A

Law Updates
Newsletter on Business Laws

October, 2021

GST, Customs
Foreign Trade
Commercial Disputes
 Law Updates – Oct 2021

Law
Updates
Newsletter on Business Laws

Contents
NO ROOM FOR ERRORS.......................................................................... 3
GST NEWS....................................................................................................... 4
GSTR-3B Amnesty extended ............................................................... 4
Verification of Aadhar and linking it to Bank Account .......... 5
If GSTR-3B is not filed, then the next GSTR-1 cannot be
filed: ............................................................................................................... 5
Fresh Opportunity to file refund claim where place of
supply was wrongly determined ....................................................... 5
Frequency of ITC-4.................................................................................. 6
Supreme Court Overrules VKC Footsteps: Refund of ITC on
Input Services not available in case of inverted tax
structure ...................................................................................................... 8
Resident Welfare Associations (Housing Societies) liable to
pay tax only on the contributions in excess of Rs.7,500/-........ 8
ITC cannot be used to make pre-deposits for Appeals: Orissa
HC ................................................................................................................... 8
CUSTOMS ...................................................................................................... 10
Electronic Duty Credit Ledger Regulations issued and made
effective: .................................................................................................... 10
FOREIGN TRADE ...................................................................................... 11
RoDTEP Scheme guidelines issued and rates declared ........ 11
Extension of FTP.................................................................................... 12
Relief in Average Export Obligation ............................................. 12

2 SRD Legal, Advocates & Consultants

 Law Updates – Oct 2021

NO ROOM FOR ERRORS

By Sanjay Dwivedi, Advocate

The government is getting stringent day-
by-day leaving no room even for bona fide
errors.
Section 75 (12) says that:
(12) Notwithstanding anything
contained in Section 73 or Section
74, where any amount of self-
assessed tax in accordance with a
return furnished under Section 39
remains unpaid, either wholly or
partly, or any amount of interest
payable on such tax remains
unpaid, the same shall be recovered
under the provisions of Section 79.
It means that the department does not
have to issue any show cause notice for
the purpose of recovering the “self-
assessed tax”. It can straightaway start
the recovery proceedings.
Now, the following explanation is being
added to the above sub-section1
Explanation. —For the purposes of
this sub-section, the expression
“self-assessed tax” shall include the
tax payable in respect of details of
outward supplies furnished under
Section 37, but not included in the
return furnished under Section 39.

1
Ins. by Finance Act 2021, S. 114 (w.e.f. a date to be
notified)
3 SRD Legal, Advocates & Consultants
 Law Updates – Oct 2021

In other words, if the tax declared in
GSTR-1 is more than the tax declared in
GSTR-3B, then the differential amount
will be considered as “self-assessed tax”.
Say, the tax charged in an Invoice was
Rupees One lakh and erroneously the
figure declared in GSTR-1 was Ten lakhs.
Say, while filing the GSTR-3B the person
realizes the mistake and pays tax of only
One lakh.
The explanation says that the excess nine
lakh becomes “self-assessed tax” and can
be recovered without issuing any notice.
Amendment of GSTR-1 is possible only
through a subsequent GSTR-1.
Let’s see some other provisions.
Rule 21 (f) says that registration can be
cancelled if the tax declared in GSTR-1 is
more than that in GSTR-3B.
Rule 59 says2 if any GSTR-3B is not filed
then the subsequent GSTR-1 cannot be
filed.
If GSTR-3B for two tax periods ae not
filed, then e-way bill will be blocked. You
will not be able to generate [rule 138E].
In fact, after the due date for GSTR-3B of
September of the subsequent Financial
Year, no error in GSTR-1 can be rectified
– whatever may be the nature of the
error. Say, you made a mistake in
mentioning GSTIN of your customer and
realized it very late, then there is no
possibility of rectifying it.
To sum up, the errors in GSTR-1 are
going to prove too costly. We need to be
very very careful while filing GSTR-1.
Secondly, we should also make
correspondence with our customers and
ask them to point out issues in our
Invoices or GSTR-1 much before
September of the subsequent financial
year. It won’t be possible for us to make
any amendments thereafter.

GST NEWS
to file GSTR-3B for one or more tax
GSTR-3B Amnesty extended
periods right from July 2017.
The amnesty from late fees for failure to
file GSTR-3B has been extended till 30th [Ref. notification 33/2021-CT]
November, 2021. The amnesty was
granted vide notification 76/2018-CT
amended from time to time. It provides
concessions and waiver in the late fees by
dividing the tax payers in several
categories and different provisions have
been made for different periods. It will
benefit all those persons who have failed

2
Presently it prevents blocking of GSTR-1 if GSTR-3B
for two periods is not filed. With effect from 1 st Jan 22
it would be blocked if one GSTR-3B is not filed.

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 Law Updates – Oct 2021

Verification of Aadhar and (a) Obtain refund (under rule 89 as well

linking it to Bank Account as rule 96); or
Following changes made in the CGST (b) Apply for revocation of cancellation
Rules need to be noted: of registration (rule 23)
Rule 10A: This pre-existing rule required
Therefore, practically everyone should
us to provide details of our bank account
get it done.
on the GST portal immediately after
grant of registration. Now, the [Ref. Notification 35/2021-CT]
amendment says that:
• The aforesaid bank account should
If GSTR-3B is not filed, then the
be in the name of the registered
next GSTR-1 cannot be filed:
person.
Rule 59 has been amended. The rule
• The bank account should have been relates to filing of GSTR-1. Earlier, the
obtained on PAN of the tax payer sub-rule (6) inserted with effect from
January 2021 had a condition to the effect
• In case of proprietorship concern,
that if GSTR-3B for two tax periods is not
the PAN should be linked with filed, then the subsequent GSTR-1 cannot
Aadhar of the proprietor. be filed. This condition was applicable
Rule 10B: This is a new rule inserted only those who had monthly turnover of
(effective date is yet to be notified). The Rs. 50 lakh or more.
rule requires every registered person to Now, the condition has been made more
undergo Aadhar Authentication. stringent. With effect from 1st Jan 2022,
Tax Payer Aadhar if one GSTR-3B is not filed, then the
authentication by subsequent GSTR-1/ IFF cannot be filed.
Proprietorship The proprietor Moreover, this provision is being made
Partnership Firm Any partner applicable to everyone, irrespective of the
HUF The Karta
turnover.
Company MD or any Whole We may recall that there is already a
time Director provision to block generation of e-way bill
Association of Persons/ Any of the members if the person has not filed the return for
Body of Individuals/ of the managing two tax periods. [rule 138E]
committee
Society
[Ref. Notification 35/2021-CT]
Trust Trustee in the board

Additionally, the authorized signatory

Fresh Opportunity to file
in every case also has to undergo Aadhar
authentication.
refund claim where place of
supply was wrongly
Technically, the authentication is not determined
mandatory for all. But it is mandatory if
the tax payer wants to: Sometimes it may happen that, on a
transaction we charged CGST + SGST

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 Law Updates – Oct 2021

and later, it was held that we were liable

to pay IGST. Section 77 says that in such
cases, the tax paid earlier by us would be Frequency of ITC-4
refunded 3 . Section 54 requires that the With effect from 1st Oct 2021, the
claim should be filed within two years frequency ITC-04 is revised as under:
from the ‘relevant date’. Now, a sub-rule Category of Frequency of
(1A) has been added to the rule 89 which Principal ITC-04
provides that Taxpayers having Half Yearly (Apr
aggregate annual to Sept and Oct to
(i) The two years period will be counted
turnover March)
from the date on which he pays the
exceeding 5 Crores
tax under correct head.
in the preceding
(ii) Where the tax under correct head was financial year
paid earlier, the period will be
Others Annual (Apr to
counted from the date on which the March)
sub-rule comes into force.

The sub-rule (1A) is yet to be notified. [Amendment to rule 45 (3)]

[Ref. Notification 35/2021-CT]

3
Same is true if we had paid IGST instead of CT + ST

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 Law Updates – Oct 2021
Supply of service to a foreign
company by its Indian subsidiary/
sister concern/ group concern, etc
A supply is considered ‘export of service’
only if all the five conditions mentioned in
section 2 (6) of IGST Act are satisfied.
There was a confusion regarding the 5th
condition which has now been clarified by
the Board. The first 4 conditions are:
(i) the supplier of service is located in
India;
(ii) the recipient of service is located
outside India.
(iii) the place of supply of service is
outside India;
(iv) the payment for such service has
been received by the supplier of
service in convertible foreign
exchange; or in Indian rupees
wherever permitted by the Reserve
Bank of India
The 5th condition reads:
“(v) the supplier of service and the
recipient of service are not merely
establishments of a distinct person
in accordance with Explanation 1 in
section 8;”
Explanation 1 and 2 of section 8 read as
under:
Explanation 1.''For the purposes of
this Act, where a person has,''
(i) an establishment in India and
any other establishment
outside India;
(ii) …….; or
(iii) …….,
then such establishments shall be
treated as establishments of distinct
persons.
7 SRD Legal, Advocates & Consultants
Explanation 2. A person carrying
on a business through a branch or an
agency or a representational office in
any territory shall be treated as
having an establishment in that
territory.
After examining meaning of the terms
Person, Company, and Foreign Company,
CBIC noted that the 5th condition is
regarding the services provided by one
establishment of a person to another
establishment of the same person,
considered as establishments of distinct
persons. The Board has clarified that:
“a company incorporated in India
and a body corporate incorporated
by or under the laws of a country
outside India, which is also
referred to as foreign company
under Companies Act, are separate
persons under CGST Act, and thus
are separate legal entities.
Accordingly, these two separate
persons would not be considered as
'merely establishments of a distinct
person in accordance with
Explanation 1 in section 8".
Therefore, in the following cases it would
not be treated that the supplier of service
and the recipient of service are merely
establishments of a distinct person.
• supply of services by a subsidiary/
sister concern/ group concern, etc.
of a foreign company, which is
incorporated in India to the
establishments of the said foreign
company located outside India
(incorporated outside India).
• the supply from a company
incorporated in India to its related
establishments outside India,
 Law Updates – Oct 2021
which are incorporated under the
laws outside India,
Such supplies, therefore, would qualify as
'export of services', subject to fulfilment of
other 4 conditions.
[Ref Circular No. 161/17/2021-GST,
dated 20th September, 2021]
Supreme Court Overrules VKC
Footsteps: Refund of ITC on Input
Services not available in case of
inverted tax structure
Section 54 (3) allows refund of unutilized
ITC in case of (i) zero-rated supplies and
(ii) inverted tax structure (i.e. where the
rate of tax on inputs is higher than the
rate of tax on output supplies).
A question arose as to whether the refund
would also be allowed of the tax paid on
input services or would be restricted
only to the tax paid on inputs. Rule 89 (5)
does not permit refund on input services.
There were contrary decisions of the two
High Courts. In VKC Footsteps India Pvt.
Ltd. [2020 SCC OnLine Guj 3206] Hon’ble
High Court of Gujarat had held that
refund of tax paid on input services would
also be available. It read down the rule 89
(5) holding that the explanation defining
‘Net Input Tax Credit’ was contrary to
section 54.
On the other hand, in Tvl.
Transtonnelstroy Afcons Joint Venture
[2020 SCC OnLine Mad 2570] the Hon'ble
High Court of Madras had upheld validity
of the rule 89 (5) and dismissed the
petition.
The matter went to Supreme Court and
now the Hon’ble Supreme Courtin VKC
4
2021 SCC OnLine SC 706
8 SRD Legal, Advocates & Consultants
Footsteps India Pvt. Ltd.4 has overruled
the decision of the Gujarat High Court.
Resident Welfare Associations
(Housing Societies) liable to pay
tax only on the contributions in
excess of Rs.7,500/-
Notification 12/2017-CTR grants
complete exemption to the services
provided by societies to its own members
up to an amount of 7500 rupees per
month per member for ……
A question arose as to when the member’s
contribution exceeds Rs. 7500/- then
whether GST would be payable only on
the amount exceeding Rs. 7500/- or on the
entire amount. Vide circular 109/28/2019-
GST, the Board clarified that the entire
amount would be taxed. It said:
“For example, if the maintenance
charges are Rs.9000/- per month per
member, GST @ 18% shall be
payable on the entire amount of
Rs.9000/- and not on (Rs.9000-
Rs.7500) = Rs.1500/-”
Hon'ble High Court 5 has quashed the
circular and held that the tax would be
payable only on the contributions in
excess of Rs. 7500/-.
ITC cannot be used to make pre-
deposits for Appeals: Orissa HC
Something which was settled during C.
Excise regime stands unsettled in GST. If
a tax payer wants to file appeal against
any order, then he is required to pay
5
Greenwood Owners Association – Order dated
01/07/2021 in WP no. 5518 of 2019 and others
 Law Updates – Oct 2021
(a) in full, the admitted liability (tax,
interest fine, fee & penalty); and
(b) In case of first appeal – 10% of the
disputed tax amount (max. 25
Crores)
(c) In case of appeal before Tribunal,
20% of the disputed tax amount
(max. 50 Crores)
In a recent judgment 6 Hon’ble Orissa
High Court has held that the amount of
10% or 20% must be paid through cash
ledger and the ITC cannot be utilized to
pay it.
Thus, if you admit a tax liability you may
pay it by utilizing credits, but if you
dispute it, you cannot utilize to pay the
part amounts by utilizing credits.
The reasons given by the court may be
summarized as under:
1. Section 41 (2) says that ITC shall
be utilised only for payment of
self-assessed output tax.
2. "Output Tax" cannot be equated to
the pre-deposit.
Such interpretation would cause extreme
hardship to the trade and availing appeal
itself would become difficult.
As early as in 1995, in a case under C.
Excise law the issue had come before the
larger bench of the Tribunal in Birla
Yamaha Ltd. V CCE, Meerut 7 where the
Hon'ble Tribunal held
“it appears reasonable to hold that
to the extent of credit available in
the Modvat credit account, it will
be possible for the appellant before
the Tribunal to get credit by
6
Jyoti Construction vs. Dy. Commissioner (Order
dated 07/10/2021 in Writ Petition no. 23508/2021 –
Orissa High Court)
9 SRD Legal, Advocates & Consultants
temporary adjustment to the extent
to which adjustment can be made.”
In Cadila Healthcare Pvt. Ltd. Vs.
Principal Commissioner Hon'ble High
8
Court of Gujarat had observed as under:
“the Commissioner does not appear
to be correct in his stand.
Essentially, credit in an assessee's
cenvat account is a duty he has
already suffered which he can
encash for specified purposes
subject to conditions laid down
under the Rules. As observed by
Division Bench of
Jharkhand C/SCA/1981/2018
ORDER High Court in case of
Akshay Steel Works Pvt. Ltd
(supra) there is nothing in the
Rules preventing an assessee from
availing such cenvat credit for the
purpose of pre-deposit. Similar
view was taken by the learned
Single Judge of Allahabad High
Court in case of India Casting
Company (supra). Petitioners had
also pointed out that even
departmental authorities have been
accepting such formula.
8. In the result, impugned
communications are quashed. Pre-
deposit made by the petitioners by
availing cenvat credit shall be
accepted for the purpose of section
35F of the Central Excise Act.”
In coming days the decision in Jyoti
Construction will be referred in other
courts and would cause much hardship to
the trade.
7
1995 SCC OnLine CEGAT 265 = (1996) 83 ELT 396
8
https://indiankanoon.org/doc/115489754/
 Law Updates – Oct 2021

CUSTOMS
covered under one scheme, generated on
Electronic Duty Credit Ledger
the day).
Regulations issued and made
effective: On the basis of the scrolls, e-scrips would
Section 51B of the Customs Act was be created in the ledger. Each scrip will
inserted in the Act vide the Finance Act have an identification number. These will
2020. This section envisioned a duty be automatically registered in the
credit ledger to be maintained in the concerned custom station. The scrip
customs automated system. This ledger would be valid for one year.
would contain all the duty credits under
various schemes. Now, the detailed
regulations have been issued.
Now, E- scrips would be created in the
ledger for duty credit against any scheme
(RoDTEP or RoSCTL).
When the customs officer allows claim of
credit against any shipping bill, a scroll
will be generated (scroll will be a list of
various shipping bills of various parties

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 Law Updates – Oct 2021

It would be permissible to transfer credit Auto-Renewal of AEO-T1 validity

from ledger of one person to another. But
We may recall that validity of AEO
its validity will not revive (it will continue
certificate is three years for AEO-T1. The
to be one year from the date of the
entity wishing to continue their AEO
original creation). Also, it won’t be
status was required to apply for renewal
possible to transfer the scrips in part.
30 days in advance of the expiry.
[Ref. Notification No. 75/2021-Cus (NT)
Now, the renewal is being made
dated 23rd Sept 2021]
‘automatic’. The condition is that we
should file an annual self-declaration
Manner of issue of scrips under between 1st October to 31st December
each year. The department would
Remission of Duties and Taxes on
undertake a review process on the basis
Exported Products (RoDTEP) scheme as
of this declaration. All AEO-T1 entities
well as the Rebate of State and Central
certified on or after 01.04.2019 shall
Taxes and Levies (RoSCTL) scheme has
stand migrated to the auto renewal
been notified.
process with effect from 01.08.2021.
[Please see the Foreign Trade section for
[Ref. Circular No. 18/2021-Cus, dated
references]
31st July, 2021

FOREIGN TRADE
RoDTEP Scheme guidelines
issued and rates declared
Remissions of Duties and Taxes on
Exported Products (RoDTEP) has
replaced the Merchandise Exports from
India Scheme (MEIS).
The scheme seeks to compensate the
exporters against cost of such taxes/
amount of benefit was calculated at
duties of which credit is not available. For
notional ad valorem rate and per unit
Electricity Tax, Stamp duty, Mandi Fee,
value cap in the System. Now the rates
Tax on petroleum products, etc.
have been notified (Appendix 4R).
The scheme is implemented with effect
For details please refer the:
from 1st January, 2021.
As per the existing mechanism in place • Notification 19/2015-20, dated 17th
w.e.f. 01.01.2021, the RoDTEP claims August, 2021
were captured in the shipping bill and the

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 Law Updates – Oct 2021

• Notification No. 76/2021-Cus (NT),

dated 23rd Sept 2021

• Circular no. 23/2021-Cus, dated

30th September, 2021; and

• Advisory No: 22/2021, dated 30th

September, 2021 issued by the DG
Systems ICES.

Extension of FTP
The current Foreign Trade Policy has
been extended up to 31st March 2022.
1. The current FTP (2015-20) and
Handbook of Procedures stands
extended till 31.03.2022
2. IGST exemption on Advance
Authorisation EPCG, and EOU)
stands extended till 31.03.2022.
[Para 4.14, 5.01(a), and 6.01(d)(ii)
respectively]
3. Validity of Status Holder Certificate
also stands extended till 31.03.2022.
(HBP Para 3.20(a))
4. Norms ratified under para 4.12 (vi) of
the HBP will remain valid till
31.03.2022 or three years from the
date of ratification whichever is later.
[Ref. Notification No. 33/2015-20 dated
28.09.2021]

If you happen to notice any error in

Relief in Average Export this newsletter, please bring it to
Obligation our notice.

Exports in certain sectors had declined in
the year 2019-20 and 2020-21. The DGFT
has issued two lists where the decline was
more than 5% and has asked the regional
authorities to re-calculate the export
obligations.
If you require copy of any of the
notifications, circulars, or court
decisions, please do write to us.
mail@srdlegal.in

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 Law Updates – Oct 2021

About SRD LEGAL:

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of dues and Commercial Disputes. It handles litigations up to High Court, renders
legal advice and also undertakes Audits.

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13 SRD Legal, Advocates & Consultants