Advice from us.

For Information purpose not to be considered as Professional

Practically How to
handle
GST Show Cause
Notice & Draft Reply for
FY 2017-18

Abhishek Raja Ram

9810638155
fca,[email protected]

1
 National Litigation Policy

Pending cases
SC – 70k+
are very high

Dist. &
HC – 40L+ Subordinate
Court – 2.75Cr+
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 National Litigation Policy

46%+ cases
Govt. biggest
are linked to
contributor
Govt.

State
Revised NLP?? Litigation
Policies
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Professional Advice from us.
National Litigation Policy – Stages of Litigation

Pre- Post
Litigation Litigation

Litigation
Emphasis on exploring alternative means of dispute resolution
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Professional Advice from us.
 Stages of Litigation - IDT

Pre Notice
Consultation Appeal

SCN

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Professional Advice from us.
 Best Practices of CBIC as per NLP

• Threshold Limit Defined for Filing of Appeals (exception a challenge

made on the constitutional validity of any legislative provision or
against any circular/notification of the Department)
• Pre SCN (Show Cause Notice) Consultation
• Authority of Advanced Ruling: Anyone an approach the authority for
seeking ruling in their dispute/cases. Such rulings are applicable to
concerned party and commissioner of appeal.
• A limit of 70 cases has to been decided by the Department for
disposal by the commissioner of appeal per month.

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Professional Advice from us.
Circular No. 1079/03/2021-CX dated November 11, 2021

• Pre-Show Cause Notice Consultation not Mandatory for Recovery of Duties

• short levied or
• short paid or
• erroneously refunded,
• by reason of
• fraud or
• collusion or
• wilful mis-statement or
• suppression of facts or
• contravention of any of the provision
• clarifies CBIC
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Professional Advice from us.
Defense - Validity of SCN issued under sec 73/74

• Pre-SCN notice should be issued before issuance of SCN

• SCN Should be in proper format
• SCN Should not be vague and incomplete
• SCN Should be issued within the specified time limit
• Justifiable Reason to invoke sec-74 – Extended period
• SCN Should specify the grounds, reasons and amount in
default
Defense - Validity of SCN issued under sec 73/74

• Reasonable and sufficient opportunity to furnish submissions

• SCN with pre – determined notion –should not give conclusion
• SCN Should be issued by the competent officer, who should not
lack jurisdiction
• Reopening of assessment
• Whether Rule 142(1)(a) is ultra – virus
• Issue of SCN when other proceedings are pending – NO defence
• Writ Petition against the SCN
Pre-SCN notice should be issued before issuance of SCN

• Purpose of pre-consultation or Pre-SCN Notice is to reduce

unnecessarygation, not only at the level of the Adjudicating Authority,
but also with the Higher Courts. Even if it is not mandatory, yet is
obligatory for the proper officer to allow pre-consultation to the
taxpayer, and if the same has not been allowed, it would be a good
ground to contest the validity of the SCN. Rule 142(1A), the proper
officer may, before service of notice to thePuposeperson chargeable
with tax, interest and penalty under sec 73(1)/74(1), As per
communicate the details of any tax, interest and penalty as ascertained
by the sand officer in Part A of Form GST DRC-01A. The word
"shall" has been substituted with "may" vide N. No. 79/2020-CT,
dated 15 Oct. 2020.
 Jagdish vs Union of India
Calcutta High Court
(3) TMI 351 Dated 23-02-2022

The Calcutta High Court held that though the pre-show-cause notice
consultation to the Noticee is not mandatory but it does not wholly
exclude issuance of notice of pre-show-cause notice consultation,
which means at least it is directory and discretionary, which shall be
exercised by the authority in a judicious and reasonable manner, and
not in an arbitrary manner or without giving any reason for not
exercising his power of discretion.
 Mal Munna Lal vs. State of UP
Calcutta High Court
(3) TMI 795 Dated 23-02-2022

• "Prima facie, perusal of Form GST DRC-01A under rule 142(LA) of the
Rules indicates that it is a pre-show cause notice intimation with reference
to Section 73(1)/(5) or Section 74(1)/(5) to an assessee so that either he
deposit the amount of tax and interest or he may disagree to the
ascertainment resulting in show cause notice under Section 73(1) or Section
74(1), as the case may be. Likewise, such an intimation in Form GST DRC-
01A provides an opportunity to the dealer to resolve the dispute by
depositing or in case of disagreement to face the adjudication proceedings
under the Act. Thus, prima facie, it appears that Section 74(1) read with
Rule 142(1A) intends to afford an opportunity to the dealer/ assessee on a
pre-show cause notice stage which shall ultimately benefit both, i.e., the
assessee and the department, and shall also reduce litigation. This also
indicates to follow the principles of natural justice at a pre-show cause
notice stage.
 Nanhey Mal Munna Lal vs. State of Gujarat
Gujarat High Court
(4) TMI 823 Dated 02.01.2023

• "There is a vast difference between Rule 142(1)(a) and Rule 142(1A)

of the Rules. Therefore, from now onwards, if the department deems
fit to issue any intimation of tax ascertained as being payable under
sub-section (5) of Section 74 in accordance with the Rule 142(1A) of
the Rules, it shall issue notice in the Form GST DRC-01A. In such a
notice of intimation, the proper officer shall not threaten the dealer that
if he would fail to comply with the intimation, the department shall
proceed to recover the tax. The proper officer should inform the dealer
that if he would pay the tax, well and good, otherwise the department
shall proceed to issue a show cause notice under sub- section (1) of
Section 74 in accordance with Rule 142(1)(a) of the Rules, 2017 in
Form GST DRC-01 and carry out regular assessment proceedings."
 Skyline Automation Industries vs. State of U.P.2
Gujarat High Court
(1) TMI 379 Dated 02.01.2023

• Initiation of proceedings without issuance of GST DRC-01A - Validity

of subsequent proceedings:
• In the case of Skyline Automation Industries vs. State of U.P.2, the
High Court observed that for initiation of proceedings against the
petitioner, a notice as provided for under Rule 142(1A) in Part A of
GST DRC-01A was not issued. It was held that any subsequent
reminder will not cure inherent defect in proceedings initiated against
the petitioner.
Action taken on 101st report of the committee on Demands
for grants (2020-21) - Rajya Sabha (11.09.2020)
The Committee observes that there is a 260% approx. increase in payment of fees to the legal
counsels/advisers by the Ministry in the last 11 years and around 4,32,000 cases relating to government
are pending.

Further, the National Litigation Policy is yet to be finalised by the Government and there is no concrete
roadmap from the Department to check pendency of cases and increasing expenditure.

The National Litigation Policy was drafted in 2010 and the Department during the Demand for Grants
(2018-19) had submitted that it is under active consideration of the Government.

The Committee, accordingly recommends the Department to expedite the formulation of National
Litigation Policy.
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 Few States Litigation Policy

Bihar State Litigation Policy'2011

Punjab State Litigation Policy, 2011

Karnataka State Dispute Resolution Policy, 2021

Puducherry Litigation Policy, 2021

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Professional Advice from us.
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17
Professional Advice from us.
For Information purpose not to be considered as
18
Professional Advice from us.
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Professional Advice from us.
 GST was introduced to reduced Litigations!!

Arbitrary Tax avoidance (if

Vague and poorly
interpretation by not, tax evasion)
drafted tax
the Revenue tendency of the
legislations
Officers taxpayer - 2A/2B

Confusing
Frequent /
Pressure of clarifications &/or
Retrospective
‘Revenue targets’ judicial
amendments
pronouncements
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Professional Advice from us.
 Why disputes are rising in GST?

Wide scope for

Poor drafted Law Excessive delegation arbitrary
interpretation

State GST authorities’

Wide scale ‘Tax
unfamiliarity with the Ill-conceived design
Frauds’ leading to
finer nuances of and structure
stringent action
litigation

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25
Professional Advice from us.
 ‘‘Tax Litigation Process” under GST

Show Cause Adjudication

Assessment
Notice & Revision

Compounding
Prosecution Appeals
of offences
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Professional Advice from us.
 Stages of Enforcing taxation statutes

• A Little difference in facts or additional facts may make a lot of

difference in the precedential value of the decision. (2003 2 SCC 111)

Levy Assessment Collection

• Collection of tax without assessment and assessment of tax without

levy are illegal.

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Professional Advice from us.
 Components of Tax

Clear Indication on
Taxable Event Whom Levy
attracting the Levy imposed & who is
obliged to pay

Measure or Value
Rate of Tax to which rate will
be applied

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28
Professional Advice from us.
 Assessment Issues

Return not filed

Return is Incorrect or Incomplete

Detail Scrutiny is required

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Professional Advice from us.
 Fundamental Right vs Procedural Benefits

• ITC is a Fundamental Right and any deviation should be strictly

interpreted.
• Issues with ITC are:
• Inverted Duty Structure – VKC Footwear
• GSTR-2A issue – Bharti Airtel Ltd.

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Professional Advice from us.
 VKC Footwear - SC

• The Observations in Para 104 to 111 are few anomalies noted by the
Honourable Supreme Court and has observed that GST Council shall
consider them in accordance with the law.
• The formula creates a distinction between suppliers having a higher
component of input goods than those having a higher component of
input services, and must be read down accordingly, must be rejected.
The formula is not perfect. matter would be considered by the GST
Council and anomalies as pointed out by the Supreme Court would be
removed.

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Professional Advice from us.
 Bharti Airtel Ltd - SC

• The law permits rectification of errors and omissions only at the initial
stages of Forms GSTR1 and GSTR3, but in the specified manner.
• Airtel had contended that, due to non-operability of Form GSTR2A at
the relevant time (July to September 2017), it had been denied of
access to the Credit Ledger.
• SC held that...despite an express mechanism provided by Section
39(9) read with Rule 61, it was not open to the HC to proceed on the
assumption that the only remedy that can enable the assessee to
enjoy the benefit of the seamless utilisation of the input tax credit
was by way of rectification of its return submitted in Form GSTR3B for
the relevant period in which the error had occurred.
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Professional Advice from us.
 Varun Beverages Ltd. – P&H HC

• Promissory Estoppel on not allowing Credit on Inputs relating to

Goods transferred outside state as Stock Transfer
• Framework suggested as per White Paper not acceptable
• 4-May2018, 27th GST Council Meeting

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Professional Advice from us.
Para (iv) of Press Release of 27th GST Council Meeting,
dated 4th May'2018

• No automatic reversal of credit: There shall not be any automatic

reversal of input tax credit from buyer on non-payment of tax by the
seller. In case of default in payment of tax by the seller, recovery shall
be made from the seller however reversal of credit from buyer shall
also be an option available with the revenue authorities to address
exceptional situations like missing dealer, closure of business by
supplier or supplier not having adequate assets etc.

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Professional Advice from us.
 GSTR-3B is a Return – AAP & Co.

• Initial Glitches in filing Returns.

• 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. – HC
• SC stayed it in Dec’19 and CBIC brought retrospective amendments

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35
Professional Advice from us.
For Information purpose not to be considered as
36
Professional Advice from us.
For Information purpose not to be considered as
37
Professional Advice from us.
For Information purpose not to be considered as
38
Professional Advice from us.
For Information purpose not to be considered as
39
Professional Advice from us.
For Information purpose not to be considered as
40
Professional Advice from us.
For Information purpose not to be considered as
41
Professional Advice from us.
For Information purpose not to be considered as
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Professional Advice from us.
Show Cause Notice
Point to remember while addressing them

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43
Professional Advice from us.
Reasons for issuance of SCN’s
Shortfall Detections by • Procedural Lapse
Tax Authorities • Contravention of law is deducted

• Now Notice is drafted by Audit Team

Audit Objection • Executed by Executive Officer
• In case of Multiple Officer – Highest or Principal

Preventive / Anti- • Here Litigation arises as Assessee doesn’t agree to be evader

Evasion • Normally Matter is closed with Tax, Interest & Penalty

• Even if Executive Officer doesn’t agree with demand, he will raise SCN
CAG Para • Try to convince CAG that demand is not justified

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44
Professional Advice from us.
Cross Empowerment
• CBIC Letter DOF No. CBEC/20/43/01/2017-GST(FT) dated 5-Oct-2018
• Both Central & State tax administrations shall have power to take
intelligence based enforcement action in respect of entire value
chain.
• Thus for intelligence based inputs both are cross empowered.

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Professional Advice from us.
CBIC have prescribed the monetary limits within for issuance of Show Cause Notices as per
Circular No. 31/05/2018-GST, dated 09-Feb-2018 which is as follows

Particulars Superintendent AC/DC ADC/JC

Amount of CGST (including Demand <= Rs. 10 Rs. 10 Lakhs < Demand <= Demand > Rs. 1
Cess) involved in a case Lakhs Rs. 1 Crore Crore

Amount of ICGST (including Demand <= Rs. 20 Rs. 20 Lakhs < Demand <= Demand > Rs. 2
Cess) involved in a case Lakhs Rs. 2 Crore Crore

Amount of ICGST and CGST Demand <= Rs. 20 Rs. 20 Lakhs < Demand <= Demand > Rs. 2
(including Cess) involved in Lakhs Rs. 2 Crore Crore
a case

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Professional Advice from us.
Sr. No. Particulars 2017-18 2018-19 2019-20 2020-21 2021-22

1 Due Date for GST Annual 31.12.2018 31.12.2019 31.12.2020 31.12.2021 31.12.2022
Return
2 Extended Due Date 05.02.2020 31.12.2020 31.03.2021 28.02.2022 -

Times lines for Bonafide / Genuine Cases

3
Last date to issue 05.11.2022 30.09.2023 31.12.2023 28.11.2024 30.09.2025
Notice under Section
30.06.2023
73(2) (33 Months)
4
Last date to issue 05.02.2023 31.12.2023 31.03.2024 28.02.2025 31.12.2025
Order under Section
30.09.2023
73(10) (36 Months)
N/N 13/2022
5th July’2022
Timelines for Malafide / Fraud Cases
5 Last date to issue Notice 05.08.2024 30.06.2025 30.09.2025 28.08.2026 30.06.2027
under Section 74(2) (54
Months)
6 Last date to issue Order 05.02.2025 31.12.2025 31.03.2026 28.02.2027 31.12.2027
under Section 74(10) (60 For Information purpose not to be considered as Professional
47
Months) Advice from us.
Sr. No. Particulars 2017-18 2018-19 2019-20 2020-21 2021-22

1 Due Date for GST Annual 31.12.2018 31.12.2019 31.12.2020 31.12.2021 31.12.2022
Return

2 Extended Due Date 05.02.2020 31.12.2020 31.03.2021 28.02.2022 -

Times lines for Bonafide / Genuine Cases

3 Last date to issue Notice 05.11.2022 30.09.2023 31.12.2023 28.11.2024 30.09.2025

under Section 73(2) (33
Months) 30.06.2023

30.09.2023 31.12.2023 31.03.2024

4 Last date to issue Order 05.02.2023 31.12.2023 31.03.2024 28.02.2025 31.12.2025

under Section 73(10) (36
Months) 30.09.2023
N/N 13/2022
5th July’2022

31.12.2023 31.03.2024 30.06.2024

N/N 09/2023 N/N 09/2023 N/N 09/2023
st
31 March’2023 31st March’2023
31st March’2023
Timelines for Malafide / Fraud Cases

5 Last date to issue Notice 05.08.2024 30.06.2025 30.09.2025 28.08.2026 30.06.2027

under Section 74(2) (54
Months)

6 Last date to issue Order 05.02.2025 31.12.2025 31.03.2026 28.02.2027 31.12.2027

under Section 74(10) (60 For Information purpose not to be considered as Professional
48
Months) Advice from us.
Sec 75(4)- Opportunity of being heard
An opportunity of being heard shall be granted

• where a request is received in writing from the person chargeable

with tax or penalty ,or
• where any adverse decision is contemplated against such person

Private Presentation Only not Professional Advice

 Sec 75(6) - Speaking Order
• The proper officer, in this order, shall set out the relevant facts and
the basis of his decisions.

Private Presentation Only not Professional Advice

Sec 75(13)- One penalty for one default
• Where any penalty is imposed under section 73 or section 74, no
penalty for the same act or omission shall be imposed on the same
person under any other provision of this Act.

Private Presentation Only not Professional Advice

Sec 75(7)- Notice and order should be on same
lines
• The amount of tax , interest and penalty demanded in the order shall
not be in excess of the amount specified in the notice and no demand
shall be confirmed on the grounds other than grounds specified in the
notice.

Private Presentation Only not Professional Advice

No Penalty is imposable in case of
Retrospective amendment
• In one of its historic judgments rendered in the case of J.K. Spinning
and Weaving Mills Ltd. vs. UOI – 1987 (32) ELT 234 (SC), the Supreme
Court held that it would be against all principles of legal jurisprudence
to impose a penalty on a person or to confiscate his goods for an act
or omission which was lawful at the time when such act was
performed or omission made, but subsequently made unlawful by
virtue of any provision of law

Private Presentation Only not Professional Advice

Penalty is not imposable when issue relates to
the statutory interpretation
• In the case of Uniflex Cables Ltd. vs. CCE – 2011 (271) ELT 161
(SC), the Supreme Court dealt with the issue with regard to the
imposition of penalty where the issue involved was of interpretational
nature. Taking note of the fact that the Commissioner himself had
found that it was only a case of interpretational nature, the Supreme
Court quashed the order of the Commissioner imposing the penalty as
also the order of the Tribunal so far as it confirmed the imposition of
penalty on the Appellant.

Private Presentation Only not Professional Advice

 DIN
• CBIC vide its Circular No 128/47/2019-GST has mandated that in all
the communications (except in exceptional circumstances) with the
assessee (including on e-mails), Documents Identification No is
required to be mentioned.
• DIN can be confirmed by the assessee online at Cbic.gov.in
• All the communication with the assessee which does not contain DIN
shall be treated Invalid and shall be considered as never been issued.

Private Presentation Only not Professional Advice

Monetary limits for SCN – 31/2018 (Circular)
Designation of Officer Monetary limit of the Monetary limit of the Monetary limit of the
amount of CGST amount of IGST amount of CGST and IGST
(including cess) for (including cess) for (including cess) for
issuance of show cause issuance of show cause issuance of show cause
notices & orders u/s 73 & notices & orders u/s 73 & notices & orders u/s 73 &
74 of CGST 74 of CGST Act made 74 of CGST Act made
applicable to IGST applicable to IGST

Superintendent Up to Rs. 10 lakhs Up to Rs. 20 lakhs Up to Rs. 20 lakhs

Deputy or Assistant Above Rs. 10 lakhs up to Above Rs. 20 lakhs up to Above Rs. 20 lakhs up to
Commissioner Rs. 1 crore Rs. 2 crore Rs. 2 crore

Additional or Joint Above Rs. 1 Crore Above Rs. 2 Crore Above Rs. 2 Crore
Commissioner

Private Presentation Only not Professional Advice

Notice and order should be on same lines(
Order beyond SCN)
• The adjudicating authority has to pass his order within the parameter
of the allegations levelled in the show cause notice
• In the case of Commissioner of customs, Mumbai v. Toyo Engineering
India ltd. [(2006) 7 SCC 592] , the apex court while delivering
judgement under para 16 held that, the department cannot travel
beyond the scope of the show cause notice

Private Presentation Only not Professional Advice

Power of Limitation
• Order cannot be issued beyond the time limit mentioned U/s 73(10)
and 74(10)
• In view of section 74(2), SCN is required to be issued at least 6
months prior to the time limit of issuing order which is 5 years from
“DUE DATE” for furnishing annual return of relevant F.Y. or date of
erroneous refund {i.e. within 4 years 6 months from due date of
annual return}
• Annual return F.Y. 17-18: 31.01.2020, order can be passed upto
30.01.2025. Order passed after this date is invalid.
• SCN issued after 31.07.2024 will be time- barred
Private Presentation Only not Professional Advice
 CROSS EMPOWERMENT
• Show cause notice
Authority empowered to issue show cause notice
❖‘Proper officer’
❖ Sec- 2(91)
❖ Circular No. 3/3/2017 –GST dt. 05-07-2017

Private Presentation Only not Professional Advice

Section – 2(91) , Central Goods And Services
Tax Act, 2017

• "proper officer" in relation to any function to be performed under

this Act, means the Commissioner or the officer of the central tax
who is assigned that function by the Commissioner in the Board;

Private Presentation Only not Professional Advice

Section - 6, Central Goods And Services Tax
Act, 2017
(1) Without prejudice to the provisions of this Act, the officers appointed under the State
Goods and Services Tax Act or the Union Territory Goods and Services Tax Act are
authorised to be the proper officers for the purposes of this Act, subject to such conditions
as the Government shall, on the recommendations of the Council, by notification33,
specify.
(2) Subject to the conditions specified in the notification issued under sub-section (1),—
(a) where any proper officer issues an order under this Act, he shall also issue an order
under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax
Act, as authorised by the State Goods and Services Tax Act or the Union Territory Goods
and Services Tax Act, as the case may be, under intimation to the jurisdictional officer of
State tax or Union territory tax;
(b) where a proper officer under the State Goods and Services Tax Act or the Union
Territory Goods and Services Tax Act has initiated any proceedings on a subject matter, no
proceedings shall be initiated by the proper officer under this Act on the same subject
matter.

Private Presentation Only not Professional Advice

Outward taxable supplies (GSTR 1 vs GSTR 3B)

Details to be checked Conclusion by Department

• Tax liability on outward taxable • If details furnished in Form
supplies including zero-rated GSTR-1 exceed the details
supply furnished in Form GSTR- furnished in Form GSTR-3B, it
3B to be verified with the details may indicate short payment of
furnished in Form GSTR-1 tax.

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62
Advice from us.
2. Tax liability on account of “Inward supplies (liable
to reverse charge)” as declared in Table 3.1(d) of
GSTR-3B may be verified with the following:.
 2(i) ITC availed in Table 4(A)(2) and Table 4(A)(3) of
FORM GSTR-3B.
Availment of ITC in excess of liablity of RCM supplies
may indicate Short payment of Tax liability of RCM
supplies or excess availment of ITC in respect of RCM
supplies.

For Information purpose not to be considered as Professional Advice

from us. 63
 Reverse charge liability with corresponding ITC

Details to be checked Conclusion by Department

• Tax liability of RCM supplies • Where concerned ITC availed
furnished in Form GSTR-3B to be exceeds the RCM liability
verified with ITC claimed on discharged, it may indicate
RCM supplies in Form GSTR-3B. either short payment of tax
liability on account of RCM
supplies or excess availment of
ITC in respect of RCM supplies.
• RCM claimed next month?

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64
Advice from us.
2.(ii) ITC in respect of inward supplies attracting reverse
charge as available in Table 3 And 5 (along with
the net effect of amendments thereof in Table 4
and 6 respectively) of GSTR-2A.
 Inward supplies attracting reverse charge from registered person, the
details of invoices and Dr/Cr note are communicate in Table 3 and 5
of GSTR-2A and amendment of that supplies in their GSTR-1 the
detail of such amendment are communicate in table 4 and 5
respectively.
 Detail of such inward supplies from unregistered persons are not
communicate in GSTR-2A. Moreover, detail of ITC on account of
Import of services also are not communicate in GSTR-2A
 Reverse charge services declared in table 3.1(d) of GSTR-3B cannot
be less than inward supplies attracting reverse charge of GSTR-2A
For Information purpose not to be considered as Professional Advice
from us. 65
 Reverse charge liability from registered persons
(GSTR-3B with GSTR-2A)

Details to be checked Conclusion by Department

• Tax liability of RCM supplies • Where details furnished in Form
furnished in Form GSTR-3B to be GSTR-3B is less than the details
verified with the details of auto- populated in Form GSTR-2A,
corresponding invoices and debit it may indicate short payment of
note/credit notes communicated in tax liability on account of RCM
Form GSTR-2A. supplies.
• Time of supply of services: Date of
payment; or 60 days - supplier’s
invoice
• Year End transactions in Next FY
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66
Advice from us.
 RCM supplies in table 3.1(d) of GSTR -3B are less than inward supplies
attracting reverse charge in GSTR-2A it may indicate short payment of tax on
account of RCM supplies.
 It may be noted that the said tables in FORM GSTR-2A contain details of
supplies attracting forward as well as reverse charge.

For Information purpose not to be considered as Professional Advice

from us. 67
2.(iii) Tax/Cess paid in cash as per column 8 of Table 6.1 of GSTR-3B.
 In respect of inward supplies liable to reverse charge, tax/cess is to be paid in
cash.
 tax liability off-set in cash should not be less than the liability arising on
account of reverse charge as per table 3.1(d) of FORM GSTR-3B.
 Where the tax liability off-set in cash is less than the liability arising on
account of reverse charge, it may indicate short payment of tax.

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from us. 68
Reverse charge liability compare with the amount
paid in cash

Details to be checked Conclusion by Department

• Tax paid in cash during the • Where the tax liability offset in
relevant month should not be cash is less than the liability
less than the tax liability arising on account of reverse
reported as supplies liable under charge, it may indicate short
RCM. payment of tax.

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69
Advice from us.
3. ITC availed in respect of “Inward supplies from
ISD” in Table 4(A)(4) of GSTR-3B may be
verified with Table 7 (along with the net effect of
amendments thereof in Table 8) of GSTR2A.

For Information purpose not to be considered as Professional Advice

from us. 70
 ISD Credit (GSTR 3B vs GSTR 2A)

Details to be checked Conclusion by Department

• The details of ITC availed on • In normal case of excess Credit
‘Inward supplies from ISD’ in pass on recovery from?
Form GSTR-3B is to be verified • ISD
with the ISD credit received in • Recipient of ITC
Form GSTR-2A.

For Information purpose not to be considered as Professional

71
Advice from us.
4. ITC availed in respect of “All other ITC” in Table
4(A) (5) of GSTR-3B may be verified with Table 3
and Table 5 (along with the net effect of
amendments thereof in Table 4 and Table 6
respectively) of GSTR-2A.
 It may be noted that the said tables in FORM GSTR-2A
contain details of supplies attracting forward as well as
reverse charge. Therefore, only the supplies against which
there is NO or N in column 14 of table 3, column 16 of
Table 4, column 15 of Table 5 and column 18 of Table 6
may be considered.

For Information purpose not to be considered as Professional Advice

from us. 72
 Other ITC (GSTR 3B vs GSTR 2A)

Details to be checked Conclusion by Department

• The details of ITC availed in • A transaction not appearing in
respect of inward supplies under Form GSTR 2A may be because
the forward charge in Form of the reason that the recipient
GSTR-3B13 would be verified has not procured the goods or
with the details auto-populated services and, hence ITC may not
in Form GSTR-2A. be allowed.

For Information purpose not to be considered as Professional

73
Advice from us.
 Cases for difference of ITC GSTR-2A vs 3B
1. Supplier has reported B2B supplies as B2C supplies in GSTR-1
and they could not amend it till expiry of time limit. So,
these transactions have not appeared in GSTR-2A of actual
recipient to whom notices served.
2. Few supplies have reported B2B supplies against GSTIN of
some other taxpayer instead of actual recipient.
3. Supplier had missed reporting of B2B transactions in his
GSTR-1
4. Supplier had reported B2B transactions taxable under
forward charge in Table 4B of his GSTR-1 instead of Table 4A.

For Information purpose not to be considered as Professional

74
Advice from us.
 Cases for difference of ITC GSTR-2A vs 3B

5. B2B transaction in GSTR-1 mistakenly reported as

transaction liable to RCM by the supplier.
6. In some of the case replies are received that the ineligible
ITC , which has been pointed out in ASMT-10 was already
reversed by taxpayer in return of subsequent period,
however the format in GSTR-3B is not so exclusive and no
separate column is provided for such reversal hence the
amount of ITC reversed for previous period is not eligible
from the return form itself.

For Information purpose not to be considered as Professional

75
Advice from us.
 ITC as per Form 2A
During FY 2017-18 and FY 2018-19, there was no restriction under the law for claiming the
ITC the invoices should appear in Form GSTR 2A.

If the ITC conditions are satisfied, then the authorities should not disallow the credit to the
recipients merely because the transaction is not appearing in GSTR 2A.

The ITC could be availed based on the tax invoices issued by the supplier.

Press Release, Dated October 18, 2018 can be considered in this matter.

Hon’ble Gujarat High Court in the case of New Nalbandh Traders is also there.

For Information purpose not to be considered as Professional

76
Advice from us.
 New Nalbandh Traders vs State of Gujarat
R/SPECIAL CIVIL APPLICATION NO. 17202 of 2021
Judgement Dated: 23-Feb-2022
• ITC was blocked , under Rule 86A, on the basis of missing trader.
• Taxpayer challenged the same through Writ contending that:
• It received the goods from the said supplier, it also received tax
invoices, weighment slips, e-way bills etc. which are the documents
prescribed for the purchase under the provisions of the CGST Act,
2017.
• Rule 86A use the words, “Reasons to Believe.” The satisfaction must
be reached on the basis of some objective material available before
the authority. It cannot be made on the flights of one’s fancies or
whims or imagination.
For Information purpose not to be considered as Professional
77
Advice from us.
 New Nalbandh Traders vs State of Gujarat
R/SPECIAL CIVIL APPLICATION NO. 17202 of 2021
Judgement Dated: 23-Feb-2022
• Rule 86A may subject a bona fide assessee to undue hardship by the
blockage of his credit ledger due to the default of his supplier. This
may tantamount to equating the default of the recipient with that of
the supplier.
• ITC needs to be checked with Conditions as prescribed in GST Laws.

For Information purpose not to be considered as Professional

78
Advice from us.
 Mahalaxmi Infra Contract Ltd vs State of Jharkhand -
Jharkhand High Court
(W.P.(T) No. 2478 of 2021 dated 18-Oct-2022
Jharkhand High Court allows revision of GSTR-1 to pass on Input Tax
Credit ITC to the correct recepient

For Information purpose not to be considered as Professional

79
Advice from us.
 Para 13 (a) of Press Release of
th
48 GST Council Meeting (17-Dec-2022)
• 13. Issuance of the following circulars in order to remove ambiguity
and legal disputes on various issues, thus benefiting taxpayers at
large:
• a. Procedure for verification of input tax credit in cases involving
difference in input tax credit availed in FORM GSTR-3B vis a vis that
available as per FORM GSTR-2A during FY 2017-18 and 2018-19.

For Information purpose not to be considered as Professional

80
Advice from us.
 Our view on Para 13 (a) of Press Release of
th
48 GST Council Meeting (17-Dec-2022)
• Maharashtra State GST has already issued a circular where these
differences could be ironed out by declaration from the supplier or a
Practicing Chartered Accountant that the tax has been paid to the
Government.
• Incase this circular would be replicated in some form, it would be a
big relief for the taxpayers reeling under similar notices.

For Information purpose not to be considered as Professional

81
Advice from us.
 Brief about Maharashtra CA Certificate
a) Mismatch of ITC claim of GSTR-3B and GSTR-2A the proper officer
may in case where difference in ITC claim (CGST+SGST or IGST) per
supplier is 2.5 lakh or more, ask the claimant to obtain certification
from Chartered accountant of the said supplier certifying the output
transaction and tax paid thereon so as to comply with the provision of
section 16 and where difference in ITC is 2.5 lakh or less ,ask the
claimant to obtain ledger confirmation of the concerned supplier along
with his/her certification.

For Information purpose not to be considered as Professional

82
Advice from us.
 Brief about Maharashtra CA Certificate
b) For RCM liability issue the proper officer upon receipt of reply from
taxpayer under scrutiny may verify whether supplier has paid the due
tax on such transactions which have been wrongly reported in Table 4B
of GSTR-1.

For Information purpose not to be considered as Professional

83
Advice from us.
 Brief about Maharashtra CA Certificate
c) In relation to ineligible ITC where taxpayer replies with reference to
specific return period, then calculation of reversal in table 4(B) (2) of
that specified return period along with transaction list should be
obtained from the tax payers and verified with ITC claim, reversal, other
reversal, etc. Alternatively, it can be verified from DRC-03 filed by the
tax payer, if any.

For Information purpose not to be considered as Professional

84
Advice from us.
 Circular No. 183/15/2022-GST

Clarification to deal with difference in Input Tax Credit (ITC)

availed in FORM GSTR-3B as compared to that detailed in
FORM GSTR-2A for FY 2017-18 and 2018-19 – reg.

For Information purpose not to be considered as Professional

85
Advice from us.
 Summary of Circular No. 183/15/2022
Difference in GSTR-3B and GSTR-2A for FY 2017-18 and 2018-19 due to following reasons;
1. GSTR-1 not filed
2. Invoice not declared in GSTR-1
3. Reported B2B supply as B2C
4. Mentioned wrong GSTIN of the recipient in GSTR-1
• Difference upto 5 lacs –Supplier’s certificate for compliance of section 16(2)(c)
• Difference exceeds 5 lacs – CA/CMA’s certificate for compliance of section 16(2)(c)

*Additionally, the proper officer of the actual recipient shall intimate jurisdictional tax authority of
the registered person, whose GSTIN has been mentioned wrongly, to ensure that ITC on those
transactions shall be disallowed to such other person.

For Information purpose not to be considered as Professional

86
Advice from us.
• Section 16 of the Central Goods and Services Tax Act, 2017 provides
for eligibility and conditions for availing Input Tax Credit.
• During the initial period of implementation of GST, during the
financial years 2017-18 and 2018-19, in many cases, the suppliers
have failed to furnish the correct details of outward supplies in their
FORM GSTR-1, which has led to certain deficiencies or discrepancies
in FORM GSTR-2A of their recipients.
• The discrepancies between the amount of ITC availed by the
registered persons in their returns in FORM GSTR-3B and the amount
as available in their FORM GSTR-2A are being noticed by the tax
officers during proceedings such as scrutiny/ audit/ investigation etc.
due to such credit not flowing to FORM GSTR-2A of the said
registered persons

For Information purpose not to be considered as Professional

87
Advice from us.
• It is mentioned that FORM GSTR-2A could not be made available to
the taxpayers on the common portal during the initial stages of
implementation of GST. Further, restrictions regarding availment of
ITC by the registered persons upto certain specified limit beyond the
ITC available as per FORM GSTR-2A were provided under rule
36(4) of Central Goods and Services Tax Rules, 2017 only with
effect from 9th October 2019. However, the availability of ITC was
subjected to restrictions and conditions specified in Section 16 of
CGST Act from 1st July, 2017 itself.

For Information purpose not to be considered as Professional

88
Advice from us.
In order to ensure uniformity in the implementation of the provisions of
the law across the field formations, the Board, in exercise of its powers
conferred under section 168(1) of the CGST Act, hereby clarifies as
follows:

S. Scenario Clarification
No.

a. Where the supplier has failed to file In such cases, the difference in ITC claimed by
FORM GSTR-1 for a tax period but has the registered person in his return in FORM
filed the return in FORM GSTR-3B for GSTR-3B and that available in FORM GSTR-
said tax period, due to which the supplies 2A may be handled by following the procedure
made in the said tax period do not get provided in para 4 below.
reflected in FORM GSTR-2A of the
recipients.

For Information purpose not to be considered as Professional

89
Advice from us.
b. Where the supplier has filed FORM In such cases, the difference in ITC claimed by
GSTR-1 as well as return in FORM the registered person in his return in FORM
GSTR-3B for a tax period, but has failed to GSTR-3B and that available in FORM GSTR-
report a particular supply in FORM 2A may be handled by following the procedure
GSTR-1, due to which the said supply provided in para 4 below
does not get reflected in FORM GSTR-2A
of the recipient.
c. Where supplies were made to a registered In such cases, the difference in ITC claimed by
person and invoice is issued as per Rule 46 the registered person in his return in FORM
of CGST Rules containing GSTIN of the GSTR-3B and that available in FORM GSTR-
recipient, but supplier has wrongly reported 2A may be handled by following the procedure
the said supply as B2C supply, instead of provided in para 4 below.
B2B supply, in his FORM GSTR-1, due to
which the said supply does not get reflected
in FORM GSTR-2A of the said registered
person.

For Information purpose not to be considered as Professional

90
Advice from us.
d. Where the supplier has filed FORM In such cases, the difference in ITC claimed by
GSTR-1 as well as return in FORM the registered person in his return in FORM
GSTR-3B for a tax period, but he has GSTR-3B and that available in FORM GSTR-
declared the supply with wrong GSTIN of 2A may be handled by following the procedure
the recipient in FORM GSTR-1. provided in para 4 below.
In addition, the proper officer of the actual
recipient shall intimate the concerned
jurisdictional tax authority of the registered
person, whose GSTIN has been mentioned
wrongly, that ITC on those transactions is
required to be disallowed, if claimed by such
recipients in their FORM GSTR-3B. However,
allowance of ITC to the actual recipient shall not
depend on the completion of the action by the
tax authority of such registered person, whose
GSTIN has been mentioned wrongly, and such
action will be pursued as an independent action.

For Information purpose not to be considered as Professional

91
Advice from us.
He shall then ascertain fulfillment of the following conditions of
Section 16 of CGST Act in respect of the input tax credit availed on
such invoices by the said registered person:
1) that he is in possession of a tax invoice or debit note issued by the
supplier or such other tax paying documents;
2) that he has received the goods or services or both;
3) that he has made payment for the amount towards the value of
supply, along with tax payable thereon, to the supplier.
Besides, the proper officer shall also check whether any reversal of
input tax credit is required to be made in accordance with section 17 or
section 18 of CGST Act and also whether the said input tax credit has
been availed within the time period specified under sub-section (4) of
section 16 of CGST Act.

For Information purpose not to be considered as Professional

92
Advice from us.
 In order to verify the condition of clause (c) of sub-section
(2) of Section 16 of CGST Act the following action may be
taken by the proper officer:
Where difference between the ITC claimed in FORM GSTR-3B and
that available in FORM GSTR 2A of the registered person in respect of
a supplier for the said financial year exceeds Rs 5 lakh, the proper
officer shall ask the registered person to produce a certificate for the
concerned supplier from the Chartered Accountant (CA) or the Cost
Accountant (CMA), certifying that supplies in respect of the said
invoices of supplier have actually been made by the supplier to the said
registered person and the tax on such supplies has been paid by the
Certificate issued by CA or CMA shall contain UDIN. UDIN of the
certificate issued by CAs can be verified from ICAI said supplier in his
return in FORM GSTR 3B.
For Information purpose not to be considered as Professional
93
Advice from us.
In cases, where difference between the ITC claimed in FORM GSTR-
3B and that available in FORM GSTR 2A of the registered person in
respect of a supplier for the said financial year is upto Rs 5 lakh, the
proper officer shall ask the claimant to produce a certificate from the
concerned supplier to the effect that said supplies have actually been
made by him to the said registered person and the tax on said supplies
has been paid by the said supplier in his return in FORM GSTR 3B.

For Information purpose not to be considered as Professional

94
Advice from us.
For the period FY 2017-18, as per proviso to section 16(4) of CGST
Act, the aforesaid relaxations shall not be applicable to the claim of ITC
made in the FORM GSTR-3B return filed after the due date of
furnishing return for the month of September, 2018 till the due date of
furnishing return for March, 2019.
These instructions will apply only to the ongoing proceedings in
scrutiny/audit/ investigation, etc. for FY 2017-18 and 2018-19 and not
to the completed proceedings. However, these instructions will apply in
those cases for FY 2017-18 and 2018-19 where any adjudication or
appeal proceedings are still pending.

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95
Advice from us.
M/s WIPRO LIMITED INDIA Vs THE ASSISTANT
COMMISSIONER OF CENTRAL TAXES, BENGALURU
2023-VIL-22-KAR
• GST – Bonafide mistakes in furnishing of correct details of outward supplies - Rectification of Form GSTR-1 – Application of Circular
No.183/15/2022-GST dated 27.12.2022 to year 2019-20 when the said Circular refers only to the years 2017-18 and 2018-19 -
Petitioner seeking direction to Revenue to allow rectification of Form GSTR-1 uploaded between FY 2017-18 and 2018-19 with
respect to certain invoices issued to the recipient so as to enable the recipient to claim input tax credit notwithstanding the time
limit prescribed in Section 16(4) of the CGST Act - Revenue submits that the Circular No.183/15/2022-GST dated 27.12.2022 relied
upon by the petitioner is not applicable to present case –
• HELD – perusal of the invoices indicates that while supplies are made by the petitioner to the M/s. ABB Global Industries and
Services Private Limited, the GSTIN Number mentioned in the invoices has been incorrectly shown as that of ABB India Limited,
which is a completely different and independent juristic and legal entity - the language employed in the Circular No.183/15/2022-
GST contemplates rectification of the bonafide and inadvertent mistakes committed by the persons at the time of filing of Forms
and submitting Returns - the error committed by the petitioner in showing the wrong GSTIN number in the invoices is clearly a
bonafide error which has occurred due to bonafide reasons, unavoidable circumstances, sufficient cause and consequently, the
aforesaid Circular would be directly and squarely applicable to the facts of the instant case - The recipient has also filed statement
of objections setting out the facts admitting, accepting and re-enforcing the claim of the petitioner with regard to the mismatch in
mentioning of the GSTIN Number - Revenue is directed to follow the procedure prescribed in the Circular and apply the said
Circular to the facts of the instant case of the petitioner - though the Circular refers only to the years 2017-18 and 2018-19, since
there are identical errors committed by the petitioner not only in respect of the years 2017-18 and 2018-19 but also in relation to
the assessment year 2019-20, by adopting a justice oriented approach, the petitioner would be entitled to the benefit of the
Circular for the year 2019-20 also - Petition is disposed of directing the respondents to take necessary steps in relation to the
petitioner and fifth respondent for the assessment years 2017-18, 2018-19 and 2019-20 in terms of the Circular No. bearing
No.183/15/2022-GST dated 27.12.2022 – the writ petition is allowed

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96
Advice from us.
TRAVANCORE MATS AND MATTINGS PVT LTD Vs THE ASSISTANT
COMMISSIONER
2022-VIL-379-MAD
• GST – Change in composition of the company – Claim of ITC - petitioner has
accepted the demand made by the respondent to pay differential tax
demand of 7% out of 12% of the tax, as the 5% have already been paid –
petitioner seeking direction to allow claim of ITC despite change in
composition of the firm – HELD - the petitioner is ready and willing to pay
the tax at the rate of 12% by making the payment of the remaining 7% for
the given tax period - Insofar as the claim of ITC is concerned, if the
petitioner is eligible to claim the said ITC, the petitioner can very well claim
that ITC from the concerned jurisdictional State GST Authority, where the
petitioner Head Office is located - change in composition of the petitioner
from Partnership Firm to Pvt Ltd Company and consequent change of GST
registration number, shall not stand in the way in claiming the ITC by the
petitioner if he is eligible to claim under the provisions of the GST Act –
writ petition is disposed of

For Information purpose not to be considered as Professional

97
Advice from us.
5. It may be verified that the taxable value declared
on account of “Outward taxable supplies (other
than zero rated, nil rated and exempted)” in Table
3.1(a) of GSTR-3B is not less than the net amount
liable for TCS and TDS credit as per Column 6 of
Table 9 of GSTR-2A.
 The details of such TDS and TCS are furnished by the corresponding
deductors and operators in their GSTR-7 and GSTR-8 respectively
and communicated to the registered person in table 9 of GSTR-2A.
 Besides such supplies, the registered person may have other supplies
also.
 A discrepancy on the aforementioned count may indicate short
payment of tax.

For Information purpose not to be considered as Professional Advice

from us. 98
 Value of outward taxable supply with the value auto-
populated for TDS/TCS purposes
(GSTR 3B vs GSTR 2A)

Details to be checked Conclusion by Department

• The value of taxable value declared • Where the value declared in Form
on account of ‘outward taxable GSTR-3B is less than the net
supplies (other than zero-rated, nil amount liable for TDS/TCS as auto-
rated and exempted)’ in Form populated in Form GSTR-2A, it
GSTR-3B to be compared with the would indicate less reporting of the
values of TDS and TCS furnished by value and hence the short payment
the corresponding deductors or E- of tax.
Commerce Operators in their Form • GST Liability is on Accrual vs TDS
GSTR-7 & Form GSTR-8 liability is linked with payment
respectively and communicated to
the registered person in Form
GSTR-2A.

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99
Advice from us.
6. Liability on account of outward supplies in Table
3.1(a) and 3.1(b) of GSTR-3B should be verified
with the Tax liability as declared in e-way bills.
 Rule 138 of the CGST Rules mandates generation of e-
way bill before commencement of movement of goods of
consignment value exceeding Rs.50,000.
 Accordingly, liability declared in table 3.1 (a) and (b) of
FORM GSTR-3B should not be less than tax liability as
declared in the e-way bills.

For Information purpose not to be considered as Professional Advice

from us. 100
 GSTR 3B with e-Way bill details

Details to be checked Conclusion by Department

• The details of outward taxable • Where the value declared in
supplies (both zero-rated and Form GSTR-3B is less than the
other than zero- rated) as amount of tax liability declared
furnished in Form GSTR-3B in e-way bills, it would indicate
would be verified with the tax short payment of tax.
liability declared in e-way bills. • What about value reported for
delivery challan, etc?

For Information purpose not to be considered as Professional

101
Advice from us.
7. Claim of ITC in respect of supplies from taxpayers
whose registrations have been cancelled
retrospectively.
 In case of retrospective cancellation of registration of a
supplier, the recipient is not entitled to claim ITC in
respect of invoices or debit notes issued after the effective
date of cancellation of the registration.
 It may be verified whether the registered person has
availed ITC in respect of such invoices or debit notes
issued by the suppliers after the effective date of
cancellation of their registrations.

For Information purpose not to be considered as Professional Advice

from us. 102
ITC claim where vendor’s registration cancelled retrospectively

Details to be checked Conclusion by Department

• Where the registration of a • The proper officer would verify
supplier is cancelled whether there is any claim of ITC
retrospectively, the recipient in respect of supplies made by
would not be entitled to claim the cancelled GSTINs.
ITC in respect of the invoices or • The effective date of the
debit notes issued after such cancellation of registrations can
date of cancellation of be viewed from Form GSTR-2A.
registration.

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103
Advice from us.
For Information purpose not to be considered as Professional
Advice from us.

Cancelled
Registration

Retrospectively
Cases of Vendor

104
 Sanchita Kundu vs The Assistant Commissioner of State Tax, Bureau of
Investigation, South Bengal
W.P.A. 7231 of 2022 and W.P.A. 7232 of 2022
dated 05.05.2022 (Calcutta High Court)
• The Input Tax Credit (ITC) was denied of the Petitioner on purchase of the
goods in question from the suppliers and asking the petitioners to pay the
penalty and interest under the relevant provisions of GST Act, on the ground
that the registration of the suppliers in question has already been
cancelled with retrospective effect covering the transaction period in
question.
• The Petitioners - due diligence - verified the genuineness and identity of the
suppliers - the names of those suppliers as registered taxable person were
available at the Government portal showing their registrations as valid and
existing at the time of transactions - petitioners - limitation -ascertaining the
validity and genuineness of the suppliers - done whatever possible - were
already available with the Government record.
For Information purpose not to be considered as Professional
105
Advice from us.
 Sanchita Kundu vs The Assistant Commissioner of State Tax, Bureau of
Investigation, South Bengal
W.P.A. 7231 of 2022 and W.P.A. 7232 of 2022
dated 05.05.2022 (Calcutta High Court)
• Petitioners further submit that they have paid the amount of
purchases in question as well as tax on the same not in cash and all
transactions were through banks and petitioners are helpless if at
some point of time after the transactions were over, if the respondents
concerned finds on enquiries that the aforesaid suppliers (RTP) were
fake and bogus and on this basis petitioners could not be penalised
unless the department/respondents establish with concrete materials
that the transactions in question were the outcome of any collusion
between the petitioners/purchasers and the suppliers in question.
• Petitioners further submit that all the purchasers in question invoices-
wise were available on the GST portal in form GSTR-2A which are
matters of record.
For Information purpose not to be considered as Professional
106
Advice from us.
 Sanchita Kundu vs The Assistant Commissioner of State Tax, Bureau of
Investigation, South Bengal
W.P.A. 7231 of 2022 and W.P.A. 7232 of 2022
dated 05.05.2022 (Calcutta High Court)
• The Calcutta High Court bench of Justice Md. Nizamuddin has held that
the Input Tax Credit (ITC) cannot be denied on genuine transactions
with suppliers whose GST registration was cancelled after the
transaction.

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107
Advice from us.
 LGW Industries Limited vs Union of India
WPA No.23512 of 2019
dated 13.12.2021 (Calcutta High Court)

• Notices issued by the respondents concerned for not allowing the

petitioners, who are the purchasers of the goods in question and
refusing to grant the benefit of input tax credit (ITC) on purchase from
the non-existent suppliers and also asking the petitioners to pay
penalty and interest under relevant provisions of GST Act.
• Disallowance of input tax credit on the ground that the purchases
made by petitioners are from non-existing suppliers and the bank
accounts opened by those suppliers are on the basis of fake
documents and that the petitioners have not verified the genuineness
and identity of the suppliers before entering into transaction with
those suppliers.
For Information purpose not to be considered as Professional
108
Advice from us.
 LGW Industries Limited vs Union of India
WPA No.23512 of 2019
dated 13.12.2021 (Calcutta High Court)

• Further grounds of denying the input tax credit benefit to the

petitioners are that the registration of suppliers in question have been
cancelled with retrospective effect covering the transactions period in
question.
• Case remanded to the Authority concerned with direction if it is found
that all purchases and transactions in question are genuine and
supported by valid documents and transaction in question were made
before the cancellation of Registration of those suppliers, the
assessees shall be given the benefit of ITC in the question.

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109
Advice from us.
 Daesung Electric India Pvt Ltd vs Commercial Tax officer, Tiruttani
W.P.Nos.1814 to 1820 of 2017 and WMP Nos.1801 to 1807 of 2017
dated 13.02.2017 (Madras High Court)

• Petitioner challenged the reversal of ITC which was

reversed because of cancellation of registration
certificate of seller.
• A perusal of details shows that in some cases, the
effective date of cancellation of registration certificate,
precedes the date of the invoice, while in other cases,
the effective date follows the date of the invoice.

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110
Advice from us.
 Daesung Electric India Pvt Ltd vs Commercial Tax officer, Tiruttani
W.P.Nos.1814 to 1820 of 2017 and WMP Nos.1801 to 1807 of 2017
dated 13.02.2017 (Madras High Court)

• Quite clearly, if, the effective date of cancellation of registration

certificate follows the date of invoice, then, the fact the registration
certificate was valid on the date, when, the transaction took place, is
an aspect, which attains criticality.
• The petitioner's transaction cannot be impacted by subsequent
cancellation of registration.
• In such like cases, therefore, logically, the petitioner should be able to
claim ITC, on such transactions.

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111
Advice from us.
 D.Y. Beathel Enterprises
vs State Tax Officer (Data Cell),
Tirunelveli

HIGH COURT OF MADRAS

W.P.(MD)NOS. 2127, 2117, 2121, 2152, 2159, 2160, 2168, 2177,
2500, 2530, 2532, 2534, 2538, 2539, 2540, 2503 & 2504 OF 2021
W.M.P. (MD) NOS. 1781 & 1791 OF 2021 & OTHER
24-FEBRUARY-2021

112
 Facts of the Case

• Recovery of input tax credit for non-payment of GST by seller.

• Validity of recovery from petitioner-buyer in the absence of similar
recovery action against the seller.
• Challenge to automatic reversal of input tax credit from the buyer on
non-payment of tax by the seller.

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113
Advice from us.
 Madras High Court Held:

• The respondent does not appear to have taken any recovery action
against the seller on the present transactions.
• When the seller has collected tax from the purchasing dealers, the
omission on the part of the seller to remit the tax in question must
have been viewed seriously and strict action ought to have been
initiated against the seller - in enquiry in question, the seller ought to
have been examined and this is all the more necessary, because the
respondent has alleged that the petitioners have not even received
the goods and had availed input tax credits on the strength of
generated invoices.

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114
Advice from us.
 Madras High Court Held:

• the impugned orders suffers from fundamental flaws of non-

examination of seller in the enquiry and non-initiation of recovery
action against seller in the first place.
• The impugned orders are quashed and the matters are remitted back
to the file of the respondent.

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115
Advice from us.
 Surana Industries Ltd vs State of Karnataka - Karnataka
Appellate Tribunal, Bangalore
Sales Tax Appeal No. 2680 to 2687 of 2012 Dated: 27-Sep-2017
The onus to prove genuineness of the transaction lies on the Person
claiming ITC. If the claim is not substantiated with any document or if
any document is found missing then Department has the right to
disallow ITC.

In my View:
As the Department is rejecting ITC claims due to Bogus or Fake ITC, it is
recommended to keep all necessary documentary evidence ready while
availing ITC. There should be monthly reconciliation of ITC with
documents so that if something is missing that can be collected timely.
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116
Advice from us.
8. Ineligible ITC availed in respect of invoices / debit
notes issued by the suppliers who have not filed
their GSTR-3B returns for the relevant tax period.
 FORM GSTR-2A of the registered person contains the
details of “GSTR-3B filing status” of the supplier in
respect of each invoice / debit note received by the
registered person.
 Where the said status is “No”, it indicates the supplier has
furnished invoice details in his FORM GSTR-1, but has
not furnished the return in FORM GSTR-3B for the
corresponding tax period.

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from us. 117
 ITC claim where the supplier has not furnished Form GSTR-3B

Details to be checked Conclusion by Department

• Form GSTR-2A provides the GSTR- • The availment of ITC in respect of
3B filing status of the supplier in such invoices/debit notes may be
respect of each invoice/debit note checked as it is not allowed.
received by the registered person. • On the basis of case discussed
• The ‘No’ status indicates the earlier the matter could be
supplier has furnished invoice litigated.
details in his Form GSTR-1 but has
not furnished Form GSTR-3B for
the corresponding tax period.

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118
Advice from us.
For Information purpose not to be considered as Professional
Advice from us.

Cases of ITC not

paid by Supplier

119
 Quest Merchandising India Pvt. Ltd. vs Govt. of NCT of Delhi
W.P. (C) 6093 of 2017
dated 26.10.2017 (Delhi High Court)
• The concerned provision (DVAT) to not include a buyer who has bona
fide entered into the purchase transactions with validly registered
dealers who have issued the tax invoices against the transaction.

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120
Advice from us.
 Arise India Limited vs Govt. of NCT of Delhi
W.P. (C) 2016 of 2015
dated 26.10.2017 (Delhi High Court)
• In the event that the selling dealer has failed to deposit the tax
collected by him from the purchasing dealer, the remedy for the
Department would be to proceed against the defaulting selling dealer
to recover such tax and not deny the purchasing dealer the ITC.
• Where, however, the Department is able to come across material to
show that the purchasing dealer and the selling dealer acted in
collusion then the Department can proceed under Section 40A of the
DVAT Act.

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121
Advice from us.
 Sri Vinayaga Agencies v. Assistant Commissioner,
W.P. Nos. 2036 to 2038 of 2013,
dated 29.01.2013 (Madras High Court)

• Law does not empower the tax authorities to reverse the ITC availed,
on a plea that the selling dealer has not deposited the tax. It can
revoke the input credit only if it relates to the incorrect, incomplete or
improper claim of such credit.

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122
Advice from us.
 Gheru Lal Bal Chand v. State of Haryana
Civil Writ Petition No.6573 of 2007
dated 23.09.2011 (P&H High Court)

• The law need to distinguish between honest and dishonest dealers.

• Law cannot put such onerous responsibility on the assessee
otherwise, it would be difficult to hold the law to be valid on the
touchstone of Articles 14 and 19 of the Constitution of India.
• In the absence of any malafide intention, connivance or wrongful
association of the assessee with the selling dealer or any dealer
earlier thereto, no liability can be imposed on the principle of
vicarious liability.
• Taxpayer cannot be forced to substantiate its truthfulness by running
from pillar to post to collect the material for its authenticity.
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Advice from us.
 Sri Ranganathar Valves P L vs Assistant Commissioner, Coimbatore
Writ Petition No. 4126 to 4129 of 2016
dated 04.09.2020 (Madras High Court)

• Disallowance of ITC on the ground that selling dealer from whom the
petitioner had purchased the goods had not paid tax to the
Government.
• Input Tax Credit cannot be disallowed on the ground that the seller
has not paid tax to the Government, when the purchaser is able to
prove that the seller has collected tax and issued invoices to the
purchaser.

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124
Advice from us.
9. Whether GSTR-3B of a tax period is filed after the
last date of availment of ITC in respect of any
invoice / debit note as per section 16(4). In such
cases, no ITC shall be availed in the return.
 It may also be noted that vide proviso to sub-section (4) of
section 16, for FY 2017-18, availment of ITC was allowed
beyond the due date of furnishing of return for the month
of September, 2018 till the due date of furnishing of the
return in FORM GSTR-3B for the month of March, 2019
subject to the condition that the details of the said invoices
/ debit notes should have been furnished by the suppliers
in their FORM GSTR-1 till the due date of furnishing of
FORM GSTR-1 for the month of March, 2019.
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from us. 125
 ITC availed beyond time limit prescribed under Section 16(4)

Details to be checked Conclusion by Department

• ITC claimed after the statutory • In respect of FY 2017-18, the
time limit shall be disallowed due date of claiming ITC was
and therefore to be disallowed. extended up to the due date of
furnishing return for the March
2019.

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126
Advice from us.
10. ITC availed in respect of “Import of goods” in
Table 4(A)(1) of FORM GSTR-3B may be verified
with corresponding details in Table 10 and Table
11 of FORM GSTR-2A

 Wherever required, the details of such imports may

also be cross-verified from ICEGATE portal.

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from us. 127
 ITC on import of goods (GSTR 3B with GSTR 2A)

Details to be checked Conclusion by Department

• The details of ITC availed in
respect of ‘import of goods’ as
furnished in Form GSTR- 3B
would be verified with details in
Form GSTR-2A

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128
Advice from us.
11. Whether the registered person has made reversals of ITC in
accordance with provisions of rule 42 and rule 43 of the CGST Rules.
 Rule 42 of the CGST Rules provides for manner of determination of input tax
credit in respect of inputs or input services and reversal thereof.
 Rule 43 provides for manner of determination of input tax credit in respect of
capital goods and reversal thereof in certain cases. The registered person avails
ITC in table 4(A) of FORM GSTR-3B and reverses in Table 4(B). It may be
verified whether requisite reversals have actually been made by the said
registered person.

For Information purpose not to be considered as Professional Advice

from us. 129
 Reversal of ITC under Rule 42 and Rule 43

Details to be checked Conclusion by Department

• The proper officer would verify • Rule 42 of the CGST Rules
whether requisite ITC reversals provides the manner of
have actually been made in determining the reversal of ITC
Form GSTR-3 in respect of inputs or input
services and Rule 43 provides for
the manner of determination of
ITC reversal in respect of capital
goods.

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130
Advice from us.
12. Whether the registered person has paid interest liability in terms of
section 50

 As per section 50 of the CGST Act a registered person is

required to pay interest on delayed payment of tax. It may
be verified whether interest payable as per the provisions
of section 50 of the CGST Act has actually been paid by
the registered person.

For Information purpose not to be considered as Professional Advice

from us. 131
13. Whether the registered person has paid late fee
in terms of section 47 in respect of returns/ statements.
 As per section 47 of the CGST Act a registered person is
required to pay late fee for delayed filing of returns /
statements under the Act. It may be verified whether late
fee payable as per the provisions of section 47 of the
CGST Act has actually been paid by the registered person.

For Information purpose not to be considered as Professional Advice

from us. 132
 Interest and Late Fee

Details to be checked Conclusion by Department

• The proper officer would verify • Retrospective amendment for
that the registered person has Interest on Net Tax Liability not
paid the interest liability on late Gross Tax Liability.
payment of tax, on excess claim
of ITC, etc. as per Section 50 of
the CGST Act.
• The payment in respect of late
fee for late filing of the returns
would also be verified by the
proper officer.
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133
Advice from us.
us.
For Information purpose not to be considered as Professional Advice from

• The SOP issued by the CBIC

suggests that the tax
authorities would primarily
What check the differences arising
Department out of the details furnished
wants? by the registered persons
with those furnished by the
other stakeholders such as its
suppliers, TDS/TCS deductor,
etc.
134
Claim of ITC on account of IGST paid on import of goods vis-a-
vis actual IGST paid while import of goods

Details to be checked Conclusion by Department

• Those import transactions may • In initial phase of the GST system
be made by air under air way many importers have not
bills, import of goods from SEZ reported their GSTIN in bill of
or import by ocean mode of entries, therefor information of
transport as the case may be. IGST paid on such import might
had not been transmitted to
GSTN.

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135
Advice from us.
Claim of ITC on account of IGST paid on import of goods vis-a-
vis actual IGST paid while import of goods

Details to be checked Action by Taxpayer

• Those import transactions may • Submit the list of all bill of
be made by air under air way entries of which ITC on import of
bills, import of goods from SEZ goods was claimed in GSTR-3B.
or import by ocean mode of • Match it with details of bill of
transport as the case may be. entries appearing in Part D of
GSTR-2A / 2B of the
corresponding period.
• For mismatch verify those bill of
entries on ICEGATE portal.
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136
Advice from us.
 Mis-match of ITC claim on account of IGST paid on import of
goods pertains to import by courier

Details to be checked Conclusion by Department

• Some courier companies are • IGST paid on import of goods
allowed as an authorized pertains to import by courier of
importer specially in Air mode. which data is not available on
• The duty, where leviable is paid ICEGATE portal.
by the courier company on
behalf of importers before
taking delivery of the parcels.

For Information purpose not to be considered as Professional

137
Advice from us.
 Mis-match of ITC claim on account of IGST paid on import of
goods pertains to import by courier

Details to be checked Action by Taxpayer

• Some courier companies are • Submit the details namely, airway
allowed as an authorized importer bill or any other document stating
specially in Air mode. details of transport by air, courier
• The duty, where leviable is paid by bill of entry evidencing payment of
the courier company on behalf of IGST, assessment note containing
importers before taking delivery of the details of imported goods,
the parcels. courier note, certificate of
authorized courier importer, etc.
may be accepted if found proper.

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138
Advice from us.
 Interest Monthly or Annually?

Issue Remark
• As a policy of financial year based • The interest under GST is required
return scrutiny what will be the to be calculated according to
date from which interest is to be return period taking into
calculated? consideration the due date for
making payment under GSTR- 3B of
the concerned return period.
• The liability on account of mis-
matches of the transaction covered
in the particular return period shall
be considered as the liability of
that return period for this purpose.

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139
Advice from us.
 In some cases, the ITC claim of GSTR-3B vis a vis GSTR-2A the
ITC claims appears to be in excess of available.

Issue Remark
• Whereas, while filing of GSTR-9 • “Any other ITC availed but not
(annual return) taxpayer had specified above” as well as ITC
reconciled the differences in claimed in subsequent financial
Table-8 of GSTR-9. year in Column 8C of GSTR-9
should also be considered for
reconciliation.

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140
Advice from us.
Current Reconciliation Statements

GSTR 3B vs GSTR 2A for ITC purposes

GSTR 3B vs GSTR 1 for matching the

outward supply details
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141
Advice from us.
Recommended Reconciliation Statements

Taxable value Value of tax liability

Reverse Charge from ITC on Reverse
appearing in GSTR 2A declared in e-way
registered persons charge Transactions
for TDS purposes bills
• Transactions of • Liability paid under • Value of taxable • GSTR 3B to be
RCM appearing in reverse charge is to supply in GSTR 3B reconciled with
GSTR 2A should be be mapped with would be required details reported for
mapped with the the ITC claimed on to be reconciled e-way bill purposes
RCM tax liability reverse charge with taxable value
paid through GSTR in GSTR 2A
3B

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142
Advice from us.
CBIC have prescribed the monetary limits within for issuance of Show Cause Notices as per
Circular No. 31/05/2018-GST, dated 09-Feb-2018 which is as follows

Particulars Superintendent AC/DC ADC/JC

Amount of CGST (including Demand <= Rs. 10 Rs. 10 Lakhs < Demand <= Demand > Rs. 1
Cess) involved in a case Lakhs Rs. 1 Crore Crore

Amount of ICGST (including Demand <= Rs. 20 Rs. 20 Lakhs < Demand <= Demand > Rs. 2
Cess) involved in a case Lakhs Rs. 2 Crore Crore

Amount of ICGST and CGST Demand <= Rs. 20 Rs. 20 Lakhs < Demand <= Demand > Rs. 2
(including Cess) involved in Lakhs Rs. 2 Crore Crore
a case

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Advice from us.
GENERAL DISCIPLINES RELATING TO
DETERMINATION OF TAX

1. Opportunity of personal hearing shall be given to the taxpayer.

2. Adjournment maximum 3 times to each party.

3. Amount demanded in order must not exceed the amount mentioned in SCN

4. Interest is payable whether or not determined in the Order.

5. Officer issuing Order must be different from him who issued Audit Report.

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144
Advice from us.
GENERAL DISCIPLINES RELATING TO
DETERMINATION OF TAX
6. Adjudication proceedings deemed to be concluded if not decided within stipulated time
period.

7. Where the service of notice is stayed by an order of a Court or Appellate Tribunal, the
period of such stay shall be excluded.

8. Order passed by the Proper Officer shall be a Speaking Order.

9. The Interest shall create automatic charge whether or not specified in the order
determining the tax liability.

10. Direct recovery proceedings U/s 79 shall be initiated for any pending self-assessed tax
liability along with interest in accordance with the returns furnished either GSTR-1 or GSTR-3B.

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145
Advice from us.
 Comparison between Old & New Scrutiny Norms
Feature Old Scrutiny Norms New Scrutiny Norms
Instruction Number Instruction No. 02/2022-GST Instruction No. 02/2023-GST
and Date 22-Mar-2022 26-May-2023
Scope Applies to returns filed for the Applies to returns filed for the financial year
financial years 2017-18 and 2018-19 2019-20 onwards
Selection of returns Returns are selected for scrutiny Returns are selected for scrutiny using a risk-
for scrutiny based on risk factors, such as: based approach, which takes into account
-> high input tax credit claims, factors such as:
-> high turnover, and -> the registered person's industry, -> turnover,
-> non-filing of returns and
-> compliance history
Scrutiny process The proper officer will scrutinize the The proper officer will scrutinize the return and
return and may issue a notice to the may issue a notice to the registered person if
registered person if any discrepancy any discrepancy is found.
is found
The notice will require the registered person to
provide an explanation for the discrepancy and
to pay any additional tax, interest, or penalty
that may be due
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Advice from us.
 Comparison between Old & New Scrutiny Norms
Feature Old Scrutiny Norms New Scrutiny Norms
Procedure for The proper officer shall scrutinize the The proper officer shall scrutinize the return
scrutiny return in accordance with the provisions in accordance with the provisions of section
of section 61 of the CGST Act, 2017, with 61 of the CGST Act, 2017, with reference to
reference to the information available the information available with him.
with him.

In case of any discrepancy, he shall issue In case of any discrepancy, he shall issue a
a notice to the registered person in Form notice to the registered person in Form GST
GST ASMT-10, informing him of ASMT-10, informing him of the discrepancy
the discrepancy and seeking his and seeking his explanation thereto within
explanation thereto within such time, such time, not exceeding thirty days from the
not exceeding thirty days from the date date of service of the notice or such further
of service of the notice or such further period as may be permitted by him.
period as may be permitted by him.

The proper officer may also use data

analytics to identify returns that are likely to
be high-risk.

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Advice from us.
 Comparison between Old & New Scrutiny Norms
Feature Old Scrutiny Norms New Scrutiny Norms
Other provisions The instruction also provides for the The instruction also provides for the
following: following:

-> The proper officer may call for -> The proper officer may use technology-
additional information or documents based tools to assist in the scrutiny process.
from the registered person.

-> The proper officer may issue a show- -> The proper officer may share information
cause notice to the registered person if with other officers of the GST department.
any discrepancy is found.

-> The registered person has the right to -> The proper officer may take any other
appeal against any action taken by the action that is necessary to ensure
proper officer compliance with the GST Act
Conclusion The instruction aims to ensure that GST The instruction aims to improve the
returns are properly scrutinized and that effectiveness of GST return scrutiny by using
any discrepancies are brought to light. a risk-based approach and data analytics.

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148
Advice from us.
 Comparison between Old & New Scrutiny Norms
Feature Old Scrutiny Norms New Scrutiny Norms
ASMT-12 The ASMT-12 form under Instruction No. The ASMT-12 form under Instruction No.
02/2022-GST was a simple one-page 02/2023-GST is a more detailed form that
form that only required the proper requires the proper officer to specify the
officer to specify the discrepancy that following information:
was noticed and the amount of tax,
interest, or penalty that was due. -> The discrepancy that was noticed
-> The amount of tax, interest, or penalty
that is due
-> The reasons for the discrepancy
-> The evidence that was used to identify the
discrepancy
-> The action that the registered person is
required to take to rectify the discrepancy

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149
Advice from us.
 R.P. Buildcon Pvt. Ltd. vs The Superintendent, CGST & CX, Circle-II - Calcutta High Court
MAT No. 1595/2022 with IA No. CAN 1/2022 Dated: 19-Sep-2022a

Parallel Proceedings By Different Wings Of The Same Department For The Same
Period Not Permissible.

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150
Advice from us.
 R. P. BUILDCON PRIVATE LIMITED Vs THE
SUPERINTENDENT, CGST & CX - Calcutta High Court
MAT 1595/2022 & IA CAN 1/2022 Dated: 30-Sep-2022
Three wings of the same department are proceeding against the appellants for the very same period, i.e. financial
years 2017- 2018, 2018-2019 and 2019-2020. The appellants had already furnished the details as called for in
the said notice and also responded to the intimation for conducting GST audit. The three wings of the
department are proceeding against the appellants because the Range office was not aware about the proceedings
initiated by the Audit Commissionerate and the Anti Evasion also was not aware of the same. In the present days
of electronic communications available in the department, such parallel proceedings cannot be conducted by
three wings of the same department for the very same period. Since the audit proceedings under Section 65 of
the Act has already commenced, it is but appropriate that the proceedings should be taken to the logical end. The
proceedings initiated by the Anti Evasion and Range Office for the very same period shall not be proceeded with
any further. Anti Evasion and Range Office are restrained from proceeding further against the appellants in
respect of the very same period for which already action has been initiated by the first and fourth respondents –
appeal is allowed.

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Advice from us.
 Vimal Raj Vs. State Tax Officer – Kerala High Court
W.P(C)NO. 927 OF 2020(M); Dated – 22 Jan 2020

• Issue - Competent Authority passed assessment order against deceased assessee - One
of legal heirs of deceased assessee filed writ petition seeking relief in this regard
Whether assessment order passed against deceased assessee was a nullity in eye of law.
• Decision - Competent Authority were directed to take fresh action in said assessment
proceedings after ascertaining from Revenue Officials as to who all were legal
representatives or legal heirs of deceased assessee and then he would be at liberty to
render reasonable opportunity of being heard to such legal representatives and then
finalise assessment proceedings in manner known to law.

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152
Advice from us.
ARSK Hardwares & Traders Vs. State Tax Officer, Madurai – Madras High Court
W.P(MD)NOS.5150, 5162 AND 5164 OF 2021, Dated – 23 April 2021

• Issue - Section 61 of the Central Goods and Services Tax Act, 2017/Section 61 of the
Tamil Nadu Goods and Services Tax Act, 2017 Assessment Scrutiny of returns Period
2017-18 to 2019-20 Competent Authority passed ex parte assessment order dated 7-2-
2020 on assessee
• Decision - Hon'ble court held that since in instant case impugned order of assessment
had been passed on 7-2-2020, whereas personal hearing had been on 3-12-2020, after
much latter impugned order of assessment made, there was total non-application of
mind on part of Competent Authority in passing impugned order of assessment dated 7-
2-2020, impugned order dated 7-2-2020 deserved to be set aside and matter was to be
remanded back to Competent Authority to pass fresh order after affording an
opportunity of hearing to assessee

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153
Advice from us.
Krome Led Lighting Technologies Pvt Ltd Vs. Assistant Commissioner – Madras High Court
W.A. NO. 693 OF 2020, Dated – 01 Sep 2020

• Issue – Assessee's case was that Superintendent of GST had already passed an order
which was against it and after that event Assessing Officer had passed an order against
which appeal filed by it was pending before Commissioner (Appeals) On other hand,
Single Judge of High Court on writ petition, relegated assessee to appear before
Assessing Officer and submit its application and Assessing Officer was directed to
forward such application to Nodal Officer, who in turn would forward it to concerned
Grievance Committee.
• Decision - Hon'ble Court stated that there was nothing to interfere with order of Single
Judge; as case of assessee was admittedly pending before Commissioner (Appeals),
assessee was to be relegated before Appellate Authority

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154
Advice from us.
 National Plywood Industries Ltd with Vs. Union of India – Gauhati High Court
W.P(C) NO. 1059 OF 2020, Dated – 17 Feb 2020

• Issue – Scrutiny of returns - GST Authority passed assessment order on assessee and
imposed tax and penalty - Assessee filed writ petition stating that an order of
moratorium had already been passed against it by National Company Law Tribunal
under provisions of Insolvency and Bankruptcy Code, 2016 and GST Authority
without examining aspect as to whether order of moratorium also covered
proceeding pending before GST Authority had passed impugned order.
• Decision - matter was to be remanded back to GST Authority for a fresh
consideration by examining aspect as to whether order of moratorium also covered
proceeding pending before GST Authority under GST Act.

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155
Advice from us.
Travancore Mats & Mattings Pvt Ltd Vs. Assistant Commissioner – Madras High Court
W.P. NOS.2869, 2875 & 2876 OF 2022 & OTHERS, Dated – 15 March 2022

• Issue – Writ petition was filed to quash said notice - Petitioner agreed to pay remaining
tax amount from its new GSTIN as its partnership firm had been converted into private
limited company and requested that claim of input tax credit might not be rejected
based on different GSTIN by Kerala GST Authorities.
• Decision - Merits of notice were not decided as petitioner had agreed to pay remaining
tax amount - Petitioner could have been made claim for ITC at jurisdictional GST Office in
State of Kerala where headquarters of company was located - Such claim should not be
rejected on ground of change of GST registration number as a result of change in
composition of partnership firm into private limited company if petitioner was entitled to
input tax credit. Writ petitions was disposed.

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156
Advice from us.
 Tvl. J.F. International Vs. Commissioner of Commercial Taxes, Chennai – Madras High Court
W.P. (MD) NO. 2609 OF 2020, Dated – 04 Nov 2020

• Issue - Competent Authority passed assessment order dated 8-11-2019 on assessee observing that at time
of inspection conducted by Inspecting Officials on 10-9-2019 and 16-9-2019 in assessee's business
premises assessee had deposed that it was not maintaining any books of account - Assessee filed writ
petition before High Court challenging impugned assessment order - It contended that to pre-assessment
notice dated 16-10-2019, it had sent a detailed reply on 18-10-2019 raising various objections and pleaded
that it was ready and willing to produce books of account and it had claimed only eligible input tax credit
under Form GSTR -3B filed by it with Competent Authority - Despite sending reply on 18-10-2019, same
had not been considered by Competent Authority under impugned assessment order.
• Decision - Hon'ble Court was of the opinion that Competent Authority had mechanically and blindly
accepted alleged statement given by assessee before Inspecting Officials without independently giving
reasons after duly considering objections raised by assessee wherein, it had categorically pleaded that it
was always ready and willing to furnish books of account to Competent Authority and Competent Authority
had also not duly considered in assessment order with regard to assessee's claim of input tax credit as per
Form GSTR-3B filed by it and no sufficient opportunity was granted to assessee impugned assessment
order passed by Competent Authority was arbitrary and was in violation of principles of natural justice -
Held, yes - Whether assessment order deserved to be quashed, matter was remanded to Competent
Authority for fresh consideration.
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157
Advice from us.
Vimal Yashwantgiri Goswami Vs. The State of Gujarat – Gujarat High Court
R/SPECIAL CIVIL APPLICATION NO- 13679 of 2019, Dated – 04 Nov 2020

• Issue - Whether for every authorized officer carrying out arrest, preparation of an arrest
memo is mandatory
• Decision - Hon'ble High Court was of the opnion that Arrest memo is a crucial component
of legal procedure of arrest and if Magistrate finds that arrest memo is absent or
improperly filled or bereft of necessary particulars, he should decline production of
arrested person and thus, arrest memo is a key safeguard against illegal arrest.

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158
Advice from us.
[2021] 125 taxmann.com 188 (SC)
Canon India Private Limited v. Commissioner of Customs
• Section 28 of the Customs Act, 1962 - Recovery - Of duty or tax not levied/paid or short-
levied/paid or erroneously refunded - Proper Officer - Appellant importers had imported
cameras/goods which were released without any customs duty after being allowed benefit of
exemption notifications as per law by Deputy Commissioner of Customs being Proper officer -
Later, a show cause notice was issued under section 28(4) by Additional Director General DRI,
alleging that Customs Authorities had been induced to clear cameras by wilful mis-statement and
suppression of facts about cameras - However, it was found that section 28(4) empowers recovery
of duty not paid, part paid or erroneously refunded by reason of collusion or any wilful mis-
statement or suppression of facts and, reassessment and recovery of duties contemplated by
section 28(4) is by same authority and not by any superior authority such as Appellate or
Revisional Authority - Further, it is impermissible to allow an officer, who has not passed original
order of assessment to reopen assessment on ground that duty was not paid/not levied, by
original officer who had decided to clear goods and who was competent and authorized to make
assessment - Whether therefore, when cameras had been cleared for import by Deputy
Commissioner of Customs who decided that cameras were exempted, Additional Director General
of DRI was not proper officer to exercise power under section 28(4) and thus, entire proceedings
initiated by Additional Director General of DRI for recovery of duty not paid under section 28(4)
were invalid, without any authority of law and liable to be set-aside - Held, yes [Paras 14,15 and
23].

Private Presentation Only not Professional Advice

[2021] 125 taxmann.com 188 (SC)
Canon India Private Limited v. Commissioner of Customs
• An officer who did assessment, could only undertake reassessment
under section 28(4) of Customs Act, hence, goods, cameras having
been cleared for import by a Deputy Commissioner of Customs who
decided that goods were exempted, Additional Director General of
DRI was not proper officer to exercise power under section 28(4)

Private Presentation Only not Professional Advice

 DIR officers are not proper officers
• Judgement by Larger bench of 3
• The expression ‘the’ in Section 28 indicates that the re-assessment by
way of issuance of SCN is to be done by the same officer who has
initially assessed- ‘the’ is difference from ‘a/an’
• Where the statue confers the same power to perform an act on
different officers, the two officers cannot exercise their power in the
same case. Where one officer has exercised his powers of
assessment, the power to order re-assessment must also be exercised
by the same officer or his successor and not by another officer of
another department though he is designated to be an officer of the
same rank.- Doctrine of Comity

Private Presentation Only not Professional Advice

• Parallel proceedings cannot be initiated by State GST authorities on
the same subject matter

Private Presentation Only not Professional Advice

Raj Metal Industries & Anr. v. UOI & Ors. [W. P. A.
1629 of 2021,]
Facts:-
• Raj Metal Industries (“the Petitioner”) has filed this petition challenging the
actions initiated by the State GST Authorities (“the Respondent”) with respect to
summons issued dated October 19, 2020 under Section 70 of the WBGST Act
• Challenging blocking of the electronic credit ledger on December 8, 2020 being
challenged the vires of Rule 86A of the West Bengal Goods and Services Tax
Rules, 2017 (“the WBGST Rules”)/ Central Goods and Services Tax Rules, 2017
(“the CGST Rules”) & Section 16(2)(c) of the WBGST Act/ CGST Act
• Further, the proceedings were already pending against the Petitioner on the
same subject matter under the CGST Act.

Private Presentation Only not Professional Advice

Raj Metal Industries & Anr. v. UOI & Ors. [W. P. A.
1629 of 2021,]
Issues:-
Whether the summon issued and proceedings initiated by the Respondent is in
violation of the Section 6(2)(b) of the WBGST Act?

Held:-
The Hon’ble Calcutta High Court in W. P. A. 1629 of 2021, dated March 24, 2021
stayed the summons and proceedings thereunder and held that the summons
issued by the Respondent is, prima facie, in violation of Section 6(2)(b) of the
WBGST Act.

Private Presentation Only not Professional Advice

Parallel proceedings cannot be initiated by State
GST authorities on the same subject matter

Private Presentation Only not Professional Advice

Certain relevant judgement on stated issue
• The Hon’ble Punjab & Haryana High Court in Kaushal Kumar Mishra
v. Additional Director General & Anr. [CWP21387-2020 (O&M),
decided on February 12, 2021] dismissed the petition and refused to
interfere with the investigations undertaken by the competent
authorities against the proprietor, for alleged misuse and fake
availment of Input Tax Credit (“ITC. Further, the Court held that where
different officers appointed are independently investigating
altogether different matters involving contraventions of prima facie
cognizable and punitive offences under CGST Act, without any
overlapping, such investigation is not barred by Section 6(2)(b) of the
CGST Act.

Private Presentation Only not Professional Advice

Certain relevant judgement on stated issue
• The Hon’ble Allahabad High Court in G.K. Trading Company v. Union
of India & Ors. [Writ Tax No. 666 of 2020, dated 2.12.2020]
dismissed the petition filed for prohibiting another proper officer to
initiate any inquiry/proceeding on the same subject-matter. The Court
observed and held that, there was no proceeding initiated by a
proper officer against the assessee on the same subject-matter
referable to Section 6(2)(b) of the CGST Act as it was merely an
inquiry by a proper officer under Section 70 of the CGST Act.
• Koenig Solutions Pvt. Ltd. Vs. UOI – 2021-TIOL-1013-HC-DEL-GST
• Himanshu Balram Gupta vs. UOI – 2020-TIOL-2241-HC-AHM-GST.

Private Presentation Only not Professional Advice

Overlapping/Different Jurisdictions [Sec .6
(2)(b)]
• Koenig Solutions Pvt. Ltd. Vs. UOI – 2021-TIOL-1013-HC-DEL-GST
• Raj Metal Indus. Vs. UOI – 2021-TIOL-744HC-KOL-GST
• Himanshu Balram Gupta vs. UOI – 2020-TIOL-2241-HC-AHM-GST.
• Kaushal Kumar Mishra vs. ADG, Ludhiana ZU-2021-TIOL-387-HC-P &
H-GST

Private Presentation Only not Professional Advice

The powers vested in Commissioner u/s. 69 be
further delegated by him
• Nathalal Maganlal Chauhan vs. State of Gujarat-2020 (35) GSTL 145
(Guj.)

Private Presentation Only not Professional Advice

Authority which initiates will conclude
• RAJ METAL INDUSTRIES-Kolkatta HC 2021-TIOL-744HC-KOL-GST
Proceedings pending before CGST , simultaneously initiated by SGST

Private Presentation Only not Professional Advice

GENERAL DISCIPLINES RELATING TO
DETERMINATION OF TAX

1. Opportunity of personal hearing shall be given to the taxpayer.

2. Adjournment maximum 3 times to each party.

3. Amount demanded in order must not exceed the amount mentioned in SCN

4. Interest is payable whether or not determined in the Order.

5. Officer issuing Order must be different from him who issued SCN.

For Information purpose not to be considered as

171
Professional Advice from us.
GENERAL DISCIPLINES RELATING TO
DETERMINATION OF TAX
6. Adjudication proceedings deemed to be concluded if not decided within stipulated time
period.

7. Where the service of notice is stayed by an order of a Court or Appellate Tribunal, the
period of such stay shall be excluded.

8. Order passed by the Proper Officer shall be a Speaking Order.

9. The Interest shall create automatic charge whether or not specified in the order
determining the tax liability.

10. Direct recovery proceedings U/s 79 shall be initiated for any pending self-assessed tax
liability along with interest in accordance with the returns furnished either GSTR-1 or GSTR-3B.

For Information purpose not to be considered as

172
Professional Advice from us.
EXTENDED PERIOD
Where Notice does not allege suppression, etc with intent to
evade, extended period (U/s 74) cannot be invoked. – Jagron
Machine Tools vs CCE, [1993 (65) ELT 300 (CEGAT – New Delhi)]

Extended period of Limitation would not apply, if assessee had

bona fide belief. – Mitul Engineering Services vs CCE, [ (2011) STT
289 (CESTAT – New Delhi)] and Sunil Metal Corpn. Vs CCE, [
(2010) STT 473 (CESTAT – Ahmedabad Branch)]
For Information purpose not to be considered as
173
Professional Advice from us.
PERSONAL HEARING

The Supreme Court observed that personal hearing enables the concerned
authority to watch the demeanour of the witness etc and also clear up his
doubts during the course of the arguments. – Automative Tyre Manufacturers
Asson. Vs Designated Authority, [ (2011) 263 ELT 481 (Supreme Court)]

A Personal Hearing is not required in an application for a stay. – Union of India

vs Jesus Sales Corporation, [ (1996) 83 ELT 486 (Supreme Court)]

For Information purpose not to be considered as

174
Professional Advice from us.
 Letters issued in the form of suggestion
or advice cannot be regarded as SCN. –
Metal Forgings vs UOI, [ (2002) 146 ELT
241 (Supreme Court)]
LETTERS ARE
NOT NOTICE Notice must be in Writing. In case of
absence of a Notice in Writing the
Principles of Natural Justice had not been
applied. – Voltas Ltd. Vs CCE, [ (2000) 121
ELT 802 (CEGAT – Bangalore)]

For Information purpose not to be considered as

175
Professional Advice from us.
NO NOTICE • Demand will not sustain without
= NO issuance of Show Cause Notice. –
Prabhat Forgings
DEMAND

NO NOTICE • Assessee can’t be forced to pay penalty

if show cause notice is not issued. – D.
= NO Rama Kotiah & Co. vs State of Andhara
Pradesh, [ (2019) 111 taxmann.com 536
PENALTY (High Court – Telangana)]
For Information purpose not to be considered as
176
Professional Advice from us.
Show
Cause
Notices -
General

For Information purpose not to be considered as

177
Professional Advice from us.
 P. P. Chandrasekhara Pai v CCE
(1987) 27 ELT 679 (Cegat Madras)

it was held that primary purpose of show cause notice was only to put
the aggrieved party on notice of facts and necessary ingredients of
charge so as to enable him to effectively meet it.

For Information purpose not to be considered as

178
Professional Advice from us.
 Gokak Patel Volkart Ltd. v. CCE
(1987) 28 ELT 53, (1987) taxmann.com 621 (SC)

it was held that demand under indirect taxes without issue of show
cause notice was to be considered as violation of statutory provision.

For Information purpose not to be considered as

179
Professional Advice from us.
 Alcobex Metals Pvt. Ltd. v. CCE
(1992) 58 ELT 108;
(1991) taxmann.com388 (Cegat, New Delhi-LB)

it was held that show cause notice is not sustainable, if partly invalid.

For Information purpose not to be considered as

180
Professional Advice from us.
 Mahindra & Mahindra v. CCE
Hyderabad (2001) 129 ELT 188 (Cegat, Chennai),

it was held that if show cause notice did not indicate the basis for
demand and there was no discussion prevailing thereto in adjudication
order, the demand was considered to be unsustainable.

For Information purpose not to be considered as

181
Professional Advice from us.
 CCE & C, Vadodara v. ABS India Ltd.
(2003) 162 ELT 487 (Cestat, Mumbai)

it was held that grounds beyond scope of show cause notice are not
allowed. Hence, Department's appeal was rejected.

For Information purpose not to be considered as

182
Professional Advice from us.
 Shree Cements Ltd. v. Union of India
(2005) 182 ELT 315 (Rajasthan)

it was held that Department cannot issue subsequent notice taking

contrary stand, if decision of the Tribunal on the earlier notice had
attained finality.

For Information purpose not to be considered as

183
Professional Advice from us.
 Modern Industrial Enterprises v. CCE
(2006) 193 ELT 513 (Cestat, Delhi)

it was held that show cause notice is not valid in respect of an unit
which is not within the jurisdiction of Commissioner.

For Information purpose not to be considered as

184
Professional Advice from us.
 CCE v. Career Point Infosystem Ltd.
(2006) 4 STR 293, (2006) 5 STT 225 (Cestat, New Delhi)

it was held that if show cause notice proposes classification under one
head, adjudicating authority cannot confirm demand under another
head.

For Information purpose not to be considered as

185
Professional Advice from us.
 CCE v. Ballarpur Industries Ltd.
(2007) 215 ELT 489 (SC)

it was held that show-cause notice is the foundation of matter of levy

and recovery of duty, penalty and interest. Hence, if there was no
invocation of a rule (Valuation Rule in this case), it would not be open
to adjudicating authority to invoke that rule.

For Information purpose not to be considered as

186
Professional Advice from us.
 Sands Hotel Pvt. Ltd. v. CST
Mumbai (2009) 17 STJ 385 (Cestat, Mumbai),

it was held that show cause notice and order in revision cannot go
beyond the original show cause notice.

For Information purpose not to be considered as

187
Professional Advice from us.
 Varalakshmi Exports v. Union of India
(2010) 259 ELT 344 (Karnataka),

it was held that firm acts only through its partners there is no need to
issue show cause notice to every partner of the firm.

For Information purpose not to be considered as

188
Professional Advice from us.
 CCE v. Kesar Marble & Granites
(2012) 278 ELT 42 (Kerala)

It was held that invalid show cause notice issued before any duty and
penalty is levied and issued under one enactment cannot be converted
into a notice under another enactment.

For Information purpose not to be considered as

189
Professional Advice from us.
 In CCE v. Merchant Impex
(2012) 276 ELT 458 (Karnataka)

It was held that a letter from the department is not a proper SCN.

For Information purpose not to be considered as

190
Professional Advice from us.
 McNally Bharat Engineering Co. Ltd. v. CCE
(2012) 25 STR 496 (Jharkhand)

It was held that order cannot travel beyond the scope of SCN.

For Information purpose not to be considered as

191
Professional Advice from us.
Bharti Mulchand Chheda V. CCE, Mumbai (2016) 336
ELT 93 (Cesta, Mumbai)

Where the sole proprietor of assessee firm was already dead as recorded
in order itself, it was held that once factum of death of sole proprietor
came to the knowledge of the Department, Department should drop
entire proceedings, as no demand can be confirmed against dead person
even if notice was issued before his death.

For Information purpose not to be considered as

192
Professional Advice from us.
Raghuveer Singh Metals Industries Ltd. v. CCE, Jaipur-II
(2017) 3 GSTL 431 (Cestat, New Delhi)

It was held that date of SCN would be the date on which it signed by the
issuing authority and not the date mentioned therein which was even
prior to issue of summon.

For Information purpose not to be considered as

193
Professional Advice from us.
Second/ Subsequent SCN
For Information purpose not to be considered as
194
Professional Advice from us.
 CCE v. Asian Cranes and Engg. Services
(2009) 17 STJ 5 (Cestat, New Delhi),

It was held that on the basis of same facts subsequent SCN could not
have been issued alleging suppression.

For Information purpose not to be considered as

195
Professional Advice from us.
CCE, Ahmedabad-III v. AksharChem (1) Ltd. (2013)
292 ELT 550 (Cestat, Ahmedabad)

Applying ratio of judgment in case of Nizam Sugar Factory v. Collector

(2008) 9 STR 314; (2006) 197 ELT 465 (SC), it was held that second
show cause notice for subsequent period on same issue was not
maintainable as Department was fully aware of credit being taken by
assessee since issuance of first show cause notice. Further, Uniworth
Textiles Ltd. v. CCE, Nagpur (2009) 244 ELT 401 (Cestat, New Delhi)
was not applicable as both show cause notices were issued prior to date
of detection in that case.

For Information purpose not to be considered as

196
Professional Advice from us.
Swiss Parenterals Pvt. Ltd. v. CCE & ST, Ahmedabad
(2014) 308 ELT 81 (Cestat, Ahmedabad)

Where one show cause notice for earlier period was issued invoking
extended period of limitation, it was held that second show cause notice
on the same ground for later period cannot be issued by invoking
extended period of limitation.

For Information purpose not to be considered as

197
Professional Advice from us.
Door Deco Industries v. Customs, Central Excise & Service Tax
(2016) 76 taxmann.com 355
(2017) 59 GST 230 (Delhi)

Where two sets of show cause notices were issued in relation to same
search and seizure, assessees could not be directed to file two separate
settlement applications for said two notices.

For Information purpose not to be considered as

198
Professional Advice from us.
India Tourism Development Corporation Ltd. v. Delhi Administration
(2017) 52 STR 229 (Delhi)

It was held that quasi-judicial authority cannot review its earlier

decision unless power of review is conferred by statute Second show
cause notice after a gap of five years can not be issued once the first
show cause notice is adjudicated, became final and accepted by both
parties. [Also see: Raghuveer Metals Industries Ltd. v. CCE, Jaipur-ll
(2017) 3 GSTL 431 (Cestat, New Delhi); CCE, Mumbai-11 v. Cona
Industries (2017) 352 ELT 12 (Bombay); wherein Nijam Sugar Factory
v Collector (2008) 9 STR 314 (SC) was applied)

For Information purpose not to be considered as

199
Professional Advice from us.
 Swapan Electricals v. Union of India
(2017) 5 GSTL 254 (Jharkhand)

Where pursuant to show cause notice on which adjudication order had

already been issued and quashed, another SCN was issued, it was held
that later show cause notice is not sustainable as purpose of its issuance
was not in existence and it was immaterial that said adjudication order
had been challenged in appeal.

For Information purpose not to be considered as

200
Professional Advice from us.
Other
Pronouncements

For Information purpose not to be considered as

201
Professional Advice from us.
 Krishnapatnam Port Company v. CCE & C & ST
(2014) 46 GST 732, 47 taxmann.com 274
38 STR 974 (Cestat, Bangalore)

Where tax demand had been confirmed ignoring revised return

completely, it was held that there was no case for tax demand at all.
Accordingly, assessee had made out a case for complete waiver of pre-
deposit, which was granted for a period of 180 days from date of order.

For Information purpose not to be considered as

202
Professional Advice from us.
 Kripa Fabs (P.) Ltd. v. Cestat, Chennai
(2015) 59 taxmann.com 157(Madras)

It was held that non-payment of duty after crossing exemption limit

amounts to 'suppression', which takes place at time of clearance of
goods; when suppression has already taken place, subsequent voluntary
disclosure by assessee to Department cannot justify a plea of no
suppression.

For Information purpose not to be considered as

203
Professional Advice from us.
Poddar Global Pvt. Ltd. v. Joint Commissioner of Customs, Chennai IV
(2017) 350 ELT 498 (Madras)

It was held that gaps and deficiencies in the show cause notice cannot be
plugged by averments made and/or Jexplanations given in counter
affidavit. Failure to mention the amount of duty payable impregnates the
notice with a fatal weakness.

For Information purpose not to be considered as

204
Professional Advice from us.
CMS (India) Operations & Maintenance Co Pvt. Ltd. v. CCE Pondicherry
(2017) 3 GSTL 164 (Cestat, Chennai)

It was held that legal deficiency or infirmity in the show case notice
cannot be cured at an appellate stage.

For Information purpose not to be considered as

205
Professional Advice from us.
Issuance of Notice vs Service
of Notice

For Information purpose not to be considered as

206
Professional Advice from us.
Manner of Service of Notice [Sec. 169]
• Any decision, order, summons or other communication should be
served in any of these matter:
• By direct delivery or messenger through courier
• By Registered Post or Speed Post with Acknowledgement Due
• By sending communication to email
• By Common Portal
• By publication in Newspaper
• By Affixing it in known place of business or residence

For Information purpose not to be considered as

207
Professional Advice from us.
 Service of Notice in certain circumstances

Section 169 of CSGST Act,

2017

Serving by Serving by affixing

Serving directly or Any of the
Serving by post publication in at conspicuous
by messenger following
newspaper place

Serving by GST
Serving by e-mail
Portal

For Information purpose not to be considered as

208
Professional Advice from us.
 Every Non-
Payment is not
Supression

For Information purpose not to be considered as

209
Professional Advice from us.
 Sec. 2 (2b)
Contempt of
Court Act’1971

For Information purpose not to be considered as

210
Professional Advice from us.
 Non-Application
of Mind

For Information purpose not to be considered as

211
Professional Advice from us.
Quoting of Document Identification
Number (DIN) Cir. No. 122/41/2019-
GST & 128/47/2019

For Information purpose not to be considered as

212
Professional Advice from us.
 DIN on email??

Exceptions to Issuance of DIN

DIN • Technical difficulty

• Inquiry, Investigation etc but
authorised officer is outside the
office
• Reasons to be recorded

For Information purpose not to be considered as

213
Professional Advice from us.
Guideline by Gujarat High Court for Recovery –
Bhumi Associates v UOI [2021-TIOL-397-HC-AHM]
No recovery or adjustment of ITC during
search/inspection

Even if Assessee comes forward to make payment DRC-03

not to take same day. Ask for next day.

Facility of grievance

For Information purpose not to be considered as

214
Professional Advice from us.
Analysis of CBIC issues instructions for payment of tax
during Search, Inspection & Investigation
Instructions 01/2022-23 GST Investigations dated 25-May-2022
For Information purpose not to be considered as
215
Professional Advice from us.
 CBIC issues Intrusions

• The CBIC has issued instructions for officers regarding recovery and
payment of tax during Search, Inspection & Investigation.
• If any complaint is received against any officer regarding use of force
or coercion for payment of tax then strict action will be taken after
enquiry.
• But what led CBIC to issue these instructions?
• Are these Instructions sufficient?

For Information purpose not to be considered as Professional

216
Advice from us.
 Reasons behind CBIC issues Intrusions

• Let's go through few GST cases:

• Shri Nandhi Dhall Mills India Private Limited vs Senior Intelligence Officer of
Madras High Court
• Bhumi Associate vs UOI of Gujarat High Court
• UOI vs Bundl* Technologies Private Limited of Karnataka High Court.
[*Swiggy]
• The Position was same in Indirect Taxes regime also and Delhi High
Court decision in case of Makemytrip (India) Pvt. Ltd. vs Union of
India is noteworthy. This was affirmed by Supreme Court also.

For Information purpose not to be considered as Professional

217
Advice from us.
 Shri Nandhi Dhall Mills India Private Limited vs Senior Intelligence Officer
Madras High Court: W.P. No.5192 of 2020 and WMP. No.6135 of 2020
Order Dated: 07-Apr-2021

• The petitioner is registered as a Small Scale Industry under the MSME

Act and is an assessee under the provisions of the GST Laws, 2017.
• An investigation was conducted in the premises of the petitioner on
22.10.2019 and various documents and registers seized.
• In the course of that investigation, a statement was recorded from
one S.A. Kumar, who has also deposed to the affidavit filed in support
of this writ petition, to the effect that the petitioner has not
discharged its GST liability correctly.
• In the statement, he accepts the mistakes in computation of GST and
assures the respondents that the liability would be discharged at the
earliest with applicable interest.
For Information purpose not to be considered as Professional
218
Advice from us.
 Shri Nandhi Dhall Mills India Private Limited vs Senior Intelligence Officer
Madras High Court: W.P. No.5192 of 2020 and WMP. No.6135 of 2020
Order Dated: 07-Apr-2021

• A scheme of payment has also been set out for the tax remaining
unpaid, as follows: scheme of payment has also been set out for the
tax remaining unpaid, as follows:

For Information purpose not to be considered as Professional

219
Advice from us.
 Shri Nandhi Dhall Mills India Private Limited vs Senior Intelligence Officer
Madras High Court: W.P. No.5192 of 2020 and WMP. No.6135 of 2020
Order Dated: 07-Apr-2021

• This undertaking has been signed by the Managing Director on

22.10.2019. In line with the undertaking, the petitioner has, on the
same day remitted a sum of Rs.1 crore in FORM GST DRC-03
corresponding to Rule 142(2) and (3) and Section 74(5) of the Act.
• The second installment of the tax was paid on 30.10.2019.
• However, on 05.11.2019 the Managing Director of the petitioner has
retracted his statement in a letter written to the Department.

For Information purpose not to be considered as Professional

220
Advice from us.
 Shri Nandhi Dhall Mills India Private Limited vs Senior Intelligence Officer
Madras High Court: W.P. No.5192 of 2020 and WMP. No.6135 of 2020
Order Dated: 07-Apr-2021

• The petitioner has stated that it has no liability to tax, that the MD
and officials were forced to accept liability to tax and the admission
was, by no means, voluntary.
• The petitioner has also made serious allegations about the high
handedness of the authorities during the conduct of search and the
scant regard expressed for the sentiments of the family of the
Managing Director and employees of the petitioner.
• They state that the visit was on the eve of Deepavali and investigation
was carried out in an intrusive and acrimonious fashion.

For Information purpose not to be considered as Professional

221
Advice from us.
 Shri Nandhi Dhall Mills India Private Limited vs Senior Intelligence Officer
Madras High Court: W.P. No.5192 of 2020 and WMP. No.6135 of 2020
Order Dated: 07-Apr-2021

• Merely because an assessee has, under the stress of investigation,

signed a statement admitting tax liability and has also made a few
payments as per the statement, cannot lead to self-assessment or
self-ascertainment.
• The ascertainment contemplated under Section 74(5) is of the nature
of self-assessment and amounts to a determination which is
unconditional, and not one that is retracted as in the present case.
• The Revenue’s understanding and application of Section 74(5) in this
case, is wholly misconceived. The amount collected shall be refunded
to the petitioner.
For Information purpose not to be considered as Professional
222
Advice from us.
 Bhumi Associate vs Union of India
Gujarat High Court: R/SPECIAL CIVIL APPLICATION NOS. 2426, 2515, 2618 & 3196 OF 2021
Order Dated: 16-Feb-2021 & 18-Feb-2021

• Petitioner filed a writ petition complaining of undue harassment,

threat, pressure, etc. by officers of GST department.
• Officers of GST department were to be directed to conduct search
proceedings under section 67 against assessee strictly in accordance
with law.
• We do not intend to discourage or lower down the morale of all the
officers before us. Our endeavour is only to bring it to their notice
that they should act and perform their duties within the four corners
of law. They should not take law in their hands. [para 5]

For Information purpose not to be considered as Professional

223
Advice from us.
Bhumi Associate vs Union of India : R/SPECIAL CIVIL APPLICATION NOS. 2426, 2515, 2618
& 3196 OF 2021 Order Dated: 16-Feb-2021 & 18-Feb-2021
Gujarat HC directed CBIC & Gujarat State GST to issue suitable guidelines following:

1) No recovery in any mode by cheque, cash, e-payment or

adjustment of input tax credit should be made at the time of
search/inspection proceedings under section 67 of the
Central/Gujarat Goods and Services Tax Act, 2017 under any
circumstances.
2) Even if the assessee comes forward to make voluntary payment by
filing Form DRC-03, the assessee should be asked/advised to file
such Form DRC-03 on the next day after the end of search
proceedings and after the officers of the visiting team have left the
premises of the assessee.

For Information purpose not to be considered as Professional

224
Advice from us.
Bhumi Associate vs Union of India : R/SPECIAL CIVIL APPLICATION NOS. 2426, 2515, 2618
& 3196 OF 2021 Order Dated: 16-Feb-2021 & 18-Feb-2021
Gujarat HC directed CBIC & Gujarat State GST to issue suitable guidelines following:

3) Facility of filing complaint/grievance after the end of search

proceedings should be made available to the assessee if the
assessee was forced to make payment in any mode during the
pendency of the search proceedings.
4) If complaint/grievance is filed by assessee and officer is found to
have acted in defiance of the afore-stated directions, then strict
disciplinary action should be initiated against the concerned
officer.

For Information purpose not to be considered as Professional

225
Advice from us.
 Union of India vs Bundl* Technologies Pvt. Ltd [*Swiggy]
Karnataka High Court: WA No. 1274 & 4467 of 2021 (T-RES)
Order Dated: 3-Mar-2022

• The company has taken a stand in the writ petition that during the course
of investigation, the DGGI officers have acted in a high handed and
arbitrary manner and that the officers locked the door and extended
threats of arrest to Directors of the Company.
• The Company (assessee) deposited a sum of Rs.15 Crores at about 4.00
a.m. on November 30, 2019 and a sum of Rs.12,51,44,157/- on
December 27, 2019.
• The company filed an application seeking refund on September 29, 2020.
• The assessee filed refund application before jurisdictional officer. When
the attempts of the company to seek refund did not yield any result, the
assessee filed writ petition.
For Information purpose not to be considered as Professional
226
Advice from us.
 Union of India vs Bundl* Technologies Pvt. Ltd [*Swiggy]
Karnataka High Court: WA No. 1274 & 4467 of 2021 (T-RES)
Order Dated: 3-Mar-2022

• There is no communication in writing from company to the proper

officer about either self ascertainment or admission of liability by
company to infer that such a payment was made under Section 74(5)
of the CGST Act.
• The company intimated the Department that it reserves its right to
claim refund of the amount and the same should not be treated as
admission of its liability.
• The company has also reiterated its stand in GST DRC-03. It is evident
that payments have not been made admitting the liability.

For Information purpose not to be considered as Professional

227
Advice from us.
 Union of India vs Bundl* Technologies Pvt. Ltd [*Swiggy]
Karnataka High Court: WA No. 1274 & 4467 of 2021 (T-RES)
Order Dated: 3-Mar-2022

• If tax is collected without any authority of law, the same would

amount to depriving a person of his property without any authority of
law and would infringe his right under Article 300A of the
Constitution.
• In the instant case, the only provision which permits deposit of an
amount during pendency of an investigation is section 74(5) of CGST
Act, which is not attracted in the fact situation of the case.
• Therefore, it is evident that amount has been collected from assessee
in violation of Article 265 and 300-A of the Constitution.

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Advice from us.
 Union of India vs Bundl* Technologies Pvt. Ltd [*Swiggy]
Karnataka High Court: WA No. 1274 & 4467 of 2021 (T-RES)
Order Dated: 3-Mar-2022

• No one in a society governed by rule of law can take resort to a

course of action not permissible in law. A Statutory power has to be
exercised reasonably and in good faith, and for the purpose for which
it is conferred. The power vested in any Authority by law has to be
exercised in consonance with the spirit as well as letter of the Act.
The broader the sweeper ambit of the power, the more caution and
circumspection is required while invoking such power. A statutory
power has to be exercised within a system of controls and has to be
exercised by relevance and reason. It needs reiteration that a
statutory power should not be exercised in a manner, so as to instill
fear in the mind of a person. [Para 27]
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229
Advice from us.
 MakeMyTrip (India) Private Limited vs Union of India
Delhi High Court: W.P. (C) Nos. 525 and 1283 of 2016 & CM no. 2153 & 5642 of 2016
Order Dated: 1-Sep-2016

• DGCEI (Directorate General of Central Excise Intelligence) or Service Tax

Department cannot straightway presume that a person has collected
service tax and retained same without depositing it with Central
Government.
• If assessee is regularly filing service tax returns (which have been
accepted or examined by Service Tax Department), then, without
adjudication of penalty under section 83A and without even a show-
cause notice or enquiry, DGCEI or other agency cannot straightway
arrest such assessee merely on suspicion of evasion or non-payment.
• In any case, amount paid as a result of search/arrest, without an
adjudication much less a show-cause notice, is required to be returned
to them forthwith with interest.
For Information purpose not to be considered as Professional
230
Advice from us.
 Conclusion
• In a strongly worded instruction, the GST Investigation wing of the CBIC
has warned its officers of disciplinary action if they use force and coercion
for recovery of tax or deposit of tax during the course of search,
inspection, or investigation.
• In various Court Judgements it has come to notice that some of the
officers have been subjecting the taxpayers to harassment and undue
demands during inspection, search, and investigation.
• Gujarat High Court have directed CBIC to issue detailed guidelines that
are missing in these instructions.
• The CBIC should demonstrate its commitment to its instructions by
punishing the officers not following its instructions.

For Information purpose not to be considered as Professional

231
Advice from us.
Validity of Show Cause Notice issued by an officer in
excess of monetary limit not acceptable

▪ Pahawa Chemicals (P) Ltd. vs. CCE – 2005 (181) ELT 339 (SC).
▪ Palak Designer Diamond Jewellery Vs. UOI – 2021 – TIOL – 424
– CESTAT - AHM
▪ Aeon Construction Products Ltd. vs. CCE – 2005 (184) ELT 120
(SC)
▪ Palak Designer Diamond Jewellery vs. UOI – 2019-TIOL-1756-
HC-AHM-CX

For Information purpose not to be considered as

232
Professional Advice from us.
Show Cause Notice – a ‘condition precedent’ to a
demand
▪ Gokak Patel Volkart Pvt. Ltd. vs. CCE -1987 (28) ELT 53 (SC)
▪ Madhumilan Syntex Pvt. Ltd. vs. UOI -1981 (35) ELT 349 (SC)
▪ Metal Forgings vs. UOI-2002 (146) ELT 241 (SC)

For Information purpose not to be considered as

233
Professional Advice from us.
Mere letter or communication asking for payment is
not a ‘show cause notice’
▪ Metal Forgings vs. UOI (supra)
▪ CC vs. Merchant Impex – 2012 (276) ELT 458 (Kar.)
▪ Steel Ingots vs. UOI – 1988 (36) ELT 529 (MP)
▪ Sidwell Refrigeration vs. CCE – 2002 (145) ELT 682 (Tri-Del)

For Information purpose not to be considered as

234
Professional Advice from us.
 Show Cause Notice must be in writing?

• Voltas Ltd. vs. CCE – 2000 (121) ELT 802 (Tri-Mum.)

For Information purpose not to be considered as

235
Professional Advice from us.
 Notice must contain all essential details

▪ CCE vs. Brindavan Beverages (P) Ltd.-2007 (213) ELT 487

(SC)
▪ Mehta Pharmaceuticals vs. CCE -2003 (157) ELT 105 (Tri-
Mum)
▪ CCE vs. Bhikhalal Dwarkadas-1998 (99) ELT 438 (Tribunal).

For Information purpose not to be considered as

236
Professional Advice from us.
Show Cause Notice shall not be based on
assumptions and presumptions
▪ Oudh Sugar Mills Ltd. vs. UOI -1978 (2) ELT (J172) (SC)

For Information purpose not to be considered as

237
Professional Advice from us.
Show Cause Notice shall not be based on
assumptions and presumptions
▪ Bihari Silk & Rayon Processing Mills (P) Ltd. vs. CCE-2000
(121) ELT 617 [Trib- LB(3/2)]
▪ Hindustan Aluminium Corp. Ltd. vs. Supdt. of C.Ex. - 1981 (8)
ELT 642 (Del.)
▪ JBA Printing Inks Ltd. vs. UOI -1980 (6) ELT 121
(Mad)
▪ Gwalior Rayon (Wgt.) Ltd.vs. UOI -1982 (10) ELT 844
(MP).

For Information purpose not to be considered as

238
Professional Advice from us.
CCE vs. Siddhartha Tubes – 2004 (170) ELT 33
(Tribunal)

• A second show cause notice for same period on different grounds

cannot be issued after the matter has been adjudicated and matter is in
appeal.
• Same view in Paro Food Products vs. CCE – 2005 (184) ELT 50
(Tribunal) where it was observed that this was barred on principle of
‘res judicata’.

For Information purpose not to be considered as

239
Professional Advice from us.
Validity of the amount recovered during investigation
and consequential refund thereof

• Shri Nandhi Dhall Mills India Pvt. Ltd. vs. SIO -2021-TIOL-828-
HC-MAD-GST
• Dabur India Ltd. vs. State of UP – 2002-TIOL-2781-SC-CX-LB
• Vodafone Essar South India Ltd. vs. UOI -2009-TIOL-117-HC-
MUM-CUS.
• Cleartrip Pvt. Ltd. vs. UOI – 2016-TIOL-863-HC-MUM-ST

For Information purpose not to be considered as

240
Professional Advice from us.
Structure of SCN : A SCN should ideally comprise of the
following parts, though it may vary from case to case :

• Introduction of the case

• Legal framework
• Factual statement and appreciation of evidences
• Discussion, facts and legal frame work,
• Discussion on Limitation
• Calculation of duty and other amounts due
• Statement of charges
• Authority to adjudicate.
• (Master Circular on Show Cause Notice, Adjudication and Recovery:
1053/2/2017- CX. dated 10-Mar-2017 issued by CBEC)
For Information purpose not to be considered as
241
Professional Advice from us.
 S.73(2) –Time limit prescribed

• Normal period of limitation

• Notice under sub-section (1) of S.73 to be issued at least 3 months
prior to the time limit specified in sub-section (10) for issuance or
order [S. 73(2) refers]

For Information purpose not to be considered as

242
Professional Advice from us.
Status of limitation period for F.Y.2017-18 to 2019-20:
SR.NO. Relevant F.Y. to which Due date for Last date for Remarks
the demand relates furnishing the AR in issuance of the show
FORM GSTR-9 cause notice as per
S.73(2) r/w.
S.73(10)

1 2017-18 05.02.2020¹ 05.11.2022

07.02.2020 07.11.2022

2 2018-19 31.12.2020² 30.09.2023

3 2019-20 31.03.202 21.12.2023

¹ROD Order No.10/2019 – CT dt. 26.12.2019 r/w Not No. 06/2020-CT dt.03.02.2020 refers
²Not. No. 80/2020-CT dt. 28.10.2020 refers
³Not. No. 04/2021-CT dt. 28.02.2021 refers.
For Information purpose not to be considered as
243
Professional Advice from us.
 S.74(10) – Computation of time limit

▪ Proper officer to issue the Order under sub-section (9) i.e. the
adjudication order within a period of 5 years from the due date for
furnishing of annual return for the financial year to which the
demand or erroneous refund relates.

For Information purpose not to be considered as

244
Professional Advice from us.
 Status of limitation period for F.Y.2017-18 to 2019-20 [S.74(2) r/w. S.74(10) refers].

SR.NO. Relevant F.Y. to Due date for Last date for Remarks
which the demand furnishing the AR issuance of the
relates in FORM GSTR- 9 show cause notice
as per S.74(2) r/w.
S.74(10)

1. 2017-18 05.02.2020 05.08.2024

07.02.2020 07.08.2024

2. 2018-19 31.12.2020 30.06.2025

3. 2019-20 31.03.2021 30.09.2025

Note: Refer slide 44 for further details

For Information purpose not to be considered as
245
Professional Advice from us.
Sr. No. Particulars 2017-18 2018-19 2019-20 2020-21 2021-22

1 Due Date for GST Annual 31.12.2018 31.12.2019 31.12.2020 31.12.2021 31.12.2022
Return
2 Extended Due Date 05.02.2020 31.12.2020 31.03.2021 28.02.2022 -

Times lines for Bonafide / Genuine Cases

3
Last date to issue 05.11.2022 30.09.2023 31.12.2023 28.11.2024 30.09.2025
Notice under Section
30.06.2023
73(2) (33 Months)
4
Last date to issue 05.02.2023 31.12.2023 31.03.2024 28.02.2025 31.12.2025
Order under Section
30.09.2023
73(10) (36 Months)
N/N 13/2022
5th July’2022
Timelines for Malafide / Fraud Cases
5 Last date to issue Notice 05.08.2024 30.06.2025 30.09.2025 28.08.2026 30.06.2027
under Section 74(2) (54
Months)
6 Last date to issue Order 05.02.2025 31.12.2025 31.03.2026 28.02.2027 31.12.2027
under Section 74(10) (60 For Information purpose not to be considered as
246
Months) Professional Advice from us.
Sr. No. Particulars 2017-18 2018-19 2019-20 2020-21 2021-22

1 Due Date for GST Annual 31.12.2018 31.12.2019 31.12.2020 31.12.2021 31.12.2022
Return

2 Extended Due Date 05.02.2020 31.12.2020 31.03.2021 28.02.2022 -

Times lines for Bonafide / Genuine Cases

3 Last date to issue Notice 05.11.2022 30.09.2023 31.12.2023 28.11.2024 30.09.2025

under Section 73(2) (33
Months) 30.06.2023

30.09.2023 31.12.2023 31.03.2024

4 Last date to issue Order 05.02.2023 31.12.2023 31.03.2024 28.02.2025 31.12.2025

under Section 73(10) (36
Months) 30.09.2023
N/N 13/2022
5th July’2022

31.12.2023 31.03.2024 30.06.2024

N/N 09/2023 N/N 09/2023 N/N 09/2023
st
31 March’2023 31st March’2023
31st March’2023
Timelines for Malafide / Fraud Cases

5 Last date to issue Notice 05.08.2024 30.06.2025 30.09.2025 28.08.2026 30.06.2027

under Section 74(2) (54
Months)

6 Last date to issue Order 05.02.2025 31.12.2025 31.03.2026 28.02.2027 31.12.2027

under Section 74(10) (60 For Information purpose not to be considered as Professional
247
Months) Advice from us.
Invocation of extended period u/s.74 only if the ingredient of-

▪ Fraud; or
▪ wilful misstatement of facts; or
▪ wilful suppression of facts exists

• Use of these expressions u/s. 11A of CEA and S.73 of FA

• However, the expressions ‘wilful mis-declaration’ and ‘collusion’ are
conspicuous by their absence!

For Information purpose not to be considered as

248
Professional Advice from us.
 Fraud vs Negligence

• As distinguished from negligence, fraud is always positive, intentional

• ‘Tax Fraud’ – ‘Federal offence of wilfully attempting to evade or
defeat the payment of taxes due and owing.’ I.R.C. § 7201.

[Source: Black’s Law Dictionary – Sixth Edition]

For Information purpose not to be considered as

249
Professional Advice from us.
 “Wilful misstatement” or “Suppression of facts”

▪ Cosmic Dye Chemical vs. CCE (supra)

▪ Tamilnadu Housing Board vs. CCE -1991 (74) ELT 9 (SC)
▪ CCE vs. Chemphar Drugs & Liniments – 1989 (40) ELT 276 (SC)
▪ Padmini Products vs. CCE – 1989 (43) ELT 195 (SC).
▪ Pushpam Pharmaceuticals Company vs. CCE 1995 (78) ELT 401
(SC)
▪ Continental Foundation Jt. Venture vs. CCE -2007 (216) ELT 177
(SC)
▪ Stone & Webster International Inc. vs. CCE -2011 (22) STR 467
(Tri-Ahmd). For Information purpose not to be considered as
250
Professional Advice from us.
“S.74–Extended period of limitation provided in the specified
circumstances

❖ Is mere inaction or failure a suppression of fact?

▪ Padmini Products vs. CCE (supra)

▪ Jaiprakash Industries vs CCE -2002 (146) ELT 481 (SC)

For Information purpose not to be considered as

251
Professional Advice from us.
“Will non-supply of information not mandated under the statute
amount to suppression of facts?

▪ Smt. Shrushti Dhawan vs. Shaw Brothers – AIR 1992 SC 1555

▪ Apex Electricals (P) Ltd. vs. UOI – 1992 (61) ELT 413 (Guj.)

▪ Explanation 2 to S.74.

For Information purpose not to be considered as

252
Professional Advice from us.
Can mere claiming wrong classification or wrong exemption be
considered a suppression or misstatement of facts?

▪ Denson Pultretaknik vs. CCE – 2003 (155) ELT 211 (SC)

▪ Virlon Textiles Ltd vs. CE – 2003 (158) ELT 469 (SC)

▪ Northern Plastics Ltd. vs. CC [1998] 101 ELT 549 (SC)

▪ Biomax Life Sciences Ltd. vs. CCE – 2021 (375) ELT 263
(Tribunal)

For Information purpose not to be considered as

253
Professional Advice from us.
 Is ignorance of law an excuse?

•Peter & Millere Packers vs. CCE – 2008 (232) ELT 695 (Tribunal)
•D. Cawasji & Co. vs. State of Mysore – 1978 (2) ELT J154 (SC)

For Information purpose not to be considered as

254
Professional Advice from us.
 REPRESENTATION AGAINST SHOW CAUSE
NOTICE & ADJUDICATION PROCEEDINGS

25
For Information purpose not to be considered as 5
Professional Advice from us.
 Study and Analysis of the SCN

• How to read the show cause notice?

▪ Date of issue of SCN
▪ Date of receipt of SCN
▪ List of Relied upon documents (RUD)
▪ Return of the non-relied upon documents
▪ Statements and Free translation
▪ Authority issuing the SCN.

For Information purpose not to be considered as

256
Professional Advice from us.
 Study and Analysis of the SCN

• Facts of the case

• Basis of SCN/Demand
▪ Scrutiny of Returns
▪ Audit
▪ Anti-evasion or Preventive action
▪ DGGI action

For Information purpose not to be considered as

257
Professional Advice from us.
 Study and Analysis of the SCN
• Allegation/charges in the SCN
▪ Nature of allegations
▪ Basis of allegations
▪ Evidence
▪ Interpretation of the statutory provisions
▪ Judgements
▪ AAR/AAAR Ruling
▪ Technical Report
▪ Third Party statements
▪ Discrepancies in Records
▪ CBIC’s Circular
▪ Recurring demand
▪ Revenue’s pending appeal For Information purpose not to be considered as
258
Professional Advice from us.
 Study and Analysis of the SCN

• Computation of demand
▪ Classification
▪ Valuation
▪ Exemption notification
▪ Rate of tax
▪ Cum-tax principle

• Statutory provisions invoked in the SCN

▪ Summary of the provisions invoked
▪ Applicability/Relevance of the provisions
▪ Action proposed under the provisions

For Information purpose not to be considered as

259
Professional Advice from us.
 Study and Analysis of the SCN

• Time limit for filing the reply to SCN

▪ 30 days time limit – Statutory or administrative?
▪ Reply and Hearing- Are they substitute of each other?
▪ Acknowledgement of the SCN before expiry of 30 days
▪ Extension of time for filing the Reply
▪ Filing of additional submissions.

For Information purpose not to be considered as

260
Professional Advice from us.
 Study and Analysis of the SCN

• Cross-examination
▪ Need for cross-examination
▪ Can cross-examination be sought as a vested right?
▪ Persons whose cross-examination can be sought
▪ Admissibility of the statement in case the person does not appear for the
cross-examination
▪ Written submissions on conclusion of the cross-examination
▪ Refusal to grant cross-examination – Consequence and course of action
▪ Law relating to cross-examination.
For Information purpose not to be considered as
261
Professional Advice from us.
 Checklist of Notice: Unregistered
Noticee Notice
Unregistered by Central or State/UT Administration

Underlying S.63 S.64 S.67 Other

Proceedings (Asst. of Unregistered (Summary Asst. in certain (Power of Inspection,
Persons) Special Cases) Search & Seizure)
Notice for Demand S.63 S.73 S.74 (Determination in S. 76
under (Asst. of Unregistered (Determination in genuine Fraud Cases) (General Provisions
Persons) cases) relating to
determination of Tax)
Notice for Penalty S.122 S.125 S.127 Other
(Penalty for Certain Offences) (General Penalty) (Power to impose penalty
in certain cases)
Accompanying DRC-01 Other
Summary
Pre-Notice - DRC-01A None -
Consultations

For Information purpose not to be considered as

262
Professional Advice from us.
 Checklist of Notice: Registered
Noticee Notice
Registered by Central or State/UT Administration

Underlying S.61-62-64 S.65 S.67 Other

Proceedings (Scrutiny – Non Filers – (Audit by Tax Authorities) (Power of Inspection,
Summary Asst. Special Cases) Search & Seizure)
Notice for Demand - S.73 S.74 (Determination in S. 76
under (Determination in genuine Fraud Cases) (General Provisions
cases) relating to
determination of Tax)
Notice for Penalty S.122 S.125 S.127 Other
(Penalty for Certain Offences) (General Penalty) (Power to impose penalty
in certain cases)
Accompanying DRC-07 DRC 01-02 DRC-01 Other
Summary
Pre-Notice - DRC-01A None -
Consultations

For Information purpose not to be considered as

263
Professional Advice from us.
 Facts vs Opinion
• Taxpayer is a Company => Fact
• Taxpayer is registered => Fact
• Taxpayer is Trader => Incorrect Fact: Taxpayer is Manufacturer and
Reseller of Steel
• Taxpayer has not discharged Output Tax Correctly => This is not a fact
but an Opinion
• Taxpayer has claimed inadmissible Input Tax Credit => This is not a fact
but an Opinion.
• Taxpayer has discharged IGST instead of CGST-SGST => This is not a
Fact but an Interpretation of Underlying facts.
For Information purpose not to be considered as
264
Professional Advice from us.
 Drafting of Reply to SCN

• Preparation of the defence reply to SCN

▪ Background or Statement of facts
a. Brief background of the Assessee
b. Narration of the relevant facts
c. Chronology of the events/facts

▪ Relevant facts leading to the issue of SCN

▪ Exhibits
▪ Amount of tax, etc. demanded and other action proposed – statutory provisions invoked
▪ Gist of the allegations

For Information purpose not to be considered as

265
Professional Advice from us.
 Drafting of Reply to SCN

• Grounds of Defence
▪ Merits of the case
▪ Limitation
▪ Computation
▪ Challenge to the penal action and other action proposed

For Information purpose not to be considered as

266
Professional Advice from us.
 Drafting of Reply to SCN

▪ Importance of the Reply to the SCN

▪ Furnishing of evidence in support of each contention
▪ Judgements’ compilation – Relevant para

For Information purpose not to be considered as

267
Professional Advice from us.
 Drafting of Reply to SCN

• Procedural requirements

▪ Summary of SCN – Form GST DRC-01

▪ Statement of Demand u/s. 73(3)/74(3) – Form GST DRC-02

▪ Payment of tax, etc. u/s. 73(5)/74(5) or in terms of other provisions - Form GST DRC-03

▪ Acknowledgement – Form GST DRC-04

▪ Payment of tax, etc. u/s. 73(8)/74 (8) or S.129 (1) – Form GST DRC-03

For Information purpose not to be considered as

268
Professional Advice from us.
 Drafting of Reply to SCN

• Procedural requirements

▪ Acknowledgement – Form GST DRC-05

▪ Representation/Reply to SCN – Form GST DRC-06

▪ Summary of the Order – Form GST DRC-07

▪ Rectification of Order (S.161) or withdrawal of Order – Form GST DRC-08.

For Information purpose not to be considered as

269
Professional Advice from us.
 Adjudication proceedings:

• Competent Authority to adjudicate the SCN

• S.2 (4) – ‘Adjudicating Authority’ defined.
• Whether adjudicating authority acts as a ‘quasi-judicial authority’?

▪ Orient Paper Mills Ltd. vs. UOI – 1978 (2) ELT J345 (SC)
▪ Orient Paper Mills Ltd. vs. UOI – 1978 (2) ELT J382 (SC)
▪ CCE vs. National Tobacco Co. of India Ltd -1978 (2) ELT J 416 (SC)

For Information purpose not to be considered as

270
Professional Advice from us.
 Adjudication proceedings:

• Opportunity of Personal hearing.

▪ Principles of natural justice
▪ ‘Reasonable opportunity of being heard’
Fedco (P) Ltd. vs. S. N. Bilgrami – 1999 (110) ELT 92 (SC)

For Information purpose not to be considered as

271
Professional Advice from us.
 Adjudication proceedings:

• Change of Adjudicating Authority–Whether a fresh hearing required?

▪ Gullapalli Nageshwara Rao vs. APSRTC -= AIR 1958 SC 308.

▪ Bhagirathi Iron & Steel (P) Ltd. vs. CCE -1999 (113) ELT 678 (Trib)
• Grant of personal hearing – S. 75(4)
• Grant of adjournment – S. 75 (5)
• Cap on number of adjournments – maximum 3 (three) adjournments – Proviso to S. 75(5)

• Fixing multiple dates of hearing by a single intimation- Is it valid?

▪ Bindal Sponge Ltd. vs. UOI – 2015 (122) ELT 657 (Tribunal)
▪ Afloat Textiles (P) Ltd. vs. CCE – 2007 (215) ELT 198 (Tri-Ahd.)
For Information purpose not to be considered as
272
Professional Advice from us.
 Adjudication proceedings:
• Fair and reasonable hearing
▪ Havacrumb Rubber (P) Ltd. vs. Supdt. of C. Ex.-1983 (14) ELT 1685 (Kerala)
▪ Aluminium Corporation of India Ltd. vs. UOI - 1978 (2) ELT J 320 (SC)

• Reasoned and speaking Order is must:

▪ Siemens Engineering and Manufacturing Co. of India Ltd. vs. UOI-AIR 1976 SC 1785
▪ S. 75 (6)
• Order cannot go beyond or be contrary to the SCN:
▪ Saci Allied Products Ltd. vs. CCE – 2005 (183) ELT 225 (SC)
▪ Hindustan Polymers Ltd. Vs. CCE – 1999 (106) ELT 12 (SC)
• Can an officer review his own order?
▪ Dwarka Das vs. State of M. P.- AIR 1999 SC 1031

For Information purpose not to be considered as

273
Professional Advice from us.
Representation before the Adjudicating Authority:

• Appearance and Representation

▪ Appearance by the Authorised Representative
• S.2 (15) r/w. S. 116
▪ Preparation of Synopsis
▪ Filing of additional submissions
▪ Records of personal hearing

For Information purpose not to be considered as

274
Professional Advice from us.
 Some Do’s & Don’ts

• A few Do’s
• Show Cause Notice:
• Do make a note of the date of issue of the SCN
• Do make a note of the date of receipt of the SCN
• Do place acknowledgement of the receipt of the SCN by way of letter, etc.
• Do check that all RUDs are available with the SCN
• Do ask for the return of non-relied upon documents, if any
• Do ask for the free translation in in English of the statement/s, if recorded in a language other than
English.

For Information purpose not to be considered as

275
Professional Advice from us.
 Reply to SCN

• Do address each allegation levelled in the SCN.

• Do provide evidence in support of each contention/ground raised.
• Do check the latest status of the judgement being relied upon.
• Do provide copies of judgements relied upon with the relevant para
duly highlighted.
• Do provide index and do page numbering of the reply.
• Do provide legible (or typed) copy of each document relied upon.

For Information purpose not to be considered as

276
Professional Advice from us.
 Adjudication Proceedings

• Do ensure that the Authorisation /Vakalatnama is on records, wherever

required.
• Do maintain Dress Protocol.
• Do carry short notes/synopsis with you which would facilitate the oral
submissions.
• Do address each question put forth by the adjudicating authority.
• Do speak slowly, softy and clearly.
• Do maintain decorum of the proceedings.

For Information purpose not to be considered as

277
Professional Advice from us.
 A few Don’ts

• Don’t address any correspondence by name of the officer.

• Don’t seek adjournment on flimsy ground.
• Don’t use harsh or abusive language in any correspondence/ communication
and reply.
• Don’t go by ‘headnotes’ of a judgement while relying upon it.
• Don’t shout or be hysteric during the hearing.
• Don’t make irrelevant submissions or state irrelevant facts.

Don’t try to impress your client while arguing a case.

Don’t ‘copy and paste’ pleadings.
For Information purpose not to be considered as
278
Professional Advice from us.
 REGISTRATON AND LITIGATION.. FEW IMP TIPS
• Section 29 and section 30 – implications …
• Requirements…
• 5 leading judgments on revocation, appeal, show cause notices, and law.
• Pleadings….what to challenge and what to plead and what judgments to quote or not quote.
• Documentary evidence in support of grounds of appeal.
• Effect of suspension or cancellation of registration certificate.

For Information purpose not to be considered as Professional Advice

from us.
279
 Key Points to take care while Drafting Reply
• Taxpayers sometimes in a hurry to prove their innocence forget to
challenge the allegations.
• Long-standing relationships with Advisors and Experts can turn sour
when notices are issued.
• Divergent AAR’s have exposed the “Other View” that is possible.
• Allegation is not Suspicion. Allegation is not Actionable Cause.
• Allegation is accusation about facts backed by Evidence, if proved
reliable, will establish said Wrongdoing. Allegation is not FACT.

For Information purpose not to be considered as Professional Advice

from us.
280
 Key Points to take care while Drafting Reply
• Allegation is an Opinion or Interpretation of Facts as Observed.
• Fact is that which is undeniable by both sides.
• If it is deniable then it is not a FACT.
• Often Opinions are presented like a Fact. As an expert you have to
segregate them like “wheat from chaff.”
• Merely offering disagreement with the allegation is not sufficient.
Such disagreement should be substantial, it must be denied
unequivocally.

For Information purpose not to be considered as Professional Advice

from us.
281
 Key Points to take care while Drafting Reply
• For example,
• Whenever a Notice is issued for mismatch of ITC (2A vs 3B) based on data
mismatch from common portal or retrospective cancellation
• there is a presumption that Supplier has defaulted in payment of tax on
supplies
• whereas there is no presumption about accuracy of data on common portal
• data has been regularly revised on common portal
• supplier might have discharged his duty while he was active
• 2A is dynamic and generates different reports on different dates

For Information purpose not to be considered as Professional Advice

from us.
282
 Key Points to take care while Drafting Reply
• For example,
• SCN issued for charging GST on “other income” appearing in Fiancials
• SCN demands tax liability as “CGST-SGST”
• This means that there is presumption about “place of supply” is interstate

For Information purpose not to be considered as Professional Advice

from us.
283
 Key Points to take care while Drafting Reply
• Taxpayers records are rejected but demand is based upon values in
the record or transaction in the record.
• “Quod Approbo Non Reprobo”: Which I approve, I cannot Disapprove
• Officer cannot act under Compulsion and/or Dictation
• Treatment of any transaction under other law has no role to GST as
GST does not import views from other laws.

For Information purpose not to be considered as Professional Advice

from us.
284
 Key Points to take care while Drafting Reply
• Taxpayers cannot admit to any “interpretation of law”
• Taxpayer can only admit Facts or tax treatment
• The more acrimonious the statement, the less reliable it becomes,
and this is polar opposite of taxpayer’s understanding and belief.

For Information purpose not to be considered as Professional Advice

from us.
285
Checklist of Notice
Noticee Notice (allegations)
Demand Raised Fact Opinion Evidence
Issue A YES\NO NO/YES YES/NO
Issue B YES\NO NO/YES YES/NO
Interest YES\NO NO/YES YES/NO
Penalty 1 YES\NO NO/YES YES/NO
Penalty 2 YES\NO NO/YES YES/NO
Checklist of notice
Notice Notice (Allegations)
Demand raised Accepted Rejected

On facts On law
Issue A YES/NO YES/NO YES/NO

Issue B YES/NO YES/NO YES/NO

Interest YES/NO YES/NO YES/NO

Penalty 1 YES/NO YES/NO YES/NO

Penalty 2 YES/NO YES/NO YES/NO

Summons under
CGST/SGST Act
For Information purpose not to be considered as 288
 Power to summon persons to give evidence
and produce documents. (Sec. 70)
(1) The proper officer under this Act shall have power to summon any
person whose attendance he considers necessary either to give
evidence or to produce a document or any other thing in any inquiry in
the same manner, as provided in the case of a civil court under the
provisions of the Code of Civil Procedure, 1908.

(2) Every such inquiry referred to in sub-section (1) shall be deemed to

be a “judicial proceedings” within the meaning of section 193 and
Section 228 of the Indian Penal Code.

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289
Advice from us.
 Sec. 70: Summons

Vital or Empowers PO
Only 2 sub-
Very Brief Indispensable to Summon
sections
Role Any Person

For Information purpose not to be considered as Professional

290
Advice from us.
Summons can be issued for

Seeking
To give
Personal
Evidence
attendance

To Produce a To record a
Document Statement

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291
Advice from us.
 Power of “Inquiry” is not restricted
• Word “Inquiry” cannot be given the restrictive meaning only to cover
post enquiry post issue of notice as the inquiry is “for the purposes of
Act” (Excise) – National Building Construction Co. Ltd. vs UOI (HC –
Delhi), [2018] 100 taxmann.com 307
• “for the Purposes of the Act” are not mentioned in GST Laws ,
However as per my understanding, the scope of “Inquiry” would be
as wide since the “Proper Officer” under the act is empowered to
undertake inquiry to carry out functions assigned to him under the
Act.
• Therefore, the inquiry shall not be limited to only issues raised in the
SCN.
For Information purpose not to be considered as Professional
292
Advice from us.
 P.V. Ramana Reddy vs UoI (HC-Tel.)
[2019] 104 taxmann.com 407 (Telengana)
• Enquiry before PO is by its nature, Criminal Proceeding, it is
nevertheless a Judicial Proceedings and hence, the person summoned
is obliged not to give false evidence nor to fabricate evidence.
• He is also obliged not to insult and not to cause any interruption to
the Proper Officer in the course of such proceedings.

For Information purpose not to be considered as Professional

293
Advice from us.
 Consequence of Failure to attend as per
Summons
• Court have the Powers to issue a warrant of arrest with or without
bail and may also issue an order for attachment of his property and
also impose fine (exception – Lawful Excuse for non-attendance)
• Penalty of Rs. 25,000/- U/s 122(3)(d) of CGST Act’2017 could also be
imposed.

For Information purpose not to be considered as Professional

294
Advice from us.
 Details available with Department –
Summons not to be issued
• A.S. Corporation vs UoI, [2008] 223 ELT 26 (HC-Gujarat)
• Dharampal Satyapal vs UoI, [2018] 360 ELT 718 (HC-Guwahati)

For Information purpose not to be considered as Professional

295
Advice from us.
 No Provisions in Law to Order the Assessee to
Create Document not in his position
• A Truck of 123 cartons of documents were taken for submission to
DGCEI office but the officer insisted on providing information in
particular format.
• Delhi High Court rejected such demand by the Officer in eBiz.com vs
UoI, [2016] 338 ELT 562 (HC-Delhi)

For Information purpose not to be considered as Professional

296
Advice from us.
 Presence of Advocate, though not in hearing
range, is permissble
• Poolpandi vs Supritendent of Central Excise, [1992] 60 ELT 24 (SC)
• Agarwal Foundries Pvt. Ltd. vs UoI, [2020] 121 taxmann.com 134 (HC
– AP & Telengana)

For Information purpose not to be considered as Professional

297
Advice from us.
 Detention of Assessee for Long Hours
• Custom Officers does not have the powers to detain assessee for long
hours. There is no Fundamental Right (Article 21 of Constitution)
which guarantee Presence of Lawyer during interrogation process.
Anil G Merchant vs Director of Revenue, [1985] 20 ELT 292 (HC-
Madras)
• FAQ of CBIC, 3rd Edition dated 15-Dec-2018, has instructed its Officers
that statements should be recorded during office hours generally and
no person should be made to wait for long hours.

For Information purpose not to be considered as Professional

298
Advice from us.
 Confessional Statements of co-accussed
• The confessional Statements of a co-accused cannot be used as
evidence unless it is corroborated by the other independent material.
– Debu Saha vs Collector of Customs, [1990] 48 ELT 302 (Tribunal –
Kolkata)
• Principles of Natural Justice – Power of Cross Examinations

For Information purpose not to be considered as Professional

299
Advice from us.
 Employee of Accussed
• Where the person giving statement was the employee of the
accused/person proceeded against, he cannot be called a third party
witness and it was held that even where cross-examination could not
be conducted, the statement has evidentiary value. – Shalini Steels
Ltd. vs Commissioner of C. Ex. Hyderabad, [2010] 258 ELT 545
(Tribunal – Bangalore)

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300
Advice from us.
Summons in GST
Instruction No.03/2022-
23 (GST Investigation)
dated 17.08.2022

For Information purpose not to be considered as

301
Professional Advice from us.
Points to be kept in mind before issuing Summons under
Section 70 of GST by Proper Officer

Summons should indicate name

Not to issue summon in routine Not to call for statutory records
of Offender so that the recipient
manner to the top officials available at GST Portal i.e. where
of the Summon has prima facie
(CMD/MD/CEO/CFO) of records are available
understanding that whether he
Company to call for material online/digitally no need for
has been called as accused or
evidence/documents. summon.
co-accused or witness.

Understand that issuing of

someone is one of the
instrument with the department Use power to issue Summon
to get/ obtain information or judiciously and with due
document or statement from consideration.
any person to find out the tax
evasion etc.

For Information purpose not to be considered as

302
Professional Advice from us.
Points to be kept in mind before issuing Summons under
Section 70 of GST by Proper Officer

Explore instances when Ensure that summons

Mandatory to Generate
instead of resorting to have adequately been
and Quote DIN in
summons, a letter for served upon the intended
communications by
requisition of information person in accordance with
officers
may suffice. section 169 of CGST Act

Follow the prescribed

procedure before issuing
Issue Summon in
Summons i.e. Prior
prescribed Form
Written Permission from
AC/DC.

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303
Professional Advice from us.
Registration
Issues
How to Handle them?

For Information purpose not to be considered as Professional Advice from us. 304
For Information purpose not to be considered as Professional Advice from us.

Supreme Court in
Amrit Foods
vs
Commissioner of Central Excise, U.P

CIVIL APPEAL NOS. 1329 & 7275 OF 2003

OCTOBER 26, 2005

305
Exact Contravention is needed
• Rule 173Q of the Central Excise Rules, 1944 - Penalty - Neither show
cause notice nor order of Commissioner specified which particular
clause of Rule allegedly contravened by appellant - Assessee to be
put on notice as to exact nature of contravention for which assessee
was liable under provisions of Rule - Tribunal order setting aside
penalty upheld - appeals disposed of (Para 5)
• Rule 173Q contains six clauses the contents of which are not same.

For Information purpose not to be considered as

306
Professional Advice from us.
For Information purpose not to be considered as Professional Advice from us.

M/S. Bright Star Plastic Industries

vs
Additional Commissioner of Sales Tax

W.P. (C) No. 15265 of 2021

dated October 04, 2021
Orrisa HC
307
 Important Timelines

•First SCN
19/08/2020 •DEPTT. DROPPED
03/12/2020 •WRIT PETITION
5/04/2021 •ORISSA HIGH
FIRST SCN AND CANCELLED COURT ISSUED
•PETITIONER’S •DEPTT. CANCELLED •AA ORDER ISSUED
ISSUED FRESH SCN DIRECTED TO FILE ORDER IN FAVOUR
REPLY GST REGISTRATION IN FAVOUR OF
APPEAL TO AA OF PETITIONER
DEPTT.

14/08/2020 25/08/2020 17/01/2021 4/10/2021

For Information purpose not to be considered as Professional

308
Advice from us.
 Facts of the Case

• The Petitioner was involved in the business of manufacturing and trade of

Poly Vinyl Chloride “PVC” pipes, iron scraps, etc.
• On August 14, 2020, the CT & GST Officer, Bhubaneswar issued a
SCN in Form GST REG-17 under Rule 22(1) of the OGST Rules, 2017 for
cancellation of the Petitioner’s registration on the ground that:
“Registration has been obtained by means of fraud, willful
misstatement or suppression of facts”.
• After the Petitioner filed a reply on 19th August, 2020, the CT & GST Officer
by an order dated 25th August, 2020 dropped the proceedings for
cancellation of the registration. However, on the very same day, issued
another SCN for cancellation of registration, this time on the ground that:
“It was claimed that ITC of Rs.2,04,650 against fake invoices was
issued by non-existent supplier”.

For Information purpose not to be considered as Professional

309
Advice from us.
 Facts of the Case
• SCN issued to The Petitioner for Purchases made from M/s.
Pawansut Enterprises (Selling dealer).
• Department conducted a field visit to the address of the Selling
dealer and it was found to be occupied by some other person and not
by the selling dealer.
• Department concluded that the transactions entered into by the
Petitioner with the selling dealer were fake transactions and hence,
cancelled the registration.

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310
Advice from us.
 Issue Involved
• In this case, Section 16 of the OGST Act and Rule 21 of the OGST
Rules 2017, states that
Registration to be cancelled in certain cases if the said person,-
(a) does not conduct any business from the declared place of
business: or
(b) issues invoice or bill without supply of goods or services in
violation of the provisions of the Act, or the rules made
thereunder; or
(c) violates the provisions of Section 171 of the Act or the rules
made thereunder.”

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311
Advice from us.
 Respondent’s Argument
• The Respondent (Department) argued that a field visit was
undertaken to the address shown for the selling dealer (M/s.
Pawansut Enterprises), the premises were found to be occupied by
some other person and not by the selling dealer.

• The said visits which were undertaken on July 01, 2019, a conclusion
was drawn that the transactions entered into by the Petitioner with
the selling dealer in April and August 2018 were fake transactions.

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312
Advice from us.
 Petitioner’s Contention
• The Petitioner contended that under Section 16 of the OGST Act and Rule
21 of the OGST Rules 2017, there is no provision that enables the
cancellation of the registration of the purchasing dealer for any fraud
committed by the selling dealer.
• The Petitioner argued that the cancellation registration of the selling
dealer M/s. Pawansut Enterprises took place only on October 01, 2019,
long after the dates of the purchases made by the Petitioner from the said
dealer.
• Therefore, it was submitted that on the date of purchases taking place,
there was no way that the Petitioner would have known that at some
future point in time, the registration of the selling dealer was going to be
cancelled.
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313
Advice from us.
 The Honorable Orissa High Court Held
• The High Court came to the conclusion that because None of the
three circumstances stated in Rule 21 are attracted. Hence, Rule 21 of
the OGST Rules cannot be invoked by the Department.
• Also, on the dates that the Petitioner entered into the transactions of
purchase with M/s. Pawansut Enterprises i.e. April and August, 2018,
the GST registration had not been cancelled. That was to take place
much later on 1st October, 2019. Therefore, on the date the
purchases took place there was no means for the Petitioner to know
that entity which had a valid GST number, was in fact non-existent.

For Information purpose not to be considered as Professional

314
Advice from us.
 The Honorable Orissa High Court Held
• The Orissa HC observed that the Respondent has failed to show that
the Petitioner as a purchasing dealer deliberately availed the ITC in
respect of the transactions with an entity knowing that such an entity
was not in existence and on the basis of this observation, the Court
revoked the GST Registration Cancellation.

•First SCN
19/08/2020 •DEPTT. DROPPED
03/12/2020 •WRIT PETITION
5/04/2021 •ORISSA HIGH
FIRST SCN AND CANCELLED COURT ISSUED
•PETITIONER’S REPLY •DEPTT. CANCELLED •AA ORDER ISSUED
ISSUED FRESH SCN DIRECTED TO FILE ORDER IN FAVOUR
GST REGISTRATION IN FAVOUR OF
APPEAL TO AA OF PETITIONER
DEPTT.

14/08/2020 25/08/2020 17/01/2021 4/10/2021

IMPORTANT DATES
For Information purpose not to be considered as Professional
315
Advice from us.
For Information purpose not to be considered as Professional Advice from us.

FADA Trading Private Limited

Vs Commissioner of GST
HIGH COURT OF DELHI

W.P.(C) 1212/2022 & CM No.3560/2022

07-Apr-2022
316
 Facts of the Case
• The Petitioner in this case is a Pvt Ltd Company named as FADA
Trading Pvt Ltd.

• Show Cause Notice received was completely deficient in material

particular and GST Registration was cancelled.

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317
Advice from us.
 Petitioner’s Contention
• The order passed by the Appellate Authority on the grounds that the
SCN gave no details as to the date and time on which the
petitioner’s authorized representative was to present himself for a
personal hearing before the Adjudicating Authority.
• Petitioner submitted that neither the SCN nor the subsequent order
cancelling the petitioner’s GST registration was received by the
petitioner.

For Information purpose not to be considered as Professional

318
Advice from us.
 Delhi High Court held that:
• HC quashed the order cancelling the GST registration as the Show
Cause Notice was completely deficient in material particular.
• The court noted that from the close perusal of the order by which
petitioner’s registration was cancelled, it was clear that there was no
demand outstanding against the petitioner.
• The court while quashing the order cancelling the GST Registration,
directed the department to restore the petitioner’s GST registration
at the earliest.

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319
Advice from us.
For Information purpose not to be considered as Professional Advice from us.

Micro Focus Software Solutions (I) Pvt Ltd

vs Union of India
HIGH COURT OF DELHI

W.P.(C) 8451/2021, CM Nos.26176/2021 & 28634/2021

26-Apr-2022
320
 Facts of the Case:
• The Petitioner(Micro Focus Software Solutions India Pvt Ltd) was
issued a show cause notice to show cause as to the factum of it not
being found functioning or existing at the given address.

• The time allowed to reply to SCN was seven days and SCN also
provided that the authorized representative of the petitioner will
appear for personal hearing.

• The petitioner sought extension of time for personal hearing .

For Information purpose not to be considered as Professional

321
Advice from us.
 Facts of the Case:
• Pursuant to filing of reply on the last date of period for filing reply i.e.
on the 7th day, an order cancelling GST registration was passed and
subsequently a second order was passed which related to the
dismissal of the application for revocation of cancellation;

For Information purpose not to be considered as Professional

322
Advice from us.
 Petitioner’s Contention
• In the absence of notice to the Petitioner for carrying out physical
inspection, there has been a complete violation of principles of
natural justice.
• Petitioner was furnished the report generated on physical inspection
having been carried out, only during the course of the proceedings.
• The request made by the petitioner for grant of extention of time
was not responded and the reply given by petitioner was not taken
into consideration.

For Information purpose not to be considered as Professional

323
Advice from us.
 Respondent’s Contentions
• there is a discrepancy and/ or contradiction as to when the petitioner
closed down his business at the given address
• the petitioner was given an opportunity to respond to the show cause
notice and since there was no response and it was only thereafter
that the order was passed
• the order rejecting the revocation application has been passed, the
petitioner should be relegated to an alternate statutory remedy

For Information purpose not to be considered as Professional

324
Advice from us.
 Delhi High Court held that:
• Despite the time extension for filing reply sought by the Petitioner,
the Petitioner duly filed a reply to show-cause notice on the 7th
working day in which reasons were set out as to why the petitioner
wished to continue with its registration;
• Delhi HC sets-aside order cancelling GST registration as well as
subsequent order of dismissal of revocation application on account
of non-consideration of reply to SCN.
• Respondents will ensure that the petitioner’s registration is revived
and requires Petitioner to suo-moto apply for de-registration.

For Information purpose not to be considered as Professional

325
Advice from us.
 326
Case Study on Registration

2. Suo Motto Registration

1. Cancellation
For Information purpose not to be considered as Professional Advice from us.
Case-1: Cancellation of Registration
• Shop was found closed of the vendor.

For Information purpose not to be considered as

327
Professional Advice from us.
Case-2: Suo Motto Registration
• Dealer in Food Grains like Rice, Wheat etc
• Inquiry for Nuts like Almonds, Cashew, Hazelnuts, Peanuts etc
• Charges levied of selling Pulses.

For Information purpose not to be considered as

328
Professional Advice from us.
Few Important Court Decisions on GST Registrations – word file
For Information purpose not to be considered as Professional Advice from us. 329
 Rohit Varma
vs Assistant Commissioner,
Burtola, Kolkata North

IN THE HIGH COURT OF CALCUTTA

MAT 456 of 2022, With I.A. No. CAN 1 of 2022
12-May-2022

For Information purpose not to be considered as Professional Advice from us. 330
 Facts of the Case
• The appellant was granted registration under the provisions of the
VAT in 2013 and was migrated to GST in 2017.
• In 2018, a show cause notice was issued to the appellant by the
Deputy Commissioner of GST calling upon the appellant to show
cause as to why the registration should not be cancelled as it has
been obtained by means of fraud, wilful mistatement or suppression
of facts.
• The appellant did not avail the remedy granted and did not appear
before the authority and therefore, the registration was cancelled.

For Information purpose not to be considered as Professional Advice from us. 331
 Facts of the Case
• Later the appellant had filed an application for revocation of the
cancellation of registration and the registration was restored.
• Thereafter, within a period of three days, another show cause notice
was issued on the same ground as the earlier show cause notice.
• The appellant submitted the reply. However, the registration was
cancelled expressing doubt on the documents produced by the
appellant to show that he was carrying on business in the premises,
which has been shown in the registration certificate.

For Information purpose not to be considered as Professional Advice from us. 332
 Facts of the Case
• Against this cancellation Order the appellant filed an application for
revocation of the said order, which was also dismissed.
• Against this dismissal appellant filed an appeal before the Joint
Commissioner, which was dismissed.
• The appellant was granted registration under the provisions of the
West Bengal Value Added Tax Act, 2003 dated 27th August, 2013. The
appellant has been enjoying the benefit of such registration ever
since 2013. After coming into force of the WBGST Act, the licence
migrated under the new provisions. On 10th September, 2018 first
SCN was issued. Appellant approached the High Court.

For Information purpose not to be considered as Professional Advice from us. 333
 Respondent’s (Department) Argument
• An inspection was conducted by the officers of the department, the
receptionist of the building affirmed that power of attorney agent of
the owner, used to come to the premises and carried on certain
business activities. Nevertheless, the said receptionist could not
recognise the owner, whose photograph appears to have been
shown to the said receptionist.

For Information purpose not to be considered as Professional Advice from us. 334
 Calcutta High Court Held:
• In any event, the authority while cancelling the registration could not have solely
relied upon a statement made by the receptionist of the building and merely
because she could not recognise owner’s photograph, could not have been the
reason for cancellation. [Para 10]
• The proper course that should have been adopted is to issue a notice directing
the owner and his power of attorney agent to be personally present in the office
of the revenue and the landlord of the premises also should have been
summoned. If all the three parties are present, the correct facts will come to
light. Had this procedure been adopted, the truth would have been established
and a proper order could have been passed either way. [Para 10]

For Information purpose not to be considered as Professional Advice from us. 335
 Calcutta High Court Held:
• Order of Joint Commissioner Set-aside and the matter is remanded back to the
first respondent for conducting a fresh enquiry.
• As a result of the same, the order dated 17th March, 2021 directing rejection of
application for revocation of cancellation is also set aside and the said application
is restored to the file of the first respondent for conducting fresh enquiry.
• The first respondent is directed to depute one of his officers to effect personal
service of the hearing notice on the landlord of the building to ensure that the
landlord is present on the said date (20-Jun-2022).

For Information purpose not to be considered as Professional Advice from us. 336
 DRS WOOD PRODUCTS LUCKNOW VS STATE OF
U.P. 2022-VIL-550-ALH
• GST - Section 29 of the CGST Act – Rejection of application for revocation of cancellation
of registration - Cancellation of registration on the ground that on an investigation at the
principal place of business of the petitioner, no business activity was found nor any stock
of goods / employee was found - whether the action taken against the petitioner in
respect of cancellation satisfies the test of the requirement of Section 29 of the CGST
Act HELD - perusal of the show-cause notice clearly depicts the opaqueness of the
allegations levelled against the petitioner, which were only to the ground that ‘tax payer
found non-Functioning / non-existing at the principal place of business’ - The said SCN
did not propose to rely upon any report or any inquiry conducted to form the opinion
and on what basis was the allegation levelled that the tax payer was found non-
functioning as it does not indicate as to when the inspection was carried - A vague show-
cause notice without any allegation or proposed evidence against the petitioner is
violative of principles of administrative justice. Cancellation of registration is a serious
consequence affecting the fundamental rights of carrying business and in a casual
manner in which the show-cause notice has been issued clearly demonstrates the need
for the State to give the quasi-adjudicatory function to persons who have judicially
trained mind, which on the face of it absent in the present case

For Information purpose not to be considered as Professional Advice

from us.
337
 DRS WOOD PRODUCTS LUCKNOW VS STATE OF
U.P. 2022-VIL-550-ALH
• Finding the orders contrary to the mandate of Section 29 and 30 of the Act
as well as the principles of adjudication by the quasi-judicial authorities,
the orders impugned are set aside - the registration of the petitioner shall
be renewed forthwith – writ petition is allowed with cost to Revenue - The
arbitrary exercise of power cancelling the registration in the manner in
which it has been done has not only adversely affected the petitioner, but
has also adversely affected the revenues that could have flown to the
coffers of GST in case the petitioner was permitted to carry out the
commercial activities. The actions are clearly not in consonance with the
ease of doing business, which is being promoted at all levels. For the
manner in which the petitioner has been harassed since 20.05.2020, the
State Government is liable to pay a cost of Rs.50,000/- to the petitioner.
The said cost of Rs.50,000/- shall be paid to the petitioner within a period
of two months, failing with the petitioner shall be entitled to file a
contempt petition
For Information purpose not to be considered as Professional Advice
from us.
338
 TVL. JEYALAKHSMI STORE VS THE COMMISSIONER OF
COMMERCIAL TAXES, CHENNAI
2022-VIL-546-MAD
• GST - Cancellation of registration under Section 29(2)(C) of the CGST Act for
non-filing of returns for a continuous period of six months – Rejection of
revoke the cancellation of registration on the ground that request for
revocation is not filed within the statutory limitation of 90 days –
aggrieved assessee find instant petition – HELD - the petitioner during the
Covid-19 pandemic period had not filed his returns and thereafter, he had
not conducted any business so that he filed only nil returns – in Tvl.Suguna
Cutpiece case the Court held that no useful purpose will be served by
keeping those petitioners out of the Goods and Services Tax regime, as
such assessee would still continue to do business and supply
goods/services.
• By not bringing them back to the Goods and Services Tax fold, would not
further the interest of the revenue – following the aforesaid case this writ
petition is allowed

For Information purpose not to be considered as Professional Advice

from us.
339
 SMS INFRASTRUCTURE VS UNION OF INDIA
2022-VIL-531-BOM
• GST - Section 30 of the CGST Act - Revocation of cancellation of registration
- Petitioner challenging impugned order dismissing appeal filed against
cancellation of GST registration on the ground that petitioner should have
filed an application under section 30 of the CGST Act – HELD – Section 107
of the CGST Act does not provide that a registered person, while
challenging an order of cancellation of registration, should also file an
application under section 30 of the CGST Act - While holding that the
appeal is maintainable, still respondent No.2 has rejected the appeal on
the ground that an application under section 30 has not been made. Court
is not agreeable with the view expressed by said respondent - the
impugned order is quashed and set aside. Respondent No.2 is directed to
consider the appeal de novo and may pass on merits such order as it
deems fit in accordance with law – Petition is disposed of
For Information purpose not to be considered as Professional Advice
from us.
340
 ITC Issues

For Information purpose not to be considered as Professional

341
Advice from us.
Section 38
“38. (1) The details of outward supplies furnished by the registered persons under sub-section (1) of section 37
and of such other supplies as may be prescribed, and an autogenerated statement containing the details of input
tax credit shall be made available electronically to the recipients of such supplies in such form and manner, within
such time, and subject to such conditions and restrictions as may be prescribed.
(2) The auto-generated statement under sub-section (1) shall consist of––
details of inward supplies in respect of which credit of input tax may be available to the recipient; and
details of supplies in respect of which such credit cannot be availed, whether wholly or partly, by the recipient, on
account of the details of the said supplies being furnished under sub-section (1) of section 37,––
(i) by any registered person within such period of taking registration as may be prescribed; or
(ii) by any registered person, who has defaulted in payment of tax and where such default has continued for such
period as may be prescribed; or
(iii) by any registered person, the output tax payable by whom in accordance with the statement of outward
supplies furnished by him under the said subsection during such period, as may be prescribed, exceeds the output
tax paid by him during the said period by such limit as may be prescribed; or
(iv) by any registered person who, during such period as may be prescribed, has availed credit of input tax of an
amount that exceeds the credit that can be availed by him in accordance with clause (a), by such limit as may be
prescribed; or
(v) by any registered person, who has defaulted in discharging his tax liability in accordance with the provisions of
sub-section (12) of section 49 subject to such conditions and restrictions as may be prescribed; or
(vi) by such other class of persons asFormay be prescribed.”.
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342
Advice from us.
New proposed Restrictions in ITC

Restrictions shall be placed wherein ITC reflecting in GSTR-2B cannot be

availed wholly or partly in following cases:

Your GSTR-1 Liability > GSTR-3B Liability + Difference > Tolerance Limit

• Now Percentage can be checked on GST Portal. New Update

Supplier has defaulted in discharging his tax liability as per Sec. 49(12)

• ITC has been used by supplier upto a specified limit but how Purchaser can control this?

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343
Advice from us.
New proposed Restrictions in ITC

Restrictions shall be placed wherein ITC reflecting in GSTR-2B cannot be

availed wholly or partly in following cases:

Your Supplier has defaulted in payment of tax and such default is continued
for prescribed period.
• GSTR-3B filing status of supplier can be checked from GST Portal but Purchaser has no control

Your Supplier has availed ITC more than his GSTR-2B.

• Only GSTR-3B filing status of supplier can be checked from GST Portal but Purchaser has no
control on his GSTR Return and ITC Claim.
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344
Advice from us.
New proposed Restrictions in ITC
Restrictions shall be placed wherein ITC reflecting in GSTR-2B cannot
be availed wholly or partly in following cases:

Newly Registered Person

• Details & restrictions would be prescribed in due course

Such a class of Person as may be prescribed

• Details & restrictions would be prescribed in due course

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345
Advice from us.
Section 16(2)(c)-Tax to be paid by the Supplier
(2) Notwithstanding anything contained in this section, no registered person
shall be entitled to the credit of any input tax in respect of any supply of goods
or services or both to him unless,—

(c) subject to the provisions of section 41 or section 43A, the tax charged in
respect of such supply has been actually paid to the Government, either in cash
or through utilisation of input tax credit admissible in respect of the said supply;

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346
Advice from us.
Commissioner of Trade & Taxes, Delhi and others Vs.
Arise India Limited and others (Delhi HC)
Therefore, there was need to restrict the denial of ITC only to the selling
dealers who had failed to deposit the tax collected by them and not punish
bona fide purchasing dealers. The latter cannot be expected to do the
impossible. It is trite that a law that is not capable of honest compliance will
fail in achieving its objective. If it seeks to visit disobedience with
disproportionate consequences to a bona fide purchasing dealer, it will
become vulnerable to invalidation on the touchstone of Article 14 of the
Constitution. In the event that selling dealer fails to deposit the tax collected
by him from the purchasing dealer, the remedy for the department would be
to proceed against the selling dealer for recovery of such tax. Further, in cases
where the department is satisfied that there is collusion of purchasing and
selling dealer then proceeding under Section 40A of the DVAT Act
can be initiated.

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Advice from us.
 D.Y. Beathel Enterprises
vs State Tax Officer (Data Cell),
Tirunelveli

HIGH COURT OF MADRAS

W.P.(MD)NOS. 2127, 2117, 2121, 2152, 2159, 2160, 2168, 2177,
2500, 2530, 2532, 2534, 2538, 2539, 2540, 2503 & 2504 OF 2021
W.M.P. (MD) NOS. 1781 & 1791 OF 2021 & OTHER
24-FEBRUARY-2021

348
 Facts of the Case

• Recovery of input tax credit for non-payment of GST by seller.

• Validity of recovery from petitioner-buyer in the absence of similar
recovery action against the seller.
• Challenge to automatic reversal of input tax credit from the buyer on
non-payment of tax by the seller.

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Advice from us.
 Madras High Court Held:

• The respondent does not appear to have taken any recovery action
against the seller on the present transactions.
• When the seller has collected tax from the purchasing dealers, the
omission on the part of the seller to remit the tax in question must
have been viewed seriously and strict action ought to have been
initiated against the seller - in enquiry in question, the seller ought to
have been examined and this is all the more necessary, because the
respondent has alleged that the petitioners have not even received
the goods and had availed input tax credits on the strength of
generated invoices.

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Advice from us.
 Madras High Court Held:

• the impugned orders suffers from fundamental flaws of non-

examination of seller in the enquiry and non-initiation of recovery
action against seller in the first place.
• The impugned orders are quashed and the matters are remitted back
to the file of the respondent.

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Radhakrishna
Industries vs State
of Himanchal
Pradesh
Supreme Court
Civil Appeal No. 1155 of 2021
Dated 20-Apr-2021
2021 SCC Online SC 334

35
2
 Supreme Court Judgment
Radhakrishna Industries

• By utilizing the expression "it is necessary so to do" the legislature

has evinced an intent that an attachment is authorized not merely
because it is expedient to do so (or profitable or practicable for the
revenue to do so) but because it is necessary to do so in order to
protect interest of the government revenue.
• A provisional attachment under Section 83 is contemplated during
the pendency of certain proceedings, meaning thereby that a final
demand or liability is yet to be crystallized. An anticipatory
attachment of this nature must strictly conform to the requirements,
both substantive and procedural, embodied in the statute and the rules.
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Professional Advice from us.
Suresh Kumar P.P. v.
Deputy Director,
Directorate General of
GST Intelligence (DGGI)

Kerala High Court

[2020] 120 taxmann.com 173/82 GST 734/41
GSTL 17 (Kerala)
Dated: 14-Aug-2020

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354
Professional Advice from us.
 Principles laid down in case of Suresh Kumar P.P.
• Operation carried out by a statutory authority invested with powers
of search, inspection and seizure, by reason only of such activities
having been carried out in residences and offices of any person under
investigation for a long time, cannot be labelled as harassment or
high-handed; nor could inconvenience caused to person under
investigation, especially of remaining in premises for entire duration,
termed to a detention pursuant to an arrest.

For Information purpose not to be considered as Professional Advice

from us.
355
 Principles laid down in case of Suresh Kumar P.P.
• If an officer not below rank of Joint Commissioner has reason to
believe that any material, useful or relevant to any proceedings under
aver Act, are secreted in a place, then he is empowered to carry out
by himself or authorize in writing any other officer to carry out search
and seizure.

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from us.
356
 Principles laid down in case of Suresh Kumar P.P.

Principle of natural justice does not apply insofar as an

attachment made to protect interest of revenue.
An officer above rank of a Joint Commissioner carrying out investigation or enforcement
activity can deposit any amounts collected, by way of cash, cheque or demand draft, during
investigation or to enforcement activity and same does not require generation of Forms
prescribed.

Audit under section 65 is independent of an investigation

under section 67 and, thus, audit and investigation
proceedings may be continued simultaneously GST.
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from us.
357
Question??
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considered as Professional Advice from us.
Thanking You
This presentation was meant for private
participation and any circulation of the
same without permission of Team
GSTpanacea &/or Abhishek Raja is an
offence.

This PPT was compiled for Information

purpose not to be considered as
Professional Advice from us.

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considered as Professional Advice from us.
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