The denial of Input Tax Credit (ITC) due to the non-registration of an additional place of business or non-conducting of business has become a contentious issue under the Goods and Services Tax (GST) regime.
Here is the case compilation on ITC Denial Due To Place Of Business:
Delhi High Court
GST Registration Cancellation On Ground Of Non-Conducting Of Business Contrary To Physical Verification Report: Delhi High Court Quashes SCN
Case Title: Rashid Proprietor Of Ms Enterprises Versus Union Of India
The Delhi High Court has quashed the show cause notice (SCN) and the order cancelling the GST registration on the grounds of non-conducting of business which was contrary to physical verification report submitted by the GST Inspector.
Madras High Court
GST Registration Can’t Be Cancelled For Mere Discrepancies In Door Number Of Place Of Business: Madras High Court
Case Title: M/s.Professional Car Decors v/s The Superintendent of CGST & C.Ex
The Madras High Court has held that the GST registration cannot be cancelled for mere discrepancies in door number of place of business.
The bench of Justice Krishnan Ramasamy has observed that the department is supposed to consider the bonafide of the petitioner and they should have obtained an affidavit from the petitioner with regard to the discrepancies, despite which, the GST Registration of the petitioner was cancelled by the respondent in a mechanical manner, which would ultimately affect the revenue of the Department.
Commissioner of Central Excise, Salem vs Chemplast Sanmar Ltd.: Madras High Court
R.C.P. No. 9 of 2004, dated 24-Mar-2005
The Madras High Court has held that the credit to the assessee cannot be denied on the technical ground that the procedure prescribed for availment of credit has not been followed.
The issue arose regarding the eligibility to pay duty on chlorine, an intermediate product. The duty payment obligation only became clear when the matter was brought before the Tribunal. Until that point, the assessee had been claiming an exemption from the payment of duty on chlorine and, consequently, had not followed the procedural requirements for availing Modvat credit on this input.
The central question was whether the assessee should be denied Modvat credit on the technical ground that the procedural steps prescribed for the availment of such credit were not adhered to at the relevant time. The complicating factor was that the assessee was under the impression that it was exempt from duty payment on chlorine and, therefore, believed it unnecessary to comply with these procedural requirements for credit availment.
The Tribunal decided that Modvat credit should not be denied to the assessee based on the technicality that the prescribed procedures for credit availment were not followed. This decision was grounded in the context that, at the time, the assessee was operating under the assumption of exemption from duty on chlorine, making it impractical for them to meet the procedural prerequisites for Modvat credit. Essentially, the Tribunal recognized the impossibility of complying with procedures for a credit claim when the assessee was not aware of the duty obligation.
CESTAT
Commissioner of Customs and CentraL Excise, Vapi vs DNH Spinners: Ahmedabad CESTAT
FINAL ORDER NO. A/1476 OF 2009-WZB APPEAL NO. ST/116 OF 2009, dated 10-Jul-2009] Credit Cannot be denied on Procedural Grounds.
The assessee availed Cenvat credit for input services received. However, the revenue authorities denied this credit on the technical ground that the documents supporting the credit claim were not in the name of the assessee’s factory but were instead issued in the name of the head office.
The core issue revolves around the procedural adherence to Rule 9 of the Cenvat Credit Rules, 2004, and whether such procedural requirements can override the substantive right to avail credit of input taxes, especially when there is no dispute regarding the actual receipt and use of the input services by the assessee.
The ruling held that since there was no dispute about the actual receipt of input services by the assessee, the substantive benefit of availing Cenvat credit cannot be denied on mere procedural grounds. This decision underscores the principle that substantive rights should not be compromised by procedural lapses, particularly when the essence of the claim (receipt and use of input services) is undisputed.
AAR
KM Trans Logistics Private Limited : Rajasthan AAR
[Advance Ruling No. RAJ/AAR/2018-19/29, dated 09-Jan-2019]
The applicant, a company incorporated with a registered office in Jaipur, Rajasthan, provides transport services to vehicle manufacturers. These services include transporting vehicles from factories to various cities across India where the manufacturers’ authorized dealers are located. To facilitate these services, the company has leased vacant lands in various cities for parking its trucks and trailers. All billing, account maintenance, and operational control are centralized at the Jaipur office, which is also the address listed on the lease deeds.
The applicant sought an advance ruling on the following questions:
1. The appropriate place of business for registration purposes.
2. Whether registration is required only in Jaipur, given that all billing and input services billing occur there, and not in any other state.
3. The necessity of registration in various cities for leased vacant lands used for operational purposes, considering centralized billing, control, and management in Jaipur.
The inquiry involved interpreting various sections of the CGST Act, 2017, and the Rajasthan GST Act, 2017, specifically focusing on the definitions and provisions related to the location of the supplier of services, place of business, and usual place of residence.
The AAR determined that the applicant, being a service provider registered in Rajasthan and conducting operations from Jaipur, satisfies the criteria for determining the place of business as per section 22(1) of the GST Acts. The transport services supplied originate from Rajasthan, and the operational and billing activities conducted from Jaipur align with the legislative definitions of the place of business and location of the supplier of services. Therefore, the applicant’s registration in Rajasthan is appropriate and fulfills the legal requirements for the supply of transport services.
