सर्वे जना

सुखिनो भवन्तु

1. IN RE NANDINI AASHRAM TRUST, 2023

Facts:

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  Nandini Ashram Trust is registered under GST and engaged in providing professional
consulting services.
 The trust engages in providing a diverse array of professional consulting services,
encompassing architecture, engineering (MEPF), planning, urban design, landscape,
sustainability, research and art, building design, interior design, surveying,
environmental sciences, project management, and project economics.
 The trust, registered under the Bombay Charitable Trust Act, holds a 12AA certificate
for charitable activities, providing accommodation to pilgrims visiting Ambaji
Temple at Rs. 1000/- per day.
 The applicant seeks an advance ruling on GST liability and payment.

Issue:

1. Whether the trust is liable for GST registration?

2. Whether the trust is liable to pay tax under GST registration?

Arguments from Applicant:

1. The applicant claims exemption from GST under Notification No. 9/2017-Integrated Tax
(Rate) for registered trusts holding a 12AA certificate.

2. Refers to GST Council meeting No. 47, Twitter updates, and Notification No. 9/2017-
Integrated Tax (Rate) for exemptions related to Sarais run by religious or charitable trusts.

Arguments from Authority:

1. Authority finds the applicant's submission lacking in clarity and facts.

2. Considers relevant provisions including Notification No. 12/2017-Central Tax (Rate),

dated 28-6-2017.

Judgement:

1. The trust's claim for exemption under Notification No. 12/2017-Central Tax (Rate) is
scrutinized.

2. The trust's activities, particularly renting rooms to pilgrims, are evaluated against the
definition of charitable activities.

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3. The trust's eligibility for exemption under Sr. No. 13(b) of the notification is assessed
based on ownership and location criteria.

4. The authority concludes that the trust is not eligible for the benefit of the exemption.

5. The liability to pay GST at the rate of 12% (CGST @ 6% and SGST @ 6%) is established
based on amendments to notifications.

6. The trust is ruled liable for GST registration under Section 22 of the CGST Act, subject to
the aggregate turnover exceeding twenty lakh rupees.

7. The reliance on tweets is deemed irrelevant to the facts of the case.

Relevant Law:

1. Section 22 of the CGST Act, 2017: Every supplier is liable to be registered if the aggregate
turnover exceeds twenty lakh rupees.

2. Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017: Specifies exemptions for
intra-State services, including services by entities registered under Section 12AA of the
Income-tax Act.

3. Notification No. 20/2019-Central Tax (Rate), dated 30-9-2019: Specifies the rate of CGST
for intra-State supply of specified services.

2. VASU CLOTHING P. LTD., 2018

FACTS

1. The petitioner, a garment manufacturer and exporter in India, aimed to supply goods to
Duty-Free Operators (DFOs) who imported various products, including liquor, tobacco,
eyewear, etc., without paying import duties initially.

2. DFOs, operating in India, imported goods through filing import general manifest and Bill
of Entry for warehousing, designating themselves as importers. The imported goods were
warehoused at a customs warehouse and marked for sale exclusively in Duty-Free Shops
(DFSs) or export.

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3. Under the former Central Excise regime, there was an exemption for domestically
manufactured goods supplied to DFSs from paying Central Excise Duty, as per Notification
No.19/2013-CE (Non-Tariff).

4. However, with the implementation of the Goods and Services Tax (GST) regime, there
was no equivalent exemption for such supplies, prompting the petitioner to file a petition
seeking relief from the payment of GST for goods supplied to DFSs at international airports
in India.

5. The petitioner emphasized the disparity between the Central Excise regime's exemption
and the absence of a similar provision under the GST regime, leading to the plea for relief
from the court.

6. The crux of the petitioner's argument lies in the unavailability of a GST exemption for the
supply of goods to DFSs, which was exempted under the previous Central Excise regime.

7. The petitioner's petition seeks the court's intervention for the grant of relief from the
payment of goods and service tax, specifically requesting an exemption for goods and service
supply to DFSs at international airports in India.

Issue:

The key issue revolves around the petitioner's claim for exemption from Goods and Services
Tax (GST) on the supply of indigenous goods to Duty-Free Shops (DFSs) at international
airports in India. The petitioner argues for an exemption analogous to the one provided under
the erstwhile Central Excise regime.

Arguments from Both Sides:

Arguments in Favor of the Petitioner:

1.) The petitioner asserts that there is no provision in the Central Goods and Services Tax
Act, 2017, granting an exemption similar to the one available under the previous Central
Excise regime.

2.) The petitioner contends that, based on the definition in section 2(5) of the Integrated
Goods and Services Tax Act, export of goods occurs only when goods are taken out to a

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place outside India. The petitioner argues that the location of DFSs beyond customs frontiers
should be considered as 'outside India.'

Arguments Against the Petitioner:

1.) The court relies on the principles of statutory interpretation, emphasizing the absence of
any statutory provision in the GST Act providing the sought exemption.

2.) The court interprets the definition of 'India' under section 2(56) of the Central Goods and
Services Tax Act, which includes territorial waters and airspace, asserting that goods can be
considered exported only when they cross the territorial waters of India.

Judgement:

The court dismisses the petitioner's claims, citing the lack of statutory provisions for the
requested exemption under the GST Act. It underscores the strict construction of tax statutes
and the principle that taxing statutes must be interpreted based on what is explicitly stated,
with no room for intendment or presumption.

The court rejects the petitioner's argument that the location of DFSs beyond customs frontiers
should be treated as 'outside India,' emphasizing that DFSs, being Duty-Free Shops situated at
airports, cannot be considered as territory outside of India.

Furthermore, the court refers to the absence of a specific GST exemption for the supply of
goods to DFSs, which was present under the previous Central Excise regime. The court
upholds that the petitioner is liable to pay GST on the supply of indigenous goods to DFSs, as
the transaction does not qualify as an export under the GST regime.

In conclusion, the court denies the petitioner's request for relief, stating that the court does not
have the power to legislate or grant exemptions in the absence of statutory provisions. The
writ petition is dismissed.

3. IN RE COFFEE DAY GLOBAL LTD., 2018

Facts:

The applicant is engaged in supply of non-alcoholic beverages to SEZ units using coffee
vending machines and undertakes the following types of transactions:

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(a) The applicant installs beverage vending machines inside SEZ premises, prepares
beverages using the vending machines and its ingredients, supplies to SEZ units which are
consumed by the employees of SEZ units and charge the SEZ units based on number of cups
of beverages supplied. (Cuppage billing)

(b) The applicant installs beverage vending machines inside SEZ premises, supplies beverage
ingredients to the SEZ units and bills based on the quantity of ingredients supplied. SEZ units
prepare the beverages using the vending machines and serve them to its employees. There
will not be any consideration for the usage of vending machine by the SEZ units.

Issue:

The central issue is whether the supply of non-alcoholic beverages to Special Economic Zone
(SEZ) units, facilitated through coffee vending machines, qualifies as a zero-rated supply as
defined under section 16 of the IGST Act, 2017.

Arguments from Both Sides:

Applicant's Argument:

1. Interpretation of 'Any Supply': The applicant contends that the phrase 'any supply' in
section 16(1) of the IGST Act includes all supplies to SEZ units, encompassing beverages
and their ingredients.

2. Lack of Explicit Reference to Authorized Operations: The applicant asserts that though
section 16(1)(b) does not explicitly mention 'authorized operations,' it should be implied, and
the litmus test for zero-rated supply is whether it is for authorized operations.

Revenue's Argument:

1. Authorized Operations as Litmus Test: The Revenue argues that the benefits under the
SEZ Act accrue only when activities are in line with authorized operations. Therefore, any
supply seeking zero-rated status must be related to authorized operations.

2. Refund Rule Implications: Referring to refund rules, the Revenue emphasizes that supplies
seeking a refund must be for authorized operations, reinforcing the connection between the
benefits of the SEZ Act and the nature of the supply.

Judgement:

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1. The court's judgment centers on the interpretation of the SEZ Act, 2005, and relevant
sections of the IGST Act, 2017, emphasizing the critical role of 'authorized operations' within
SEZs for availing benefits.

2. The court examines the applicant's two transaction types involving the supply of non-
alcoholic beverages through coffee vending machines to SEZ units. In the first type, where
the applicant installs vending machines and supplies beverages, the lack of evidence for
certification as an authorized operation is noted.

3. The court addresses the applicant's argument concerning the phrase 'any supply' in section
16(1) of the IGST Act, clarifying that it specifically refers to supplies for authorized
operations within SEZs, not a broad inclusion of all supplies.

4. Referring to refund rules, the court underscores that supplies seeking a refund must be
certified as constituting authorized operations, reinforcing the connection between the
benefits of the SEZ Act and the nature of the supply.

5. Despite the IGST Act, 2017, not explicitly using the term 'authorized operations' in section
16(1)(b), the court concludes that it is implicit that supplies under this section must be related
to authorized operations within SEZs.

6. In summary, the court rules that the supply of non-alcoholic beverages and ingredients by
the applicant to SEZ units, facilitated through coffee vending machines, does not qualify as a
zero-rated supply under section 16 of the IGST Act, 2017, due to the absence of certification
for the activity as an authorized operation.

4. IN RE GOGTE INFRASTRUCTURE DEVELOPMENT CORPORATION LTD.,

2018

FACTS

- The applicant, Gogte Infrastructure Development Corporation Ltd., is engaged in the hotel
business, providing hotel accommodation and restaurant services.

- They offer services to employees and guests of some Special Economic Zone (SEZ) units,
in addition to regular customers, charging SGST and CGST at applicable rates.

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- The SEZ units argue that services are exclusively supplied/rendered to SEZ units, and
therefore, GST rate should be Nil as per section 16(1)(b) of the IGST Act.

- The applicant seeks clarification on whether hotel accommodation and restaurant services
provided within the hotel premises to SEZ unit employees and guests should be treated as a
supply of goods and services to SEZ units in Karnataka.

ISSUE

- Whether hotel accommodation and restaurant services provided by the applicant within the
hotel premises to SEZ unit employees and guests constitute a supply of goods and services to
SEZ units in Karnataka.

ARGUMENTS

- The applicant contends that services are being supplied to SEZ units only, and therefore, the
Nil GST rate should apply under section 16(1)(b) of the IGST Act.

- SEZ units argue for the concession, claiming that services are exclusively provided to them.

JUDGEMENT

1. Supplies towards authorized operations only, as per section 16(1)(b) of the IGST Act and
Rule 46 of CGST Rules, are treated as supplies to SEZ Developer/SEZ Unit.

2. The place of supply for hotel accommodation is where the hotel is located, and for
restaurant services, it's where the services are performed.

3. As the applicant is located outside the SEZ, and the services are not part of authorized
operations nor consumed inside the SEZ, the supply is considered an intra-state supply.

4. Hotel accommodation and restaurant services provided within the hotel premises to
employees and guests of SEZ units cannot be treated as a supply of goods and services to
SEZ units in Karnataka.

5. The services are taxable as intra-state supply. The Hotel Accommodation & Restaurant
services provided by the applicant within the premises of the Hotel to the employees and
guests of SEZ units are deemed an intra-state supply and are taxable accordingly.

5. Singh Caterers & Vendors v. UOI, 2023

Facts:

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1. The petitioner-assessee, subject to the Bihar Goods and Services Tax Act, 2017, was
aggrieved by the audit report issued under section 65(6).

2. In response, the petitioner filed a rectification application under section 161 of the Act,
challenging the audit report and specifically requesting to wait for the disposal of the
rectification application before initiating recovery proceedings under section 73.

3. The Assessing Officer issued a show-cause notice, indicating the petitioner's request and
stating that there was no error apparent on the face of the record that could be rectified under
section 161.

4. Proceedings under section 73 were initiated based on the final audit report, prompting the
petitioner to approach the court challenging the validity of the recovery proceedings.

Issue:

Whether the proceedings for recovery initiated by the Assessing Officer based on the audit
report are valid when the petitioner-assessee filed a rectification application under section
161 of the Central Goods and Services Tax Act, 2017 (CGST Act) challenging the audit
report.

Arguments by the Petitioner:

1. The petitioner contended that the order passed on the audit report is subject to rectification
under section 161, and without considering the rectification application, the show-cause
notice cannot proceed.

2. The petitioner argued that the aspects raised in the rectification application pertain to errors
on the face of the record and warrant correction under section 161.

Arguments by the Respondent (Revenue):

1. The Government Pleader argued that the audit report was finalized after hearing the
petitioner, and the matters raised in the rectification application are not errors on the face of
the record but rather a review of the audit report.

2. It was submitted that the report of the audit is not final, and the Assessing Officer must
decide on the defects pointed out in the audit report, for which the show-cause notice is
issued.

Judgment:

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1. The court examined section 65, which provides for an audit by tax authorities, and noted
that any registered person can be audited. The audit report enables the Proper Officer to
initiate action under section 73 or section 74 of the CGST Act.

2. The court emphasized that despite the audit report, it is for the Proper Officer to decide
whether there are defects, as pointed out in the notice under section 73 or section 74, leading
to further tax liability.

3. The show-cause notice indicated that the petitioner's request to wait for the disposal of the
rectification application was considered. The Assessing Officer found no error apparent on
the face of the record that could be rectified under section 161.

4. The court held that the rectification application, seeking a re-examination of the audit
report, does not fall under the description of errors apparent on the face of the record as per
section 161.

5. It was observed that the show-cause notice was appropriately issued based on the final
audit report, and the petitioner could raise objections against the same.

6. The court dismissed the writ petition, stating that there is no reason to entertain it,
especially when the rectification application cannot be invoked fruitfully by the petitioner. If
the Assessing Officer has not completed the proceedings, the petitioner can file objections
before the Assessing Officer.

6. IN RE S. P. Y. AGRO INDUSTRIES LTD., 2021

Facts:

1. S.P.Y. Agroindustries Ltd., the petitioner, is a company engaged in the manufacture of

Grain-based Extra Neutral Alcohol and bottling Indian Made Foreign Liquor.

2. The petitioner, registered under the CGST Act, discharged its GST liability and regularly
filed monthly returns in Form GSTR-1 and GSTR-3B.

3. The Competent Authority issued a notice under section 46 on 15-1-2019, directing the
petitioner to file returns for the period from February 2018 to December 2018 within 15 days,
failing which tax liability would be assessed under section 62.

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4. Without waiting for the statutory period stipulated under the GST Act, the Competent
Authority passed an assessment order under section 62 on 29-1-2019, directing the petitioner
to pay a substantial amount, including penalty.

Issue:

Whether the assessment order dated 29-1-2019, passed under section 62, is valid, considering
that it was done without following the principles of natural justice?

Arguments from Both Sides:

- Petitioner's Argument:

- The petitioner contends that the assessment order was passed without issuing a notice
under sections 73 and 74, which are essential for the imposition of penalties. The petitioner
argues a violation of principles of natural justice.

- The petitioner has paid the total GST liability for the period in question, filed GST DRC-
03, and accepted the GST liability, interest, and late fees as per the CGST Act provisions.

- Imposing a penalty of Rs. 4,27,19,192/- under section 122(1) of CGST Act and AP GST
Act is illegal, and the Competent Authority lacks the power to impose such a penalty.

- Revenue's Argument:

- The revenue argues that the petitioner failed to pay GST liabilities and did not file GSTR-
3B returns for various months within the prescribed due dates.

- As the petitioner did not submit GSTR-3B returns within the prescribed time, the
authorities had to recover the GST liability, which includes penalties.

- There is no bar on imposing a penalty under section 122 of CGST Act while issuing an
assessment order under section 62, and sections 73 and 74 are not applicable.

Judgement

The Court noted that the petitioner, S.P.Y. Agroindustries Ltd., had been engaged in the
regular discharge of its GST liability, filing returns as required by the CGST Act. The
Competent Authority, through a notice dated 15-1-2019 under section 46, informed the

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petitioner of its failure to file GSTR 3B returns for the period from February 2018 to
December 2018. The petitioner was directed to furnish the returns within 15 days, with a
warning of tax liability assessment under section 62 in case of non-compliance.

Subsequently, without adhering to the statutory period stipulated under the GST Act, the
Competent Authority issued an assessment order dated 29-1-2019 under section 62. This
order mandated the petitioner to pay a substantial amount, including penalties. The petitioner,
in response, contended that it had already paid the total GST liability for the specified period,
filing GST DRC-03 and accepting the GST liability, interest, and late fees.

Crucially, the Court highlighted the absence of a notice under sections 73 and 74 of the
CGST Act, which are fundamental for the imposition of penalties. The principles of natural
justice were deemed violated as no effective opportunity for a fair hearing was provided to
the petitioner. The Court underscored that procedural requirements under section 73 and 74
must be strictly adhered to before imposing penalties.

In light of these observations, the Court ruled in favor of the petitioner, setting aside the
assessment order dated 29-1-2019 and consequential proceedings dated 12-8-2020. The
matter was remanded back to the concerned authorities with a directive to reexamine it afresh
in accordance with the law. The Court emphasized the importance of affording the petitioner
an opportunity for a fair hearing, thereby upholding the principles of natural justice.

The Court did not award any costs in this matter. This detailed judgement reaffirms the
significance of due process and adherence to statutory procedures in tax assessments,
ensuring fairness and justice in such proceedings.

Legal Reference:

- Section 73(1) of CGST Act: Provides for the proper officer to serve notice on the person
chargeable with tax for tax not paid or short paid or erroneously refunded, requiring them to
show cause.

- Section 62 of CGST Act: Empowers the proper officer to assess the tax liability of a
registered person who fails to furnish returns under section 39 or section 45, within a
specified period.

- Section 122 of CGST Act: Specifies penalties for certain offenses, including a penalty of ten
thousand rupees or an amount equivalent to the tax evaded, whichever is higher.

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 7. SUDHAKAR TRDERS V. STATE OF ANDHRA PRADESH, 2023

Facts:

 The V&E Department was constituted by the government with the objective of
safeguarding revenue due to the government. It has the statutory right to conduct
inspections in the assessee's premises and share relevant information with the
Commercial Tax Department.
 Officials of V&E Department have statutory right to conduct inspection in assessee's
premises and can share relevant information with Commercial Tax Department
without any prior requisition under section 72(2) of APGST Act, 2017
 The V&E Department's powers are independent and exclusive and are in aid of the
Tax department
 The petitioner, Sudhakar Traders, challenged notices in Form GST ASMT-10 dated
28-2-2023 issued by the Deputy Commissioner under rule 99 of the A.P. Goods and
Service Tax Rules, 2017, calling for explanations regarding discrepancies found in
returns for the tax periods April 2019 to March 2020 and April 2020 to March 2021.
 The notices were issued in response to an alert note from the Regional Vigilance &
Enforcement Officer indicating the suppression of sales turnover.

Issue:

There are two primary issues raised in the case:

1. Whether the Vigilance and Enforcement (V&E) Department officials have the statutory
authority to inspect the premises of a taxable trader and share relevant information with the
Commercial Tax Department without prior requisition?

2. Whether the impugned notices are sustainable in law, specifically addressing the lack of
authorization from the Proper Officer under section 67 of the APGST Act?

Arguments from both sides:

Petitioner's Arguments:

1. The petitioner argued that the V&E Department lacks statutory authority to inspect their
premises and forward alert notes without requisition.

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2. They contended that section 67 of the APGST Act is the relevant provision for inspection,
and since the impugned notices were issued under rule 99(1) r/w section 61, they lacked
proper authorization.

3. The petitioner claimed a lack of material showing requisition from the Chief
Commissioner for assistance from the V&E Department.

Respondent's Arguments:

1. The government argued that the V&E Department, constituted to prevent revenue leakage,
has the authority to inspect and share information with the Commercial Tax Department.

2. They contended that the impugned notices were issued under rule 99(1) r/w section 61, not
under section 67, and thus did not require specific authorization under section 67.

3. The Respondent emphasized that the V&E Department's actions were legal, given their
role in protecting government revenue.

Judgment:

1. The court acknowledged the V&E Department's authority to conduct inspections in traders'
premises and share information with the tax department without prior requisition.

2. Regarding the lack of authorization under section 67, the court held that since the notices
were issued under rule 99(1) r/w section 61, no authorization under section 67 was necessary.

3. However, the court noted that the impugned notices lacked authorization from the Proper
Officer (Chief Commissioner) as required by rule 99(1) r/w section 61. Therefore, the notices
were set aside.

4. The court allowed the authorities to issue fresh notices under rule 99 of the APGST Rules
r/w section 61 through the Chief Commissioner or any other authorized officer.

8. RHC GLOBAL EXPORTS P. LTD. V. UOI, 2023

Facts:

1.) M/s. RHC Global Exports Pvt. Ltd. ("the Petitioner") operates in the Gem and Jewelry
business within Surat SEZ.

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 2.) The Petitioner is accused of availing fake Input Tax Credit (ITC) through non-existent
suppliers and using it to offset output tax liability.
3.) The GST authorities searched, seized, and sealed the business premises in Surat SEZ
and the residential premises on March 3, 2023.
4.) Simultaneously, the Revenue Department issued summons under Section 70 of the
CGST Act to the Directors of the Petitioner, directing them to appear on March 4,
2023.
5.) Parallel proceedings were initiated under Section 67 of the CGST Act, and the
Petitioner's business premises in Mumbai were searched. The books of accounts were
seized, and an order of seizure was passed on March 4, 2023.

Issue:

Whether SEZ units are exempt from investigation, search and seizure conducted under the
GST law?

Whether the search and seizure conducted by the Revenue Department on the Petitioner's
business premises in Surat SEZ are within the jurisdiction of the CGST Act, considering that
the SEZ is deemed a foreign territory?

Arguments from Petitioner:

The Petitioner contends that as an SEZ unit in Surat SEZ, it falls outside the CGST Act's
ambit, and thus, the search and seizure are beyond the jurisdiction.

The business premise is situated in the Surat SEZ, which is considered foreign territory.

Arguments from Revenue Department:

The Revenue Department asserts that their actions are in line with Section 22 of the SEZ Act,
2005, read with Section 6 of the GGST Act, authorizing officers or agencies to conduct
search and seizure in SEZ without prior intimation or approval.

Reference is made to Section 7(5) of the IGST Act, stating that the supply of goods and
services to or by the SEZ unit is considered interstate trade.

Held:

The Gujarat High Court in R/Special Civil Application No. 5978 of 2023 dated June 06, 2023
held as under:

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Observed, the Section 22 of the SEZ Act and stated that any officer or agency who is
authorized by Central Government may carry out search or seizure or investigation or
inspection in the special economic zone and the authorized officer of Central Government is
empowered to carryout such proceeding without any prior approval or intimation. Stated that,
the order issued by the proper officer under the SEZ Act will be deemed that he has issued an
order under the CGST Act.

Further observed that, provision of the IGST Act are applicable to whole of India and since
the Petitioner is registered under the IGST Act and the Petitioner is under misbelief that once
business is carried out through and within SEZ, the Petitioner is outside the purview of GST
authority and hence these SEZ units are not exempted from any investigation or inspection.

Held that, the Revenue Department acted within the authority of law/jurisdiction and in the
view of the present circumstances the court applied the costs of INR 10,000/- and instructed
the Petitioner to pay cost within ten days.

9. ARYA METCAST P. LTD. V. STATE OF GUJARAT, 2022

Facts:

1. Writ applicant No. 1, a private limited company engaged in the manufacture and sale of
ingots, is registered under the GST Act.

2. The company, along with its Managing Director (writ applicant No. 2), has a three-year
history of regularly paying output tax from 2018 to 2021.

3. A search was conducted at the company's premises by the Deputy Commissioner of State
Tax, Vadodara, suspecting fraudulent input tax credit claims based on purchases from
fictitious firms.

4. The respondents provisionally attached various properties, including the factory shed,
machinery, pollution control unit, stock of goods, demat accounts, and the current account.

Issue:

Whether the provisional attachment of the writ applicant's properties, including bank and
demat accounts, is legal and in accordance with the guidelines outlined in the Circular dated
02.2021 and the statutory provisions of Section 83 of the GST Act.

Writ-applicant submissions:

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1. The provisional attachment is considered draconian, and the Commissioner's opinion, a
prerequisite for such action, must be strictly adhered to.

2. The attachment of properties is deemed arbitrary and illegal, hindering normal business
activities.

3. Citing a Supreme Court decision (Radhe Krishan Industries Vs. State of Himachal
Pradesh) and a Circular (CBEC-20/16/05/2021-GST), the writ-applicant argues against
hampering business activities through provisional attachment.

4. As of the writ filing, no substantial proceedings against the writ applicant have occurred in
over four months, requesting suitable conditions to operate the demat and current accounts
and lifting the provisional attachment on stock.

Revenue Submissions:

1. The respondents argue that the writ-applicants engaged in transactions with fictitious firms,
leading to wrongly availed input tax credit of 4,73,39,338/-.

2. Seized invoices of fictitious firms during inquiry supported the opinion to provisionally
attach various properties, aligning with CBIC guidelines.

Held:

1. The Hon’ble Court, considering both sides' submissions and relevant law, noted that the
respondent No. 2 overlooked guidelines in CBIC's circular dated 23.02.2021 when exercising
powers under Section 83.

2. Referencing a previous decision (Valerius Industries Vs. Union of India) and instructions
from 23.02.2021, the court emphasized the need for cautious exercise of Section 83 powers,
ensuring provisional attachment does not disrupt normal business activities.

3. Recognizing the decision in Radhe Krishan Industries vs. State of H.P., the court deemed
provisional attachment of valuable assets, including bank accounts, as draconian, and strict
fulfillment of statutory conditions is necessary.

4. Considering its own decision in M/s. Utkarsh Ispat LLP Vs. State of Gujarat, the court set
aside and quashed the impugned order of provisional attachment (27.11.2021) concerning
stock, demat & current accounts.

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5. The court directed the release of stock, electronic items, and documents upon the writ-
applicant furnishing an undertaking not to dispose of these assets and keeping them in their
original form.

10. DHRUV KRISHAN MAGGU V. UNION OF INDIA, 2021

Facts:

- Writ applicant No. 1 is a private limited company engaged in manufacturing and selling
ingots, located near Rajkot.

- Writ applicant No. 2 is the Managing Director of the company.

- The company is duly registered under the GST Act and has consistently paid output tax
from 2018 to 2021.

- Business transactions were conducted with genuine dealers who are registered taxable
persons under GST.

- A search was conducted at the company's premises by the Deputy Commissioner of State
Tax, Vadodara.

- The suspicion was raised regarding the company showing purchases from fictitious firms,
leading to a dispute over the Input Tax Credit claimed by the company.

- Writ applicants cooperated during the search, but subsequently, three Form GST DRC-22
were served, provisionally attaching various assets and seizing items like mobile phones and
laptops.

Issue:

- Whether the provisional attachment of the company's properties, including bank and
demat accounts, is arbitrary and illegal, and if the respondent authority adhered to the
guidelines before passing the order.

Arguments:

- Writ Applicants:

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 1. Provisional attachment is draconian, and the Commissioner's opinion is a prerequisite.

2. Respondent's action is arbitrary, violating guidelines and the Supreme Court decision
in Radhe Krishan Industries Vs. State of Himachal Pradesh.

3. Urgent need to lift the provisional attachment on the stock of goods and allow the
company to operate the demat and current accounts.

- Revenue:

1. Writ applicants engaged in transactions with fictitious firms and wrongly availed input
tax credit.

2. Seizure of various invoices from fictitious firms justified the opinion to provisionally
attach the company's properties.

3. The respondent's actions align with the guidelines prescribed in Circular No. CBEC-
20/16/05/2021-GST.

Judgement:

- The Hon'ble Court, after considering submissions and relevant law, found that the
respondent authority overlooked the guidelines issued by CBIC dated 23.02.2021 for
exercising powers under Section 83.

- The Court referred to Valerius Industries Vs. Union of India and Radhe Krishan Industries
vs. State of H.P., emphasizing that powers under Section 83 should be exercised cautiously
and not used to harass the assessee.

- The provisional attachment, including stock of goods, demat, and current account, was set
aside and quashed by the Court.

- The Court directed the release of the stock of goods, electronic items, and other
documents, provided the writ applicant furnishes an undertaking not to dispose of these items
and to keep them in their original form.

Relevant Law:

- Section 83 of the GST Act: Provides for provisional attachment of property during the
pendency of proceedings.

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 - Circular No. CBEC-20/16/05/2021-GST: Prescribes guidelines to ensure that provisional
attachment does not hamper normal business activities.

- Valerius Industries Vs. Union of India: Stresses that powers under Section 83 should be
exercised with extreme care and should not be used as a tool to harass the assessee.

- Radhe Krishan Industries vs. State of H.P.: Highlights that provisional attachment,
including bank accounts, is draconian in nature, and conditions prescribed by the statute must
be strictly fulfilled.

11. YOGESH JAGDISH KANODIA V. STATE OF MAHARASHTRA, 2021

Facts:

**Elaboration on Facts:**

1. The petitioner in this case was arrested and subsequently presented before the Additional
Chief Metropolitan Magistrate in Mumbai. The arrest was based on allegations under section
132(1)(b)(c) of the Central Goods and Services Tax (CGST) Act.

2. It was alleged that the petitioner was effectively operating four distinct business
establishments, each involved in engaging in fraudulent activities related to fake purchase
and sale invoices.

3. The magnitude of the alleged wrongful input tax credit claimed exceeded Rs. 5 crores,
which, according to section 132(1)(i) of the CGST Act, categorized the offence as cognizable
and non-bailable.

4. The Commissioner, citing the involvement of the petitioner in these fraudulent activities,
deemed it necessary to place the petitioner under arrest. The decision to arrest was not solely
based on the individual transactions of each legal entity but on the overarching control and
influence exercised by the petitioner across all four businesses.

5. In response to the arrest, the petitioner, through a Writ Petition, contended that the arrest
and subsequent remand to judicial custody were illegal. The petitioner's argument revolved
around the claim that the four distinct legal entities were erroneously treated as a single
entity. It was asserted that, when applying the provisions of the CGST Act to each individual
entity, the wrongful input tax credit did not exceed Rs. 5 crores, rendering the offences non-
cognizable and bailable.

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6. The petitioner, therefore, sought intervention from the court, asserting that the arrest and
continued custody were in violation of established legal procedures, particularly under article
21 of the Constitution of India, which safeguards the right to life and personal liberty.

Issue:

Whether the arrest of the petitioner, who allegedly operated four distinct businesses engaged
in fraudulent activities, is justified under section 69 of the CGST Act.

Arguments:

Petitioner:

1. Contended that each of the four legal entities should be treated separately, and the
alleged wrongful activities did not exceed Rs. 5 crores in each case.

2. Claimed that the arrest and custody were illegal and unsustainable, violating the
petitioner's rights under article 21 of the Constitution.

State Tax Authorities:

1. Argued that the petitioner effectively controlled and ran all four businesses, as indicated
by statements and other evidence.

2. Emphasized that the total input tax credit wrongly availed by at least two or more of the
firms exceeded Rs. 5 crores, justifying the non-bailable offence under section 132(1)(i).

3. Asserted that the Commissioner had sufficient reasons to believe that the petitioner
committed the specified offences, warranting arrest.

Judgement:

The Court opined that the petitioner failed to establish that his arrest was in violation of the
procedure established by law and, consequently, a violation of his constitutional right under
article 21. It noted that the petitioner was effectively controlling all four businesses, and the
material available prima facie justified the arrest. The Court rejected the petitioner's
contention that separate legal entities should be treated independently for the purpose of

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calculating input tax credit. It concluded that the petitioner had not made a strong prima facie
case for his release, and therefore, the writ petition was dismissed.

Relevant Law:

- Section 69 of the CGST Act: Provides for the power to arrest during the investigation of
certain offences.

- Section 132(1)(i) of the CGST Act: Specifies that non-bailable offences, punishable with
imprisonment up to five years and a fine, apply when the input tax credit wrongly availed
exceeds Rs. 5 crores.

- Article 21 of the Constitution of India: Guarantees the right to life and personal liberty and
cannot be violated except according to the procedure established by law.

12. KERALA STATE TRADING SCREENING COMMITTEE ON ANTI-

PROFITEERING V. WIN WIN APPLIANCES, 2019

Facts:

The case involves the Kerala State Screening Committee on Anti-Profiteering versus Dev
Snacks Cheriyela, Kerala. The respondent, engaged in the supply of snacks, faced allegations
of wrongly charging GST at a higher rate (12%) on snacks from customers during the period
from 27-11-2017 to 31-12-2018, despite the reduced rate being 5% from 27-11-2017. The
National Anti-profiteering Authority (NAA) found the respondent in violation of section
171(1) of the Central Goods and Services Tax Act, 2017 (CGST Act).

Issue:

Whether the penalty prescribed under section 122(1)(i) of the CGST Act can be imposed on
the assessee for violating the anti-profiteering provisions under section 171(1)?

Arguments:

- The NAA held that the respondent not only collected an extra amount on the price of snacks
but also compelled consumers to pay more GST during the mentioned period. It argued that
this amounted to an offense under section 122(1)(i) and, therefore, warranted a penalty.

- The respondent objected to the penalty proceedings, contending that section 122(1)(i) did
not cover the violation of section 171(1). It argued that there were no penalty provisions for
not passing on the benefit of tax reduction and input tax credit during the relevant period.

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Judgment:

The NAA withdrew the penalty proceedings, noting that the violation of section 171(1) was
not covered under section 122(1)(i). It emphasized that section 122(1)(i) did not provide a
penalty for failing to pass on the benefits of tax reduction and input tax credit. The NAA
highlighted that specific penalty provisions for section 171(1) violations were added through
section 112 of the Finance Act, 2019, effective from 1-1-2020. As there were no penalty
provisions during the period of violation (27-11-2017 to 31-12-2017), the penalty prescribed
under section 171(3A) could not be imposed retrospectively.

13. PURUSHOTTAM STORES V. STATE OF BIHAR, 2023

Facts:

1. The petitioner, an assessee under the Bihar Goods and Services Tax Act, 2017, challenged
an appellate order dated 15.02.2023 passed by the 3rd Respondent under Section 74 of the
Act.

2. The challenge was based on the grounds that the Appellate Authority had dismissed the
appeal for non-prosecution, citing the absence of the appellant during the proceedings.

3. The Appellate Authority, in its order, noted that the appellant did not appear on multiple
hearing dates, and there was a lack of action on their part toward the disposal of the case.

4. The appellant contended that even in the absence of the appellant, the Appellate Authority
was statutorily obliged to dispose of the appeal on merits.

5. The decision in CIT v. S. Chenniappa Mudaliar, Madurai [1969] 1 SCC 591 was cited to
support the argument that the Appellate Authority must go into the correctness or otherwise
of the points decided by the departmental authorities in light of the submissions made by the
appellant.

Issue:

Whether the dismissal of the appeal by the Appellate Authority solely due to non-prosecution
and the non-appearance of the appellant, without consideration on merits and compliance
with the requirements under section 107, is justified.

Arguments from Both Sides:

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- Petitioner's Argument: The Appellate Authority failed to follow the statutory mandate
under section 107, which requires a hearing of the appellant, further inquiry if necessary, and
passing orders on merits. The dismissal for non-prosecution was not in compliance with the
provisions of the Act, and the decision of the Hon'ble Supreme Court in CIT v. S.
Chenniappa Mudaliar, Madurai was invoked to emphasize the necessity of disposing of
appeals on merits.

- Respondent's Argument: The Respondent, representing the State, argued that the grounds
raised by the appellant had been adequately dealt with by the Assessing Officer and reiterated
by the Appellate Authority. The consistent non-appearance of the appellant was also
highlighted as a valid reason for dismissing the appeal. The availability of an appeal before
the GST Tribunal was mentioned as an alternate remedy.

Judgement:

The High Court held that the Appellate Authority was statutorily obliged to dispose of the
appeal on merits, as specified under section 107 of the Bihar Goods and Services Tax Act,
2017. The court observed that there was little consideration on merits in the impugned order,
and compliance with the requirements under section 107 was totally absent. The court
referred to the decision of the Hon'ble Supreme Court in State of H.P. v. Gujarat Ambuja
Cement Ltd. (2006) and emphasized that the Appellate Authority failed to follow the
statutory mandate for the disposal of the appeal.

The appellate order was set aside, and the Appellate Authority was directed to restore the
appeal. The court instructed that the appeal should be heard on merits, even if the appellant
failed to appear, and a speaking order should be passed within two months from the date of
the last hearing.

Relevant Law:

Section 107 of the Bihar Goods and Services Tax Act, 2017, specifies the statutory mandate
for the disposal of appeals. Sub-sections (8) to (12) outline the procedure, including
providing an opportunity of hearing to the appellant, conducting further inquiry if necessary,
and passing orders on merits. The court emphasized that the order should be in writing,
stating the points for determination, the decision thereon, and the reasons for such a decision.

14. IN RE SRICO PROJECTS P. LTD., 2023

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Facts:

1. The applicant, Srico Projects Private Limited, was engaged in executing civil works for the
Central Government Employees Welfare Housing Organization (CGEWHO).

2. The applicant sought an advance ruling on whether CGEWHO is covered under the
definition of the term "Government Entity" as per Notification No. 11/2017 and 31/2017 and
the applicable rate of tax on the contract entered into with CGEWHO.

3. The AAR-Telangana observed that crucial information, such as the notification by which
CGEWHO was created and the percentage equity/control of the Central Government in
CGEWHO, was requested but not provided by the applicant.

4. The AAR-Telangana, in the absence of the necessary information, dismissed the

application under Section 7 of the Central Goods and Services Tax Act, 2017/Telangana
Goods and Services Tax Act, 2017.

Issue:

Whether CGEWHO is covered under the definition of "Government Entity," and what is the
applicable rate of tax on the contract with CGEWHO.

Arguments from Both Sides:

- Applicant's Argument: The applicant contended that they are executing contracts for a
Government Entity, CGEWHO. They sought clarification on the applicability of the tax rate
to the contract based on Notification No. 11/2017 and 31/2017. The applicant emphasized
that they are entitled to the benefits accorded to contracts with government entities.

-AAR-Telangana's Argument: The AAR-Telangana noted that the applicant did not provide
crucial information despite requests. The AAR emphasized that details such as the
notification creating CGEWHO and the percentage equity/control of the Central Government
were essential for forming an opinion on the matter. Due to the absence of this material, the
AAR dismissed the application.

Judgment:

The AAR-Telangana dismissed the application due to the applicant's failure to provide
crucial information, including the notification creating CGEWHO and the percentage
equity/control of the Central Government in CGEWHO. The AAR emphasized that this

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information was necessary for them to give a clarification on the questions raised in the
application. The dismissal was in favor of the revenue.

Relevant Law:

Section 7 of the Central Goods and Services Tax Act, 2017/Telangana Goods and Services
Tax Act, 2017 empowers the AAR to seek relevant information for providing advance
rulings. The AAR may dismiss an application if the applicant fails to provide essential
information necessary for forming an opinion on the matter. The specific notifications
referred to in the application, such as Notification No. 11/2017 and 31/2017, are crucial for
determining the tax implications.

15. SHRI RAM PLY PRODUCTS V. ADDITIONAL COMMISSIONER GRADE 2

APPEAL STATE TAX, 2023

Facts:

1. The petitioner, Shri Ram Ply Product, filed an appeal against the order of the adjudicating
authority confirming a demand of Rs. 49.74 Lakhs.

2. The appeal was dismissed by the Additional Commissioner Grade-2 (Appeal) on the
ground that it was beyond the maximum period prescribed under the statute, i.e., four months.

3. The adjudicating authority had passed the order on 07.06.2022, and the appeal was filed on
the 121st day, falling within the four-month period.

Issue:

Whether the appeal filed on the 121st day, within four months of the adjudicating authority's
order, should be considered timely.

Arguments:

- Petitioner's Argument: The petitioner argued that Section 107 of the Uttar Pradesh Goods
and Services Tax Act, 2017, provides a four-month limitation for filing an appeal. The
computation of four months should be based on the number of days in each month, and in this
case, the appeal was filed on the 121st day, falling within the four-month period. The appeal
should be considered timely.

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- Respondent's Argument: The Additional Chief Standing Counsel did not dispute the legal
or factual position presented by the petitioner.

Judgment:

The High Court held that Section 107 of the Act provides a four-month limitation for filing
an appeal, and the computation of four months should be based on the actual number of days
in each month. In this case, the appeal was filed on the 121st day, falling within the four-
month period. The appellate authority's summary dismissal of the appeal solely on the ground
that it was beyond 120 days by computing four months as each month being of 30 days was
deemed improper. The court directed the appellate authority to consider the appeal on its
merits, specifically evaluating whether the petitioner had a sufficient cause for not filing the
appeal within the initial three months. The appeal was restored.

Relevant Law:

- Section 107 of the Uttar Pradesh Goods and Services Tax Act, 2017, provides a four-month
period for filing an appeal from the date on which the order is communicated, with a
provision for condonation of delay if sufficient cause is shown. The computation of four
months depends on the actual number of days in each month.

16. NARINDER SINGH C. UNION OF INDIA, 2021

Facts:

- The petitioner filed a writ petition challenging the validity of sections 69 and 132 of the
Central Goods and Services Tax Act, 2017.

- He also sought interim relief during the pendency of the writ petition, as non-bailable
warrants had been issued by the Competent Authority.

- The petitioner expressed concern that appearing before the concerned authority might lead
to his custody.

- The revenue argued that the total amount of GST evasion in the case was Rs. 7.83 crores,
justifying punitive action as it constituted a cognizable and non-bailable offense.

- The revenue opposed interference with the investigation at the current stage through the
writ petition.

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Issue:

- Whether interference with the investigation at this stage in the writ petition is warranted?**

- Whether the prayer for interim protection to the assessee during the pendency of the
investigation should be accepted or rejected?

Arguments from Both Sides:

Petitioner's Arguments:

- The petitioner raised legal issues, including the powers of the Legislature to enact laws
under Article 246-A of the Constitution of India, specifically related to Goods & Services
Tax.

- Reference was made to the Telangana High Court's order in P.V. Ramana Reddy's case,
where some incongruities within sections 69 and 132 of the CGST Act were acknowledged.

- Sections 4, 5, and provisions of Chapter XII of the Code of Criminal Procedure (Cr.P.C.)
were cited to argue that offenses under CGST should be dealt with according to the Cr.P.C.

Revenue's Arguments:

- The revenue contended that the total amount of GST evasion in the case was substantial
(Rs. 7.83 crores), justifying punitive action as a cognizable and non-bailable offense.

- The revenue argued that there were attempts by the petitioner to obstruct the investigation,
including destroying evidence, to avoid the consequences of Section 132 of the Act.

Judgement:

- The court referred to the Telangana High Court's order in P.V. Ramana Reddy's case,
which was upheld by the Supreme Court, indicating that despite recognizing incongruities in
the law, relief against arrest was not granted.

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 - The court was prima facie of the view that a special enactment had been enacted for the
recovery of taxes under enabling provisions of Section 4 of the Cr.P.C.

- The court acknowledged that custodial interrogation is advantageous in extracting

information, emphasizing the distinction between custodial and non-custodial situations.

- The court concluded that interference with the investigation at this stage in the writ
jurisdiction would not be warranted.

- Consequently, the court declined the prayer for interim protection to the petitioner during
the pendency of the investigation.

- The court addressed the petitioner's reference to previous orders in other cases,
emphasizing that subsequent orders passed after those cases were by the Supreme Court
itself.

- the court, considering the nature of the case, the amount involved, and the petitioner's
actions, concluded that interference with the investigation at this stage through a writ petition
was not justified, leading to the rejection of the prayer for interim protection.

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