Abhishek Raja "Ram"
@abhishekrajaram
MEC, STBA Delhi || Speaker and Author on GST. Life dedicated towards Tax and Economic Reforms & Simplification
Assessee's Input Tax Credit Error in GSTR-3B
Important Judgment: Please save
Where assessee inadvertently claimed Input Tax Credit in ‘RCM’ column instead of ‘All other ITC’ column in GSTR-3B returns, demand order passed without properly considering assessee’s reply cannot be sustained.
Madras High Court in Revathi Industrial Enterprises vs Deputy State Tax Officer, Chennai
[2024] 168 taxmann com 102
Allahabad High Court Upholds Natural Justice
🚨 Allahabad High Court Quashes GST Demand Order where the Department failed to provide a personal hearing. The court upheld the Principles of Natural Justice.
🔍 Issue: A show-cause notice under Section 73 of CGST Act (FY 2019-20) failed to provide a date for personal hearing as 'NA' was mentioned.
📆 Timeline:
• SCN issued: 25-05-2024 📄
• FY: 2019-20
• Reply filed: 06-08-2024 🗓️
• Request for hearing: YES marked in Form DRC-06 ✅
• Same day: Assessment order passed 06-08-2024 ❌
Patna High Court Grants Relief on ITC Denial
🏛️ Patna High Court Grants Relief: ITC Denial Due to GSTR-2A Mismatch Set Aside! ⚖️
Issue: Denial of Input Tax Credit (ITC) due to a mismatch between GSTR-2A and GSTR-3B, caused by the supplier's failure to reflect the tax payment in GSTR-1.
🔹 Contention: The petitioner argued that the supplier's lapse should not penalize them as the tax was already paid.
Court’s Direction 🧑⚖️:
• The assessment order was set aside.
• Case remanded for reconsideration in line with CBIC Circular (27.12.2022).
• Circular prescribes a procedure when GSTR-1 is not filed, but GSTR-3B is.
🔹 Outcome 🎯: As the supplier has now filed GSTR-3B, ITC claimed by the petitioner must be reassessed accordingly.
Enhanced GST Registration Process in Selected States
GST Registration Applicants in Chhattisgarh, Goa, and Mizoram Must Undergo Biometric-Based Aadhaar Authentication
New Advisory dated: December 15, 2024
The Goods and Services Tax Network (GSTN) has introduced a new biometric-based Aadhaar authentication process for GST registration applicants in Chhattisgarh, Goa, and Mizoram, effective December 15, 2024.
GSTR-9 & GSTR-9C FY 2023-24 Reporting
Summary of GSTR-9 & GSTR-9C Reporting Requirements for FY 2023-24
(Updated as per Notification No. 12/2024 – Central Tax dated 11/07/2024)
A. GSTR-9: Annual Return
A.1. GSTR-9 Tables: Mandatory Tables/Section
4A to 4G: Taxable outward supplies, tax on advances, and RCM.
• 4I to 4L: Credit/Debit Notes (CN/DN) and amendments related to supplies reported in 4B to 4E.
• A to 5C: Zero-rated supplies without tax payment, supplies where the recipient discharges tax.
• 6E: Import of goods.
• 6F to 6M: Other ITC details.
Balancing GST Compliance and Enforcement: No Penalty for Unused Ineligible ITC
Here's the reduced version of the blog post, maintaining key points while shortening the content:
No Penalty Unless Ineligible ITC is Utilized: A Consistent Jurisprudence Under GST
The imposition of penalties under Section 74 of the CGST Act, 2017, has been a matter of judicial scrutiny. Courts have consistently ruled that penalties cannot be imposed merely for availment of ineligible Input Tax Credit (ITC) unless such credit is utilized, thereby reducing tax liability. This approach ensures a fair balance between compliance and enforcement under GST.
Judicial Interpretation of 'Availment' and 'Utilization'
A recurring issue in penalty cases is the distinction between "availment" and "utilization" of ITC. The judiciary has emphasized that the mere reflection of ineligible credit in the electronic ledger does not constitute availment. Penalties under Section 74 can only be imposed when:
• The ineligible ITC is availed and utilized.
• Its utilization leads to a reduction in tax liability.
Key High Court Rulings
• Madras High Court: Greenstar Fertilizers Limited [2024-VIL-577-MAD] The court clarified that penalties require proof of both availment and utilization of ineligible ITC. ITC reflected in the ledger without reducing tax liability does not attract penalties.
• Patna High Court: Commercial Steel Engineering Corporation [2019-VIL-348-PAT] The court ruled that unutilized ITC in the ledger does not meet the criteria for invoking penalties under Section 74.
• Madras High Court: Kumaran Filaments (P) Ltd. [2021-VIL-959-MAD] It was reiterated that penalties under Section 74 must be supported by evidence of tax loss or intent to evade taxes. Unutilized ITC cases lack these elements.
Key Takeaways
• No Revenue Loss = No Penalty: If ITC is not utilized, there is no impact on government revenue, making penalties unwarranted.
• Intent to Evade Matters: Penalties are justified only in cases of fraud, willful misstatement, or suppression of facts, none of which applies to unutilized ITC.
• Electronic Ledger Reflection ≠ Availment: Simply showing ineligible ITC in the ledger is not sufficient to trigger penalties.
Implications for Taxpayers
• Compliance Assurance: Taxpayers should verify ITC claims but can rely on judicial precedents to contest penalties for unutilized ITC.
• GST Authorities: Enforcement agencies must establish both availment and utilization of ineligible ITC to justify penalties.
Conclusion
The judiciary’s consistent stance ensures penalties under GST are imposed only in cases of tax loss or evasion. Taxpayers can rely on rulings like Greenstar Fertilizers Limited, Commercial Steel Engineering Corporation, and Kumaran Filaments to defend against penalties for unutilized ITC.
References:
• Greenstar Fertilizers Limited vs. JC (Appeals), Madurai [2024-VIL-577-MAD]
• Commercial Steel Engineering Corporation v. State of Bihar [2019-VIL-348-PAT]
• Kumaran Filaments (P) Ltd. v. Commissioner of CGST [2021-VIL-959-MAD]
This shortened blog provides clarity on Section 74 penalties, helping taxpayers navigate GST compliance effectively.
GST Amnesty: Key Highlights and Forms
KEY HIGHLIGHTS OF GST AMNESTY
Section 128A aims to reduce litigation during the initial years of GST implementation (FY 2017-18 to 2019-20) by waiving interest and penalties for demands under Section 73 for amounts deposited on or before March 31, 2025.
Post right: Abhishek Raja Ram; 9810638155
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FORMS & OTHER DETAILS ARE AS FOLLOWS:
1. Form SPL-01: Sec. 128(1)(a)
1.1 SCN issued U/s 73, but the Order was not passed. They are eligible under 128(1)(a) and would need to fill form SPL-01
Top Five Judgments from CENTAX
Select the Top Five Judgments reported by CENTAX..!!
1. Where petitioners bank accounts were frozen by separate orders passed under section 83(1), respondents were to be directed to send copies of respective orders for freezing bank accounts of petitioners, and petitioner were at liberty to file objections.
Delhi High Court in Tirupati Overseas vs. Principal Commissioner of GST
(2024) 24 CENTAX 345
2. Where respondent authority passed a non-speaking order denying ITC claim of assessee despite directions issued by HC to consider objections submitted by assessee, same was to be set aside and matter was to be remanded.
Madras High Court in Tvl. Sri Chima Note Book Pvt. Ltd. vs. Assistant Commissioner (ST)
(2024) 24 CENTAX 346
Exemption of Service Tax Under Notification No. 25/2012-ST
The Institute of Chartered Accountants of India (ICAI) is a "Governmental Authority" under Notification No. 25/2012-ST for services provided to various governmental and quasi-governmental authorities in Service Tax. - 🏗️ CESTAT Ahmedabad in C.C.E. & S.T. Rajkot Vs Malani Construction Company
The CESTAT Ahmedabad upheld the exemption of service tax for Malani Construction Company under Notification No. 25/2012-ST for services provided to various governmental and quasi-governmental authorities:
🏛️ Institute of Chartered Accountants of India (ICAI): Recognized as a "Governmental Authority" as it operates under the Chartered Accountants Act, 1949 under the control of the Ministry of Corporate Affairs.