savings clause for continuing with the proceedings
initiated/to be initiated was also duly provided. Existence of the
savings clause in respect of omission of Chapter V of the Finance
Act of 1994 clearly brings it within the purview of the provisions
laid down by the Constitution Bench of the Supreme Court in
 paragraph 37 of Kolhapur Canesugar Works Ltd.'s case (supra). 32.
As already elucidated hereinabove, paragraph 37 of Kolhapur
Canesugar Works Ltd.'s case (supra) provides that if a statute stood
omitted with a savings clause, the savings clause would not render
it impermissible for the proceedings initiated/to be initiated under
Chapter V of the Finance Act of 1994, which stood omitted by
Section 173 of the CGST Act of 2017 to be continued. 33. A
conjoint reading of the provisions laid down in paragraph 37 of
Kolhapur Canesugar Works Ltd.'s case (supra) and Sections 173
and 174(2)(e) would lead to a conclusion that although Chapter V
of the Finance Act of 1994 stood omitted under Section 173, but the
savings clause provided under Section 174(2)(e) will enable the
continuation of the investigation, enquiry, verification etc., that
were made/to be made under Chapter V of the Finance Act of 1994.
119. Section 174 – Mascot EntradePvt. Ltd. v. Union Of India Issue:-
“Repeal and 2018 (10) TMI 904 - Gauhati High Court Section 173 of the CGST Act of 2017 having omitted chapter V of
Saving” the Finance Act of 1994, no proceeding initiated under Chapter V
can further be continued, in view of the legal implication of a
statutory provision being omitted, as laid down by the Supreme
Court in its decision in Messrs RayalaCorporaion (P) Ltd., Vs.
Director of Enforcement, New Delhi reported in 1969 (2) SCC 412
in paragraph Nos. 17 and 18 and in Kolhapur Canesugar Work Ltd.
and Another –vs- Union of India and Others reported in (2000) 2
SCC 536 in paragraph 37, which was again reiterated in General
Finance Co. and Another –vs- Assistant Commissioner of Income
Tax, Punjab reported in (2002) 7 SCC 1.
Held:-

The provisions of Section 174(2) also is clearly applicable in respect

of an omission of the enactment under Section 173, therefore, any
such investigation, enquiry, etc., that was instituted, continued or
enforced under Chapter V of the Finance Act of 1994, continues to
remain in place inspite of such omission of Chapter V of the Finance
Act. In other words, Section 174(2)(e) is a savings clause in respect
of any investigation, enquiry etc., that was/to be instituted under
Chapter V of the Finance Act of 1994. A conjoint reading of Section
173 and 174(2)(e) would show that while bringing an omission to
the provision of Chapter V of the Finance Act of 1994, a savings
clause for continuing with the proceedings initiated/to be initiated
was also duly provided. Existence of the savings clause in respect
of omission of Chapter V of the Finance Act of 1994 clearly brings
it within the purview of the provisions laid down by the Constitution
Bench of the Supreme Court in paragraph 37 of Kolhapur
Canesugar Works Ltd. (supra).

As already elucidated hereinabove, paragraph 37 of Kolhapur

Canesugar Works Ltd. (supra) provides that if a statute stood
omitted with a savings clause, the savings clause would not render
it impermissible for the proceedings initiated/to be initiated under
Chapter V of the Finance Act of 1994, which stood omitted by
Section 173 of the CGST Act of 2017 to be continued.

A conjoint reading of the provisions laid down in paragraph 37 of

Kolhapur Canesugar Works Ltd. (supra) and Section 173 and
174(2)(e) would lead to a conclusion that although Chapter V of the
Finance Act of 1994 stood omitted under Section 173, but the
savings clause provided under Section 174(2)(e) will enable the
continuation of the investigation, enquiry, verification etc., that
were made/to be made under Chapter V of the Finance Act of 1994.
120. Section 2(13) - MATERIAL RECYCLING ASSOCIATION OF INDIA v. UNOIN OF Held:-
IGST Act, INDIA & 2 other(s) Parliament has exclusive power under Article 246A to frame laws
2017- R/SPECIAL CIVIL APPLICATION NO. 13238 of 2018 for inter State supply of goods or services - the basic underlying
“Intermediary” Dated 24.07.2020Gujrat HC change brought in by the GST regime is to shift the base of levy of
tax from point of sale to the point of supply of goods or services -
Section 13 – sub-section 8 of section 13 refers to place of supply of the services
IGST Act- in case of banking company, intermediary services and services
“Place of consisting of hiring of means of transport - Intermediary services is
supply of defined in section 2(13) of the IGST Act, 2017 which means a
services where broker, an agent or any other person, by whatever name called, who
location of arranges or facilitates the supply of goods or services or both, or
supplier or securities, between two or more persons, but does not include a
location of person who supplies such goods or services or both, or securities on
recipient is his own account and accordingly, when intermediary services are
outside India “ provided by brokers, the place of supply could be either the location
of the service provider or the service recipient - petitioner has tried
to submit that the services provided by a broker outside India by
way of intermediary service should be considered as ‘export of
services' but the legislature has thought it fit to consider such
intermediary services; that the place of supply would be location of
the supplier of services - in that view of the matter, it would be
necessary to refer to the definition of ‘export of services' as
contained in s.2(6) of the Act, 2017 which provides that 'export of
service' means the place of service of supply outside India - Upon a
conjoint reading of section 2(6) and 2(13) which defines 'export of
service' and 'intermediary service' respectively, then the person who
is intermediary cannot be considered as exporter of services because
he is only a broker who arranges and facilitates the supply of goods
and services or both - in such circumstances, the respondent no. 3
have issued Notification no. 20/2019-IT(R) where exemption is
granted in IGST rates from payment of IGST in respect of services
provided by intermediary in case the goods are supplied in India -
It, therefore, appears that the basic logic or inception of section
13(8)(b) of the IGST Act, 2017 considering the place of supply in
case of intermediary to be the location of supply of service is in
order to levy CGST and SGST and such intermediary service,
therefore, would be out of the purview of IGST - There is no
distinction between the intermediary services provided by a person
in India or outside India - only because the invoices are raised on
the person outside India with regard to the commission and foreign
exchange is received in India, it would not qualify to be export of
services, more particularly when the legislature has thought it fit to
consider the place of supply of services as place of person who
provides such service in India - There is no deeming provision as
tried to be canvassed by the petitioner, but there is a stipulation by
the Act legislated by the Parliament to consider the location of the
service provider of the intermediary to be place of supply - similar
situation was existing in service tax regime w.e.f 1st October 2014
and as such same situation is continued in GST regime also -
Therefore, this being a consistent stand of the respondents to tax the
service provided by intermediary in India, the same cannot be
treated as ‘export of services' under IGST Act, 2017 and, therefore,
rightly included in section 13(8)(b) of the IGST Act to consider the
location of supplier of service as place of supply so as to attract
CGST and SGST - contention of the petitioner that it would amount
to double taxation is also not tenable in eyes of law because the
services provided by the petitioner as intermediary would not be
taxable in the hands of recipient of such service, but on the contrary
a commission paid by the recipient of service outside India would
be entitled to get deduction of such payment of commission by way
of expenses and, therefore, it would not be a case of double taxation
- If the services provided by intermediary is not taxed in India,
 which is a location of supply of service, then, providing such service
by the intermediary located in India would be without payment of
any tax and such services would not be liable to tax anywhere -
contentions raised on behalf of the petitioner are not tenable in view
of the notification 20/2019-IT(R) issued by the GOI whereby Entry
no. 12AA is inserted to provide Nil rate of tax granting exemption
from payment of IGST for service provided by an intermediary
when location of both supplier and recipient of goods is outside the
taxable territory i.e. India - respondents have thought it fit to
consider granting exemption to the intermediary services viz.
service provider when the movement of goods is outside India -
accordingly, it cannot be said that the provision of section 13(8)(b)
read with section 2(13) of the IGST Act are ultra vires or
unconstitutional in any manner - it would, however, be open for the
respondents to consider the representation made by the petitioner so
as to redress its grievance in suitable manner - Petition is disposed
of accordingly.
121. Section 5 – Atin Krishna v. UOI and Ors. [2019] 107 taxmann.com 411 (Allahabad) Facts:-
IGST Act – The petitioner submitted that due to the mis-interpretation of the
P.I.L. CIVILNO. 12929 OF 2019
“Levy and provisions of CGST/SGST/IGST Acts, (GST Act), the public
Collection” MAY 3, 2019 exchequer is being made to suffer huge financial loss and therefore,
it is necessary in public interest that this Court provides true and
Section 7 – correct interpretation of the applicable provisions of the aforesaid
IGST Act – enactments so as to ensure that the revenue loss to the public
“Inter-state exchequer is forthwith prevented.
supply”
Held:-
On a careful reading of Section 7 (2) along with Sections 2 (10),
2(4) of IGST Act and Sections 2 (11) and 2 (13) of Customs Act,
1962, it is concluded that "crossing the customs frontier of India"
under the IGST Act means crossing the limits of custom area which
includes the area of customs port, customs airport or land customs
station or a warehouse and also any area in which imported goods
are ordinarily kept before clearance by customs authority. The DFS
located in the custom airport, the custom warehouse are both part of
the custom area as defined under Section 2 (11) of the Customs Act,
1962. The supply of imported goods to and from the DFS do not
cross the customs frontier and hence these supplies will be an inter-
State supply in accordance to Section 7 (2) of the IGST Act.
Consequently, they cannot be an interState supply liable to CGST
and SGST under Section 9 of the CGST Act and SGST Act.

The point of time is one of the essential ingredients for levy of

integrated tax on supply of goods imported into India and is
governed by the proviso of Section 5 (1) of the IGST Act read with
the provisions of Customs Act, 1962.

Section 7 (2) read with proviso of Section 5 (1) of the IGST Act
states that integrated tax on "goods imported into India" shall be
levied and collected in accordance with the provisions of Section 3
of the Customs Tariff Act, 1975. Further, such tax is required to be
levied "at the point" when the duties of customs are levied on the
said goods under Section 12 of the Customs Act, 1962 and at no
other point.

The above observations of Hon'ble Apex Court make it clear that

the effective taxable event for the purpose of levy of Customs Duty
is the time only when the goods cross the customs barrier and the
bill of entry for home consumption is filed i.e. when the goods
become part of the mass of goods within the country. Therefore,
when the goods are imported from outside India and are kept in
customs warehouse and exported therefrom, the stage for payment
of customs duty under Customs Act, 1962 does not arise. Hence
neither Custom duty nor IGST is payable.

The warehouse goods are supplied by the DFS to the International

arriving passengers before its clearance for home consumption. The
arriving passengers thereafter cross the customs frontier at the
airport along with the goods and only then clears the same for home
consumption. The passenger is therefore liable to pay the applicable
duties of customs. The goods being a part of passenger's bonafide
baggage are cleared for home consumption by the passenger under
the Baggage Rules, 2016 and not by the DFS, hence no customs
duty is payable by the DFS and therefore under proviso of Section
5 (1) of the IGST Act read with Section 12 of the Customs Act 1962,
No IGST is payable either.

The supply of warehoused goods by the DFS at the departure

terminal is to departing International passengers i.e. the passengers
travelling from India to a foreign destination. Thus, the goods
supplied are never cleared for home consumption and the
warehoused goods are exported by the DFS, therefore the levy
Customs duty and of the IGST do not arise.

The above observations conclude that IGST is not payable on the

supply either to or from the DFS located at the arrival or at departure
terminal.

Hence the sale/supply at the International departure terminals DFS

would be export of goods under Customs Law and therefore will be
considered as exports of goods under GST Act, since the definition
of "export" and "export of goods" under both the laws is the same.
 The supply from DFS at departure terminal of the Airport is similar
to a FOB export, the only difference being that in the case of DFS
supply, the International passenger also acts as carrier of goods out
of India.

In view of above discussion, we find that exemption under GST on

goods supplied to and from DFS is rightly conferred and the claims
of any accumulated unutilized ITC are refundable.

122. Section 5 – A-1 Cuisines Private LimitedV.Union of India and Ors. Writ Petition NO. Issue:-
IGST Act – Exempt the petitioner from charging applicable taxes under the GST
8034 OF 2018
“Levy and Legislations on sale of cosmetic products, perfumes etc. to the
Collection” 28th November, 2018. International passengers and claim refund of any input tax paid on
input supplies and input services from the retail shop which the
petitioner intends to set up at the Domestic Security Hold Area at
Dr. Babasaheb Ambedkar International Airport.

Held:-
The Central Government has thus applied the ratio laid down by
Hon'ble Supreme Court in Hotel Ashoka (supra) and correctly held
that the transactions effected at the duty free shops at the arrival or
departure of the International Airports in India located after the
passenger clears immigration might have taken place within the
geographic territory of India, but for the purposes of levy of
Customs Duties or any other taxes, the area of duty free shops shall
be deemed to be the area beyond the customs frontiers of India and
the transaction would be said to have taken place outside India.

The aforesaid Judgments are clearly applicable only in respect of

supplies to or from duty free shops situated after the passenger
crosses the immigration counter beyond the Customs Frontiers, at
 arrival or departure hall of International Airport Terminals, where
the transaction would be said to have taken place outside India. The
International travel of incoming or outgoing passenger after
immigration clearance would be beyond any doubt. In such event,
whether it is the sale/purchase/supplies of goods or services, to or
from such duty free shop, the same is said to be taken place outside
India. Hence, the same would be a "non-taxable supply" under
Section 2(78) of CGST/SGST and such duty free 15 wp8034.18.odt
Shops located at the International Airports would be in "non-taxable
territory" as defined in Section 2(79) of CGST/SGST. As per
section 2(24) of IGST, the same meaning as given in CGST/SGST
applies for IGST as well.

123. Section 7 – Mohit Minerals Pvt Ltd Versus Union Of India

IGST Act 2020 (1) TMI 974 - Gujarat High Court Issue:-
“inter state
supply” Special Civil Application NO. 726 of 2018 Writ-applicants have challenged the levy of the IGST on the
Section 8 – estimated component of the Ocean Freight paid for the
IGST Act Dated.- January 23, 2020 transportation of the goods by the foreign seller as sought to be
“intra state levied and collected from the writ-applicants as the importer of the
supply” https://taxguru.in/wp-content/uploads/2020/01/Mohit-Minerals-Pvt.-Ltd.- goods.
Vs-Union-of-India-Gujarat-High-Court.pdf

Held:-

Article 246A, inserted through Section 2 of the Amendment Act, is

a marvel of the federal fiscal mechanism. By this Article, the State
Legislatures now have the power to make laws regarding GST tax
imposed by the Union or by that State and to implement them in
intra-state trade. The Centre, of course, continues to have exclusive
power to make GST laws regarding inter-state trade. Both the Union
and States in India now have simultaneous powers to make law on
the goods and services.

118. Article 269A, inserted through Section 9 of the Act, deals with
levy and collection of goods and services tax in the course of inter-
State trade or commerce. That is, in case of inter-state trade, the
amount collected by the Centre is to be apportioned between the
Centre and the States as per the GST Council’s recommendations.
Under the GST, if the Centre collects the tax, it assigns State’s share
to the State concerned; on the other hand, if the State collects the
tax, it assigns the Centre’s share to the Centre. Those proceeds will
not form a part of the Consolidated Fund of India, so it avoids
having an Appropriation Bill passed every time a deposit is made.

119. Article 279A provides for the constitution of a GST Council,

besides prescribing its powers and positions. Earlier, Article 268A
dealt with the service tax levied by Union and collected and
appropriated by the Union and States. Now, this Article stands
repealed. As to the amended constitutional provisions, Article 248
confers residuary legislative powers on Parliament. Now this
provision is subject to Article 246A of the Constitution. Article 249,
amended through Section 4 of the Act, now stands changed so that
if RajyaSabha approves the resolution with 2/3rd majority,
Parliament will have powers to make necessary laws regarding
GST, in the national interest. So has Article 250 been amended;
Parliament will have powers to make laws on GST during the
emergency period.

It appears that despite having levied and collected the integrated tax
under the IGST Act, 2017, on import of goods on the entire value
which includes the Ocean Freight through the impugned
notifications, once again the integrated tax is being levied under an
erroneous misconception of law that separate tax can be levied on
the services components (freight), which is otherwise impermissible
under the scheme of the GST legislation made under the CA Act,
2016.

Thus, the scheme of the Act is that generally the tax shall be payable
by the person who is making the supply of goods or services, i.e.
supplier. However, in case of certain specified supplies, the
recipient of supply can be made liable to pay tax. Thus, a
meaningful reading of the charging section would entail that the
person who is neither the supplier nor the recipient of the supply
cannot be made liable to pay tax under the IGST Act (except for the
provisions under sub-section (5) of Section 5 where the electronic
commerce operator can be made liable to pay tax if the services are
supplied through him).

In the present case, the writ-applicant is importing goods on the CIF

basis, i.e. the contract is for supply of goods delivered at the Indian
port. Thus, the transportation of goods in a vessel is the obligation
of the foreign exporter. The foreign exporter enters into contract
with the shipping line for availing the services of transportation of
goods in a vessel. The obligation to pay consideration is also of the
foreign exporter. The writ-applicant is not at all concerned with how
the foreign exporter delivers the goods at the Indian port or whether
the consideration of the shipping line has been paid by the foreign
exporter or not. Even in a case of non-payment of the consideration
of the freight by the foreign exporter, the shipping line cannot
recover the consideration from the writ-applicant.

The Notification No.8/2017 – Integrated Tax (Rate) and

Notification No.10/2017 – Integrated Tax (Rate) both dated
28.6.2017, makes the importer of the goods as the person liable to
pay the integrated tax on the supply of service by a person located
in the non-taxable territory to a person located in a non-taxable
territory by way of transportation of goods by vessel from a place
outside India to a place in India. The impugned notifications have
been issued in exercise of the powers conferred by Section 5(3) of
the IGST Act. The said section provides power to the Government
to specify the categories of supply on which the tax shall be paid by
the recipient of the supply. The section does not further provide that
the Government may also specify the other person (other than the
recipient of supply) liable to pay tax. Under Section 5(3), the person
liable to pay can only be the recipient of supply.

151. It is a settled principle of law that if a delegated legislation goes

beyond the power conferred by the statute, such delegated
legislation has to be declared ultra vires. The delegated legislation
derives power from the parent statute and not without it. The
delegated legislation is to supplant the statute and not to supplement
it.

152. In the aforesaid view of the matter, the impugned notifications

levying tax on supply of service of transportation of goods by a
person in a non-taxable territory to a person in a non-taxable
territory from a place outside India upto the customs station of
clearance in India and making the petitioner, i.e. the importer, liable
for paying such tax, are ultra vires the provisions of the IGST Act.

At the outset, sub-section (1) of Section 8 states when a supply of

goods is an intra-state supply and sub-section (2) of Section 8 states
when a supply of services is an intra-state supply. Both sub-sections
apply only where the location of the supplier and the place of supply
are in the same State or Union Territory. Here, the State or the Union
Territory means a State or Union Territory in India. Thus, for
Section 8 to apply, both the location of the supplier and the place of
supply should be in India. In the present case, the location of the
supplier, i.e. the foreign shipping line is outside India. Thus, the
impugned transaction is not an intra-state supply under Section 8 of
the IGST Act.

Now, Section 7 provides for what is an inter-state supply. Sub-

sections (1) and (2) of section 7 deal with the supply of goods and
are not relevant for the present purpose. Sub-section (3) provides
that where the location of the supplier and the place of supply are in
two different States or two different Union Territories or in a State
and a Union Territory, the supply shall be treated as an inter-state
supply. Thus, the provisions of sub-section (3) only applies when
both the supplier and the place of supply are in India (i.e. either in a
State or Union Territory). Further, sub-section (3) is subject to the
provisions of Section 12 of the IGST Act which applies only when
both the supplier of service and the recipient of service are in India.
In the present case, the location of the supplier, i.e. the shipping line,
is outside India. Thus, sub-section (3) will also not apply in the
present case.

In the present case, the location of the recipient of the service, i.e.
the foreign exporter, is not in India but outside India. Thus, the
provisions of sub-section (4) of Section 7 are also not applicable in
the present case.

At the outset, the phrase 'supply of goods or services or both in the

taxable territory' cannot be equated with 'place of supply' in India.
If the intention of the legislature was to cover all the supplies where
the 'place of supply' is in India within the ambit of the IGST Act by
virtue of clause (c) of sub-section (5) of Section 7, nothing
prevented the legislature from expressing its intention in clear
words as used elsewhere in Section 7 and Section 8. Further, it is
submitted that the provisions relating to the 'place of supply' under
Sections 10 to 13 of the IGST Act does not determine where the
supply takes place in its ordinary sense. They are artificial
provisions enacted for fixing the situs of supply to determine the
nature of supply as inter-state or intra-state and has to be used only
where provided by the Act, i.e. under Sections 7(1), 7(2), 7(5)(a)
and Section 8. The said provisions cannot be applied to Section
7(5)(c) of the IGST Act.

In the present case, the entire transaction takes place outside the
taxable territory, i.e. outside India. The supplier is located outside
India, the recipient of the supply is located outside India, the
contract for the supply has been entered into outside India, the
payment for the supply has been made outside India, the goods have
been handed over to the supplier outside India and the
transportation, for the most part, takes place outside India. The mere
fact that the transportation of goods terminates in India, will not
make such supply of transportation of goods as taking place in India.

In our opinion, such observations, on the contrary, supports the case

of the writ-applicants that in a case of CIF contract, the contract for
transportation is entered into by the seller, i.e. the foreign exporter,
and not the buyer, i.e. the importer, and the importer is not the
recipient of the service of transportation of the goods.

In view of the aforesaid discussion, we have reached to the

conclusion that no tax is leviable under the Integrated Goods and
Services Tax Act, 2007, on the ocean freight for the services
provided by a person located in a non-taxable territory by way of
transportation of goods by a vessel from a place outside India upto
the customs station of clearance in India and the levy and collection
of tax of such ocean freight under the impugned Notifications is not
permissible in law.
124. Section 8 - Lalitha Muraleedharan v. The Range Forest Officer, Forest Range Office Case of Assessee:-
IGST Act – The case of petitioner is that petitioner is located in a notified
and Ors. [2020] 113 taxmann.com 428 (Kerala) W.P. (C). NOS. 24675 AND
“Intra-state Special Economic Zone. Purchase of goods by a dealer located
supply” 41418 OF 2018September 3, 2019 beyond the territorial limits of State of Kerala comes as interstate
purchase of goods. The Integrated Goods and Services Act, 2017
(for short ‘IGST’) was introduced to make provision for levy and
collection of tax by the Central Government on interstate supply of
goods or services or both, and for matters connected therewith or
incidental thereto. Section 5 of IGST Act deals with levy and
collection of tax; Section 6 deals with the power to grant exemption
from the levy of IGST. Section 7(5)(b) deals with interstate supply
of goods and that supply of goods or services or both to or by a
Special Economic Zone developer or Special Economic Zone unit
shall be treated to be a supply of goods or services or both in the
course of interstate trade or commerce. Therefore petitioner
contends that the demand of 18% IGST for the purchase made by
her is illegal.

Held:-
The approach under GST regime prescribes a set of rules for
defining the place of taxation or place of supply. Now a supply is
taxable in a given jurisdiction only if the supply is considered to
take place in that jurisdiction. The basic principle behind provisions
relating to place of supply is that GST is destination based tax.
Therefore, tax is finally payable where goods and services are
consumed. It is admitted that the supply of goods is to an
SEZ Unit.
Chapter IV deals with determination of nature of supply i.e. inter-
state import/export including supplies to SEZ. According to
Section 7(1)2 the supply of goods where the section of the supplier
and the place of supply are in two different states, such supply is
treated as supply of goods in the course of inter state trade or
commence attracting incidence of tax under Section 5(1) of IGST
with change of permutation/combination in State/Union Territories
and Union Territories/Union Territories the incidence of IGST is
attracted. Section 7(5)3 deals supply of goods/services or both to
or by a Special Economic Zone developer or a Special Economic
Zone Unit as inter-state supply of goods/services in the course of
inter state trade or commerce. A reading of Section 7(5) of IGST
Act shows thus: Supply of goods or services or both - When the
supplier is located in India and the place of supply is outside India
it is treated as inter-State trade or commerce.

The supply of goods or services or both to or by a SEZ developer or

the SEZ unit shall be treated to be a supply of goods in the course
of inter State trade or commerce. Section 7(5) deals with supply to
SEZ and treats supply as a supply in the course of inter-State trade
or commerce.

Section 8(1)4 deals with intra state supply and proviso to Section 8
holds that supply of goods to or by a SEZ developer or SEZ unit
shall not be treated as intra state supply. In other words the supplier
and the purchaser if is located within the State and goods are
supplied to one of them satisfying SEZ supply requirement, such
supply is not covered by
the meaning of intra state. Section 8 states that subject to the
provisions of Section 10, supply of goods where the location of the
supplier and the place of supply of goods are in the same State or
same Union Territory shall be treated as intra-State supply. The
presumption of that transaction being an intra-State sale is effaced
by proviso when the supply of goods to or by a SEZ developer or a
SEZ unit takes place.

In other words, even if the transaction is within the State of Kerala,

if the transaction originates from SEZ or terminates in SEZ, still it
is not treated as intra-State transaction. Section 7(1) and Section
8(1) operate subject to section 10 of IGST.

Chapter V of IGST Act is captioned as Place of Supply of Goods or

Services or Both . The Statute provides for determining what is the
place of supply of goods or services or both. According to Section
10(1)5 of IGST Act the place of supply of goods shall be in cases
where the supply involves movement of goods whether by the
supplier or recipient i.e. recipient of goods, or by any other person,
i.e. transport by road/rail etc.; place of supply of such goods shall
be the location of the goods at the time at which the movement of
goods terminates for delivery movement of goods terminates for
delivery to the recipient. Section 10(1)(b) to (e) are not applicable
and hence are not adverted to. Therefore, from the above, assuming
that the goods upon payment of sale price are handed over to
petitioner at Marayoor Depot, such delivery of good is for onward
movement to Madras SEZ in State of Tamil Nadu. The definition
and the substantive provisions in the
applicable Statute that is binding between the parties but not the
inference respondents 1 and 2 draw on the alleged completed
transaction at Marayoor. The place of supply of goods shall be the
location of the goods at the time at which the movement of goods
terminates for delivery to the recipient. Therefore, as rightly
contended by petitioner that the acceptance of delivery of sandal
wood logs at Government Forest Department, Marayoor, is not the
conclusive circumstance for deciding the place of supply of goods
 in the present regime of GST. Mr. Kumar does not dispute the
circumstance that the petitioner upon completion of other sale
conditions receives the sandal wood logs at Marayoor Forest
Department depot, and the acknowledgment of goods at Marayoor
Forest Department Depot does not result in termination of
movement of goods but results in further movement of goods at the
hands of recipient to SEZ. So the final destination i.e. SEZ in the
case on hand is the supply point. The actual place of supply by plain
interpretation of Section 10(1) is within the SEZ in Madras, State of
Tamilnadu, but not in State of Kerala. Therefore, the contention of
respondents 1 and 2 that supply of goods
is completed at Marayoor Forest Department and subject sets is an
intra state transaction is unsustainable.

The goods and services exported, burden of taxes are not exported
with the goods and services exported. The reason is simple i.e., to
make the exports internationally competitive and earn foreign
exchange to the country. Export incentives are impermissible under
WTO. However, goods and services can be relieved from the
burden of domestic taxes. Under the scheme of IGST supplies to
SEZ unit and SEZ developer are treated at par with physical exports.
The exporting units to compete with world market need raw
materials without payment of taxes and duties. Either the denial of
zero-rated tax benefit by respondents or calling upon the petitioner
to pay 18% tax and claim refund is not in line with statutory scheme
discussed above. Respondents 1 & 2 by calling upon petitioner to
pay 18% IGST are acting contrary to the scheme under IGST.

125. Section 10 – Penna Cement Industries Ltd Issue:-

IGST Act
“Place of
 supply of goods Applicant is manufacturer of cement having two cement plants in
other than 2020-TIOL-112-AAR-GST TSAAR Order No.03/2020 Telangana - They occasionally made inter-state sale of cement on
supply of goods ex-factory/works basis from their plants in Telangana - when they
imported into, make ex-factory sales from their plant, delivery terminates at their
or exported factory gate itself but the further movement is carried by recipient
from India” or transporter of goods up to the billing address State - inasmuch as
March 02, 2020 in such cases, the delivery terminates in another State and,
therefore, applicant is of the view that they should charge IGST in
https://taxguru.in/wp-content/uploads/2020/06/In-re-Ms.-Penna-Cement- respect of such supplies - Applicant, therefore, seeks to know as to
Industries-Limited-GST-AAR-Telangana.pdf what tax should be charged on ex-factory inter-State supplies made
by them.

Held:-

IGST is chargeable on ex-factory inter-state supplies since

although the goods are made available by the supplier to the
recipient at the factory gate, this is not the point where the
movement terminates since the recipient subsequently assumes
the charge for transportation of the goods up to the destination in
another state - place (in the other State) where the goods are destined
turns out to be ‘place of supply' in terms of section 10(1)(a) of the
IGST Act - consequently, the ‘location of supplier' and the ‘place of
supply' fall under different States and the supply qualifies as inter-
State supply: AAR
126. Section 11- IN RE: M/S. Dolphine Die Cast (P) Ltd., Held:-
IGST Act 2020 (5) Tmi 604 - Authority For Advance Rulings, Karnataka
“Place of Place of supply - Levy of IGST - manufacture and supply of die to
supply of goods KAR ADRG 35/2020 the foreign customer - export or not - location and time of supply -
imported into, reverse charge mechanism (RCM) for import - HELD THAT:- The
or exported Dated.- May 20, 2020 applicant manufactures the Die as per the requirement and
from India” specifications given by the foreign buyer and using this die
https://gst.kar.nic.in/Documents/General/AAROrderFinal352020DolphinD applicant manufacture and export the Aluminium and Zinc die
ieCast(P)Ltd.pdf Castings to the foreign buyer by retaining the Die with them till the
completion of the export order or completion of Die life. However,
applicant raised the tax invoice for this die immediately after the
manufacture in the name of overseas customer in foreign currency
for receipt of payment though the die not physically moved out of
India to the place outside India. Hence manufacture and supply of
die to the foreign customer does not amounts to export as per section
2(5) of the IGST Act, 2017.

It is rightly admitted by the applicant that the tax invoice is raised

after the manufacture of the Die in the name of the foreign customer
in foreign currency for receipt of payment. The date of issue of tax
invoice by the applicant is the time of supply of Die to the foreign
customer as per section 12 of the CGST Act,2017. Further, on date
of issue of tax invoice the die is with the applicant and it is not
moved either by the applicant or by the foreign customer. Hence the
place of supply of goods, other than supply of goods imported into,
or exported from India, shall be the location of such goods at the
time of the delivery to the recipient as per clause (c) of sub section
(1) of section 10 of the IGST Act 2017. Therefore, the place of
supply of die in this case is the location of the applicant.

The location of the supplier of die and place of supply of the die to
the foreign customer are one and the same i.e., location of the
applicant and such being the case said transaction shall be treated as
infra-State transaction as per sub section (1) of section 8 of the IGST
Act 2017 and the applicant has to issue the CGST and SGST tax
invoice to the foreign customer and liable to collect and pay the
CGST and SGST tax.
 The applicant is an importer of the Aluminium casting and pressure
die Casting component of Aluminium from Thailand. The Thailand
supplier first manufacture die as per the requirement and
specifications given by the applicant, retained with them and used
for the manufacture of the Aluminium casting and pressure die
Casting component of Aluminium to the applicant. Thailand
supplier raise the tax invoice in the name of the applicant though the
die not physically imported by the applicant. Hence said transaction
does not amounts to import as per section 2(10) of the IGST Act,
2017 - However, after the completion of the order or die life if
applicant physically imports the Die from the place outside India to
a place in India then the applicant liable to pay the IGST tax on
reverse charge mechanism and claim the IGST tax paid as input tax
credit, if eligible. Further if the steel die belonging to the applicant
is scrapped at the location of the overseas supplier without die
coming to India then such transaction is a transaction occurring
outside the taxable territory, i.e. India and hence is not under the
purview of GST.

127. S. 2(13) - IGST In Re: Global Reach Education Services Pvt. Ltd. [2018] 96 taxmann.com Case of Assessee:-
Act – The Appellant argued that it was providing 'business auxiliary
107 (AAAR-WEST BENGAL) APPEAL CASE NO. 01/WBAAAR/2018
“intermediary” services' to Foreign Universities by promoting their courses and its
JULY 24, 2018 services are in the nature of marketing and promotion of courses
offered by these Universities. The Appellant argued that the
function of an intermediary is to facilitate or arrange the supply of
http://gstcouncil.gov.in/sites/default/files/appelate-authority/WBAAAR- goods or services between two or more persons. The Appellant on
the contrary was providing services on its own account, in the nature
Appeal_NO-01-%202018_dt_24-07-2018.pdf
of marketing and promotion of courses of Foreign Universities in
India and remuneration paid for these services was based on a
percentage of fees paid by students admitted to the University.
 Held:-
Under GST an "Intermediary" is an entity who arranges/facilitates
for the supply of services of another entity, which may include
ancilliary services, whereas under POPS Rules, 2012, the
intermediary arrange s/facilitates for provisions of services of the
main service provider.

In this case, the Appellant promotes the courses of the University,

finds suitable prospective students to undertake the courses, and, in
accordance with University procedures and requirements, recruits
and assists in the recruitment of suitable students, and hence, the
Appellant is to be considered as an intermediary in terms of Section
2(13) of the IGST Act.

In view of the above discussions, we are in conformity with the

West Bengal Authority for Advance Ruling, that the services of the
Appellant are not 'Export of Services' under the GST Act, and are
eligible to tax.
128. Classification In Re: Hafele India Pvt. Ltd. [2018] 96 taxmann.com 154 (AAAR- Issue:-
of goods Correct classification of Caesarstone.
Maharashtra) Order No. MAH/AAAR/SS-RJ/02/2018-19
http://gstcouncil.gov.in/sites/default/files/appelate-authority/hafele- Held:-
At the outset here we note that to avoid classification disputes under
appellate-authority-order.pdf
the GST regime, the Customs Tariff has been adopted for
descriptive classification of goods under GST. Further, although the
tariff entries for the purposes of GST have been kept at 4 digits, in
case of any doubt, for exact classification reference will always be
need to be made to 6 to 8 digit entries of the HSN, as also the
Explanatory Notes provided therein, which have been held to be
 binding in nature by the courts. Reliance is placed on the following
two judgments of Hon'ble Supreme Court in this regard:
a) Collector of Customs v. Business Forms Ltd. 2002
taxmann.com 1325 (SC) "Classification of goods -
Explanatory Notes to HSN not only of persuasive value but
entitled to the greater consideration in classifying goods
under Central Excise & Customs Tariff"
b) O.K. Play(lndia) Ltd. v. CCE 2005 taxmann.com 601 (SC)
Classification of goods - Parameters - (1) HSN along with
explanatory notes provide a safe guide for interpretation of
an entry - (2) Equal importance to be given to Rules of
Interpretation of Excise Tariff (3) Functional utility, design,
shape and predominant usage have also got to be taken into
account while determining classification of an item -
Aforesaid aids and assistance more important than names
used in trade or common parlance.
In view of the above discussions, we hold that Caesarstone imported
by the Appellant merits classification under HSN 6810 in view of
the Rule 1 of the Rules for interpretation of the Customs Tariff,
applicable to classifications under GST, read with chapter Note 1 of
the Chapter 25 and terms of the heading 6810.
129. Classification of In Re: Akansha Hair & Skin Care Herbal Unit Pvt. Ltd. [2018] 96 Issue:-
goods The core issue involved in this appeal is whether Ayurvedic
taxmann.com 243 (AAAR-West Bengal)
Products manufactured by the Appellant, are classifiable under
https://taxguru.in/wp-content/uploads/2018/08/Akansha-Hair-Skin-Care- Chapter 33, or any other Chapter, or as medicaments under Chapter
30 of the Tariff.
Herbal-Unit-Pvt-Ltd-GST-AAAR-West-Bengal-2.pdf
Held:-
 Appeal Case No. 02/WBAAAR/APPEAL/2018 August 1, 2018 To determine whether or not a product or a formulation is to be
.labelled as a "medicament" it is necessary to consider its efficacy
in treating or remedying an "injury" an "ailment" or an "illness".
As per the descriptions of the products printed on the labels of the
products when packaged for retail sale and for information to the
customer it is found that the products are used mostly for
brightening the skin, controlling the excess oil secretion, keeping
skin clean glossy and free of freckles and spots, beautifying the skin
of sunburn and black patches, ensuring dazzling liveliness,
enhancing glamour and beauty, preventing excessive perspiration,
promoting feeling of freshness, increasing lustre of skin, keeping
skin soft, fair, glowing, stop premature ageing and wrinkling of
skin, preventing sunburn rashes, dryness, discolouration and
burning sensation of skin, properly cleansing, exfoliating and
moisturizing the skin, helping for removal of make-ups and
sunscreen which clogs pores, helping in the normal firming and
toning of skin along with hydrating the skin to make it glow, fresh
and smooth, helping to skin and tighten skin pores, makes skin soft
and more elastic, reducing excess skin oil, protecting from sunburn
injury.

None of the above descriptions qualify for categorising the products

as "medicaments" or "medicines" as they are not used in the
diagnosis, treatment, mitigation or prevention of disease or disorder
in human beings; rather they are more in tandem with the definition
of 'cosmetics' as we find in the Drugs and Cosmetics Act, 1940,
because none of the problems that these products treat can be
classified as "injury" or "ailment" as already discussed in Para 14
and Para 15 above.
130. Classification In Re: M/S. Solize India Technologies Private Limited Classification of supply - supply of goods or not - software supplied
of goods by the applicant - Computer Software or not - Applicability of N/N.
 45/2017-Central Tax (Rate) and 47/2017-Integrated Tax (Rate)
2020 (4) TMI 872 - Authority For Advance Ruling, Karnataka dated 14.11.17 to the supplies made to the institutions given in the
notification - HELD THAT:- The applicant states that he purchases
KAR ADRG 25/2020 the off-the-shelf software which are not developed for any specific
client and the same software is sold to all the clients. Hence the
Dated.- April 23, 2020 software sold by the applicant is a pre-developed or pre-designed
software and made available through the use of encryption keys and
https://gst.kar.nic.in/Documents/General/KAR_ADRG_25.pdf hence it satisfies all the conditions that are required to be satisfied
to cover them under the definition of “goods”. Further, the goods
which are supplied by the applicant cannot be used without the aid
of the computer and has to be loaded on a computer and then after
activation, would become usable and hence the goods supplied is
“computer software” and more specifically covered under
“Application Software”. Hence the supply made by the applicant is
covered under “supply of goods” and the goods supplied are
covered under the HSN 8523.

Applicability of N/N. 45/2017- Central Tax (Rate) dated 14th

November, 2017 - HELD THAT:- The computer software are
covered in the column (3) of the Table present in the Notification
No. 45/2017 - Central Tax (Rate) dated 14th November, 2017 as
amended from time to time. If they are sold to such recipients as
covered under Column (2) of the Notification and if they are
satisfies the conditions specified in Column (4) of the Notification,
then the supply of such computer software would be liable to tax at
2.5% under the CGST Act.
131. Balaji Theatre Vs. The Chief Secretary, Secretariat Officer, Governent of Issue:-
Whether levy of entertainment tax after introduction of GST is
Ponducherry and Ors. The Chief Secretary, Secretariat Officer, Governent
valid?
of Ponducherry and Ors. November 20, 2019
Held:-
It is to be noted at this juncture, that Entry 62 of the State List of the
http://164.100.79.153/judis/chennai/index.php/casestatus/viewpdf/503886 Seventh Schedule of the Constitution of India, as amended by the
Constitution (One Hundredth and First Amendment) Act, 2016,
would show that the taxes on luxuries including the taxes on
entertainment, amusements, betting and gambling are taxes
authorized by law and the authorities empowered under the relevant
provisions of law to collect the said taxes are justified in doing so.
Therefore, going by the above constitutional and statutory position,
this Court is of the considered view that the collection of the
entertainment tax by the 5th respondent Municipality is within their
power, competence and with authority of law. This Court is also of
the view that introduction of the PGST Act has not taken away the
power of the Municipality to collect the entertainment tax. To put it
specifically, Section 173(2) of the PGST Act, does not debar the
Municipality, in any manner, from collecting the entertainment tax
from the petitioner.
It is relevant to note that collection of service tax and entertainment
tax is under different enactment by different authorities. In this case,
providing admission into the Cinema theater is treated as service
and thus, tax on such service is collected under the GST Act. On
such admission, the viewer gets the entertainment viz., Movie and
thus, such entertainment being a different content, tax is levied on
the same by the local authorities as "Entertainment Tax". Thus, the
entertainment itself being a different content, will not fit into the act
of service provided by the theater owner viz., admission of the
viewer into the cinema hall. Therefore, the question of subsuming
 the entertainment tax under the PGST Act, or the event of double
taxation as contended by the petitioner, does not arise in this case
so long as the Puducherry Municipalities Act, 1973, is in force and
not repealed by the introduction of the PGST Act.
132. Section 1 of the Union of India (UOI) and Ors.v. Hind Energy and Coal Benefication (India) Issue:-
Goods and The validity of the Goods and Services Tax (Compensation to
Ltd. [2018] 98 taxmann.com 45 (SC) October 3, 2018
Services Tax States) Act, 2017 enacted by Parliament as well as the Goods and
(Compensation Services Tax Compensation Cess Rules, 2017, the Rules framed by
To States) Act, the Central Government in exercise of power under Section 11 of
2017 the Goods and Service Tax (Compensation to States) Act, 2017 are
under challenge in these cases.

Held:-
When Constitution provision empowers the Parliament to provide
for Compensation to the States for loss of revenue by law, the
expression "law" used therein is of wide import which includes levy
of any cess for the above purpose. We, thus, do not find any merit
in the submission of the learned counsel for the petitioner that
Parliament has no legislative competence to enact the
Compensation to States Act, 2017.

The expression used in Article 246A is "power to make laws with

respect to goods and services tax". The power to make law, thus, is
not general power related to a general entry rather it specifically
relates to goods and services tax. When express power is there to
make law regarding goods and services tax, we fail to comprehend
that how such power shall not include power to levy cess on goods
and services tax. True, that Constitution (One Hundred and First
Amendment) Act, 2016 was passed to subsume various taxes,
surcharges and cesses into one tax but the constitutional provision
does not indicate that henceforth no surcharge or cess shall be
levied.

Further, the Preamble of Compensation to States Act, 2017

expressly mentions the Act to provide for compensation to the
States for the loss of revenue arising on account of implementation
of the goods and services Tax in pursuance of the provisions of the
Constitution (One Hundred and First Amendment) Act, 2016. Thus,
the Compensation to States Act, 2017 has been enacted under the
express Constitution (One Hundred and First Amendment) Act,
2016. We, thus, also do not find any force in the submission of the
learned counsel for the petitioner that Compensation to States Act,
2017 transgresses the Constitution (One Hundred and First
Amendment) Act, 2016.

The petitioner's submission that the petitioner should be given the

credit to the extent of payment of Clean Energy Cess upto
30.06.2017 also cannot be accepted. The Clean Energy Cess and
States Compensation Cess are entirely different from each other,
payment of Clean Energy Cess was for different purpose and has no
bearing or connection with States Compensation Cess. Giving credit
or set off in the payment is legislative policy which had to be
reflected in the legislative scheme. Compensation to States Act,
2017 or Rules framed thereunder does not indicate giving of any
credit or set off of the Clean Energy Cess already paid till
30.06.2017. Thus, claim of the petitioner that he is entitled for set
off in payment of Compensation to States Cess to the extent he had
already paid Clean Energy Cess cannot be accepted.
133. ImartiLakdiVyapariSansthan, Jodhpur v. State of Rajasthan [2018] 100 Issue:-
Having laid the factual foundation, learned counsel contended that
taxmann.com 47 (Rajasthan) D.B. Civil Writ Petition No. 1451 Of 2018
the cess on purchase and sale of timber from the members of the
October 29, 2018 petitioner society is illegal, as the same is not an agricultural
produce While maintaining said argument, he contended that after
the introduction of Goods and Service Tax, the impugned cess
https://indiankanoon.org/doc/145226306/ cannot continue. In a bid to lend support to such argument, he
invited attention of the Court towards a booklet published by the
State Government, which contain an information that after
imposition of GST, all cesses and surcharges levied by the State
Government and Central Government shall be done away with.

Held:-
On the advent of GST regime with respect to the Indirect Taxes,
under entry 66 of concurrent list, all earlier taxes being levied and
collected by the Central Government such as Central Sales Tax,
Service Tax, Excise Duty etc. have been brought under one
umbrella viz. Central Goods and Service Tax Act, 2017; whereas
the State levies such taxes as Sales Tax, Entry Tax etc. have been
subsumed in the State GST Acts. Both those enactments contain a
repeal and saving provision in the form of Section 174, enumerating
various taxes which have been done away with.

By a combined effect of Section 174 of CGST Act and RGST Act,

the levy governed by only those enactments have been abolished,
which have been enlisted in said sections. The market fee leviable
under the Act of 1961 neither finds mention in any of the repeal and
saving provisions, nor can it be so done, as the market fee is leviable
under a separate enactment under the State's power to legislate
under Entry 66 of the List-II of the VIIth Schedule.