The 2024 edition of the landmark judgements on GST offers important insights into significant rulings made by the Supreme Court and High Courts on a number of controversial GST-related topics.
Table of Contents – Landmark Judgements On GST
Supreme Court
Whether ‘Cash’ Qualify As Thing’ Under GST? Supreme Court To Decide
The Supreme Court is all set to decide the issue of whether ‘cash’ qualifies as a ‘thing’ under GST.
The bench of Justice J.B. Pardiwala and Justice R. Mahadevan while issuing the notice to the assessee stated, “we need to interpret the expression “and seize or may himself search and seize such goods, documents or books or things”.
Madras High Court
GST Acts Restrains Assessee In Default To Transfer Assets With A Motive To Defeat Revenue’s Interest: Madras High Court
The Madras High Court ruled that GST laws make it impossible for debtors to part with their properties that are potentially dangerous to state interests.
The Court observed that Section 81 of the Goods and Service Tax Act limits assessors in prosecution with an aim of safeguarding government’s fiscal interests from being dissipated by properties transfer or disposition. This clause has similarities with previous legal provisions like TNVAT Act, 2006 or TNGST Act, 1959. Therefore, proving one’s bona fides rests with the petitioner within legal parameters.
Madras High Court Quashes Suspension Of Commercial Tax Officer Allegedly Involved In Processing GST Refund To Fake Firm
The Madras High Court has quashed the suspension of a commercial tax officer allegedly involved in processing Goods and Service Tax (GST) refund to a fake firm.
The court remarked that It must be borne in mind that the threshold while dealing with a suspension order passed against an authority exercising a Quasi-Judicial power or a Judicial power, must be slightly at a higher level than the test applied for the authorities who are performing administrative functions.
The court observed that the act of passing orders on the application filed for refund of the Input Tax, is clearly a Quasi-Judicial function. The relevant provision contemplates that the refund claim must be proceeded within a period of seven days from the date of filing of he application for refund. If it is not complied with, it will attract interest and in which case it will also amount to a misconduct for violation of the provisions of the GST Act.
Procedural Irregularity Should Not Come In Legitimate Way Of Grant Of Export Incentives: Madras High Court
The Madras High Court ruled that the procedural irregularity should not come in legitimate way of grant of export incentives.
The court noted that the petitioner is admittedly a 100% Export Oriented Unit [EOU] and has wrongly availed the benefit of refund under Rule 96 of CGST Rules, 2017 seeking to grant refund of input tax credit availed and utilized in discharging IGST on the exported goods. It is however subjected to rider or limitation under Rule 96(10) of the CGST Rules, 2017.
Kerala High Court
No GST Exemption On mutual beneficial schemes Provided By Indian Medical Association To Its Members: Kerala High Court
The Kerala High Court has held that no Goods and Service Tax (GST) exemption on mutual beneficial schemes provided by Indian medical associations to its members.
As per Article 366(29A) a levy of service tax on the supply of goods by an unincorporated Association or body of persons to a member for cash, deferred payment, or other valuable consideration would be covered.
However, Article 366(29A) does not provide the service tax on incorporated associations. Even otherwise, if it is held that the principle of mutuality is involved in the supply of goods or services by a club/association to its members, the basis of the judgment can be altered or removed by necessary amendments in the legislature.
Tax Officer Can’t Pass Final Orders After Granting Adjournment: Kerala High Court
The Kerala High Court ruled that the Tax Officer can’t pass final orders after granting adjournment.
The bench viewed that there is some merit in the contention taken by the petitioner that after having granted an adjournment for a period of two weeks on the basis of an adjournment request filed on 05.12.2019, the officer could not have proceeded to pass final orders on 17.12.2019 as the period of two weeks would have expired only on 19.12.2019.
Allahabad High Court
Human Error In Mentioning Place Of Delivery In E-Way Bill: Allahabad High Court Quashes Penalty Under GST
The Allahabad High Court quashed the penalty under GST while stating that there was human error in mentioning place of delivery in e-way bill.
The bench noted that it is not in dispute that the purchaser was of Chandpur, but the goods were to be consigned to M/s Udit Engineers, Aligarh. When the goods were onward journey, the same were intercepted as in the e-way bill, the place of delivery was mentioned as Chandpur (UP), instead of Aligarh. This error can occur due to human error while filling up the form/e-way bill.
Further, there is no finding recorded by any of the authorities below that there was a mens rea for evading payment of tax. Even before the Court, there is no pleading on behalf of the Sate that there was any intention to evade tax.
Primary Responsibility Of Claiming Benefit Is Upon Dealer To Prove And Establish Actual Physical Movement Of Goods: Allahabad High Court
The Allahabad High Court ruled that the primary responsibility of claiming benefit is upon the dealer to prove and establish actual physical movement of goods.
The bench noted that the scheme of input tax credit is being introduced with an object to avoid cascading effect of tax. The purchasing dealer can avail the input tax credit on tax paid on its purchase whereas the manufacturer can avail the same on purchase of its raw material used for manufacturing or selling of its final product which will avoid double taxation.
Rajasthan High Court
Rajasthan High Court Dismisses Buyer’s Writ Petition Challenging ITC Reversal On Pretext Of Supplier Being Fake Firm
The Rajasthan High Court dismissed buyer’s Writ Petition challenging ITC reversal on the pretext of the supplier being a fake firm.
Despite the existence of an alternative remedy available to the petitioner, the petitioner has filed the writ petition seeking to invoke extraordinary jurisdiction of the Court on the submission that there is no proper consideration of the reply of the petitioner.
Writ Court Has Ample Powers To Condone Delay Which GST Authority Can’t: Rajasthan High Court
The Rajasthan High Court ruled that writ court has ample powers to condone the delay which the GST authority can’t.
The bench noted that the CGST Act has been enacted to levy taxes on manufacture of certain goods in the form of Central Excise Duty and to consolidate certain provisions of service tax and inter-state sale of goods in the form of Central Sales Tax as also to levy tax by the State Governments on retail sales in the form of Value added Tax, entry of goods in the form of Entry Tax, Luxury Tax etc.
The provisions under the CGST Act besides seeking levy and calculation of taxes are also intended to facilitate commercial and business activities. The legislative intentment in this regard is manifest in the provisions under Section 30 of the CGST Act.
Telangana High Court
Construction In Maldives For Maldives Govt. under MoU Between India And Maldives Doesn’t Falls Within GST Net: Telangana High Court
The Telangana High Court while setting aside the advance ruling of the Appellate Authority of Advance Ruling (AAR) has held that construction of institute of security and law enforcement studies in Maldives does not fall within GST net in India.
The court found that Taxation fundamentally operates as a legal principle, structured by a comprehensive set of laws, regulations, and statutory provisions that establish the processes for calculating, levying, and allocating taxes. These legal instruments, enacted by legislative bodies, aim to ensure fairness, equity, and the effective financing of public services. They are crafted to prevent tax evasion, stimulate economic progress, and equitably distribute the tax obligation.
However, the application of tax law is not a mere application of set rules. The determination of taxes involves a deep dive into the factual aspects of each taxpayer’s circumstances. The practical details of each case including income streams, allowable deductions, business operations, and investment activities are critical in applying the legal framework. Each taxpayer’s circumstances are distinct, necessitating a careful approach to determine tax obligations based on factual elements.
Gauhati High Court
Tax Paid To Supplier Not Remitted To State Exchequer, Purchaser Can’t Be Punished: Gauhati High Court
The Gauhati High Court ruled that the tax paid to the supplier is not remitted to the state exchequer and the purchaser can’t be punished.
A. Saraf, senior counsel for the petitioners submitted that though in the batch writ petitions, the petitioners have challenged the validity of Sections 16(2)(c) and 16(2)(d) of the Assam Goods and Services Tax Act, 2017 as well as the validity of Sections 16(2)(c) and 16(2)(d) of the Central Goods and Services Tax Act, 2017 along with the show cause notices issued to the petitioners.
owever, the controversy involved in these writ petitions is squarely covered by the decision of the Delhi High Court in the case of On Quest Merchandising India Private Limited -Vs- Government of NCT of Delhi & Ors., wherein it was categorically held that a purchasing dealer cannot be punished for the act of the selling dealer in case the selling dealer had failed to deposit the tax collected by it.
No Recommendation By GST Council For Limitation Extension Allowing GST Dept. To Issue S. 73 Notice: Gauhati High Court
The Gauhati High Court ruled that there is no recommendation by the GST council for limitation extension allowing the GST department to issue Section 73 notice.
The petitioners have challenged the Notification issued by the respondent thereby extending the limitation under the provisions of Section 168(A) of the Central Goods and Service Tax Act, 2017 as well as the notice under DRC-01 issued by the respondent under Section 73 of the CGST Act of 2017 for the period 2019-20 along with attachment to DRC 01.
Gujarat High Court
12% GST Payable On Geo Membrane: Gujarat High Court
Case Name: Messrs Ananta Synthetic Innovations & Anr. Versus State Of Gujarat & Ors.
The Gujarat High Court has ruled that 12% GST is applicable on geo membranes.
The court observed that the product manufactured by the petitioner being Geo Membrane is classifiable would fall under Chapter 59 and not under Chapter 39 as held by the respondent, the Gujarat Advance Ruling Authority relying upon the decision of the Madhya Pradesh High Court in case of Raj Packwell Ltd. The petitioner, therefore, is liable to pay the 12% GST from 15.11.2017 onwards and not 18%.
Himachal Pradesh High Court
GST Dept. Can’t Red Mark Property In Revenue Records For Tax Dues Once Resolution Plan Is Approved: Himachal Pradesh High Court
The Himachal Pradesh High court has held that tax dues cannot be regarded as crown debt once the resolution plan is approved and the GST department cannot red mark property in revenue records for tax dues once resolution plan is approved.
The bench of Chief Justice M.S. Ramachandra Rao and Justice Satyen Vaidya has observed that the department is estopped from continuing the red entry/charge on the properties of the petitioner-Company, since they had never objected to the acquisition plan submitted by the current management of the petitioner-Company andthey had also not challenged the order passed by the National Company Law Tribunal (NCLT) approving the acquisition plan for the petitioner-Company.
Orissa High Court
Order Uploaded On GST Portal Is Deemed To Be Proper Service; Orissa High Court Refuses To Condone Delay Of 2.5 Years
The Orissa High Court has refused to condone the delay of 2.5 years and held that even though the petitioner has not been communicated with the order physically, since the same was made available on the common GST portal, it is deemed to have been served on him.
The court observed that Section 169 (1)(d) of the GST Act provides for the service of notice in case of any decision, order, summons, notice, or other communication by making it available on the common portal.
