GST PDF - OCT 2021

LATEST DECISIONS OF
SUPREME COURT
ALL HIGH COURTS
LATEST STATUTES OF
ARTICLES VINAYAK
…..WITH FAQ
ISSUE NO. 10 YEAR: 12
OCTOBER - 2021
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INDEX
ARTICLES & STATUTES
CLASSIFICATION OF INDIAN SWEETS UNDER GST AND GST RATE
APPLICABLE. 218
The Authority For Advance Ruling, Kerala has in the case of "In Re: M/s. Square
One Homemade Treats (KER/66/2019 decided on 30.9.2019)" has classified food
and bakery items as per following classification:
DEMAND OF INTEREST ON AVAILMENT OF INELIGIBLE ITC AND NOT
UTILIZED IN GST RETURNS / REVERSAL OF AVAILED INELIGIBLE ITC IN
GST RETURNS AFTER AVAILMENT BUT BEFORE UTILIZATION IN GST
RETURNS—END TO CONTROVERSY/LITIGATION BY 45TH GST COUNCIL
MEETING. 203
In post GST regime, there is no clarification/provision under the statute which
explicitly provide for the levy of interest in the cases of reversal of availed
ineligible input tax credit (ITC) which is not utilized against any output tax liability
or availment of ineligible ITC but not utilized in GST Returns.
NO REFUND FOR ACCUMULATED ITC ON INPUT SERVICES—

CONSTITUTIONAL VALIDITY OF RULE 89(5) UPHELD BY THE SUPREME
COURT. 207
Ina recent case of Union of India & Ors. Vs. VKC Footsteps India Pvt. Ltd., decided
on 13.9.2021, the Hon'ble Supreme Court has upheld constitutional validity of
Rule 89(5) of CGST Rules, 2017.
REFRESHER ON GST ON IMPORT OF GOODS AND SERVICES. 214
Under the GST regime, Article 269A constitutionally mandates that supply of
goods, or of services, or both in the course of import into the territory of India
shall be deemed to be supply of goods, or of services, or both in the course of
inter-State trade or commerce.
ASK US ONE...
GST on restaurant services—Restaurant serving in restaurant as well as

through e-commerce operators —Applicability of
threshold exemption. 226
GST Registration—Cancellation—Revocation thereof—Failure of
department to prove wrongful availment of
ITC on fake invoices. 225
GST Registration—Suo moto cancelled registration—
How to activate 223
GST Registration—Transfer of registration from one person to
another—Not possible. 223
Levy of IGST—Imports—Exemption of CVD & SAD between 13.10.2017
to 19.1.2019—Whether available? 224
Refund of ITC transferred through Form ITC 02—Is admissible.225
LIST OF CASES
Bright Star Plastic Industries Vs. Add. Commissioner
of Sales Tax (Ori) 381
Eficaz Project Limited Liability Partnership Vs.
Commissioner & Anr. (Ukh) 386
Evertime Overseas Pvt. Ltd. Vs. Union of India & Ors. (Bom) 379
In Re: Ex-servicemen Resettlement Society (AAR-WB) 390
In Re: Gujarat Hira Bourse (AAR-Guj) 397
International Value Retail Pvt. Ltd. Vs. Union
of India & Ors. (Cal) 363
Jagat Singh @ Jaggi Vs. Union of India (All) 365
Savista Global Solutions Pvt. Ltd. Vs. Union of India & Ors. (All) 367
Shri Tyres Vs. State Tax Officer (Mad) 371
Vinita Gupta (Smt.) Vs. State Of Bihar (Pat) 376
SUBJECT INDEX
APPEAL TO ADDITIONAL COMMISSIONER—REJECTION— Principles of natural
justice—Appeal rejected without considering time petition filed by petitioner
as well as grounds of appeal mentioned in appeal filed —Appeal restored to its
original file and number. [Vinita Gupta (Smt.) Vs. State Of Bihar(Pat)] 376
ARREST—BAIL—GST deposited of about 31 companies illegally —Having heard

the submissions of counsel of both sides, nature of accusation and severity of
punishment in case of conviction and nature of supporting evidence, prima
facie satisfaction of court in support of charge, reformative theory of
punishment, and larger mandate of article 21 of the constitution without
expressing any opinion on merit of case, it was found to be a case of bail.[Jagat
Singh @ Jaggi Vs. Union of India(All)] 365
FORM GST DRC-01 & DRC-01A—Requirements of issue of form GST DRC-01 &
DRC-01A is not a mere procedural requirement. [Shri Tyres Vs. State Tax Officer
(Mad)] 371
IGST—REFUND—Claim for refund not processed on ground that investigation is

pending against petitioner—There being no order or decision on record on
application claiming refund, respondent directed to process the application for
refund and pass a reasoned order upon hearing the petitioner. [Evertime
Overseas Pvt. Ltd. Vs. Union of India & Ors.(Bom)] 379
LEVY OF GST—LEASING SERVICES—Contribution paid/payable by members of
council towards development cost of bourse for promotion of exports of gem
and jewellery—Is supply and liable to GST—Exemption under entry
no.41(heading 9972) of notification no.12/2017central tax(rate), dated
28.6.2017, not available.[In Re: Gujarat Hira Bourse(AAR-Guj)] 397
LEVY OF TAX—VALUATION OF SUPPLY—Management fee/ administrative

charges & employer portion of EPF & ESI not deductible •for the purpose of
determination of value of supply under section •15 of CGST ACT—Tax would be
leviable under section 9 on the entire billing amount. [In Re: Exservicemen
Resettlement Society(AAR-WB)] 390
REFUND—INTEREST ON REFUND—Refund awarded by order—Application for

refund filed manually, on 27.9.2019 yet same not processed and refund not
directed to be paid within a period of 60 days therefrom—Respondent was
directed to refund entire amount together with interest from date against
27.11.2019 till date of issuance of demand draft @ 6%. [Savista Global
Solutions Pvt. Ltd. Vs. Union of India & Ors.(All)] 367
REGISTRATION—CANCELLATION—Automatic cancellation of registration of
purchasing dealer for fraud committed by selling dealer—Is not justified.
[Bright Star Plastic Industries Vs. Add. Commissioner of Sales Tax (Ori)] 381
REGISTRATION—CANCELLATION—Opportunity of hearing as contemplated
under sub-section (2) of section 29 is mandatory before cancellation or
suspension of registration—This is further postulated by ru les framed under
section 164 of Uttarakhand goods and services tax act, 2017, as provided under
rule 22 sub-rule (3). [Eficaz Project Limited Liability Partnership Vs.
Commissioner & Anr. (Ukh)] 386
REGISTRATION—CANCELLATION—Revocation—Petitioner not carrying on

business from officially registered premises instead from home due to
prevailing covid-19 situation—Directions issued to consider matter afresh and
dispose of application for revocation of cancellation in accordance with law and
by passing a reasoned and speaking order after giving opportunity of
hearing.[International Value Retail Pvt. Ltd. Vs. Union of India & Ors.(Cal)] 363

(2021) [ARTICLES & STATUTES] 203
DEMAND OF INTEREST ON AVAILMENT OF INELIGIBLE ITC

AND NOT UTILIZED IN GST RETURNS / REVERSAL OF
AVAILED INELIGIBLE ITC IN GST RETURNS AFTER
AVAILMENT BUT BEFORE UTILIZATION IN GST RETURNS—
END TO CONTROVERSY/LITIGATION BY 45TH GST COUNCIL
MEETING.
- CA V. Vyas
Introduction.
In post GST regime, there is no clarification/provision under the statute
which explicitly provide for the levy of interest in the cases of reversal of availed
ineligible input tax credit (ITC) which is not utilized against any output tax liability
or availment of ineligible ITC but not utilized in GST Returns. Recent 45th GST
Council meeting has put a logical end in relation to demand of interest on
availment of ineligible ITC but not utilized in GST Returns by providing that "In
the spirit of earlier Council decision that interest is to be charged only in respect
of net cash liability, section 50 (3) of the CGST Act to be amended
retrospectively, w.e.f. 1.7.2017, to provide that interest is to be paid by a
taxpayer on "ineligible ITC availed and utilized" and not on "ineligible ITC
availed". It has also been decided that interest in such cases should be charged
on ineligible ITC availed and utilized at 18% w.e.f. 1.7.2017."
No interest Proceedings on ineligible ITC availed but not utilized In GST returns.
Generally, availment of Ineligible Input tax credit can arise broadly in four
sceneries which are enlisted as under
(a)Availment of ineligible ITC and utilized in GST returns.
(b)Availment of ineligible ITC and not utilized in GST returns.
(c) Reversal of availed ineligible ITC in GST returns after availment but
before utilization in GST returns
(d)Reversal of availed ineligible ITC in GST returns after availment and
utilization in GST returns.
The demand of interest on availment of Ineligible Input Tax Credit and not
utilized in GST Returns / reversal of availed Ineligible Input tax credit in GST
Returns after availment but before utilization in GST Returns may arise due to
interpretational issues in analyzing provisions of section 16 or section 17 of
CGST Act coupled with department advance rulings, Circulars, Departmental
notifications, dichotomy of opinion in Judicial Pronouncements of different
judicial forums, to avoid lapse of Input tax credit under section 16(4) of GST Act.
It is a well settled law in Pre-GST regime that if credit has been reversed before
its utilization
GS T Informations, Dated. 20.10.2021. 9

204 [GST INFORMATIONS] (2021)
it tantamount to non-availment of Input tax credit. Under Rule 14 of CENVAT

Credit Rules, interest can be demanded only when wrong credit is taken and
utilized. The Judicial Pronouncements affirming the above are as Follows:
 CCE Vs. Startegic Engineering Pvt. Ltd. (2014- TIOL 466-HC_Mad-
CX)
 IDEA Celluar Ltd. Vs. CCE
 Grasim Bhiwani Textiles Ltd. Vs. CCE 2016 (332) ELT 865 [CESAT,
DELHI]
 Commissioner Of Central Excise Vs. Pearl Insulation Ltd.
However, ignoring the past Judicial Pronouncements and provisions of GST
Act, the demand notices were being issued against the assesses who have
availed Ineligible ITC but the same was reversed before its utilization in GST
returns or not utilized in GST Returns. Further on Wrongful availment of ITC
department used to demand 24% rate of interest by invoking section 50(3) of
CGST Act
Judicial Pronouncements in favour of assesses post GST regime.
Judicial Pronouncements in the favor of assesses post GST regime on above
said issue are as under:
A. Commercial Steel Engineering Vs. State Of Bihar (W.P. No. 2125 of
2019 )- In this case hon’ble Patna High Court held that ITC availed but
not utilized for tax payment doesn’t invite penal consequences of
section 73 of CGST Act, 2017 and interest cannot be recovered on
mere availment of ITC which was not utilized
B. F1 Components Pvt Ltd. Vs. State Officer Chennai (W.P No. 6631 Of
2021)- It was held by the Hon’ble Madras High Court that "Heard Mr.
P.V. Sudakar, learned counsel for the petitioner and Mr. TNC. Kaushik,
learned Government Advocate for the respondent.
2. Though no counter is filed, the challenge involves only a legal issue
and there are no disputed questions of fact. Learned revenue counsel
is thus armed with instructions to proceed with the hearing of the
matter.
3. The challenge is to order dated 27.1.2021 levying interest under
section 50 of the Central Goods and Services Tax Act, 2017 (in short
‘Act’) relating to both interest on cash remittances as well as
remittances by way of adjustment of electronic credit register.
4. As far as the second limb of the levy is concerned, it is covered by a
decision in the case of Maansarovar Motors Private Limited Vs.
Assistant Commissioner (W.P.Nos.28437 of 2019 etc. batch, order
dated 29.9.2020). Both learned counsel concur on the position that in
the light of the aforesaid decision, the levy to this extent is to be set
aside and it is hence accordingly set aside."
C. Maanasrovar Motors Pvt Ltd Vs. Assistant Commissioner (W.P NO.
4468 of 2020)- It was held by the Hon’ble Madras High
10
GST Informations, Dated. 20.10.2021.
Court that every person who is liable to pay tax in terms of the Act shall
remit the tax either in cash or by way of adjustment of credit available in
the Input Tax Credit (ITC) register. Where delay is made in remitting
the tax, no interest under section 50 of CGST Act, 2017 would be
chargeable in case payment of tax was made through input tax credit.
The Court held that section 50 stated that every person who is liable to
pay tax in terms of the Act shall remit the tax either in cash or by way of
adjustment of credit available in the Input Tax Credit (ITC) register. In
cases of delay in such remittance, interest is liable to be paid for the
period of delay. While the levy of interest on remittances of tax in cash
is not in question, the authorities had proceeded to levy interest on
remittances of tax by adjustment of available ITC and this was the
subject matter of challenge. Assessee con-tended that (i) the credit was
available even prior to the arising of the output tax liability and hence
the question of delay did not arise(ii) no opportunity was granted prior
to raising of the impugned demand and consequential proceedings (iii)
interest was a measure of compensation and since ITC was already
available in the electronic ledger, there was no question of the same
being due to the revenue (iv) the proviso to section 50 which stated that
interest should be levied only on that part of that paid in cash had been
inserted to set right an anomaly and was therefore retrospective in
operation. Reliance was placed on
(i) Eicher Motors Ltd. Vs. Union of India [(1996) 88 ELT 12] (iii) Refix
Industry Vs. Assistant Commissioner of CGST order dated 6.1.2020 in
W.P.No.23360 & 23361 of 2019. The Revenue had argued that section
16(2) entitles a person to take credit of input tax and section 41(1)
provides for a credit entry in the electronic credit ledger, which is
provisional in nature. Since section 41 provides that the entitlement to
credit is only with the filing of return on self-assessment basis, this
entitlement cannot be availed of till such time a return is filed by an
assessee. After a return is filed and the credit is availed by entry in the
register, the assessee can proceed to utilize the same against output
tax liability. In fact, the question of payment of interest arose only in the
satisfaction of the tax computed under that return, belatedly and either
by cash or by reversal of ITC. It was held that notwithstanding that the
proviso had been stated to be effective only from 1.9.2020 by
Notification No.63 of 2020 dated 25.8.2020, the resolution of the GST
Council dated 22.12.2018 introducing the proposal for amendment of
section 50 to allow payment of interest on net cash liability, taking into
account admissible credit that amount payable through electronic cash
ledger (ii) the GST Council meeting dated 21.6.2019 wherein the
recommendation was made to amend section 50 vide section 100 of
Finance (No.2) Act, 2019 to provide for charging interest on net cash
liability (iii) the Council in its meeting on 14.3.2020 recommending
charging of interest on net cash tax liability with effect from 1.7.2017
and accordingly, retrospective amendment

of the Act from the aforesaid date (iv) the press release of the Council
post the 39th meeting also dated 14.3.2020 allaying apprehensions of
the tax payers that the amendment of section 50 would be prospective,
setting out clearly as a trade facilitation measure, the assurance that
the insertion of the proviso would be retrospective, applicable with
effect from 1.7.2017 (v) the fact that close on the heels of Notification
No.63 of 2020 dated 25.8.2020 stipulating the effective date as
1.9.2020, the CBIC issued a press release assuaging apprehensions
by stating that the prospective notification was only on account of
technical limitations. The Board had extended a waiver of recovery for
the past period in line with the decisions of the Council and Notification
dated 18.9.2020 which cemented the long line of assurances of the
GST Council and the Board in letter and spirit. A direction was issued
to the appropriate authority to compute the interest liability for belated
remittances of cash and refund the balance of the amount collected
from assessee within a period of four weeks from date of uploading of
this order. AO were at liberty to raise fresh demands relating to interest
on delayed remittances of tax by cash, in accordance with law.
End to controversies and unnecessary litigations.
The recent 45thGST council meeting has put an end to above controversies
and unnecessary litigations by clarifying that no interest shall be demanded
against the assessee in relation to input tax credit availed but not utilized in GST
Returns. The relevant portion of 45thGST Council Press release is extracted as
under:
"In the spirit of earlier Council decision that interest is to be charged only i n
respect of net cash liability, section 50 (3) of the CGST Act to be amended
retrospectively, w.e.f. 1.7.2017, to provide that interest is to be paid by a taxpayer
on "ineligible ITC availed and utilized" and not on "ineligible ITC availed". It has
also been decided that interest in such cases should be charged on ineligible ITC
availed and utilized at 18% w.e.f. 1.7.2017."
Conclusion.
This is one of the appreciable decision by 45th GST Council meeting wherein
the assessee who were in dilemma to take ITC on certain transactions can avail
the same without utilizing in GST Returns. This exercise would prevent assessee
from lapse of ITC under section 16(4) of CGST Act, 2017. It has been provided
that "In the spirit of earlier Council decision that interest is to be charged only in
respect of net cash liability, section 50 (3) of the CGST Act to be amended
retrospectively, w.e.f. 1.7.2017, to provide that interest is to be paid by a taxpayer
on "ineligible ITC availed and utilized" and not on "ineligible ITC availed". It has
also been decided that interest in such cases should be charged on ineligible ITC
availed and utilized at 18% w.e.f. 1.7.2017."

12
NO REFUND FOR ACCUMULATED ITC ON INPUT SERVICES—

CONSTITUTIONAL VALIDITY OF RULE 89(5) UPHELD BY THE
SUPREME COURT.
- CA Ajay Joshi
Introduction.
Ina recent case of Union of India & Ors. Vs. VKC Footsteps India Pvt. Ltd.,
decided on 13.9.2021, the Hon’ble Supreme Court has upheld constitutional
validity of Rule 89(5) of CGST Rules, 2017. Rule 89(5) denies refund of
unutilised ITC in respect of input services on account of inverted duty structure.
The decision of Gujarat High Court in the case of VKC Footsteps India Pvt. Ltd.
Vs. UOI was set aside by the Hon’ble Apex Court, whereas decision of Madras
High Court in the case of Tvl. Transtonnelstroy Afcons Joint Venture Vs. UOI
was affirmed.
Points considered by the Apex Court.
1. Section 54 (3) of the CGST Act, 2017provides for claiming refund of
"any unutilised input tax" whereas Rule 89(5) of the CGST Rules, 2017
restricts the claim of refund only to "input goods", excluding "input
services" from the purview of ITC. This is constitutionally valid.
2. There is no constitutional guarantee for right to refund, but is purely
statutory.
3. The latitude to make classification in matters of taxation by Parliament
is wider than in other forms of legislation. Classification between input
supplies & input services is valid & non-arbitrary.
4. Provisos in a statute have multi-faceted personalities. Where provision
of a statute lacks clarity, proviso explains true meaning of the same and
guide between possible constructions and give proper view of the
statute.
5. Rule making powers are wide and shall include the power to make
rules with retrospective effect, but not earlier than the date on which the
provisions of the Act came into force. Mere absence of the words "as
may be prescribed" in section 54(3) does not deprive the rule making
authority to make rules.
6. Formula given under rule 89(5) is neither untoward nor ultra vires. An
anomaly in a formula per se cannot invalidate a fiscal rule. inequities in
a formula to be ironed out by the government in the due course and no
judicial review is required.
7. Given the anomalies pointed out by the assessees herein, it is strongly
urged to the GST Council to reconsider the formula, in the light of the
anomalies therein, and take a policy decision regarding the same

Facts of the case before Apex Court.

The common question sought to be answered in the writ petitions before the
High Court of Gujarat and before the High Court of Madras was whether the
petitioners are entitled to a refund of the entire unutilised input tax credit that
each of them has accumulated on account of inverted duty structure. As a result,
the registered person is unable to adjust the available input tax credit fully
against the tax payable on output supplies; consequently, there is an
accumulation of unutilised input tax credit. The case of the petitioners is that they
are entitled to a refund of the entire unutilised input tax credit, irrespective of
whether such credit accumulated on account of procurement of input goods
and/or input services by paying tax at a higher rate than that paid on output
supplies. On the contrary, the case of the Union of India and the Tax
Department, both at the Central and State level, is that refund of unutilised input
tax credit is permissible only in respect of the quantum of credit that has
accumulated due to the procurement of input goods at a higher rate than that
paid on output supplies, and that credit accumulation on account of procuring
input services at a rate of tax higher than that paid on output supplies is
impermissible. By its judgment in VKC Footsteps India Pvt. Ltd. Vs. Union of
India, decided on 24.7.2020, the Gujarat High Court, held that "Explanation (a) to
Rule 89(5) which denies the refund of "unutilised input tax" paid on "input
services" as part of "input tax credit" accumulated on account of inverted duty
structure is ultra vires the provision of section 54(3) of the CGST Act, 2017." The
Madras High Court, per contra, in Tvl. Transtonnelstory Afcons Joint Venture Vs.
Union of India & Ors. held that "section 54(3)(ii) does not infringe Article 14 and
refund is a statutory right and the extension of the benefit of refund only to the
unutilised credit that accumulates on account of the rate of tax on input goods
being higher than the rate of tax on output supplies by excluding unutilised input
tax credit that accumulated on account of input services is a valid classification
and a valid exercise of legislative power". The divergent views taken by the two
high courts forms the subject matter of this batch of civil appeals.
Decision by the Apex court.
It was held that:
1. As per section 2 (52) the expression ‘goods’ is defined to mean every
kind of movable property other than money and securities. It also includes
certain other items incorporated in the inclusive part ("but includes") of the
definition. The expression ‘goods’ is broadly defined. As per section 2(102)
"services" means anything other than goods, money and securities but
includes activities relating to the use of money or its conversion by cash or
by any other mode, from one form, currency or denomination, to another
form, currency or denomination for which a separate consideration is
charged. The expression ‘services’ is thus distinguished from goods since
the expression means "anything other than goods"
2. The submission which has been urged on behalf of the assessees is that
registered persons constitute a class within the meaning of
14
sub-section (3) of section 54 and each of them is entitled to claim a refund

of unutilized ITC whether its origin lies in input goods or input services. In
other words, it has been urged that section 54(3) constitutes one
homogenous class of registered persons who have unutilized ITC. The
fallacy of the argument is in the hypothesis that unutilized ITC cannot be
unbundled for the purpose of fiscal legislation. Accumulated ITC may result
due to a variety of circum-stances, some of which may while others may
not lie within the volition of a registered person. The class, comprising of
registered persons with unutilized ITC, covers a bundle of species as
opposed to one unique or homogenous specie. Once this is recognized, it
is necessary to allow the legislature the latitude to distinguish between
credits arising out of the input goods stream and input service stream. As
on date, there is an absence of uniformity in GST rates and it is the
multiplicity of rates which has given rise to an inverted duty structure.
Registered persons with unutilized ITC may conceivably form one class but
it is not possible to ignore that this class consists of species of different
hues. Given these intrinsic complexities, the legislature has to draw the
balance when it decides upon granting a refund of accumulated ITC which
has remained unutilized. In doing so, Parliament while enacting sub-section
(3) of section 54 has stipulated that no refund of unutilized ITC shall be
allowed other than in the two specific situations envisaged in clauses (i)
and (ii) of the first proviso. Whereas clause (i) has dealt with zero rated
supplies made without the payment of tax, clause (ii), which governs
domestic supplies, has envisaged a more restricted ambit where the credit
has accumulated on account of the rate of tax on inputs being higher than
the rate of tax on output supplies. While the CGST Act defines the
expression ‘input’ in section 2(59) by bracketing it with goods other than
capital goods, it is true that the plural expression ‘inputs’ has not been
specifically defined. But there is no reason why the ordinary principle of
construing the plural in the same plane as the singular should not be
applied. To construe ‘inputs’ so as to include both input goods and input
services would do violence to the provisions of section 54(3) and would run
contrary to the terms of Explanation-I. Consequently, it is not open to the
Court to accept the argument of the assessee that in the process of
construing section 54(3) contextually the court should broaden the
expression ‘inputs’ to cover both goods and services.
 Provisos in a statute have multi-faceted personalities. As
interpretational principles governing statutes have evolved, certain basic
ideas have been recognized, while heeding to the text and context. Where
the substantive provision of a statute lacks clarity, a proviso may shed light
on its true meaning. If the enacting portion of a section is not clear, a
proviso appended to it may give an indication as its true meaning. As
stated by LORD HERSCHELL: " Of course a proviso may be used to guide
you in the selection of one or other of two possible constructions of the
words to be found in the enactment, and show when there is doubt about
its scope, when it may reasonably admit of doubt as to having this scope
or that, which is the proper view to take of it.

"Clause (ii) of the proviso to section 54(3) of the CGST Act, when it refers
to "on account of" clearly intends the meaning which can ordinarily be said
to imply ‘because of or due to’. When proviso (ii) refers to "rate of tax", it
indicates a clear intent that a refund would be allowed where and only if the
inverted duty structure has arisen due to the rate of tax on input being
higher than the rate of tax on output supplies. Reading the expression
‘input’ to cover input goods and input services would lead to recognising an
entitlement to refund, beyond what was contemplated by Parliament.
The court must be cognizant of the fact that no consti tutional right is
being asserted to claim a refund, as there cannot be. Refund is a matter of
a statutory prescription. Parliament was within its legislative authority in
determining whether refunds should be allowed of unutilised ITC tracing its
origin both to input goods and input services or, as it has legislated, input
goods alone. By its clear stipulation that a refund would be admissible only
where the unutilised ITC has accumulated on account of the rate of tax on
inputs being higher than the rate of tax on output supplies, Parliament has
confined the refund in the manner which it is described above. While
recognising an entitlement to refund, it is open to the legislature to define
the circumstances in which a refund can be claimed. The proviso to section
54(3) is not a condition of eligibility but a restriction which must govern the
grant of refund under section 54(3).
 The submission which has been urged on behalf of the assessees is that
if section 54(3) is construed to confine a refund of unutilised ITC only to the
extent that the accumulation arises on account of the rate of tax on inputs
(meaning input goods) exceeding the rate of tax on outward supplies, the
principles underlying Article 14 of the Constitution would be attracted and
the statutory provision would suffer from the vice of arbitrariness. The
submission is that this has become an incident of a class legislation: the
class consists of registered persons having unutilised ITC. The class
comprises of the following species (i) domestic suppliers; and (ii) exporters.
The sub-species are (i) input goods; and (ii) input services. Opposing this
submission, the appellant’s submission is that this is a valid classification,
denying one of the species namely input services the benefit of refund. As
a matter of first principle, it is not possible to accept the premise that the
guiding principles which impart a measure of flexibility to the legislature in
designing appropriate classifications for the purpose of a fiscal regime
should be confined only to the revenue harvesting measures of a statute.
The prece-dents of this Court provide abundant justification for the
fundamental principle that a discriminatory provision under tax legislation is
not per se invalid. A cause of invalidity arises where equals are treated as
unequally and un-equals are treated as equals. Both under the Constitution
and the CGST Act, goods and services and input goods and input services
are not treated as one and the same and they are distinct species.
Parliament engrafted a provision for refund, section 54(3). In enacting such
a provision, Parliament is
16
entitled to make policy choices and adopt appropriate classifications, given

the latitude which the constitutional jurisprudence allows it in matters
involving tax legislation and to provide for exemptions, concessions and
benefits on terms, as it considers appropriate. Parliament while enacting
the provisions of section 54(3), legislated within the fold of the GST regime
to prescribe a refund. While doing so, it has confined the grant of refund in
terms of the first proviso to section 54(3) to the two categories which are
governed by clauses (i) and (ii). A claim to refund is governed by statute.
There is no constitutional entitlement to seek a refund. Parliament has in
clause (i) of the first proviso allowed a refund of the unutilized ITC in the
case of zero-rated supplies made without payment of tax. Under clause (ii)
of the first proviso, Parliament has envisaged a refund of unutilized ITC,
where the credit has accumulated on account of the rate of tax on inputs
being higher than the rate of tax on output supplies. When there is neither a
constitutional guarantee nor a statutory entitlement to refund, the
submission that goods and services must necessarily be treated at par on a
matter of a refund of unutilized ITC cannot be accepted. Such an
interpretation, if carried to its logical conclusion would involve unforeseen
consequences, circumscribing the legislative discretion of Parliament to
fashion the rate of tax, concessions and exemptions. If the judiciary were to
do so, it would run the risk of encroaching upon legislative choices, and on
policy decisions which are the prerogative of the executi ve. The court is
therefore unable to accept the challenge to the constitutional validity of
section 54(3).
 Rule 89(5) of the CGST Rules provides for the computation of the refund
of ITC on account of an inverted duty structure. The rule, as it was originally
enacted, provided for a refund of ITC paid both on input goods and input
services. Rules 89(5) was amended on 18 April 2018 with prospective
effect. On 13 June 2018, Rule 89(5) as amended was substituted with
retrospective effect from 1.7.2017. The effect of this amendment is that
refund of unutilized ITC can only be availed on input goods. Section 164 of
the CGST Act empowers the Central Government to make rules for
carrying out the provisions of the Act on the recommendations of the GST
Council. Sub-section (3) of section 164 stipulates that power to make rules
shall include the power to make rules with retrospective effect not earlier
than the date on which the provisions of the Act came into force.
 It may be true that in certain specific statutory provisions, the Act
recognizes, by using the expression ‘prescribes’, that rules may be framed
for that purpose. But the converse cannot be assumed inferentially, by
presuming that in other areas, recourse to the rule making power cannot be
taken. By its very nature, a statutory provision may not visualize every
eventuality which may arise in implementing the provisions of the Act.
Hence it is open to the rule making authority to frame rules, so long as they
are consistent with the provisions of the parent enactment. The rules may
interstitially fill-up gaps which are unattended in the main legislation or
introduce provisions for implementing the legislation.

So long as the authority which frames the rules has not transgressed a
provision of the statute, it cannot be deprived of its authority to exercise the
rule making power. The wide powers given under section 164 of the CGST
Act are only limited by the provisions of the Act itself, in furtherance of
which a rule may be framed. It is for this reason that the powers under
section 164 are not restricted to only those sections which grant specific
authority to frame rules. Thus, it is found that the absence of the words "as
may be prescribed" in section 54(3) does not deprive the rule making
authority to make rules for carrying out the provisions of the Act.
 Rule 89(5) in defining Net ITC to mean "input tax credit availed on inputs"
does not transgress the statutory restriction which is contained in proviso
(ii) of section 54(3). The challenge to Rule 89(5) as a piece of delegated
legislation on the ground that it is ultra vires Clause (ii) of the first proviso to
section 54(3) is therefore lacking in substance. As reasoned in the earlier
part of this judgment, Clause (ii) of the first proviso is not merely a condition
of eligibility for availing of a refund but a substantive restriction under which
a refund of unutilized ITC can be availed of only when the accumulation is
relatable to an inverted duty structure, namely the tax on input goods being
higher than the rate of tax on output supplies. There is therefore no
disharmony between Rule 89(5) on the one hand and section 54(3)
particularly Clause (ii) of its first proviso on the other hand (Para 92)
With regard to the formula under Rule 89(5), it would be material to
advert to the provisions of Rule 42. Rule 42(1) provides that the ITC in
respect of input goods or input services which attract the provisions of sub-
section (1) or sub-section (2) of section 17. Rule 42 provides for the
manner in which the attributions of ITC in respect of the input or input
services under sub-sections (1) or (2) of section 17 shall be carried out.
Rule 43 similarly provides the manner in which ITC in respect of capital
goods attracting the provisions of sub-section (1) of section 17. Both Rules
42 and 43 provide for a formula for attribution. Rule 86 provides for the
maintenance of an electronic credit ledger. Rule 89(5) provides for a
refund. In both sets of rule clusters, Rules 42 and 43 on the one hand and
Rule 89(5) on the other hand, a formula is used for the purpose of
attribution in a post assimilated scenario. The use of such formulae is a
familiar terrain in fiscal legislation including delegated legis lation under
parent norms and is neither untoward nor ultra vires.
 Regarding the anomalies of the formula, an anomaly per se cannot
result in the invalidation of a fiscal rule which has been framed in exercise
of the power of delegated legislation. Ruling in RK Garg Vs. UOI (1981) 4
SCC 675, underscored the importance of the rationale for viewing laws
relating to economic activities with greater latitude than laws touching civil
rights. The dictum in RK Garg (supra) squarely applies to the present case
in which the Government has exercised its powers of delegated legislation
to frame a formula,
18
which has certain inequities. However, these inequities are to be ironed out
by the Government in the course of the application of the formula. It is
affirmatively viewed that this Court should not in the exercise of the power
of judicial review allow itself to become a one-time arbiter of any and every
anomaly of a fiscal regime despite i ts meeting the jurisdictional framework
for the validity of the legislation, including delegated legislation
 The judicial precedents indicate that in the field of taxation, this Court
has only intervened to read down or interpret a formula if the formula leads
to absurd results or is unworkable. In the present case however, the
formula is not ambiguous in nature or unworkable, nor is it opposed to the
intent of the legislature in granting limited refund on accumulation of
unutilised ITC. It is merely the case that the practical effect of the formula
might result in certain inequities. The reading down of the formula would
take this Court down the path of recrafting the formula and walk into the
shoes of the executive or the legislature, which is impermissible.
Accordingly, the court shall refrain from replacing the wisdom of the
legislature or its delegate with the court’s in such a case. However, given
the anomalies pointed out by the assessees, it is strongly urged to the
GST Council to reconsider the formula and take a policy decision
regarding the same.
Conclusion.
The Gujarat High Court having examined the provisions of section 54(3) and
rule 89(5) held that the latter was ultra vires. It also held that by prescribing a
formula in sub-rule (5) of Rule 89 of the CGST Rules to execute refund of
unutilized ITC accumulated on account of input services, the delegate of the
legislature had acted contrary to the provisions of sub-section (3) of section 54 of
the CGST Act which provides for a claim of refund of any unutilized ITC. The
Gujarat High Court noted the definition of ITC in section 2(62) and held that rule
89(5) by restricting the refund only to input goods had acted ultra vires section
54(3). The Madras High Court on the other hand declined to follow the view of
the Gujarat High Court noting that the proviso to section 54(3) and, more
significantly, its implications do not appear to have been taken into consideration
except for a brief reference. The Apex Court affirmed the view of the Madras
High Court and disapproved the view of the Gujarat High Court.


REFRESHER ON GST ON IMPORT OF GOODS AND SERVICES.
- CA D. Garg
Introduction
Under the GST regime, Article 269A constitutionally mandates that supply of
goods, or of services, or both in the course of import into the territory of India
shall be deemed to be supply of goods, or of services, or both in the course of
inter-State trade or commerce. So import of goods or services will be treated as
deemed inter-State supplies and would be subject to Integrated tax. While IGST
on import of services would be leviable under the IGST Act, the levy of the IGST
on import of goods would be levied under the Customs Act, 1962 read with the
Custom Tariff Act, 1975. The importer of services will have to pay tax on reverse
charge basis. However, in respect of import of online information and database
access or retrieval services (OIDAR) by unregistered, non-tax-able recipients, the
supplier located outside India shall be responsible for payment of taxes (IGST).
Either the supplier will have to take registration or will have to appoint a person in
India for payment of taxes. Supply of goods or services or both to a Special
Economic Zone developer or a unit shall be treated as inter-State supply and
shall be subject to levy of integrated tax.
Import of Goods explained.
The import of goods has been defined in the IGST Act, 2017 as bringing
goods into India from a place outside India. All imports shall be deemed as inter-
State supplies and accordingly Integrated tax shall be levied in addition to the
applicable Custom duties. The IGST Act, 2017 provides that the integrated tax on
goods imported into India shall be levied and collected in accordance with the
provisions of the Customs Tariff Act, 1975 on the value as determined under the
said Act at the point when duties of customs are levied on the said goods under
the Customs Act, 1962. The integrated tax on goods shall be in addition to the
applicable Basic Customs Duty (BCD) which is levied as per the Customs Tariff
Act. In addition, GST compensation cess, may also be leviable on certain luxury
and demerit goods under the Goods and Services Tax (Compensation to States)
Cess Act, 2017. The Customs Tariff Act, 1975 has accordingly been amended to
provide for levy of integrated tax and the compensation cess on imported goods.
Accordingly, any goods which are imported into India shall, in addition to the
Basic Customs duty, be liable to integrated tax at such rate as is leviable under
the IGST Act, 2017 on a like article on its supply in India. Further, the value of the
goods for the purpose of levying Integrated tax shall be assessable value plus
Customs Duty levied under the Act, and any other duty chargeable on the said
goods under any law for the time being in force as an addition to, and in the
same manner as, a duty of customs.
20
The value of the imported article for the purpose of levying cess shall be
assessable value plus Basic Customs Duty levied under the Act, and any sum
chargeable on that goods under any law for the time being in force as an
addition to, and in the same manner as, a duty of customs. The integrated tax
paid shall not be added to the value for the purpose of calculating cess.
Import of services explained.
Import of services has specifically been defined under IGST Act, 2017 and
refers to supply of any service where the supplier is located outside India, the
recipient is located in India and the place of supply of service is in India. As per
the provisions contained in section 7(1) (b) of the CGST Act, 2017, import of
services for a consideration whether or not in the course or furtherance of
business shall be considered as a supply. Thus, in general, import of services
without consideration shall not be considered as supply. However, business test
is not required to be fulfilled for import of service to be considered as supply.
Furthermore, in view of the provisions contained in Schedule I of the CGST Act,
2017, the import of services by a taxable person from a related person or from a
distinct person as defined in section 25 of the CGST Act, 2017, in the course or
furtherance of business shall be treated as supply even if it is made without any
consideration. In view of the provisions contained in section 14 of the IGST Act,
2017, import of free services from Google and Facebook by individuals without
any consideration are not considered as supply. Import (Downloading) of a song
for consideration for personal use would be a service, even though the same are
not in the course or furtherance of business. Import of some services by an
Indian branch from their parent company, in the course or furtherance of
business, even if without consideration will be a supply. Thus, import of services
can be considered as supply based on whether there is consideration or not and
whether the service is supplied in the course or furtherance of business.
Documents required for Import of Goods.
1. Bill of Entry- A bill of entry is a registered document issued by Custom
Authority which contains complete details of goods imported. It covers details
such as Invoice Details, Party Names, Assessable Value of Goods, duty amount,
etc. This document is the primary document on the basis of which the importer
can avail ITC.
2. Commercial Invoice- A commercial invoice is the primary document
issued by the exporter to the Importer. It contains information about the order,
including details such as description, selling price, quantity, packaging costs,
weight or volume of the goods etc., etc. The custom representative will decide to
clear the shipment based on this Invoice.
3. Bill of Lading or Airway Bill- Bill of lading under sea shipment or Airway
bill under air shipment is carrier’s document required to be submitted with
customs for clearance purpose. Bill of lading or Airway bill issued by carrier
provides the details of cargo with terms of delivery.

4.Other documents:
* Import License (IEC)
* Certificate of Insurance
* Letter of Credit or LC
* Technical Write-up or Literature (Only required for specific goods)
* Industrial License (for specific goods)
* Test Report (If any)
* RCMC Registration cum Membership Certificate
* GATT/DGFT declaration
* DEEC/DEPB/ECGC License for duty benefits
Documents required for Import of Services.
* Commercial Invoice
* Tax Residency Service Certificate
Tax Residency Certificate is a certificate issued by the Tax Department to the
Residents of that Country. It will help to determine country in which service
provider is a resident and accordingly provisions of Double Taxable Avoidance
Agreement (DTAA)can be applied. It is really important if there are withh olding
tax implications on the services provided.
GST on Import of Goods.
In the case of import, Input tax credit of the integrated tax (IGST) and GST
Compensation Cess paid during import is made available to the importer. In
order to avail such input tax credit of IGST and GST compensation cess, an
importer has to mandatorily declare GST Registration number (GSTIN) in the Bill
of Entry. Once the Custom Agent (CHA) processes the Import through Customs,
GST credit will automatically get reflected in GSTR 2B of Importer. The Importer
can check the bill of entry status through Indian Customs Electronic Gateway
(ICEGATE) website. It is to be noted that, it is important to compare the GST
Amount between bill of entry and GSTR 2B and inform the CHA immediately in
case of any discrepancies.
GST on Import of Services.
An importer of services will have to pay GST on reverse charge basis.
Accordingly, the recipient of the service in India becomes liable for the payment
of tax. Once the GST is paid on RCM basis the credit for the same can be
availed.
What precautions are required?
* ITC should be availed of IGST only and not of Custom Duty.
* Maintain an import tracker for businesses engaged in frequent import of
goods. The tracker should be reconciled with GSTR 2B as well as ICEGATE at
the end of the year.
22
* In case of imports of goods, set of import documents are required to be

submitted with Authorised Dealer (AD) Bank on regular basis.
Conclusion.
It has been observed that the department issues notices to businesses
whose Import GST credits are not matching with Imports as per departments
records. Therefore, it is important to maintain robust documentation and detailed
tracker of imports in order to provide proper explanation against such notices.

CLASSIFICATION OF INDIAN SWEETS UNDER GST AND GST

RATE APPLICABLE.
- CA Ajay Joshi
The Authority For Advance Ruling, Kerala has in the case of "In Re: M/s.
Square One Homemade Treats (KER/66/2019 decided on 30.9.2019)" has
classified food and bakery items as per following classification:
Agra Peda, Maladoo, Rava Ladoo, Kappa Ladoo, Kesari, Kesari Beetroot,
Boli, Boli Banana, Pappada Boli, Churuttu, Swefet Kachori, Halwa Guava, Halwa
Jackfruit, Halwa- Mango, Halwa Wheat, Carrot Sweet, Kaju Burfi, Aval
Vilayichathu, Ariunda, Avalose unda, Diamond Cuts (Sweet), Carrot Sweet and
Unniyapam - Are classifiable under HSN Code 2106 90 - Sweetmeat and attracts
GST at the rate of 5% as per SI No. 101 of Schedule I of Notification No.01/2017
Central Tax (Rate) dated 28.6.2017.
Chappathi - Chappathi is classifiable under HSN Code 2106 90 99 and is
liable to GST at the rate of 5% as per SI No.99A of Schedule I of Notification
No.01/2017 Central Tax (Rate) dated 28.6.2017.
Coconut Chutney Powder and Dosa Chutney Powder - Coconut Chutney
Powder and Dosa Chutney Powder are classifiable under HSN Code 2106 90 99
and is liable to GST at the rate of 5% as per SI No. 100A of Schedule I of
Notification No.01/2017 Central Tax (Rate) dated 28.6.2017.
Namkeen items - Achappam, Avalose Podi, Cheeda, Diamond Cuts(Hot),
Kuzhalappam, Murukku and Thatta are classifiable under HSN Code 2106 90
and is liable to GST at the rate of 12% as per SI No. 46 of Schedule II of
Notification No.01/20117 Central Tax (Rate) dated 28.6.2017 for those put up in
unit container and, (a) bearing a registered brand name; or (b) bearing a brand
name on which an actionable claim or enforceable right in a court of law is
available - The rate of GST is 5% as per SI No. 101A of Schedule I of Notification
No.01/2017 Central Tax (Rate) dated 28.6.2017 for those other than put up in
unit container and, (a) bearing a registered brand name; or (b) bearing a brand
name on which an actionable claim or enforceable right in a court of law is
available.
Banana Chips - Chakka Chips - Cheema Chakka Chips - Chembu Chips -
Kappa Chips - Sarkara Varatti - Kovakkai Vattal - Pavakkai Vattal - These are
classifiable under HSN Code 2008 19 40-Other roasted and fried vegetable
products and is liable to GST at the rate of 12%; as per SI No. 40 of Schedule II
of Notification No.01/2017 Central Tax (Rate) dated 28.6.2017.
Fried Peanuts and Chilly Nuts - Fried Peanuts and Chilly Nuts are
classifiable under HSN Code 2008 and are liable to GST at the rate of
24
12% as per SI No. 40 of Schedule II of Notification No.01/2017 Central Tax

(Rate) dated 28.6.2017.
Pickles - Various pickles are classifiable under HSN Code 2001 90 00 and
attracts GST at the rate of 12% as per SI No. 33 of Schedule II of Notification
King Fish Pickle and Tuna Pickle - King Fish Pickle and Tuna Pickle are
classifiable under HSN Code 1604 12 10 and Meat Pickle is classifiable under
HSN Code 1602 90 00 and are liable to GST at the rate of 12% as per SI Nos. 31
and 29 respectively of Schedule II of Notification No.01/2017 Central Tax (Rate)
dated 28.6.2017.
Mango Jam - Mixed Fruit Jam - Orange Jam - Pineapple Jam - Plantain Jam
- - Mango Jam, Mixed Fruit Jam, Orange Jam, Pineapple Jam and Plantain Jam
are classifiable under HSN Code 2007 and attract GST at the rate of 12% as per
SI No. 39 of Schedule II of Notification No.01/2017 Central Tax (Rate) dated
28.6.2017.
Juice Green Mango - Juice Mango - Juice Passion Fruit - Juice Rose Apple -
Juice Green Mango, Juice Mango, Juice Passion Fruit and Juice Rose Apple are
classifiable under HSN Code 2009 and attract GST at the rate of 12% as per Si
No. 41 of Schedule II of Notification No.01/2017 Central Tax (Rate) dated
28.6.2017.
Juice Butter Milk - Juice Butter Milk is classifiable under HSN Code 0403 90
10 and is exempted as per SI No. 26 of Notification No.02/2017 Central Tax
(Rate) dated 28.6.2017.
Caramel Pudding - Chocolate Pineapple Pudding - Fruit Salad Mix - Tender
Coconut Pudding - These are classifiable under HSN Code 2106 90 99-Other
food preparations not elsewhere specified or included and is liable to GST at the
rate of 18% as per SI No. 23 of Schedule III of Notification No.01/2017 Central
Tax (Rate) dated 28.6.2017.
Payasam of all varieties - These are classifiable under HSN Code 2106 90
99- Other food preparations not elsewhere specified or included and attracts GST
at the rate of 18% as per SI No. 23 of Schedule III of Notification No. 01/2017
Various sandwiches and rolls - These are classifiable under HSN Code 2106
90 99-Other food preparations not elsewhere specified or included and taxable
at the rate of 18% as per Sl No. 23 of of Schedule III of Notification No.01/2017
Ada Chakka - Ada Pazham, - Ada Plain - Ada Ragi - Ada Wheat -
Vattayappam - Sharkara Vattayappam, Banana Ball, Banana Fry, Bonda Veg,
Chicken Burger, Chicken Cheese Steak, Chilli & Padaval, Chilli Cauliflower,
Chirotta, Parippu Vada, Sambar Vada, Sukhiyan, Mini Chicken Samosa, Noodle
Chicken Samosa, Noodle Veg Samosa arid Punjabi Samosa - These are

classifiable under HSN Code 2106 90 99-Other food preparations not elsewhere
specified and liable to GST at the rate of 18% as per SI No. 23 of of Schedule III
of Notification No.01/2017 Central Tax (Rate) dated 28.6.2017.
Various other food items - These are classifiable under HSN Code 2106 90
99-Other food preparations not elsewhere specified or included and is liable to
GST at the rate of 18% as per Sl No. 23 of of Schedule III of Notification
Lasagne - Lasagne is classifiable under HSN Code 1902 20 10 and is liable
to GST at the rate of 12% as per SI No. 32B of Schedule II of Notification
Natural Honey - Natural Honey is classifiable under HSN Code 0409 00 00
and is liable to GST at the rate of 5% as per SI No. 13 of Schedule I of Notification
No.01/2017 Central Tax (Rate) dated 28.6.2017 for those put up in unit container
and, (a) bearing a registered brand name; or (b) bearing a brand name on which
an actionable claim or enforceable right in a court of law is available - Natural
Honey other than those put up in unit container and, (a) bearing a registered
brand name; or (b) bearing a brand name on which an actionable claim or
enforceable right in a court of law is available is exempt from GST as per SI No.
29 of Notification No.02/2017 Central Tax (Rate) dated 28.6.2017.
Cone - Cone is classifiable under HSN Code 1905 32 90 and is liable to GST
at the rate of 18% as per SI No. 16 of Schedule III of Notification No.01/2017
Further Authority For Advance Ruling, Madhya Pradesh has in the case of
"In Re: M/s. Italian Edibles Private Limited (Order No. 13/2018 and Case No.
09/2018 decided on 18.9.2018)" has classified further items in above category by
observing that"
Militry Malai Mithai - Applicant’s reservations against Chapter Head 1704 are
driven, among other things, by financial grounds. Because, against Chapter Head
1704 they would have to cough up GST @18%. We also sense a similar but tacit
approach from the department to maintain the status quo by placing the
impugned product under Chapter 17 with an eye on higher rate of tax that is
attracts - however, the endeavour of the department should be to decide
appropriate classification irrespective of the rate of tax attached to it.
Chapter 04 essentially covers dairy products and as per Chapter Note 4 of
Chapter 04, the heading 0404 applies inter alia to products consisting of natural
milk constituents whether or not containing added sugar or other sweetening
matter or flavoured or containing added fruit or cocoa. Now while chapter head
0401 to 0406 are meant for natural dairy products viz. Milk, Cheese, Butter Milk,
Butter, Whey etc. and other products made out of such items, the product
26
in question i.e. Militry Malai Mithai contains Skimmed Milk Powder, Whey
Powder, Sugar, Emulsifiers etc. as predominant ingredients, which would not
make it entitles to be classified as a product of natural milk constituents as has
been pleaded by the Applicant. By no stretch of imagination, the product in
question can be brought under the ambit of Chpater 04 of the HSN -
classification of the impugned product under Chapter 04 of the I-ISN is ruled out.
Fitment of impugned product under Chapter 1704 - Held that:- The product
‘Militry Malai Mithai’ cannot be terms as ‘Chewing Gum’ (1704 10 00) or Jelly
Confectionery (1704 90 10) or Boiled Sweet (1704 90 20) or Toffee, caramel etc
(1704 90 30). Clearly the product is neither a gum nor boiled sweet nor toffee or
caramel. That leaves residual entry ‘Others’ (1704 90 90) if at all the impugned
product is to brought under the purview of Chapter 17. In other words, there is no
specific entry under Chapter 17 which would encompass the impugned product
even by a remote chance. Moreover, the residual entry i.e ‘Others’ (1704 90 90) is
to take care of other similar products of the same family viz. Sugar Confectionery
which do not find specific mention against rest of the sub-headings.
The impugned product i.e. ‘Militry Malai Mithai’ is made of Skimmed Milk
Powder, Sugar, Whey Powder, Emulsifiers & flavours etc. mixed together in a
semi-liquid form (neither semi-solid nor in the form of Jelly) and packed in
elongated pouches/sachets and ready for consumption. The ingredients, process
and final shape of the impugned product takes itself out of the family of Sugar
Confectionery in any form - the impugned product cannot be termed and classified
as Sugar Confectionery under Chapter 17 of the GST Tariff.
The product in question i.e. ‘Militry Malai Mithai’ is a product made ou t of
Skimmed Milk Powder, Sugar & Whey Powder as main ingredients with
Emulsifiers etc. put up in small sachet/pouch in semi-liquid (paste) consistency,
ready for consumption. The product cannot be termed as Dairy Product or Sugar
Confectionery - there is no doubt that being edible preparation, manufactured
under due license issued by concerned Government authorities, it would merit
classification under Chapter 21 i.e. ‘Miscellaneous Edible Products’. Once the
chapter is decided, a careful examination of different entries under Chapter 21,
the quest for appropriate classification rests finally at 2106 90 99, the residual
entry, as the product itself does not find specific place anywhere else in the
Chapter 21 - the impugned product viz. ‘Militry Malai Mithai’ would merit
classification as Miscellaneous Edible Product under Chapter Heading 2106 90
99, as ‘Sweetmeat’ and chargeable to GST as applicable.
The impugned goods shall be aptly classifiable under Chapter Head 2106 90
99 as ‘Sweetmeats’ and shall be entitled to benefit of Notification No.01/2017-
Central Tax (Rate) dtd.28.6.2017 (as amended) and corresponding

notification under MPGST Act,2017 at present attracting GST @5% Adv. [(2.5%
CGST + 2.5% SGST) or 5% IGST as the case may be) as envisaged under Serial
Number 101 Schedule I to the said Notification.
The AAR delivered the following ruling:
"The product ‘Militry Malai Mithai’ as described in the Application will merit
classification under Chapter Heading 2106 90 of the GST Tariff as ‘Sweetmeat’
and would be chargeable to GST at applicable rate under the said tariff entry,
presently read with Notification No.01/2017-Central Tax (Rate) dtd.28.6.2017 (Sr.
No. 101 to Schedule l) and corresponding notification under MPGST Act,2017."

28
ASK US ONE...
GST Registration—Suo moto cancelled registration—How to

activate
Question 1.
Due to shortage of cash/monetary liquidity during lockdown period many

GST registered dealers were not able to comply with GST law requirements and
they were not able to file GST returns on time, due to this reason there GST
registration has been cancelled. Now, they want to start there business again
and want to activate there cancelled GST Registration. How to activate such
cancelled registration?
Answer:
GST Registration cancellation process is governed by section 29 of CGST
Act, 2017. As per section 29 (2), in the below circumstances, GST Officer has
the power to cancel GST Registration of dealer suo moto.
"The proper officer may cancel the registration of a person from such date,
including any retrospective date, as he may deem fit, where,—
(a) a registered person has contravened such provisions of the Act or the
rules made thereunder as may be prescribed; or
(b) a person paying tax under section10 has not furnished returns for three
consecutive tax periods; or
(c) any registered person, other than a person specified in clause (b), has
not furnished returns for a continuous period of six months; or
(d) any person who has taken voluntary registration under sub-section (3)
of section 25 has not commenced business within six months from the
date of registration; or
(e) registration has been obtained by means of fraud, wilful mis-statement
or suppression of facts:
Provided that the proper officer shall not cancel the registration without
giving the person an opportunity of being heard.
Speaking practically, the GST Officer issues show cause notice for suo moto
GST registration cancellation and the assessee is required to submit his reply
within specified time period. If no response is received or officer is not satisfied
with the dealers reply then he cancels the GST Registration. After cancellation,
section 30 of CGST Act, 2017 gives an opportunity to registered dealer to apply
for GST Revocation request within 30 days from the date of service of
cancellation order. From above it is clear that after suo moto GST Registration
cancellation, the dealer has to approach the GST officer for revocation of GST
Registration within prescribed time period.
GST Registration—Transfer of registration from one person to

another—Not possible.

Question 2.
A person has one shop in which GST No. in the name of his sister. He now
want to apply for GST Registration in his name in this premises. Whether this old
GST Number can be transferred in his name or he has to apply for other/ne w
number?
Answer:
New registration will have to be taken if the business is to be done in new
name. Transfer of GST number does not happen. The old registration will have to
be cancelled. Registration certificate is not transferrable. GSTIN is a PAN based
registration number and each person has separate PAN. Therefore, a GSTIN of
one person cannot be transferred to another person. New registration has to be
taken. Since, there is already existing GSTIN he has to cancel that number so as
to have new GSTIN. One business at one premises cannot have two GSTIN
simultaneously. Please refer to section 22(3) of CGST Act, 2017 which is
extracted below:
Section 22(3). "Where a business carried on by a taxable person registered
under this Act is transferred, whether on account of succession or otherwise, to
another person as a going concern, the transferee or the successor, as the case
may be, shall be liable to be registered with effect from the date of such transfer
or succession."
Levy of IGST—Imports—Exemption of CVD & SAD between 13.10.2017

to 19.1.2019—Whether available?
Question 3.
On introduction of GST regime the earlier exemption of CVD & SAD was not
extended to IGST, forcing the exporters to pay IGST at the time of imports.
Thereafter Notification No. 79/2017-cus, dated 13.10.2017 was issued restoring
earlier position i.e. exempting IGST. However with condition of ‘pre-import’,
subsequently this condition of ‘pre-import’ was removed vide Notification
No.01/2019-cus, dated 10.1.2019. However many exporters being unaware of
‘pre-import’ condition continued imports under Advance Authorisation for the
intervening period (13.10.2017 to 19.1.2019) and the customs allowed such
imports. At the time of getting export obligation discharge certificate, now office of
Jt. DGFT is asking to pay IGST amount on the imports made. Gujarat High Court
in the case of Maxim Tubes Co. Pvt. Ltd. Vs. UOI 2019 (2) TMI 1445 has struck
down the ‘pre-import’ condition. Now:
1. Is Jt. DGFT is correct in demanding payment of IGST in light of Gujarat
HC decision. We have imported under Advance Authorisation with
IGST payment & made exports under LUT without payment of IGST?
2. If we opt to pay IGST, whether we will be eligible to claim ITC?
Answer:
The department has filed Special Leave Petition against the judgment of
Guajrat High Court in the Supreme Court [Union of India Vs. Yasho Industries
Ltd. 2019 (368) E.L.T. A339 (SC) & Union of India Vs. Maxim Tubes Company
Pvt. Ltd. 2020 (372) E.L.T. A104 (SC)]. The matter issub judice.
30
According to me re-assessed bill of entry is the better recourse. You will not face
the sword of time limitation in this way.
Regarding ITC after payment of IGST after re-assessing the Bill of entry, the
issue is debatable. However, in my view, ITC can be availed on the strength of
re-assessed bill of entry.
I have expressed my personal views on the issue. Since the issue is
debatable, one may opt for Advance Ruling.
Refund of ITC transferred through Form ITC 02—Is admissible.

Question 4.
Whether refund claim of unutilized ITC available, which was transferred
through Form ITC-02 which party cannot claim and utilise due to GST rates on
inputs materials being higher than the outward and if yes, what are the terms
and conditions as per provisions?
Answer:
The ITC transferred under Form ITC-2 relates to transfer of ITC in case of
sale, merger, demerger, amalgamation, lease or transfer of a business under
sub-section (3) of section 18 of CGST Act, 2017. The procedure is prescribed
under rule 41ofCGST Rules, 2017. Since the said provisions permit transfer of
unutilized ITC on sale, merger, demerger, amalgamation, lease or transfer of a
business under sub-section (3) of section 18 of CGST Act, 2017one can easily
claim the refund of the same if the rate of tax in output materials are lower than
the tax on input materials.
GST Registration—Cancellation—Revocation thereof—Failure of

department to prove wrongful availment of ITC on fake invoices.
Question 5.
The GST Registration has been cancelled by the department because 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.
However, the department failed to show that the assessee 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. Is this a valid case for
revocation of cancelled registration?
Answer:
Recently in the case of Bright Star Plastic Industries Vs. Additional
Commissioner of Sales Tax [W.P. (C) No. 15265 of 2021 dated 4.10.2021], the
CT & GST Officer issued a Show-Cause Notice 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". 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. Secondly, the
cancellation registration of the selling dealer took place only on 1.10.2019, 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. The Respondent
argued that a field visit was undertaken to the address shown for the selling
dealer, the premises were found to be occupied by some other person and not by
the selling dealer. From the said visits which were undertaken on 1.7.2019, a
conclusion was drawn that the transactions entered into by the Petitioner with the
selling dealer in April and August 2018 were fake transactions. The Hon’ble
Orissa High Court ob-served 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.
GST on restaurant services—Restaurant serving in restaurant as well as

through e-commerce operators —Applicability of threshold exemption.
Question 6.
A person is running a standalone restaurant (NonAC). Restaurant is serving
food in the restaurant as well as through e-commerce operator such as Zomato,
swiggy, etc. Can he claim the threshold exemption of Rs. 20 Lacs?
Answer:
Compulsory registration under section 24 is applicable only when the supply
is made through an e-commerce operator who is required to collect tax at source
under section 52. In this case if the e-commerce operator is not required to
collect tax at source then the restaurant can still eligible to avail the threshold
limit. In case E-Commerce Operator falls under the category of compulsory
registration, the issue of threshold limit for registration in respect of restaurant
services becomes meaningless/redundant. In other words, in this hypothetical
situation, the question of separate threshold exemption for registration purpose
does not arise.
In case e-commerce Operator does not fall under the category of compulsory
registration, then threshold exemption of Rs. 20 lakhs for both services is
admissible.
32
(2021) International Value Retail Pvt. Ltd. Vs. Union of India & Ors.(Cal) 363
[2021] GTI 363 (Cal)

[IN THE HIGH COURT OF CALCUTTA]
HON’BLE MD. NIZAMUDDIN, J.
International Value Retail Pvt. Ltd. Vs. Union of India &

Ors.
WPA 11147 of 2020
Dated. 10.9.2021.
REGISTRATION—CANCELLATION—REVOCATION—PETIT IONER
NOT CARRYING ON BUSINESS FROM OFFICIALLY REGISTERED
PREMISES INSTEAD FROM HOME DUE TO PREVAILING COVID-19
SITUATION—DIRECTIONS ISSUED TO CONSIDER MATTER
AFRESH AND DISPOSE OF APPLICATION FOR REVOCATION OF
CANCELLATION IN ACCORDANCE WITH LAW AND BY PASSING A
REASONED AND SPEAKING ORDER AFTER GIVING
OPPORTUNITY OF HEARING.
HELD.—
The petitioner in the instant case has challenged inter alia impugned sh ow -cause
notice and subsequent final impugned adjudication or der of rejection of application of the
petitioner for revocation of cancellation of its GST registration on the ground that the
same is perverse and is in disregard to and non-con sideration of the relevant material
documents/records in su pport of the case of the petitioner that principal place of
business of the petitioner and which was carried out in the official registered premises in
question and only due to extraordinary compelling circumstances of Covid-19 and in
following the protocol and norms of Covid-19 temporarily petitioner was not carrying his
business from the premises in question from officially registered premises and they were
carrying business in question from home.
The Court without going into the merit of the petitioner’s application for revocation
of cancellation in question directed the respondents concerned to con sider afresh and
dispose of the petitioner’s application for revocation of cancellation of its registration of
the petitioner under GST Act in accordance with law and by passing a reasoned an d
speaking order after giving opportunity of hearing to the petitioner or its authorized
representative within four weeks from the date of communication of this order and also to
consider the documents to be placed by the petitioner in support of its contention at the
time of hearing.
Shri Tarun Gulati, Shri Kishore Kunal, Shri Tanmoy Chakraborty, Shri A. Daga
and Arti Bhattacharyya, for the Petitioner.
Shri Abhradip Maity, Shri A. Ray, Shri S. Mukherjee and Shri D. Ghosh, for the
Respondents.
Judgement
Heard both the parties.
In this matter, petitioner has challenged inter alia impugned show-
33
GS T Informations, Dated. 20.10.2021.
cause notice and subsequent final impugned adjudication order of rejection of

application of the petitioner dated 29.9.2020 for revocation of cancellation of its
GST registration on the ground that the same is perverse and is in disregard to
and non-consideration of the relevant material documents/records in support of
the case of the petitioner that principal place of business of the petitioner and
which was carried out in the official registered premises in question and only due
to extraordinary compelling circumstances of Covid-19 and in following the
protocol and norms of Covid-19 temporarily petitioner was not carrying his
business from the premises in question from officially registered premises and
they were carrying business in question from home.
Considering this fact of the case I am inclined to set aside the impugned
order dated 9.11.2020 being Annexure P-6 to the writ petition by which the
respondent concerned has rejected the petitioner’s application for revocation of
cancellation of its GST registration and I direct the respondents concerned to
consider afresh and dispose of the petitioner’s application for revocation of
cancellation of its registration of the petitioner under GST Act in accordance with
law and by passing a reasoned and speaking order after giving opportunity of
hearing to the petitioner or its authorized representative within four weeks from
the date of communication of this order and also to consider the documents to be
placed by the petitioner in support of its contention at the time of hearing.
Petitioner submits that it intends to carry the business in question from new
premises but since that is not the subject-matter of this writ petition I am not
inclined to make any comment on that and it is up to the petitioner to act in
accordance with law in that regard. As a consequence of remand, the order of
the appellate authority dated 14.12.2020 also stands set aside.
It is recorded that this Court has not gone into the merit of the petitioner’s
application for revocation of cancellation in question.
WPA 11147 of 2020 is disposed of.
**
Vital Point:
On cancellation of petitioner registration as he was not carrying his
business from officially registered premises and was carrying
business from home due to prevailing covid-19 situation,
directions issued to consider matter afresh and dispose of the
application for revocation of cancellation in accordance with law.
***
34 GST Informations, Dated. 20.10.2021.

(2021) Jagat Singh @ Jaggi Vs. Union of India(All) 365
[2021] GTI 365 (All)

[IN THE HIGH COURT OF ALLAHABAD]
HON’BLE RAJIV JOSHI, J.
Jagat Singh @ Jaggi Vs. Union of India

Criminal Misc. Bail application No. 18365 of 2021
Dated. 7.10.2021.
ARREST—BAIL—GST DEPOSITED OF ABOUT 31 COMPANIES
ILLEGALLY—HAVING HEARD THE SUBMISSIONS OF COUNSEL
OF BOTH SIDES, NATURE OF ACCUSATION AND SEVERITY OF
PUNISHMENT IN CASE OF CONVICTION AND NATURE OF
SUPPORTING EVIDENCE, PRIMA FACIE SATISFACTION OF
COURT IN SUPPORT OF CHARGE, REFORMATIVE THEORY OF
PUNISHMENT, AND LARGER MANDATE OF ARTICLE 21 OF THE
CONSTITUTION WITHOUT EXPRESSING ANY OPINION ON MERIT
OF CASE, IT WAS FOUND TO BE A CASE OF BAIL.
HELD.—
Having heard the submission s of learned counsel of both sides, nature of
accusation and the severity of punish ment in case of conviction and the nature of
supporting evidence, prima facie satisfaction of the Court in support of the charge,
reformative theory of punishment, and larger mandate of the Article 21 of the Constitution
of India, the dictum of Apex Court in the case of Dataram Singh Vs. State of UP & Anr.
[2018 (2) TMI 410 - SC]and without expressing any opinion on the merit of the case, it is
found to be a case of bail. Let the applicant, Jagat Singh @ Jaggi involved in crime be
released on bail on his furnishing a personal bond and two sureties each in the like
amount to the satisfaction of the Court concerned subject to following con ditions.
Sarwar Ali Siddique, Shri Anshul Tiwari, Shri Nikhil Kumar, Shri Subhojeet
Pathaka and Shri Sunil Kumar, for the Applicant.
Shri Dileep Chandra Mathur, for the Opposite Party.
ORDER
(Per: Rajiv Joshi, J.)
Heard Sri Nikhil Kumar, learned counsel for the applicant, learned A.G.A. for
the State and Sri Dileep Chandra Mathura, learned Counsel for the opposite
party and perused the record.
The instant bail application has been filed on behalf of the applicant seeking
bail in Case No. 01 of 2021, under section 132 (1) (b), 132 (i) CGST Act,
Department of D.G.G.I., Meerut, District Meerut during the pendency of trial.
It is contended by learned counsel for the applicant that the applicant is
innocent and has falsely been implicated in the present case. The
35
applicant was arrested following an interrogation by the G.S.T. officials and

implicated him by filing a criminal complaint with the allegation that the applicant
deposited GST of about 31 Companies illegally. It is further contended by
learned Counsel for the applicant that the charge sheet in the matter has been
filed on 1.3.2021 and the investigation has already been comp leted. It is next
contended that as per section 132 (1) (iv) "in cases where he commits or abets
the commission of an offence specified in clause (f) or clause (g) or clause (j), he
shall be punishable with imprisonment for a term which may extend to six months
or with fine or with both". It is also contended that the applicant was on interim
bail vide order dated 28.5.2021, which was issued by the Chief Judicial
Magistrate, Meerut as per guidelines of Hon’ble Apex Court during Covid-19
Pandemic subject to furnishing two personal bonds of Rs. 10 lacs . Lastly it is
contended that the applicant is in jail since 1.1.2021 having no criminal history to
his credit as stated in paragraph no.18 of the affidavit filed along with bail
application and in case he is released on bail, he will not misuse the liberty of bail
and will cooperate in trial.
Learned Counsel for the opposite party has opposed the prayer for bail but
could not dispute the aforesaid facts as argued by learned counsel for the
applicant.
Having heard the submissions of learned counsel of both sides, nature of
accusation and the severity of punishment in case of conviction and the nature of
supporting evidence, prima facie satisfaction of the Court in support of the
charge, reformative theory of punishment, and larger mandate of the Article 21 of
the Constitution of India, the dictum of Apex Court in the case of Dataram Singh
Vs. State of U.P. & Anr., reported in (2018) 2 SCC 22and without expressing any
opinion on the merit of the case, I find it to be a case of bail. Let the applicant,
Jagat Singh @ Jaggi involved in aforesaid crime be released on bail on his
furnishing a personal bond and two sureties each in the like amount to the
satisfaction of the Court concerned subject to following conditions. Further,
before issuing the release order, the sureties be verified.
a. The appellants shall not directly or indirectly make any inducement,
threat or promise to any person acquainted with the facts or the case
so as to dissuade him to disclose such facts to the Court or to any other
authority.
b. They shall remain present before the Court on the dates fixed for
hearing of the case. If they want to remain absent, then they shall take
prior permission of the Court and in case of unavoidable circumstances
for remaining absent, they shall immediately give intimation to the
appropriate Court and also to the Superintendent, CBI and request that
they may be permitted to be present through the counsel.
c. They will not dispute their identity as the accused in the case.
d. They shall surrender their passport, if any (if not already surrendered),
and in case, they are not a holder of the same, they shall swear to an
affidavit. If they have already surrendered

(2021)Savista Global Solutions Pvt. Ltd. Vs. Union of India & Ors.(All) 367
before the Ld. Special Judge, CBI, that fact should also be supported
by an affidavit.
e. We reserve liberty to the CBI to make an appropriate application for
modification/recalling the order passed by us, if for any reason, the
appellants violate any of the conditions imposed by this Court."
It is clarified that the observations, if any, made in this order are strictly
confined to the disposal of this bail application and must not be construed to
have any reflection on the ultimate merits of the case. The party shall file
computer generated copy of such order downloaded from the official website of
High Court Allahabad. The computer generated copy of such order shall be self
attested by the counsel of the party concerned.
The concerned Court/Authority/Official shall verify the authenticity of such
computerized copy of the order from the official website of High Court Allahabad
and shall make a declaration of such verification in writing.
**
Vital Point:
Having heard the submissions of counsel of both sides, nature of
accusation and severity of punishment in case of conviction and
nature of supporting evidence, prima facie satisfaction of Court in
support of charge, reformative theory of punishment, and larger
mandate of Article 21 of the Constitution without expressing any
opinion on merit of case, it was found to be a case of bail.
***
[2021] GTI 367 (All)
[IN THE HIGH COURT OF ALLAHABAD]
HON’BLE NAHEED ARA MOONIS & HON’BLE SAUMITRA DAYAL SINGH, JJ.
Savista Global Solutions Pvt. Ltd. Vs. Union of India &

Ors.
Writ Tax No. 113 of 2021
Dated. 6.10.2021.
REFUND—INTEREST ON REFUND—REFUND AWARDED BY

ORDER—APPLICATION FOR REFUND FILED MANUALLY, ON
27.9.2019 YET SAME NOT PROCESSED AND REFUND NOT
DIRECTED TO BE PAID WITHIN A PERIOD OF 60 DAYS
THEREFROM—RESPONDENT WAS DIRECTED TO REFUND
ENTIRE AMOUNT TOGETHER WITH INTEREST FROM DATE
AGAINST 27.11.2019 TILL DATE OF ISSUANCE OF DEMAND
DRAFT @ 6%.
HELD.—
37
Admittedly, neither the amount of refund awarded under the order dated 6.1.2020
nor any interest has been paid to the petitioner, till date. There is no dispute to the fact
that an amount of Rs. 1,28,50,535 is refundable to the petitioner by r espon dent no.6 for
the month of July, 2019. Also, upon exchange of pleadin gs, there is no dispute that the
application for refund was filed by the petitioner manually, on 27.9.2019 yet the same was
not processed and the refund was not directed to be paid within a period of sixty days
therefrom.
So long as Rule 97A remains on the Rule book, the Circular No.125/44/2019 -GST,
dated 18.11.2019, prescribing the online mode for such refund applications w.e.f.
26.9.2019, cannot take away the plain effect of the said Rule 97A. Therefore, the Circular
could only provide a directory or an optional mode, to process a refund claim. Second, in
any case, since the Circular itself was issued on 18.11.2019 i.e. well after the application
dated 27.9.2019 had been filed by the petitioner, the same could not be pressed into
service by the respondents. Third, and more crucially, the respon dents have themselves
processed the application filed by the petitioner and passed the order dated 6.10.2020
directing for refund.
Once the application had been processed and or order passed, which has attained
finality, the respondents cannot escape the plain effect of the same. They also cannot
escape the liability of interest that arises on non-compliance of the same. Respon dent
no.6 shall refund the entire amount together with interest from the date against
27.11.2019 till the date of issuance of the demand draft @ 6%. The respon dents
themselves shall have choice to make payment either through online mode or through
bank draft within a period of one month from date of order.
Shri Nishant Mishra, Shri Tanmay Sad and Shri Yashonidhi Shukla, for the
Petitioner.
Shri Krishna Ji Shukla and Shri Manu Ghildyal, for the Respondent.
ORDER
1. Heard Sri Nishant Mishra along with Sri Nikhil Gupta and Ms Vedika Nath,
learned counsel for the petitioner and Sri Krishna Ji Shukla, learned counsel for
respondent nos.1 and 5 and Sri Manu Ghildyal, learned counsel for respondent
nos.2 and 6.
2. Present petition has been filed seeking a mandamus to respondent no.6
to refund to the petitioner Rs. 1,28,50,535/- that became due to the petitioner
under the order dated 6.1.2020 passed by respondent no.6. That amount of
refund relates to the month July, 2019. Since that amount was not refunded to
the petitioner which was then known as Nthrive Global Solutions Private Limited,
further prayer for award of interest has also been made.
3. Since the refund was not made, the petitioner filed an application seeking
refund, on 27.9.2019 before respondent no.6. Under Rule 97A of the Central
Goods and Services Tax (CGST) Rules, 2017 (hereinafter referred to as the
‘Rules’), it was permissible to file that application, manually. In any case the said
application has admittedly been processed. Though, under Rule 54(7) of the
Rules, the said application should have been processed and necessary order

(2021)Savista Global Solutions Pvt. Ltd. Vs. Union of India & Ors.(All) 369
passed within a period of sixty days, however, the order of refund was pa ssed
beyond that period of sixty days, on 6.1.2020. Therefore, by virtue of section 56
of the Central Goods and Services Tax Act, 2017, interest @ 6% from the date
of expiry of 60 days contemplated under section 54(7) of that Act, till the date of
actual payment of refund, also became due.
4. Admittedly, neither the amount of refund awarded under the order dated
6.1.2020 nor any interest has been paid to the petitioner, till date. By earlier
order last opportunity had been allowed to the respondents to either pay up the
entire amount or explain their conduct. Neither the amount has been paid up nor
any further affidavit has been filed. Accordingly, the matter has been proceeded.
5. Having heard learned counsel for the parties and having perused the
record, there is no dispute to the fact that an amount of Rs. 1,28,50,535/- is
refundable to the petitioner by respondent no.6 for the month of July, 2019. Also,
upon exchange of pleadings, there is no dispute that the application for refund
was filed by the petitioner manually, on 27.9.2019 yet the same was not
processed and the refund was not directed to be paid within a period of sixty
days therefrom.
6. Therefore, by way of a legal consequence arising from the plain language
of the statute, the respondents have exposed themselves to interest liability @
6% from the date 27.11.2019 onwards, on the amount of admitted refund Rs.
1,28,50,535/-. No amount having been paid even today, the interest liability is
continuing.
7. As to the defence set up by the respondents, it is seen that respondent
no.6 claims, it had approved the refund on 6.1.2020 itself and he had forwarded
the file for actual payment, to respondent no.5, on 15.1.2020. Therefore, that
authority claims no liability to pay interest.
8. Insofar as the respondent no.5 is concerned, Sri Krishna Ji Shukla,
learned counsel for the respondents would submit, the refund application and
the forwarding letter by respondent no.6 were moved through physical mode and
therefore, the same could not have been processed by the said respondent no.5.
Upon activation of the GST portal on 26.9.2019, the application made by the
petitioner and the further process made by respondent no.6 should have been
through online mode only. He has vehemently urged that the said deficiency of
procedure was intimated by respondent no.5 to the respondent no.6, vide earlier
communications dated 20.7.2020 and 27.8.2020. Therefore, he claims no
interest is due to the petitioner and that the refund may be paid only after due
compliance is made by the petitioner and respondent no.6 by logging in the
particulars of the refund and the refund order on the GST portal, through online
mode, only.
9. The aforesaid contentions do not bring out any disentitlement of the
petitioner either towards the refund of Rs. 1,28,50,535/- or the interest payable
thereon. The insistence on part of respondent no.5 to have the details of the
refund claimed and the refund order passed by respondent no.6, uploaded on
the GST portal is an eye wash. Though, the law did contemplate such
39
applications to be made and orders to be passed and also refund to be made

through online mode, at the same time, on account of the problems that arose
upon the introduction of GST regime, Rule 97A of the Rules was introduced to
the Rules 2017 by the Central Goods and Services Tax (Twelth Amendment)
Rules, 2017. It reads as below :
"97A-Notwithstanding anything contained in this Chapter, in respect of any
process or procedure prescribed herein, any reference to electronic filing of
an application, intimation, reply, declaration, statement or electronic
issuance of a notice, order or certificate on the common portal shall, in
respect of that process or procedure, include manual filing of the said
application, intimation, reply, declaration, statement or issuance of the said
notice, order or certificate in such Forms as appended to these rules."
10. Further, the subsequent Circular No.125/44/2019-GST came to be
issued on 18.11.2019 prescribing the online mode for such refund applications
w.e.f. 26.9.2019. It is of no benefit to the respondents, as in the first place, the
said Circular did not and it could not override or negate the effect of law arising
from Rule 97A of the Rules. It is a settled principle in law that the delegated
legislation would stand on a higher pedestal over a pure administrative
instruction.
11. So long as Rule 97A remains on the Rule book, the Circular cannot take
away the plain effect of the said Rule 97A. Therefore, the Circular could only
provide a directory or an optional mode, to process a refund claim. Second, in
any case, since the Circular itself was issued on 18.11.2019 i.e. well after the
application dated 27.9.2019 had been filed by the petitioner, the same could not
be pressed into service by the respondents. Third, and more crucially, the
respondents have themselves processed the application filed by the petitioner
and passed the order dated 6.10.2020 directing for refund.
12. Once the application had been processed and or order passed, which
has attained finality, the respondents cannot escape the plain effect of the same.
They also cannot escape the liability of interest that arises on noncompliance of
the same.
13. Though, Sri Krishna Ji Shukla and Sri Manu Ghildyal, learned counsel
for the respondents would insist that the respondents only acted in the best
interest of revenue and with the sole object to comply the law in letter and spirit
at the same time, it gives no relief to the misery caused to the petitioner who has
been made to wait for refund for a very long period of almost two years, after
complying with the law.
14. Respondent no.6 shall refund the entire amount of Rs.1,28,50,535/-
together with interest from the date against 27.11.2019 till the date of issuance of
the demand draft @ 6%. The respondents themselves shall have choice to make
payment either through online mode or through bank draft within a period of one
month from today.
15. As to the inter se differences that may exist between respondent

(2021) Shri Tyres Vs. State Tax Officer (Mad) 371
nos.5 and 6, it is left to those parties to resolve it among themselves so that

other similar disputes may be resolved in a time bound manner.
16. Accordingly, the writ petition isallowed.
17. No order as to costs.
**
Vital Point:
Once the application for refund had been processed and or order passed, which has
attained finality, the respondents cannot escape the plain effect of the same. They also
cannot escape the liability of interest that arises on non-compliance of the same.
***
[2021] GTI 371 (Mad)
[IN THE HIGH COURT OF MADRAS]
HON’BLE M.SUNDAR, J.
Shri Tyres Vs. State Tax Officer

W.P. No. 19756 of 2021
Dated.1.9.2021
FORM GST DRC-01 & DRC-01A—REQUIREMENTS OF ISSUE OF
FORM GST DRC-01 & DRC-01A IS NOT A MERE PROCEDURAL
REQUIREMENT.
HELD.—
Following two points were raised on behalf of the petitioner in the instant case:
 No per sonal hearing has been granted and
 The procedure prescribed for making the impugned order has not been followed
i.e., impugned order was not preceded by Forms GST DRC-01 and GST DRC-01A.
The requirements of issue of FORM GST DRC-01 and FORM GST DRC-01A have
been statutorily ingrained in the rules made under the CG&ST Act i.e., Rule 142 of the
CG&ST Rules, 2017.
A careful perusal of section 73 of the CG&ST Act in conjunction with Rule 142
makes it clear that non adherence to Rule 142 had caused prejudice to the writ petitioner
qua impugned or der and therefore, it is a rule which necessarily needs to be adher ed to, if
prejudice is to be eliminated in the case on hand. In other words, it is not a mere
procedural requirement but on the facts and circumstances of this case, it becomes clear
that it tantamount to trampling the rights of writ petitioner.
Shri Adithya Reddy, for the Petitioner.

Amirta Dinakaran, Government Advocate, for the Respondent.
ORDER
41
Read this in conjunction with and in continuation of earlier proceedings made

in previous listing on 17.9.2021, which reads as follows:
‘At request, list on Tuesday (21.9.2021) under the caption ‘AD-JOURNED
ADMISSION’.’
2. Pursuant to the aforesaid proceedings, captioned writ petition and writ
miscellaneous petition therein have been listed in the cause list caption
‘ADJOURNED ADMISSION’ today.
3. Adithya Reddy, learned counsel for writ petitioner who was before me
submitted that the impugned order has been made under section 73 of the
‘Central Goods and Services Tax Act, 2017’ [hereinafter ‘CG& ST Act, 2017’ for
the sake of convenience and clarity]. To be noted, the impugned order dated
25.8.2021 bearing reference No. GST-01/2018-19.
4. Learned counsel for writ petitioner raised two points and they are as
follows:
(a) No personal hearing has been granted and
(b) The procedure prescribed for making the impugned order has not
been followed i.e., impugned order was not preceded by Forms GST
DRC-01 and GST DRC-01A.
5. Amirta Dinakaran, learned State counsel, accepted notice on behalf of the
lone respondent.
6. Owing to the narrow legal points on which the captioned writ petition
turns, with the consent of learned counsel on both sides main writ petition was
taken up.
7. Responding to the aforementioned two points raised by the learned
counsel for writ petitioner, learned Revenue counsel on instructions submitted that
personal hearing has in fact been held and that the records demonstrate that
personal hearing was held on 9.7.2021. This douses this first point urged.
8. Be that as it may, learned Revenue counsel on instructions submits that
the records do not demonstrate that FORM GST DRC-01 and FORM GST DRC-
01A preceded the impugned order.
9. By way of reply, learned counsel for writ petitioner reiterated his second
point i.e., procedure proceeding impugned order not been in-formed.
10. I carefully considered the submissions made by either side and find that
the second point enures in favour of writ petitioner and the reasons are as follows:
(a) The requirements of issue of FORM GST DRC-01 and FORM GST
DRC-01A have been statutorily ingrained in the rules made under the
CG&ST Act i.e., Rule 142 of the CG&ST Rules, 2017, which reads as
follows:

‘142. Notice and order for demand of amounts payable under the Act (1)
The proper officer shall serve, along with the
(a) notice issued under section 52 or section 73 or section 74 or section 76
or section 122 or section 123 or section 124 or section 125 or section 127
or section 129 or section 130, a summary thereof electronically in FORM
GST DRC-01,
(b) statement under sub-section (3) of section 73 or sub-section(3) of
section 74, a summary thereof electronically in FORM GST DRC-02,
specifying therein the details of the amount payable.
[(1A) The proper officer shall, before service of notice to the person
chargeable with tax, interest and penalty, under subsection (1) of section
73 or sub-section (1) of section 74, as the case may be, shall communicate
the details of any tax, interest and penalty as ascertained by the said
officer, in Part A of FORM GST DRC-01A.]
(2) Where, before the service of notice or statement, the person chargeable
with tax makes payment of the tax and interest in accordance with the
provisions of sub-section (5) of section 73 or, as the case may be, tax,
interest and penalty in accordance with the provisions of sub-section (5) of
section 74, or where any person makes payment of tax, interest, penalty or
any other amount due in accordance with the provisions of the Act [whether
on his own ascertainment or, as communicated by the proper officer under
sub-rule (1A),] he shall inform the proper officer of such payment in FORM
GST DRC-03 and the proper officer shall issue an acknowledgement,
accepting the payment made by the said person in FORM GST DRC04.
[(2A) Where the person referred to in sub-rule (1A) has made partial
payment of the amount communicated to him or desires to file any
submissions against the proposed liability, he may make such submission
in Part B of FORM GST DRC-01A.]
(3) Where the person chargeable with tax makes payment of tax and
interest under sub-section (8) of section 73 or, as the case may be, tax,
interest and penalty under sub-section (8) of section 74 within thirty days of
the service of a notice under sub-rule (1), or where the person concerned
makes payment of the amount referred to in sub-section (1) of section 129
within fourteen days of detention or seizure of the goods and conveyance,
he shall intimate the proper officer of such payment in FORM GST DRC-03
and the proper officer shall issue an order in FORM GST DRC-05
concluding the proceedings in respect of the said notice.
(4) The representation referred to in sub-section (9) of section 73 or sub-
section (9) of section 74 or sub-section (3) of section 76 or the reply to any
notice issued under any section whose summary has been uploaded
electronically in FORM GST DRC-01 under sub-rule (1) shall be furnished
in FORM GST DRC-06.
(5) A summary of the order issued under section 52 or section 62 or
section 63 or section 64 or section 73 or section 74 or section 75
43
or section 76 or section 122 or section 123 or section 124 or section 125 or

section 127 or section 129 or section 130 shall be uploaded electronically in
FORM GST DRC-07, specifying therein the amount of tax, interest and
penalty payable by the person chargeable with tax.
(6) The order referred to in sub-rule (5) shall be treated as the notice for
recovery.
(7) Where a rectification of the order has been passed in accordance with
the provisions of section 161 or where an order uploaded on the system
has been withdrawn, a summary of the rectification order or of the
withdrawal order shall be uploaded electronically by the proper officer in
FORM GST DRC-08.]’
11. Section 73 of CG&ST Act reads as follows:
‘173.Determination of tax not paid or short paid or erroneously refunded or
input tax credit wrongly availed or utilised for any reason other than fraud or
any wilful misstatement or suppression of facts
(1) Where it appears to the proper officer that any tax has not been paid or
short paid or erroneously refunded, or where input tax credit has been
wrongly availed or utilised for any reason, other that the reason of fraud or
any wilful mis statement or suppression of facts to evade tax, he shall serve
notice on the person chargeable with tax which has not been so paid or
which so paid or which has been so wrongly availed or utilized input tax
credit, requiring him to show cause as to why he should not pay the amount
specified in the notice along with interest payable thereon under section 50
and a penalty leviable under the provisions of this Act of the rules made
thereunder.
(2) The proper officer shall issue the notice under subsection (1) at least
three months prior to the time limit specified in sub-section (10) for
issuance of order.
(3) Where a notice has been issued for any period under sub-section (1),
the proper officer may serve a statement, containing the details of tax not
paid or short paid or erroneously refunded or input tax credit wrongly
availed or utilised for such periods other than those covered under sub-
section(1), on the person chargeable with tax.
(4) The service of such statement shall be deemed to be service of notice
on such person under sub-section (1), subject to the condition that the
grounds relied upon for such tax periods other than those covered under
sub-section (1) are the same as are mentioned in the earlier notice.
(5) The person chargeable with tax may, before service of notice under
sub-section(1) or, as the case may be, the statement under sub-section 50
on the basis of his own ascertainment of such tax or the tax as ascertained
by the proper officer and inform the proper officer in writing of such
payment.
(6) The proper officer, on receipt of such information, shall not serve

any notice under sub-section (1) or, as the case may be, the statement
under sub-section (3), in respect of the tax so paid or any penalty payable
under the provisions of this Act or the rules made thereunder.
(7) Where the proper officer is of the opinion that the amount paid under
sub-section(5) falls short of the amount actually payable, he shall proceed
to issue the notice as provided for in sub-section (1) in respect of such
amount which falls short of the amount actually payable.
(8) Where any person chargeable with tax under subsection (1) or sub-
section (3) pays the said tax along with the interest payable under sec tion
50 within thirty days of issue of show cause notice, no penalty shall be
payable and all proceedings in respect of the said notice shall be deemed
to be concluded.
(9) The proper officer shall, after considering the representation, if any,
made by person chargeable with tax, determine the amount of tax, interest
and a penalty equivalent to ten per cent. of tax or ten thousand rupees,
whichever is higher, due from such person and issue an order.
(10) The proper officer shall issue the order under sub-section(9) within
three years form the due date for furnishing of annual return for the
financial year to which the tax not paid or short paid or input tax credit
wrongly availed or utilised relates to or within three years from the date of
erroneous refund.
(11) Notwithstanding anything contained in sub-section (6) or sub-section
(8), penalty under sub-section (9) shall be payable where any amount of
self-assessed tax or any amount collected as tax has not been paid within a
period of thirty days from the due date of payment of such tax.’
12. A careful perusal of section 73 of the CG&ST Act in conjunction with
Rule 142 makes it clear that non adherence to Rule 142 had caused prejudice to
the writ petitioner qua impugned order and therefore it is a rule which necessarily
needs to be adhered to, if prejudice is to be eliminated in the case on hand. In
other words, it is not a mere procedural requirement but on the facts and
circumstances of this case, it becomes clear that it tantamount to trampling the
rights of writ petitioner.
13. In the light of the narrative thus far, the following order is passed:
(a) The impugned order dated 25.8.2021 bearing reference No. GST-
01/2018-19, is set aside, solely on the ground of non adherence to Rule
142 of the CG&ST Rules, 2017 and all other procedural requirements;
(b) As the impugned order is set aside solely on the ground Rule 142 of
CG&ST Act, 2017, though obvious it is made clear that no view or opinion
on the merits of the matter have been expressed in the instant order;
(c) As sequitur, the respondent shall commence proceedings afresh
45
i.e., de-novo and complete the exercise by adhering to the requirements

more particularly requirements under Rule 142 of CG&ST Rules, 201 7.
(d) The above de-novo exercise shall be commenced and concluded as
expeditiously as the business of the respondent would permit and in any
event within twelve weeks from today, i.e., on or before 14.12.2021.
14. Captioned Writ Petition is disposed of with the above directives.
Consequently, Writ Miscellaneous Petition is also disposed of as closed. There
shall be no order as to costs.
**
Vital Point:
Requirements of issue of FORM GST DRC-01 & DRC-01A is not a
mere Procedural Requirement.
***
[2021] GTI 376 (Pat)
[IN THE HIGH COURT OF PATNA]
HON’BLE SANJAY KAROL, CJ. & HON’BLE RAJENDRA KUMAR MISHRA, J.
Vinita Gupta (Smt.) Vs. State Of Bihar

Civil Writ Jurisdiction Case No.16888 of 2021
Dated. 30.9.2021.
APPEAL TO ADDITIONAL COMMISSIONER—REJECTION—
PRINCIPLES OF NATURAL JUSTICE—APPEAL REJECTED
WITHOUT CONSIDERING TIME PETITION FILED BY PETITIONER
AS WELL AS GROUNDS OF APPEAL MENTIONED IN APPEAL
FILED—APPEAL RESTORED TO ITS ORIGINAL FILE AND
NUMBER.
HELD.—
It was brought to n otice that vide impugned or der pa ssed b y the Additional
Commissioner (Appeal), the appeal of the petitioner against the order dated 11.1.2021
passed by the Assistant Commissioner had been rejected, without following the
principles of natural justice. It was informed that the appeal through electronic mode
stood filed by the petitioner. Since counsel for the Revenue, stated that he has no
objection if the matter is remanded to the Appellate Authority for deciding the appeal
afresh, appeal was restored to its original file and number.
Shri Ramesh Kumar Agrawal, for the Petitioner.

Shri Vikash Kumar, for the Respondent.
ORAL JUDGMENT
(Per: Sanjay Karol, CJ)

(2021) Vinita Gupta (Smt.) Vs. State Of Bihar(Pat) 377
Petitioner has prayed for the following relief(s):-

"1(i) For issuance of an appropriate writ(s), order(s) or directions(s) in the
nature of writ of certiorari quashing the impugned order cum demand notice
dated 11.1.2021 (Annexure- 3) passed by the respondent Assistant
Commissioner of State Tax under section 74 of the Bihar Goods and
Service Tax Act, 2017 (herein after referred to as ‘the BGST Act, 2017
only) read with Central Goods and Service Tax Act, 2017 (herein after
referred to as ‘the CGST Act, 2017 only’) for the periods October 2019 to
March 2020 by which Rs.4,31,690.80 has been assessed as tax, Rs.
58,278.26 has been assessed as interest and Rs. 4,31,690.80 has been
imposed as penalty. Thus, total liability of Rs. 9,21,659.86 has been
created.
(ii) For issuance of an appropriate writ, order or direction for quashing the
ex parte appellate order dated 5.7.2021 passed by the respondent
Appellate Authority that is Additional Commissioner State Tax, Purnea
Division, Purnea by which appeal filed by the petitioner has been rejected
without considering the time petition filed by the petitioner as well as
grounds of appeal mentioned in the appeal filed before him which is
violation of principle of natural justice.
(iii) For issuance of appropriate writ, order or direction restraining the
respondents from initiating any recovery proceedings against the petitioner
as demanded by the respondents by the aforesaid demand notice.
(iv) For issuance of appropriate writ, order or direction restraining the
respondents from taking or initiating any coercive action against the
petitioner and or its agents/officials etc, and
(v) To grant such other consequential relief(s) to the petitioner, which this
Hon’ble Court may find the petitioner to be entitled to in equity and/or in law
in the facts and circumstances of the case."
It is brought to our notice that vide impugned order dated 5.7.2021
(Annexure-7) passed by the Additional Commissioner of State Tax (Appeal),
Purnea Division, Purnea in Appeal No. (ARN) AD100421000881X, the appeal of
the petitioner against the order dated 11.1.2021 (Annexure-3) passed by
respondent no.3, namely the Assistant Commissioner of State Tax, Katihar -
Purnea, Bihar in GST No. 10BDUPG7802C1ZX has been rejected, without
following the principles of natural justice. We are informed that the appeal
through electronic mode stood filed by the petitioner.
Learned counsel for the Revenue, states that he has no objection if the
matter is remanded to the Appellate Authority for deciding the appeal afresh.
Also, while considering and deciding the appeal, the ground of delay shall not be
taken into account and the appeal shall be decided on merits. Also, during
pendency of the appeal, no coercive steps shall be taken against the petitioner.
Statement accepted and taken on record.
Having heard learned counsel for the parties as also perused the
47
record made available, we dispose of the present petition in the following

mutually agreeable terms:-
(a) We quash and set aside the impugned order dated 5.7.2021
(Annexure-7) passed by the Additional Commissioner of State Tax
(Appeal), Purnea Division, Purnea (Respondent No. 2) in Appeal No. (ARN)
AD100421000881X;
(b) The appeal is restored to its original file and number;
(c) We accept the statement of the petitioner that ten per cent of the total
amount, being condition prerequisite for hearing of the appeal, already
stands deposited. If that were so, the appeal shall be decided on merits.
However, if the amount is not deposited for whatever reason(s), same shall
be done before the next date;
(d) This deposit shall be without prejudice to the respective rights and
contention of the parties and subject to the order passed by the Appellate
Authority. However, if it is ultimately found that the petitioner’s deposit is in
excess, the same shall be refunded within two months from the date of
passing of the order;
(e) We also direct for de-freezing/de-attaching of the bank ac-count(s) of
the writ-petitioner, if attached in reference to the proceedings, subject
matter of present petition. This shall be done immediately.
(f) Petitioner undertakes to appear before the Appellate Authority i.e.
Additional Commissioner of State Tax (Appeal), Purnea Division, Purnea
(Respondent No. 2) on 28.10.2021 at 10:30 A.M., if possible through digital
mode;
(g) The Appellate Authority shall condone the delay, if any, in filing the
appeal and decide the appeal on merits after complying with the principles
of natural justice;
(h) Opportunity of hearing shall be afforded to the parties to place on
record all essential documents and materials, if so required and desired;
(i) During pendency of the appeal, no coercive steps shall be taken against
the petitioner.
(j) The Appellate Authority shall pass a fresh order only after affording
adequate opportunity to all concerned, including the writ petitioner;
(k) Petitioner through learned counsel undertakes to fully cooperate in
such proceedings and not take unnecessary adjournment;
(l) The Appellate Authority shall decide the appeal on merits expeditiously,
preferably within a period of two months from the date of appearance of the
petitioner;
(m) The Appellate Authority shall pass a speaking order assigning
reasons, copy whereof shall be supplied to the parties;

(2021) Evertime Overseas Pvt. Ltd. Vs. Union of India & Ors.(Bom) 379
(n) Liberty reserved to the petitioner to challenge the order, if required and
desired;
(o) Equally, liberty reserved to the parties to take recourse to such other
remedies as are otherwise available in accordance with law;
(p) We are hopeful that as and when petitioner takes recourse to such
remedies, before the appropriate forum, the same shall be dealt with, in
accordance with law, with a reasonable dispatch;
(q) We have not expressed any opinion on merits and all issues are left
open;
(r) If possible, proceedings during the time of current Pandemic [Covid-19]
be conducted through digital mode;
The instant petition sands disposed of in the aforesaid terms.
Interlocutory Application(s), if any, also stands disposed of.
Learned counsel for the respondents undertakes to communicate the order
to the appropriate authority through electronic mode.
**
Vital Point:
Where appeal had been rejected, without following the principles
of natural justice and counsel for the Revenue, stated that he has
no objection if the matter is remanded to the Appellate Authority
for deciding the appeal afresh, appeal was restored to its original
file and number.
***
[2021] GTI 379 (Bom)
[IN THE HIGH COURT OF BOMBAY]
HON’BLE DIPANKAR DATTA, CJ. & HON’BLE M. S. KARNIK, J.
Evertime Overseas Pvt. Ltd. Vs. Union of India & Ors.

WP 3793 OF 2021
Dated. 8.10.2021
IGST—REFUND—CLAIM FOR REFUND NOT PROCESSED ON
GROUND THAT INVESTIGATION IS PENDING AGAINST
PETITIONER—THERE BEING NO ORDER OR DECISION ON
RECORD ON APPLICATION CLAIMING REFUND, RESPONDENT
DIRECTED TO PROCESS THE APPLICATION FOR REFUND AND
PASS A REASONED ORDER UPON HEARING THE PETITIONER.
HELD.—
It was found that there is no order or decision on record on the application claimin g
refund. In this view of the matter, it would be appropriate to direct the respondent No.4 to
process the application made b y the petitioner for refund and pass
49
a reasoned order upon hearing the petitioner. The claim for refund be decided as
expeditiou sly as possible on its own merits and preferably within a period of eight weeks
from date of or der.
Shri Prithwiraj Choudhuri i/b. Shri Aansh Prashant Desai, for the Petitioner.
Shri Ashutosh Misra and Shri Jitendra Mishra a/w Shri Satyaprakash Sharma, for
the Respondent .
P.C.
1. The petitioner claimed that he is entitled to refund under the provisions of
section 16 of the Integrated Goods and Services Tax Act, 2017 (hereafter "the
IGST Act" for short). It is the case of learned counsel that in respect of the goods
that have been supplied, the petitioner is entitled to claim the refund under sub-
section 3(b) of section 16 of the said Act. It is submitted that the claim for refund
is not being processed by respondent no.4 on the ground that the investigation is
pending against the petitioner.
2. Learned counsel for the petitioner invited our attention to the provisions of
sub-section 10 of section 54 of the Central Goods and Services Tax Act, 2017
(hereafter "the CGST Act" for short). Sub-section 10 of section 54 of the CGST
Act reads thus :-
"(10) Where any refund is due under sub-section (3) to a registered person
who has defaulted in furnishing any return or who is required to pay any
tax, interest or penalty, which has not been stayed by any Court, Tribunal
or Appellate Authority by the specified date, the proper officer may -
(a) Withhold payment of refund due until the said person has furnished
the return or paid the tax, interest or penalty, as the case may be;
(b) Deduct from the refund due, any tax, interest, penalty, fee or any other
amount which the taxable person is liable to pay but which remains unpaid
under this Act or under the existing law."
3. Learned counsel submits that in the teeth of the provisions of sub-section
10 of section 54 of the CGST Act, the action on the part of the respondents
refusing to process the refund on the ground that the investigation is pending is
untenable. Our attention is invited to one such application made on 18.5.2021
which is at page 92 of the petition seeking release of the outstanding amount of
drawback and IGST refund.
4. Mr. Mishra, learned counsel appearing on behalf of the respondent Nos.2
to 4 submitted that the department is justified in not processing the application on
the count of a pending investigation to secure the interest of the revenue.
5. In our opinion and having regard to the facts of the present case, it would
be appropriate if the claim for the refund is processed by the respondents in
accordance with law. We find that there is no order or decision on record on the
application claiming refund. In this view of the matter, it would be appropriate

(2021)Bright Star Plastic Industries Vs. Add. Commissioner of Sales Tax (Ori) 381
to direct the respondent No.4 to process the application made by the petitioner
for refund and pass a reasoned order upon hearing the petitioner. The claim for
refund be decided as expeditiously as possible on its own merits and preferably
within a period of eight weeks from today. The petitioner to appear before the
Competent Authority on 21.10.2021 at 11.00 a.m.
6. All contentions are kept open.
7. The writ petition is disposed of. There shall be no order as to costs.
**
Vital point:
There being no order or decision on record on application claiming
refund, respondent directed to process the application for refund
and pass a reasoned order upon hearing the petitioner.
***
[2021] GTI 381 (Ori)
[IN THE HIGH COURT OF ORISSA]
HON’BLE DR. S. MURALIDHAR, CJ. & HON’BLE B. P. ROUTRAY, J.
Bright Star Plastic Industries Vs. Add. Commissioner of

Sales Tax
W.P.(C) No.15265 of 2021
Dated. 4.10.2021.
REGISTRATION—CANCELLATION—AUTOMATIC CANCELLATION
OF REGISTRATION OF PURCHASING DEALER FOR FRAUD
COMMITTED BY SELLING DEALER—IS NOT JUSTIFIED.
HELD.—
For the fraud committed by the selling dealer, which resulted in cancellation of a
selling dealer’s registration, there cannot be an automatic cancellation of the registration
of the purchasing dealer. To attribute fraud in such circumstances to the Petitioner, as a
purchasing dealer, the Department would have to satisfy a high threshold of showing that
the purchaser indulged in the transactions with the full knowledge that the selling dealer
was non-existent. The Department would have to show that somehow the purchasing
dealer and selling dealer acted in connivance to defraud the revenue. This threshold has
not been made in the present case. In other words, the Department has failed to show that
the Petitioner as a purchasing dealer deliberately availed of the ITC in respect of the
transactions with an entity knowing that such an entity was not in existence.
Court observed that Rule 21 of the OGST Rules reads as under:

"21. Registration to be cancelled in certain cases.
The registration granted to a person is liable to be cancelled, if the said person, -
51
(a) does not con duct any business from the declared place of business: or
(b) issues invoice or bill without supply of goods or services in violation of the
provision s of the Act, or the rules made thereunder; or
(c) violates the provisions of section 171 of the Act or the rules made thereunder."
None of the three circumstances outlined above, in Clau ses (a), (b ) & (c) are
attracted in the present case. Consequently, Rule 21 of the OGST Rules cannot be
invoked by the Department, in circumstances such as the present, to cancel the
registration of the purchasing dealer.
Shri P.K. Harichandan, Advocate, for the Petitioner.

Shri S.S. Padhy and Mr. S. Mishra, ASC, for the opposite Parties.
ORDER
Per: Dr. S. Muralidhar, CJ.
1. The Petitioner, who is a dealer registered under the Odisha GST Act, has
filed this petition questioning the order dated 5.4.2021 passed by the Addi tional
Commissioner of CT & GST (Appeal), Bhubaneswar rejecting the Petitioner’s
appeal questioning the order passed by the learned Proper Officer (LPO)
rejecting the Petitioner’s application for revocation of cancellation of his
registration on 7.1.2021 under section 30(2) of the OGST Act.
2. The background facts are that the Petitioner is carrying on the business of
manufacturing and trade of Poly Vinyl Chloride (PVC) pipes, high-density
polyethylene and low-density polyethylene pipes, scrap iron angles, iron scraps
etc. On 14.8.2020, the CT & GST Officer, Bhubaneswar (Opposite Party No.2)
issued a show cause notice (SCN) in Form GST REG-17 under Rule 22(1) of the
OGST Rules, 2017 for cancellation of Petitioner’s registration on the ground that
"in case, Registration has been obtained by means of fraud, willful misstatement
or suppression of facts,".
3. After the Petitioner filed a reply on 19.8.2020, Opposite Party No.2 by an
order dated 25.8.2020 dropped the proceedings for cancellation of the
registration. However, on the very same day, the Opposite Party No.2 issued
another SCN for cancellation of registration, this time on the ground that: "you
have claimed ITC (Input Tax Credit) of Rs.2,04,650,06 against fake invoices
issued by nonexistent supplier".
4. A detailed reply was sent by the Petitioner to the aforesaid SCN on
31.8.2020. It was pointed out that the Petitioner had purchased G.P. Sheets from
M/s. Pawansut Enterprises. The details of the bill numbers, the dates, the value
of the goods and the CGST & SGST amounts paid and the total amount were set
out in a tabular form. The three invoices were dated 11.4.2018, 30.4.2018 and
13.8.2018. It was further pointed out that the Petitioner had reflected the
purchases so made in the return 3B for the relevant showing the total tax paid
purchases and tax collected messages and that no mismatch in the return had
been intimated to the Petitioner. It was ascertained that the purchases had

been made from a dealer, who is registered with the Department, and ITC was
being claimed on the basis of the tax invoices that fulfilled the requirement of
law. Reliance was placed on a decision of the Delhi High Court in On Quest
Merchandising India Pvt. Ltd. Vs. Government of NCT of Delhi (2017) 64 GST
623 (Delhi),wherein it was observed that the buyer cannot be put in jeopardy
when he has done all that the law requires him to do and further that the
purchasing dealer has no means to ascertain and secure compliance of the
selling dealer.
5. On 17.10.2020 an intimation was issued in Form GST DRC-01A Part-A
under section 74(5) of the OGST Act read with Rule 142(1A) of the OGST Rules
by Opposite Party No.2 calling upon the Petitioner to pay the tax, interest and
penalty amount aggregating to Rs.3,48,066/- on the ground that the ‘ITC claimed
was against fake invoices issued by nonexistent supplier’. A reply was sent on
2.11.2020 by the Petitioner to Opposite Party No.2 asking for being provided
with the material in possession of Opposite Party No.2.
6. On 3.12.2020, Opposite Party No.2 cancelled the Petitioner’s registration
with effect from 3.11.2020 with the remark "clarification submitted not
satisfactory, hence cancelled."
7. On 10.12.2020 the Petitioner applied under section 30 of the OGST Act
for revocation of the cancellation of registration. On 18.12.2020, Opposite Party
No.2 issued SCN in Form GST REG-23 for rejection of the said application. After
the Petitioner filed a reply thereto on 24.12.2020, Opposite Party No.2 on
7.1.2020 rejected the revocation application.
8. On 8.1.2021 Opposite Party No.2 issued a SCN under 74 (1) of the
OGST Act read with Rule 142(1) of the OGST Rules fixing the date of filing the
reply to the SCN dated 17.10.2020 till 8.2.2021.
9. The Petitioner at that stage filed W.P.(C) No.2708 of 2021 in this Court.
The said writ petition was disposed of by this Court on 17.1.2021 directing the
Petitioner to file an appeal before the Appellate Authority. Challenging the order
dated 7.1.2021, the Petitioner filed an appeal before the Additional
Commissioner CT & GST (Appeals). The said appeal was rejected by impugned
order dated 5.4.2021.
10. This Court has heard the submissions of Mr. P.K. Harichandan and Mr.
Padhy and Mr. Mishra, learned Additional Standing Counsel (ASC) for the
Department.
11. The reasoning in the impugned order dated 5.4.2021 of the Appellate
Authority is only that "the preventive measure has been taken by the LPO by
cancellation of the registration of the appellate to prevent future fraud or to
prevent from recurrence for such the regular claims of the ITC and that is the
interest of the Government revenue". As noted earlier, the cancellation of the
Petitioner’s registration was for a very terse reason: "clarification submitted not
satisfactory". As a result, the Court is not in a position to appreciate the actual
reasons that prevailed with either the Appellate Authority or the LPO for
cancellation of the Petitioner’s GST registration.
53
12. At the outset, it is noted that Mr. Harichandan confines his submission
to the restoration of the Petitioner’s registration. According to him, of the 21
transactions of purchase made by the Petitioner during the relevant period, it is
only the purchase from one dealer viz., M/s. Pawansut Enterprises, that has
attracted the SCN issued to the Petitioner by Opposite Party No.2 on the ground
that ITC had been claimed against a fake invoice.
13. It is submitted by Mr. Harichandan that on a collective reading of section
16 of the OGST Act with 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. Secondly, he points out that the
cancellation registration of the selling dealer M/s. Pawansut Enterprises took
place only on 1.10.2019 i.e., long after the dates of the purchases made by the
present Petitioner from the said dealer. He, therefore, submits that on the date of
purchases took 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.
14. Mr. Padhy, learned ASC for the Department drew the attention of the
Court to the reply filed to the present petition where it has been stated that when
a field visit was undertaken to the address shown for the selling dealer, the
premises were found to be occupied by some other person and not the selling
dealer. From the said visits which were undertaken on 1.7.2019, a conclusion
was drawn that the transactions entered into by the present Petitioner with the
selling dealer in April and August 2018 were fake transactions.
15. The Court finds merit in the contention of Mr. Harichandan that for the
fraud committed by the selling dealer, which resulted in cancellation of a selling
dealer’s registration, there cannot be an automatic cancellation of the registration
of the purchasing dealer. Rule 21 of the OGST Rules reads as under:
"21. Registration to be cancelled in certain cases.
The registration granted to a person is liable to be cancelled, 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."
16. None of the three circumstances outlined above, in Clauses (a), (b) & (c)
are attracted in the present case. Consequently, Rule 21 of the

OGST Rules cannot be invoked by the Department, in circumstances such as

the present, to cancel the registration of the purchasing dealer.
17. The decision of the Gujrat High Court dated 10.12.2020 in Special Leave
Application No.15508 of 2020 (Vimal Yashwantgiri Goswami Vs. State of
Gujarat) supports the case of the Petitioner. There, in nearly identical
circumstances, the High Court came to the conclusion that the cancellation of
registration was without any reason and the explanation offered by the registered
dealer in response to the SCN issued for cancellation of registration was not
even discussed. Here too apart from simply stating that the explanation offered
was not ‘satisfactory’, no reasons have been given by the LPO for cancellation of
the petitioner’s registration. The appellate order also only proceeds on the basis
that this is a preventive measure. It fails to discuss the explanation offered by the
Petitioner.
18. To the same effect a decision dated 3.8.2021 of the High Court of
Telengana at Hyderabad in W.P.No.7063 of 2021 (M/s. Deem Distributors
Private Ltd. Vs. Union of India). In the present case, 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 of M/s. Pawansut
Enterprises had not been cancelled. That was to take place much later on
1.10.2019. 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.
19. To attribute fraud in such circumstances to the Petitioner, as a
purchasing dealer, the Department would have to satisfy a high threshold of
showing that the purchaser indulged in the transactions with the full knowledge
that the selling dealer was non-existent. The Department would have to show
that somehow the purchasing dealer and selling dealer acted in connivance to
defraud the revenue. This threshold has not been made in the present case. In
other words, the Department has failed to show that the Petitioner as a
purchasing dealer deliberately availed of the ITC in respect of the transactions
with an entity knowing that such an entity was not in existence.
20. For the aforementioned reasons, the impugned order of the LPO
rejecting the Petitioner’s application for revocation of i ts cancellation of
registration and the impugned appellate order dated 5.4.2021 rejecting the
Petitioner’s appeal are hereby set aside. The Department is now directed to
restore the Petitioner’s registration forthwith by issuing appropriate
orders/directions not later than one week from today. The Petitioner will
correspondingly now be permitted to file all the return which it could not file on
account of the cancellation of the registration.
21. The petition is allowed in above terms. No order as to costs. An urgent
certified copy of this order be granted as per rules.
**
Vital Point:
For the fraud committed by the selling dealer, which resulted in
55
cancellation of a selling dealer’s registration, there cannot be an

automatic cancellation of the registration of the purchasing dealer.
***
[2021] GTI 386 (Ukh)
[IN THE HIGH COURT OF UTTARAKHAND]
HON’BLE SHARAD KUMAR SHARMA, J.
Eficaz Project Limited Liability Partnership Vs.

Commissioner & Anr.
WP (M/S) No. 1968 of 2021
Dated. 21.9.2021.
REGISTRATION—CANCELLATION—OPPORTUNITY OF HEARING
AS CONTEMPLATED UNDER SUB-SECTION (2) OF SECTION 29 IS
MANDATORY BEFORE CANCELLATION OR SUSPENSION OF
REGISTRATION—THIS IS FURTHER POSTULATED BY RULES
FRAMED UNDER SECTION 164 OF UTTARAKHAND GOODS AND
SERVICES TAX ACT, 2017, AS PROVIDED UNDER RULE 22 SUB-
RULE (3).
HELD.—
Sub-section (2) of section 29 of the Act, specifically creates a statutory obligation,
that in an eventuality, where the registration is req uired to be cancelled, under either of
the modes, i.e. on account of the commission of the default or on account of an
application submitted b y the registered assessee, the opportunity of hearing is
mandatory, required to be provided. This is what has been further postulated by the
Rules framed under section 164 of Uttarakhand Goods and Services Tax Act, 2017, as
provided under Rule 22 Sub-rule (3).
Even if the impugned order of 12.7.2021, is taken into con sideration, there is not
even a single whisper that after the expiry of 30 days, as provided under Sub-rule (3) Rule
22, when the cancellation was being resorted to, thou gh apart from the fact that the office
concerned has become functus officio after the expiry of 30 days, even if at all, the
cancellation was required, in that eventuality, then the petitioner ought to have been
heard.
Because the order impugned apparently suffers from the violation of a statutory
provision s of non-providing of an y opportunity as contemplated under Sub -section (2) of
section 29, with the consensu s of the parties, the impugned order is quashed.
Shri S.K. Posti, Senior Advocate and Shri Ashutosh Posti, Advocate, for the
Petitioner.
Shri Mohit Maulakhi, Brief Holder, for the Respondent.
JUDGEMENT
Per: Sharad Kumar Sharma, J.
Before this Court ventures into the actual controversy, which has been

(2021)Eficaz Project Limited Liability Partnership Vs. Commissioner & Anr. (Ukh) 387
raised by the learned counsel for the petitioner, certain references, to the
relevant provisions becomes imminent to be considered, which deals with the
aspect of cancellation or suspension of the registration, particularly, that as
contained under section 29 of the Central Goods and Services Tax Act, 2017,
which is extracted hereunder :-
"29. Cancellation [or suspension] of registration.-[(1) The proper officer
may, either on his own motion or on an application filed by the registered
person or by his legal heirs, in case of death of such person, cancel the
registration, in such manner and within such period as may be prescribed,
having regard to the circumstances where,-
(a) the business has been discontinued, transferred fully for any reason
including death of the proprietor, amalgamated with other legal entity,
demerged or otherwise disposed of; or
(b) there is any change in the constitution of the business; or
[(c) the taxable person is no longer liable to be registered under section 22
or section 24 or intends to opt out of the registration voluntarily made under
sub-section (3) of section 25:]
[Provided that during pendency of the proceedings relating to cancellation
of registration filed by the registered person, the registration may be
suspended for such period and in such manner as may be prescribed.]
(2) The proper officer may cancel the registration of a person from such
date, including any retrospective date, as he may deem fit, where,-
(a) a registered person has contravened such provisions of the Act or the
rules made thereunder as may be prescribed; or
(b) a person paying tax under section 10 has not furnished returns for
three consecutive tax periods; or
(c) any registered person, other than a person specified in clause (b), has
not furnished returns for a continuous period of six months; or
(d) any person who has taken voluntary registration under sub-sec-tion (3)
of section 25 has not commenced business within six months from the date
of registration; or
(e) registration has been obtained by means of fraud, wilful mis-statement
or suppression of facts:
Provided that the proper officer shall not cancel the registration without
giving the person an opportunity of being heard.
[Provided further that during pendency of the proceedings relating to
cancellation of registration, the proper officer may suspend the registration
for such period and in such manner as may be pre-scribed.]
(3) The cancellation of registration under this section shall not affect
57
the liability of the person to pay tax and other dues under this Act or to
discharge any obligation under this Act or the rules made thereunder for
any period prior to the date of cancellation whether or not such tax and
other dues are determined before or after the date of cancellation.
(4) The cancellation of registration under the State Goods and Services
Tax Act or the Union Territory Goods and Services Tax Act, as the case
may be, shall be deemed to be a cancellation of registration under this Act.
(5) Every registered person whose registration is cancelled shall pay an
amount, by way of debit in the electronic credit ledger or electronic cash
ledger, equivalent to the credit of input tax in respect of inputs held in stock
and inputs contained in semi-finished or finished goods held in stock or
capital goods or plant and machinery on the day immediately preceding the
date of such cancellation or the output tax payable on such goods,
whichever is higher, calculated in such manner as may be prescribed:
Provided that in case of capital goods or plant and machinery, the taxable
person shall pay an amount equal to the input tax credit taken on the said
capital goods or plant and machinery, reduced by such percentage points
as may be prescribed or the tax on the transaction value of such capital
goods or plant and machinery under section 15, whichever is higher.
(6) The amount payable under sub-section (5) shall be calculated in such
manner as may be prescribed."
2. Sub-section (2) of section 29 of the Act, specifically creates a statutory
obligation, that in an eventuality, where the registration is required to be
cancelled, under either of the modes, i.e. on account of the commission of the
default or on account of an application submitted by the registered assessee, the
opportunity of hearing is mandatory, required to be provided.
3. This is what has been further postulated by the Rules framed under
section 164 of Uttarakhand Goods and Services Tax Act, 2017, as provided
under Rule 22 Sub-rule (3). In fact, what the learned Senior Counsel for the
petitioner, Mr. S.K. Posti, wants to contend that once he himself as a partner of a
partnership firm has submitted an application for cancellation of his GST
registration No.GSTIN05AAGFE8721Q1ZZ, which was filed on 30.5.2020, in that
eventuality, under Sub-rule (3) of Rule 22 of the Rules framed under the Act, the
decision on the application submitted for the cancellation of the registration was
required to be taken by respondent No.2, within a period of 30 days as provided
therein. In case, if no decision is taken, within a period of 30 days, in that
eventuality, the respondent No.2, becomes functus officio, to pass any order on
the application which was submitted by the person concerned for cancellation of
the registration and hence, any subsequent cancellation of registration after the
expiry of the aforesaid period would be without jurisdiction.
4. Rule 22 of the Rules is extracted hereunder :-

(2021)Eficaz Project Limited Liability Partnership Vs. Commissioner & Anr. (Ukh) 389
"22. Cancellation of registration.-(1) Where the proper officer has reasons

to believe that the registration of a person is liable to be cancelled under
section 29, he shall issue a notice to such person in FROM GST REG-17,
requiring him to show cause, within a period of seven working days from
the dale of the service of such notice, as to why his registration shall not be
cancelled.
(2) The reply to the show cause notice issued under sub-rule
(1) shall be furnished in FORM REG-18 within the period specified in the
said sub-rule.
(3) Where a person who has submitted an application for cancellation of
his registration is no longer liable to be registered or his registration is liable
to be cancelled, the proper officer shall issue an order in FORM GST REG-
19. within a period of thirty days from ilk-date of application submitted under
rule 20 or, as the case may be, the date of the reply to the show cause
issued under sub-rule (1), cancel the registration, with effect from a date to
be determined by him and notify the taxable person, directing him to pay
arrears of any lax, interest or penalty including the amount liable to be paid
under sub-section (5) of section 29.
(4) Where the reply furnished under sub-rule (2) is found to be
satisfactory, the proper officer shall drop the proceedings and pass an
order in FORM GST REG-20.
(5) The provisions of sub-rule (3) shall, mutatis mutandis, apply to the legal
heirs of a deceased proprietor, as if the application had been submitted by
the proprietor himself"
5. The second limb of argument of the learned counsel for the petitioner is
that, even if at all a decision was required to be taken on an application
submitted by the petitioner on 30.5.2020, requesting for the cancellation of the
registration, if at all, the decision was required to be taken after the expiry of the
period of 30 days, as provided under Sub-rule (3) of Rule 22 of the Rules, in that
eventuality too, the implications of Sub-section (2) of section 29 of the Act, ought
to have been followed and the petitioner should have been mandatorily provided
with an opportunity of hearing and in the absence of there being any prior show
cause issued to the petitioner, calling his explanation, the order of cancellation of
his registration would be apparently and statutorily bad in the eyes of law.
6. Even if the impugned order of 12.7.2021, is taken into consideration,
there is not even a single whisper that after the expiry of 30 days, as provided
under Sub-rule (3) Rule 22, when the cancellation was being resorted to, though
apart from the fact that the office concerned has become functus officio after the
expiry of 30 days, even if at all, the cancellation was required, in that eventuality,
then the petitioner ought to have been heard.
7. On these short premise, the learned counsel for the parties agreed that
because the order impugned apparently suffers from the violation of a statutory
provisions of non-providing of any opportunity as contemplated under
59
Sub-section (2) of section 29 of the Act, with the consensus of the parties, the
impugned order is quashed.
8. The Writ Petition is allowed. The matter is remitted back to the respondent
No. 2, to take an appropriate action and decision thereon too, only after pr oviding
an opportunity of hearing to the petitioner and the decision on the same would be
taken within a period of 30 days from the date of service of the certified copy of
this order.
**
Vital Point:
Because the order impugned apparently suffers from the violation
of a statutory provisions of non-providing of any opportunity as
contemplated under sub-section (2) of section 29 of the CGST Act,
with the consensus of the parties, the impugned order of
cancellation of registration is quashed.
***
[2021] GTI 390 (AAR-WB)
[IN THE AUTHORITY FOR ADVANCE RULING, WEST BENGAL]
HON’BLE BRAJESH KUMAR SINGH & HON’BLE JOYJIT BANIK, MEMBERS
In Re: Ex-servicemen Resettlement Society

Case No. 10 of 2021; Order Number 09/WBAAR/2021-22.
Dated. 30.9.2021.
LEVY OF TAX—VALUATION OF SUPPLY—MANAGEMENT FEE/
ADMINISTRATIVE CHARGES & EMPLOYER PORTION OF EPF &
ESI NOT DEDUCTIBLE FOR THE PURPOSE OF DETERMINATION
OF VALUE OF SUPPLY UNDER SECTION 15 OF CGST ACT—TAX
WOULD BE LEVIABLE UNDER SECTION 9 ON THE ENTIRE
BILLING AMOUNT.
HELD.—
Levy and collection of tax under the GST Act has been specified in section 9 of the
GST Act and section 5 of the Integrated Goods and Services Tax Act, 2017. It transpires
from the above-noted provision s of the Act that while sub-section (2) of section 15 clearly
specifies the elements that will form a part of value of supply, sub -section (3) of section
15 excludes the elements that are not to be included in the value of supply. The aforesaid
provision s of the Act leave no room to deduct any amount like management fee,
Administrative charges and employer portion of EPF and ESI for the purpose of
determination of value of supply under section 15 of the CGST Act meaning thereby in
the instant case, tax is leviable under section 9 of the Act ibid on the entire bill ing
amount.
Shri Nirmal Dhaoa, for the Applicant.

(2021) In Re: Exservicemen Resettlement Society(AAR-WB) 391
Preamble
A person within the ambit of section 100 (1) of the Central Goods and
Services Tax Act, 2017 or West Bengal Goods and Services Tax Act, 2017
(hereinafter collectively called ‘the GST Act’), if aggrieved by this Ruling, may
appeal against it before the West Bengal Appellate Authority for Advance Ruling,
constituted under section 99 of the West Bengal Goods and Services Tax Act,
2017, within a period of thirty days from the date of communication of this Ruling,
or within such further time as mentioned in the proviso to section 100 (2) of the
GST Act.
Every such appeal shall be filed in accordance with section 100 (3) of the
GST Act and the Rules prescribed thereunder, and the Regulations prescribed
by the West Bengal Authority for Advance Ruling Regulations, 2018.
1.1 At the outset, we would like to make it clear that the provisions of the
Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the
West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short)
have the same provisions in like matter except for certain provisions. Therefore,
unless a mention is specifically made to such dissimilar provisions, a reference
to the CGST Act would also mean reference to the corresponding similar
provisions in the WBGST Act. Further to the earlier, henceforth for the purposes
of these proceedings, the expression ‘GST Act’ would mean the C GST Act and
the WBGST Act both.
1.2 The applicant is stated to be a registered society providing security
services and scavenging services (Karma Bandhus) to different Medical
Colleges & Hospital, District Hospitals and other hospitals of Government of
West Bengal.
1.3 It is submitted by the applicant that as per labour laws of Government
of West Bengal, the applicant claims Minimum Wage + Employer Portion of EPF
@ 13% + ESI @ 3.25% and charges tax @ 18% leviable under the GST Act on
gross bill amount in every month for providing security & Karma Bandhus
(Scavenging) services to the Government Hospitals.
1.4 However, the Audit Authority (Indian Audit and Accounts Department,
West Bengal) in course of audit of Bankura Sammilani Medical College &.
Hospital, has raised objection of excess payment of GST upon observation that
‘GST’ to be payable only on Management Fees/Services Charges.
1.5 Further, few hospital have raised objection that since employer portion
of EPF & ESI amount are deposited to respective authority (i.e. EPF & ESIC),
the amount of EPF & ESIC should be exempted from paying GST.
1.6 Under these circumstances, the applicant has made this application
under sub-section (1) of section 97 of the GST Act and the rules made there
under raising following questions vide serial number 14 of the application in
FORM GST ARA-01:
61
(i) Whether GST to be payable on Management Fee/Administrative

charges only or otherwise complete billing amount?
(ii) Whether employer portion of EPF & ESl amount of the bill are
exempted for paying GST?
1.7 The aforesaid question on which the advance ruling is sought for is
found to be covered under clause (e) of sub-section (2) of section 97 of the GST
Act.
1.8 The applicant states that the question raised in the application has
neither been decided by nor is pending before any authority under any provision
of the GST Act.
1.9 The officer concerned from the Revenue has raised no objection to the
admission of the application.
1.10 The application is, therefore, admitted.
2. Submission of the Applicant
2.1 The applicant has appeared for personal hearing proceedings and
reiterated the submissions as narrated above.
2.2 The applicant argues that as per labour laws of Govt. of WB, this society
is claiming Minimum Wage + Employer Portion of EPF (13%), ESI (3.25%) and is
paying GST @18% on gross bill amount in every month for providing Security &
Karma Bandhus (Scavenging) services to the Govt. Hospitals.
2.3 Medical Colleges & Hospital, District Hospitals and other Hospitals of
Govt. of WB, on capacity of recipient, sanction above mentioned bill amount
through Pay & Accounts/Treasury. The applicant disburses the same amount to
their employees (Security Guards) through bank payment. EPF, ESI &
CGST/SGST are deposited through e-challan.
2.4 In course of personal hearing, the applicant has furnished follow-ing
documents in support of his submission:
* A copy of letter dated 4.3.2004 issued by the Department of Health &
Family Welfare, M.A. Branch, Government of West Bengal which is stated
by the Applicant as the initial Work Order for providing security personnel to
various Medical College & Hospital;
* A copy of letter dated 18.5.2015 issued by the Department of Health &
Family Welfare, M.A. Branch, Government of West Bengal on the subject
matter of ‘Engagement of Ex-servicemen through ERS (Ex-servicemen
Resettlement Society) for providing security services at different Second
Tier Govt. Hospital;
* Copy of work order for extension of security services at B.S. Medical
College & Hospital, Bankura;
* Photocopy of bill issued by the Applicant to Bankura Sammilani Medical
College &. Hospital for the months of June’20 and June’21 showing tax is
charged on entire billing amount;
* Copy of Bank Statement;

* A print out of relevant pages (only two pages) of e-Tender for security
services for Lady Duffer in Victoria Hospital under Memo No.
LDVH/2021/828 dated 12.5.2021 where GST on ‘Management Fee’ has
been specified.
2.5 The applicant has reiterated that few hospitals have again raised
objection that employer portion of EPF & ESI amount are deposited to respective
authority (i.e. EPF & ESIC). So the amount of EPF & ESIC should be exempted
from paying GST.
3. Submission of the Revenue
The concerned officer from the revenue has expressed his view in writing
which is reproduced verbatim as under:
3.1 The valuation aspect under GST era is dealt with only one section i.e.
Section 15 under the CGST Act and there is a separate chapter i.e. chapter IV in
name of "Determination of Value of Supply" containing rules 27 to 35 under the
CGST Rules.
Now sub-section 15(1) of CGST Act 2017 very categorically states that:
"The value of a supply of goods or services or both shall be the transaction
value, which is the price actually paid or payable for the said supply of
goods or services or both where the supplier and the recipient of the supply
are not related and the price is the sole consideration for the supply".
3.2 Further, sub-section (2) of section 15 of the CGST Act 2017 even more
clearly states that
"(2) The value of supply shall include
(a) any taxes, duties, cesses, fees and charges levied under any law for the
time being in force other than this Act, the State Goods and Services Tax
Act, the Union Territory Goods and Services Tax Act and the Goods and
Services Tax (Compensation to States) Act, if charged separately by the
supplier."
3.3 Hence as per opinion of the undersigned it is crystal clear that for the
purpose of valuation one has to take the total value as indicated in the Invoice /
Bill.
3.4 It is submitted that only Management Fees / Administrative charges
consists the taxable amount is merely a presumption and not backed by any law.
Further the objection of Audit also fails to refer any legal provision, what so ever,
to justify their objection. The only point of their argument was that in the e-tender
there was a clause of Management Fees / Administrative charges [4th Para of
the Audit Query, attached by the applicant]. But the condition of an e-tender
cannot be the basis of determining the assessable value under any Tax Law.
The said assessable value must be defined by specific provision of law. And as
discussed above that specific provision of law clearly speaks that the
63
entire amount shown in the invoice excluding the CGST / SGST or IGST part, as
the case may be, is the assessable / taxable value.
3.5 Regarding the point of inclusion of employer’s contribution to-wards EPF
& ESI separately indicated in the bill, the submission of the undersigned is that,
sub-section (2) of section 15 of the CGST Act 2017 (supra) categorically clarifies
that each and every component of the invoice, except GST taxes, must form a
part of the taxable value. Hence there is no ambiguity that EPF & ESI amount
shown in the bill has to be included in the taxable value to calculate the GST
liability.
3.6 Further both the EPF & ESI contribution amount, stated ibid, have
nothing to do with the recipient of the service or the supplier of the service. These
are the amount related to the employee of the supplier of the service. The role of
the supplier of the service is nothing but collector cum depositor of the stated
amount to specific Govt. exchequer. Now in the course of business the supplier
of the service has received this amount from the recipient of the service in lieu of
providing service. Hence, whatever the use of the said amount may be, it must
be taxable as per laws stated above.
3.7 In this regard, the undersigned prefers to make reference towards
advance ruling given by the Ld. Advance Ruling Bench of Karnataka [Advance
Ruling No. KAR ADRG 02/2021 dated 29.1.2021]where though the factum was a
bit different but the principle was the same and the observation was as under (in
the order part),
"The value of the taxable supply of the manpower services is the
transaction value equivalent to the bill amount ".
3.8 On the basis of argument supra the undersigned is most respect-fully
making the following submission:
"The taxable value in this case is the entire billing amount inclusive of the
EPF & ESIs amounts and any other amount(s) in whatever form or in
whatever nomenclature it may be described, except the tax parts under the
GST Acts."
4. Observations & Findings of the Authority
4.1 We have gone through the records of the issue as well as submissions
made by the applicant during the course of personal hearing. We have also
considered the submission made by the officer concerned from the Revenue.
4.2 The applicant submits that he is engaged in providing security services
and scavenging services to various Medical College and hospitals for which he
charges the amount to be paid to the guards as per Minimum Wages Act. The
issue involved in the instant case, as we find, is to decide the value of supply in
respect of the supply of the services on which the applicant is liable to pay tax
under the GST Act.
4.3 The applicant has produced photocopies of some tax invoices issued by
the applicant wherein SAC of the services provided by the Applicant is found to
be 998525 which is taxable @ 18% (CGST @ 9% +

WBGST @ 9%) vide entry serial number 23 of the Notification No. 11/2017-
Central Tax (Rate) dated 28.6.2017, as amended from time to time
[corresponding W.B. State Notification No. 1135 F.T. dated 28.6.2017, as
amended from time to time]. The same is not disputed.
4.4 Levy and collection of tax under the GST Act has been specified in
section 9 of the GST Act and section 5 of the Integrated Goods and Services
Tax Act, 2017. Sub-section (1) of section 9 of the GST Act reads as follows:
(1) Subject to the provisions of sub-section (2), there shall be levied a tax
called the central goods and services tax on all intra-State supplies of
goods or services or both, except on the supply of alcoholic liquor for
human consumption, on the value determined under section 15 and at such
rates, not exceeding twenty per cent., as may be notified by the
Government on the recommendations of the Council and collected in such
manner as may be prescribed and shall be paid by the taxable person.
Sub-section (1) of section 5 of the Integrated Goods and Services Tax Act,
2017 reads as under:
(1) Subject to the provisions of sub-section (2), there shall be levied a tax
called the integrated goods and services tax on all inter-State supplies of
goods or services or both, except on the supply of alcoholic liquor for
human consumption, on the value determined under section 15 of the
Central Goods and Services Tax Act and at such rates, not exceeding forty
per cent., as may be notified by the Government on the recommendations
of the Council and collected in such manner as may be prescribed and
shall be paid by the taxable person:
Provided that the integrated tax on goods imported into India shall be levied
and collected in accordance with the provisions of section 3 of the Customs
Tariff Act, 1975 on the value as determined under the said Act at the point
when duties of customs are levied on the said goods under section 12 of
the Customs Act, 1962.
4.5 It follows from above that except in cases of integrated tax on goods
imported into India, tax under the GST Act as well as IGST Act shall be levied on
the value determined under section 15 of the GST Act.
4.6 For the sake of convenience and further discussion, relevant portion of
section 15 is reproduced herein under:
"15. (1) The value of a supply of goods or services or both shall be the
transaction value, which is the price actually paid or payable for the said
supply of goods or services or both where the supplier and the recipient of
the supply are not related and the price is the sole consideration for the
supply.
(2) The value of supply shall include-
(a) any taxes, duties, cesses, fees and charges levied under any law for the
time being in force other than this Act, the State Goods and
65
Services Tax Act, the Union Territory Goods and Services Tax Act and the
Goods and Services Tax (Compensation to States) Act, if charged
separately by the supplier;
(b) any amount that the supplier is liable to pay in relation to such supply
but which has been incurred by the recipient of the supply and not included
in the price actually paid or payable for the goods or services or both;
(c) incidental expenses, including commission and packing, charged by the
supplier to the recipient of a supply and any amount charged for anything
done by the supplier in respect of the supply of goods or services or both at
the time of, or before delivery of goods or supply of services;
(d) interest or late fee or penalty for delayed payment of any consideration
for any supply; and
(e) subsidies directly linked to the price excluding subsidies provided by
the Central Government and State Governments.
Explanation.-For the purposes of this sub-section, the amount of subsidy
shall be included in the value of supply of the supplier who receives the
subsidy.
(3) The value of the supply shall not include any discount which is given-
(a) before or at the time of the supply if such discount has been duly
recorded in the invoice issued in respect of such supply; and
(b) after the supply has been effected, if-
(i) such discount is established in terms of an agreement entered into at or
before the time of such supply and specifically linked to relevant invoices;
and
(ii) input tax credit as is attributable to the discount on the basis of
document issued by the supplier has been reversed by the recipient of the
supply."
4.7 It transpires from the above-noted provisions of the Act that while sub-
section (2) of section 15 clearly specifies the elements that will form a part of
value of supply, sub-section (3) of section 15 excludes the elements that are not
to be included in the value of supply.
4.8 The aforesaid provisions of the Act leave no room to deduct any amount
like management fee, employer portion of EPF and ESI for the purpose of
determination of value of supply under section 15 of the GST Act meaning
thereby in the instant case, tax is leviable under section 9 of the Act ibid on the
entire billing amount.
In view of the above discussions, we rule as under:
RULING
Question: Whether GST to be payable on Management Fee/Administrative
charges only or otherwise complete billing amount?

(2021) In Re: Gujarat Hira Bourse(AAR-Guj) 397
Answer: GST is payable on total value of supply, as discussed.

Question: Whether employer portion of EPF & ESl amount of the bill are
exempted for paying GST?
Answer: Answered in the negative.
**
Vital Point:
Any amount like management fee, Administrative charges and
employer portion of EPF and ESI is not deductible for the purpose
of determination of value of supply under section 15 meaning
thereby in the instant case, tax is leviable under section 9 of the
Act ibid on the entire billing amount.
***
[2021] GTI 397 (AAR-Guj)
[IN THE AUTHORITY FOR ADVANCE RULING, GUJARAT]
HON’BLE SANJAY SAXENA & HON’BLE ARUN RICHARD, MEMBERS
In Re: Gujarat Hira Bourse

GUJ/GAAR/R/52/2021
Dated. 15.9.2021.
LEVY OF GST—LEASING SERVICES—CONTRIBUTION

PAID/PAYABLE BY MEMBERS OF COUNCIL TOWARDS
DEVELOPMENT COST OF BOURSE FOR PROMOTION OF
EXPORTS OF GEM AND JEWELLERY—IS SUPPLY AND LIABLE
TO GST—EXEMPTION UNDER ENTRY NO.41(HEADING 9972) OF
NOTIFICATION NO.12/2017CENTRAL TAX(RATE), DATED
28.6.2017, NOT AVAILABLE.
HELD.—
Question on which Advance Ruling sought:
a. Whether the contribution paid/payable by the members towards Development
Cost of the Bourse amounts to supply liable to Goods and Service Tax?
b. Whether the said Contribution by members towards Development Cost of Bourse
for the promotion of Exports of Gem and Jewellery would be exempt under Entry
No.41(Heading 9972) of Notification No.12/2017Central Tax(Rate) dated 28.6.2017?
c. Once the captioned amendment to section 7(1) of the CGST Act, 2017 is notified
by the Central Government, if the liability to pay tax shall accrue with retrospective effect
from 1st July, 2017. Whether, interest would be payable on the accrued Tax
67
liability for the said period from 1.7.2017 upto the date on which the amendment is
notified?
Ruling:
a. The subject consideration paid by indu strial units to GHB is liable to GST. The
Subject activity by GHB is Supply of Service.
b. The consideration paid to GHB is n ot exempt under entry 41 to said Notification.

c. Liability to GST arises from 1.7.2017. Thereby Statutory Interest is payable. This
issue has been expounded at paragraph 17 of subject Ruling.
Hardik Modh, Nitin Gheewale & Arjun Akruwala, for the Applicant.
Ruling
Brief Facts:
M/s. Gujarat Hira Bourse (hereinafter referred to as GHB for sake of brevity)
submits that it is Not-for-Profit Company incorporated under section 25 of the
erstwhile Companies Act, 1956 which is now the section 8 of the Companies Act,
2013 and that it is registered under section 12A of the Income Tax, 1961,
engaged in the development of Gems and Jewellery Park.
2. GHB submits that its main object is to establish a Bourse for promotion of
exports of Diamond, Gems, Pearl and Jewellery from India and provide for this
purpose, an infrastructure and other facilities in India for Indian and overseas
buyers and sellers of Diamond, Gems, Pearl and Jewellery; that within its
objects, to develop India as Modern and sophisticated Diamond market, GHB
has taken the activity of developing a superlative Gem and Jewellery park in
Surat, which has traditionally been the head-quarter of Diamond polishing,
trading and export industry in Gujarat; that for the fulfilment of its objects, GHB
has acquired pieces of land within the village limits of Ichchapore-Bhatpore of
Surat District vide Lease Deed executed between the Gujarat Industrial
Development Corporation (GIDC) as owner and GHB as Lessee, for a period of
99 years which is further sub-leased based on plots allotted to its members/appli-
cants; that to achieve the intended purpose, GHB receives contribution from its
members who are well known Gem and Jewellery exporters which is used
towards the Infrastructure cost of the facilities like road, drainage, park, water
supply, etc. for the members/applicants as per their booked area; that the
members’ contribution towards the infrastructure cost includes building of roads,
storm water drainage, water distribution network, sewage network, landscape
infrastructure, cable network, ESR water tank, sump, pump house, control room,
sub-station, minor bridge on canal, approach road, electrical and power
installation and fittings and street light infrastructure, Administrative cum Custom
House Building, Compound wall etc.
3. GHB further submits that the amendment to section 7(1) of the CGST Act,
2017 by insertion of new sub-clause(aa) through Finance Budget, 2021,

has culminated the essence of Doctrine of Mutuality and upturned the hypothesis
that the income which falls within the purview of the doctrine of mutuality is
exempt from taxation; that this is despite of perpetuity of the right to use the land
and other allied conditions that form part of the agreement between GIDC, which
bestows sufficient justification for the amount of infrastructure cost contributed by
the members to be exempt from tax under Central GST Act, 2017, the
perceptible state of affairs has hauled this Not-for-Profit Company towards
payment of GST with retrospective effect from 1.7.2017 till date; that pursuant to
the above, GHB has paid GST along with interest, under Protest on the
contribution by members towards Infra-structure cost with retrospective effect.
4. GHB has submitted as follows:
(i) GHB being a not-for-profit company incorporated under section 8 of the
Companies Act, 2013 (section 25 of erstwhile Companies Act, 1956), is a
body Corporate, Limited by Guarantee, which collects one time
infrastructure cost from its members to develop infrastructure for its
members to achieve its intended purpose as mentioned under the facts of
the case.
(ii) This immovable property leased by GIDC to GHB is subject to
conversion into freehold land but has been leased by the GIDC with an
option to convert the leasehold land into freehold land subject to an
obligation for the company to operate for 15 years continuously and then
only the demised premises can be converted into freehold land. It is to be
noted that after this conversion to free hold superior rights shall accrue to
GHB and GHB will become the owner of the land. This shall be subject to
payment of premium which shall be 30% of the amount determined by the
GIDC at the time of allotment of land or the value fixed as per new ‘Jantri’
(a ready reckoner for stamp duty being used by the revenue department of
the state) whichever is higher. Considering the above, the ownership of the
demised land shall be transferred to GHB and ultimately the ownership of
the demised land shall be transferred to the respective members.
Consequently, it indicates that there shall be complete and total transfer of
all rights in the property and the seller shall retain no rights in the
transferred property.
(iii) As per the MOU executed with GIDC, the land is to be transferred to
GHB after 15 years, for which the process is already initiated. Therefore, it
can be inferred that the initial transaction can be termed as pre-sale
arrangement. Like in any executed sale transaction, there are two steps
viz., Agreement to sale and actual sale through conveyance deed, by
whatever name called, in the current transaction too, the activity of
allotment of land initially, subject to permanent transfer after 15 years was
one of the condition of sale/transfer of the land and not a separate
transaction. Hence, it is clear that it is a sale/transfer of land and not
leasing of the land.
(iv) The transaction between GIDC and GHB was of ‘Conditional sale of
land’ and the intention was not lease of land for earning rent
69
income. Here it is significant to look at the substance of the transaction

rather than just the legal form.
(v) The said long term lease and sublease for the long term period is taxed
under Gujarat Stamp Duty Act, 1958 at prevailing stamp duty rates
equivalent to the sale of property (calculated on the ‘Jantri value’ of the land
or consideration whichever is higher) treating the long term lease
transaction as transfer of immovable property at the stamp duty amount.
Consequently, it is construed that Stamp Duty is levied on the transaction
and this is not a transaction registration or documentation procedure fee.
The registration fees are paid separately for registration of the said
transaction. Hence, it can be construed that the law treats the transaction of
long term lease similar to the sale of property and consequently, the
treatment under GST law should be similar to that of sale of property only.
Considering the said transaction as supply of service and taxing the same
would be a case of double taxation.
(vi) Attention is drawn towards doctrine of part performance in English
law. It is also known as ‘equity of part-performance which is defined under
section 53A of the Transfer of Property Act, 1882 and has been a decided
principle under section 2(47) of the Income Tax Act, 1961.
Section 2(47) in The Income- Tax Act, 1961
"Transfer", in relation to a capital asset, includes,-
(i) the sale, exchange or relinquishment of the asset; or
(ii) the extinguishment of any rights therein; or
(iii) the compulsory acquisition thereof under any law; or
(iv) in a case where the asset is converted by the owner thereof into, or is
treated by him as, stock- in- trade of a business carried on by him, such
conversion or treatment;] 6 or]
(iva) the maturity or redemption of a zero coupon bond or
(v) 7 any transaction involving the allowing of the possession of any
immovable property to be taken or retained in part performance of a
contract of the nature referred to in section 53A of the Transfer of Property
Act, 1882 (4 of 1882); or
(vi) any transaction (whether by way of becoming a member of, or
acquiring shares in, a co- operative society, company or other association
of persons or by way of any agreement or any arrangement or in any other
manner whatsoever) which has the effect of transferring, or enabling the
enjoyment of, any immovable property.
Explanation 1.-For the purposes of sub- clauses (v) and (vi)," immovable
property" shall have the same meaning as in clause (d) of section 269UA;]
Explanation 2.- For the removal of doubts, it is hereby clarified that
disposing of or partying with an asset or any interest therein, or creating
any interest in any asset in any manner whatsoever, directly

or indirectly, absolutely or conditionally, voluntarily or involuntarily , by way

of an agreement (whether entered into in India or outside India) or
otherwise, not withstanding that such transfer of rights has been
characterised as being effected or dependent upon or flowing from the
transfer of a share or shares of a company registered or incorporated
outside India.
Transfer of Property Act, 1882
[53A. Part performance.-Where any person contracts to transfer for
consideration any immoveable property by writing signed by him or on his
behalf from which the terms necessary to constitute the transfer can be
ascertained with reasonable certainty, and the transferee has. in part
performance of the contract, taken posses-sion of the property or any part
thereof, or the transferee, being already in possession, continues in
possession in part performance of the contract and has done some act in
furtherance of the contract, and the transferee has performed or is willing to
perform his part of the contract, then, notwithstanding that 2 ***, or, where
there is an instrument of transfer, that the transfer has not been completed
in the manner prescribed there for by the law for the time being in force, the
transferor or any person claiming under him shall be debarred from
enforcing against the transferee and persons claiming under him any right
in respect of the property of which the transferee has taken or continued in
possession, other than a right expressly provided by the terms of the
contract: Provided that nothing in this section shall affect the rights of a
transferee for consideration who has no notice of the contract or of the part
performance thereof.]
(vii) It is a settled principle that the long term lease shall be considered as
transfer of property and has been adjudicated on similar principle.
(viii) Without prejudice to the above, the Contribution by members towards
Development Cost of Bourse for the promotion of Exports of Gem and
Jewellery would be exempt under Entry No.41 (Heading 9972) of
Notification No.12/2017-Central Tax(Rate) dated 28.6.2017:
(a) It is onetime upfront payment towards Infrastructure Develop-ment.
(b) The lease is for industrial development of infrastructure or finance
business.
(c) The demised land is located in industrial or finance business area.
As per Gujarat Industrial Development Act, 1962 the definition of Industrial
area or Industrial Estate is reproduced as follows:
Section 2(g)
‘Industrial area’ means any area declared to be an industrial area by the
State Government by notification in the Official Gazette, which is to be
developed and where industries are to be accommodated;
71
Section 2(h)
‘Industrial estate’ means any site selected by the State Government, where
the Corporation builds factories and other buildings and makes them
available for any industry or class of industries.
(d) The demised premises is owned by GIDC which has been leased to
GHB vide Principal lease executed between GIDC and GHB. This demised
premises is developed by GHB from the funds received from the members
to whom the land has been sub-leased in accordance with the plots
allocated to each of the members.
(ix) GHB is not a developer, but merely an SPV, which has been
constituted for and on behalf of the members of Gems and Jewellery
industry. The intention of Government is to provide a land to the business
units, but it is not practically feasible for the Government to deal with each
businessman separately. Consequently, just to facilitate the Government
and businesses, GHB-as SPV has been incorporated.
(x) In furtherance to point no.(9) above, it is to state here that the sublease
of demised property by the GHB to its property members is in accordance
with the terms and conditions set forth in principal deed with GIDC shall
mutatis mutandis apply to sub-lease creating a deeming fiction as if the
deed is being executed between GIDC and sub-lease. The purpose of the
Government to promote the industry can endure and sustain only if
intention of the legislature to exempt certain category of persons (State
Government Industrial Development Corporations or undertakings or by
any other entity having 20% or more ownership of Central Government,
State Government, Union territory) from tax for a specific purpose is to be
applied to other person with similar purpose as well. Pursuant to the above,
the supplier of land for all purpose is deemed to be GIDC.
(xi) The word ‘lease’ and/or ‘sub-lease’ mentioned in various agree-
ments/documents in relation to these transactions are merely for the
understanding of the common public. However, it does not reflect the true
character or essence of the transaction. Consequently, the transaction is
between businesses and the GIDC, wherein the GHB is merely a facilitator
or ‘collective voice’ of entire business community holding/desirous of
holding the land in this park.
(xii) Taxing the contribution received from the property member would be
akin to cascading effect where the funds received for the purpose of
development of infrastructure from members would be taxed and again
when these funds would be utilized, GST shall be paid on the material that
would be used for the said development purpose. This contribution
received from the property members is the financial support to the Not-for
profit company to develop the infrastructure of the Bourse and manage its
affairs for the members.
(xiii) Without prejudice to the above, the one-time infrastructure cost
collected by GHB from its members being applied towards

development of infrastructure cost for the members, the rule of doctrine of

mutuality/principle of mutuality is applicable and since the infrastructure
cost so collected is applied as contribution towards the project of
developing Bourse. The doctrine of mutuality is established on the concept
that a person cannot make a profit from himself. An amount received from
oneself, therefore, cannot be regarded as supply and taxable.
(xiv) The contribution towards infrastructure cost by the property members
of GHB has been applied by the Company towards the Project and the
same has never been recognized as revenue in the books of accounts of
the Bourse. The contribution has been sitting as liabilities in the Balance
Sheet while the infrastructure developed by application of these funds form
part of the Fixed Assets in the Balance Sheet. Consequently, this is a
reimbursement of expenses incurred by GHB for its property members.
(xv) GHB submits that contribution received from the property members is
for acquisition of access to the land and is not a rental, hence not perpetual
in nature. Moreover, this is procurement of access to the immovable
property supplied by GIDC by the property members of GHB to develop the
premises for their own business purpose.
(xvi) The indenture between GHB and its members is merely for allotment
of Industrial plots/premises to grant occupancy rights of the land supplied
by GIDC to the property member of the company.
5. GHB has submitted the copies of the following documents:
(a) Registration Certificate issued to Gujarat Hira Bourse under section
12A of the Income Tax Act.
(b) Memorandum & Articles of Association of Gujarat Hira Bourse along
with license under section25 of the Companies Act, 1956.
(c) Section 7 of the CGST Act, 2017.
(d) Relevant Extracts of the Finance Act, 2021.
(e) Advance Ruling decision dated 22.4.2021 given by the Karnataka
Advance Ruling Authority in the matter of M/s. Bowring Institute.
(f) State of West Bengal & Others Vs. Calcutta Club Limited and Chief
Commissioner of Central Excise and Service & Others [2019 (29)
GSTL.545 (SC)].
(g) Entry No.41 of the Notification No.12/2017-CGST (Rate) dated 28.6.2017
as amended from time to time.
(h) Extract of the Additional Agenda of the 22nd GST Council Meeting.
6. GHB has submitted the following:
i. Lease Deed between GIDC and GHB on 27.3.2008 for Plot Nos. X2, X2A
& X3 (totally admeasuring 2,30,970 sq. Mtrs. Land), known as DTA at
Ichchapore, Surat, Gujarat. The cost of land has been worked
73
out at Rs. 225/- per sq.mtr. and accordingly the total cost of the land has
been worked out to Rs. 5,19,68,250/- and on payment of the said amount
of Rs,5,19,68,250/-, the demised land has been leased to GHB for a term
of 99 years computed from 22.4.2004. As per the lease deed, the lan d is
allotted on ‘as it is where it is’ basis for the purpose of setting up the Gem &
Jewellery Park on the demised premises. GHB has also been given the
mandate to sub lease parts of developed plots to the actual users and GHB
shall make available to GIDC, a list of actual users of developed plots in the
industrial park. GHB is also required to pay to the GIDC, an amount of Rs.
277/- annually on or before the 31st day of March in each year towards rent
of the demised land.
ii. Lease Deed between GIDC and GHB on 30.4.2007 for Plot Nos.X3A
(totally admeasuring 7,38,797 sq. Mtrs. Land, at Ichchapore, Surat, Gujarat.
The cost of land has been worked out at Rs. 225/- per sq.mtr. and
accordingly the total cost of the land has been worked out to Rs.
16,62,29,325/- and on payment of the said amount of Rs. 16,62,29,325/-,
the demised land has been leased to GHB for a term of 99 years computed
from 22.4.2004. As per the lease deed, the land is allotted on ‘as it is where
it is’ basis for the purpose of setting up the Gem & Jewellery Park Special
Economic Zone on the demised premises. GHB can also sub lease parcels
of developed plots to the entrepreneurs for setting up their units in the
SEZ/Industrial park. GHB is also required to pay to the GIDC, an amount of
Rs. 884/-annually on or before the 31st day of March in each year towards
rent of the demised land.
(i) Allotment of Industrial plot/premises made between GHB and M/s. P.
Hirani Exports LLP, Mumbai made on 1.6.2021: A plot measuring 1680
square metres has been sub leased/allotted to M/s. P.Hirani Exports LLP,
Mumbai by GHB in the Gem and Jewellery Park (referred to in Lease Deed
detailed at (i) above and referred to as principal lease deed herein) for a
price of Rs. 45,57,553/-(Price Rs. 2,712.83 per square metre) subject to the
terms of the Principal lease) but not in any case beyond the period of
principal lease deed. M/s P.Hirani Exports LLP is also required to pay an
annual lease rent at the rate of Rs. 2/- per square metre to GHB.
(ii) Allotment of Industrial plot/premises made between GHB and M/s.
Sonani Jewels pvt. ltd., Surat made on 2.6.2021: A plot measuring 837
square metres has been sub leased/allotted to M/s. Sonani Jewels pvt.ltd.,
Surat by GHB in the Gem and Jewellery Park (referred to in Lease Deed
detailed at (ii) above above and referred to as principal lease deed herein)
for a price of ? 1,00,10,500/-(Price Rs. 11,960/- approx. per square metre)
subject to the terms of the Principal lease) but not in any case beyond the
period of principal lease deed. M/s Sonani Jewels pvt.ltd., Surat is also
required to pay an annual lease rent at the rate of Rs. 2/- per square metre
to GHB.
7. Question on which Advance Ruling sought?
a. Whether the contribution paid/payable by the members towards

Development Cost of the Bourse amounts to supply liable to Goods and

Service Tax?
b. Whether the said Contribution by members towards Development Cost
of Bourse for the promotion of Exports of Gem and Jewellery would be
exempt under Entry No.41(Heading 9972) of Notification No.12/2017
Central Tax(Rate) dated 28.6.2017 (hereinafter referred to as the said
Notification)?
41 H e a d i n g On e tim e upfro nt amou nt (called as pr emiu m, sala m i, cost, price, NIL NIL
9972 developm ent charg es or by a ny other na me) leviable in resp ect of
the service, by way of granting long term (thirty years, or more)
lease of industrial plots, provided by the State Government
Industrial De velopment Corporations or Undertakings to industrial
units.
c. Once the captioned amendment to section 7(1) of the CGST Act,

2017 is notified by the Central Government, if the liability to pay tax
shall accrue with retrospecti ve effect from 1.7.2017. Whether,
interest would be payable on the accrued Tax liability for the said
period from 1.7.2017 upto the date on which the amendment is
notified?
8. GHB has submitted photocopies of the letters dated 24.5.2021, 8.6.2021 and
1.7.2021 addressed to the Divisional Officer, GST, Divn-7, Range-15, Unit 57,
Surat intimating the payment of tax paid along with interest under duress and
protest on the amount of contribution which they have received from their
members (being well known Gem and Jewellery exporters) towards development
cost that includes building of roads, storm water drainage, water distribution
nework, sewage net-work, landscape infrastructure, cable network, ESR water
tank, sump, pump house, control room, sub-station, minor bridge on canal,
approach road, electrical and power installation and fittings and street light
infrastructure, administrative cum custom house building, compound wall etc.
GHB has informed that they have tendered payment of the tax and interest to the
credit of the Government pursuant to the recently proposed imperative
amendment to section 7(1) of CGST Act, 2017. GHB has submitted copies of
relevant challans along with the aforementioned letters.
Revenue’s Submission
9. The Assistant Commissioner of State Tax, Unit-57, Surat vide letter dated
9.8.2021 has submitted as follows:
(1) Whether the activity/service in respect of which an Advance Ruling has
been sought is an ongoing activity or a proposed one?
Ans: The activity in respect of Advance Ruling sought is ongoing activity as
the dealer has paid the tax of the transactions as per section 7(1)(aa) of the
CGST Act, 2017 which has been inserted vide Finance Act, 2021.
(2) Report in terms of proviso to sub section (2) of section 98 of the Act.
Whether the questions/issues raised in the application are already pending
or decided in any proceedings in the case of GHB.
75
Ans: No proceedings are initiated against the dealer.

(3) Whether the application can be admitted for granting Advance Ruling? If
not give reasons?
Ans: Yes.
(4) Comments on Merits.
Ans: section 7(1)(aa) is inserted through Finance Budget 2021 which has
retrospective effect from 1.7.2017. The inserted subsection (aa) reads as
follows:
‘the activities or transactions, by a person, other than an individual to its
members or constituents or vice versa, for cash, deferred payment or other
valuable consideration.’
And also as per Circular No.101/20/2019-GST dated 30.4.2019 of
Department of Revenue, Ministry of Finance, reads as follows:
Upfront amount(called as premium, salami, cost price, development
charges or by any other name) payable in respect of service by the way of
granting of long term lease(of thirty years or more) of industrial plots for
development of infrastructure for financial business provided by State
Government Industrial Development Corporations or undertakings or by
other entity having 50% or more Ownership of Central Government, State
Government, Union Territory to the Industrial Units or Developers in any
industrial or Financial Business area is exempted from Tax as per SAC
9972.
It means that the Long Term Lease is granted by Government Authority is
exempted from tax but if the lease is granted by other than the authority
which is not mentioned in the above para is taxable under the GGST Act,
2017.
Personal Hearing
10. Shri Hardik Modh, Advocate, Shri Nitin Gheewale and Shri Arjun
Akruwala appeared for the virtual hearing (Video Conferencing) on 12.8.2021
and reiterated the contents of the application.
FINDINGS
11. At the outset we would like to make it clear that the provisions of CGST
Act and GGST Act are in pari materia and have the same provisions in like
matter and differ from each other only on a few specific provisions. Therefore,
unless a mention is particularly made to such dissimilar provisions, a reference to
the CGST Act would also mean reference to the corresponding similar provisions
in the GGST Act.
12. We have carefully considered all the submissions made by GHB and the
Revenue.
13. We find the following facts emerging from the submissions made before
us:
i. GIDC has leased Plot X2,2A,3 to GHB at Rs. 225 per sqm, for a period
of 99 years, GHB to pay annual rent of Rs. 277.

ii. GIDC has leased Plot X3A to GHB at Rs. 225 per sqm, for a period of 99
years, GHB to pay annual rent of Rs. 884.
iii. GHB has leased a plot to M/s P Hirani at Rs. 2712.83 per sqm, for a
total 1680 sqm, totalling the price to Rs Rs. 45,57,553; with an annual lease
rent at the rate of Rs. 2 per sqm per annum. M/s Hirani shall reimburse
expense to GHB, made for maintenance, upkeep, security service of
officials and other administration of the Gem & Jewellary Park and for the
common benefits, easements and infrastructural facilities like road, street
lights etc.
iv. GHB has leased a plot to M/s Sonani Jewels at Rs. 11,960 per sqm, for
a total of 837 sqm, totalling the price to Rs. 1,00,10,500; with an annual
lease rent at the rate of Rs. 2 per sqm per annum. M/s Sonani shall
reimburse expense to GHB, made for maintenance, upkeep, security
service of officials and other administration of the Gem & Jewellary Park
and for the common benefits, easements and infrastructural facilities like
road, street lights etc.
v. Vide subject application, GHB refers the amount of Rs. 45,57,553 and
Rs. 1,00,10,500 as reflected at sr no iii & iv of this para as Development
Cost received by its members/ applicants towards the infrastructure/
Development Cost of the Bourse and it is this amount for which Ruling has
been sought by GHB. We, therefore, pronounce our Ruling regarding
taxability on this specific amounts and not on the other considerations
between GHB and its members/applicants.
13.1 We refer to the definition of Supply as per section 7 CGST Act which
reads as follows:
7. (1) For the purposes of this Act, the expression "supply" includes
(a) all forms of supply of goods or services or both such as sale, transfer,
barter, exchange, license, rental, lease or disposal made or agreed to be
made for a consideration by a person in the course or furtherance of
business;
13.2 We also refer clause 2 (a) of Schedule II which read as follows:
ACTIVITIES [OR TRANSACTIONS] TO BE TREATED AS SUPPLY OF
GOODS OR SUPPLY OF SERVICES’
2 (a) any lease, tenancy, easement, licence to occupy land is a supply of
services
13.3 Further, as per the inclusive definition of business, as per section 2(17)
CGST Act, Business includes-
a. any trade, commerce, manufacture, profession, vocation, adventure,
wager or any other similar activity, whether or not it is for a pecuniary
benefit;
b. any activity or transaction in connection with or incidental or ancillary to
sub-clause (a);
c. any activity or transaction in the nature of sub-clause(a), whether
77
or not there is volume, frequency, continuity or regularity of such

transaction
e. provision by a club, association, society, or any such body (for a
subscription or any other consideration) of the facilities or benefits to its
members;
14. We note that GHB is incorporated under the section 25 of the erstwhile
Companies Act, now section 8 of Companies Act, 2013 (CIN
U91110GJ2000NPL039065). As per the GST scheme of law, with specific
reference to section 2(17)(a),(e) CGST Act, we find that the activity by GHB to its
members, whether or not it is for pecuniary benefit, falls within the definition of
‘business’.
15. On careful reading of the copies of the two deeds entered between GHB
and GIDC, it is forthcoming that the deeds pertain to leasing of subject plots by
GIDC to GHB for a period of 99 years and it is not sale of land. GHB’s contention
that it has paid stamp duty on lease deed does not change the scope of supply of
service into sale of land. The supply is Leasing services in present case. The
procedure of registration of purchase of land and applicable stamp duties is
different from the procedure of lease of land. Further, we note that GHB is aware
of this fact that subject activity is leasing service because GHB itself argues for
the applicability of entry 41 to said Notification, wherein the description of services
is long term leasing of plots for thirty years or more.
16. We draw our attention to Entry No. 41 of Notification No. 12/2017-CT (R)
dated 28.6.2017 which reads as follows:
Sr.No Chapter, Description of services Rate Condition

Section, (percen t)
Heading,
Group or
Service
Cod e (Tariff)
41 H e adin g 99 7 2 U pfro nt a mo u nt (called as pre mi u m, s ala mi NIL NIL
cost, price, d evelop men t ch arg es or by
any other name) payable in respect o
service by way of gr a nting of lon g term
lease of thirty years, or more of industrial
Plots or plots for development to
infrastructure for Fina ncial b usiness
provided by the State Go vern ment
In d ustrial Develop men t Co rp o ratio n s o
Un dertakings or by any other entity
having 50 p er cen t. or more o wn ersh ip o
Central Government, State
Government, Union territory to the
in du strial un its or th e d evelo p ers in any
industrial or financial business area.”;
Exp lan ation .- For th e p urp os e of this
exe mption, the C entral Govern ment, State
Gov ern me nt or U nion t erritory shall h ave 5 0
per cent. or more ow n ership in the entity
directly or through an entity which is wholly
o wn e d by th e C entral G over n me nt, State
Government or Union territory.”.

16.1 On reading the words of the said entry of Notification, we find that the
exemption is available for subject leasing of plots by GIDC to GHB for the period
of 99 years. The description of services, in subject matter, may be read as long
term leasing services of the subject plots by GIDC to GHB (Developer).
16.2 We find that subject entry 41 to said Notification provides exemption
for providing said services by GIDC to GHB (developer). In this regard, we find
no merit in the contention of GHB, that GIDC has supplied services to industrial
units, such as M/s. P. Hirani Exports LLP and M/s. Sonani Jewels Pvt. Ltd. for it
is on record that GIDC has provided subject services to GHB and not to
industrial units. It is also on record that GHB has supplied subject leasing
services to industrial units such as M/s. P. Hirani Exports LLP and M/s. Sonani
Jewels Pvt. Ltd. Now that GHB is not a State Government Industrial
Development Corporations or Undertakings, also that GHB is not having 50 per
cent. or more ownership of Central Government, State Government, Union
territory, we find no merit to extend the scope of exemption granted vide Entry
No. 41 to the said Notification to consideration received by GHB. The gist of the
findings is condensed into the tabular form as follows:
Sl.No Gist of Sr. No. 41 Service Service Eligibility to exemption

of Not. No. 12/201 provider Recipient
CT) R)
1 Long term leasingGIDC GHB i. GIDC is state industria
of plot by State (developer) development corporation.
2 industrial
ii. GHB is developer.
development
corporation iii. Service is long term leasing o
plot for 99 years.
iv. Consideration exempted.
GHB Industrial i. GHB is not State industrial
units development corporation/
undertaking / entity having 50 % or
more ownership of Central
Government, State Government,
Union territory.
ii. Condition of Notification not
satisfied.
iii. Thereby exemption cannot be
granted to GHB.
79
16.3 The Wording in the said Notification, when clear, plain and
unambiguous and only one meaning can be inferred, we are bound to give effect
to the said meaning. We give due regard to the clear meaning of words and
matter should be governed wholly by the language of the notification. We note
the wordings of the Notification and its conditions imposed for satisfaction to
merit entry in the said serial number. We cannot allow any scope for intendment.
We find that our view of strict interpretation of the wordings of the said notification
is in compliance to the Supreme Court Judgements as follows:
* 2015 (324) E.L.T. 656 (S.C.) [ para 31]
* 2011 (265) E.L.T. 14 (S.C.) [ para 10]
* 1989 (40) E.L.T. 239 (S.C.) [ para 11].
* 1978(2) ELT (J350) (SC) [ para 5]
* CCE1995 (77) ELT 474 (SC) [para 16].
17. We hold that GHB is not State industrial development corporation and
thereby cannot claim eligibility to exemption on consideration received from its
applicants.
18. Further, We, suo-moto, examine the GST scheme of law in detail and
find it worth mentioning the entry No. 77 to Notification No. 12/2017-CT (R) dated
28.6.2017 in this regard, which is reproduced as follows :
77 H e a d i n g Service by an unincorpor ated body or a non -pro fit entity registered Nil Nil
9995 under any law for the time being in force, to its own members by
way of reimbursement of charges or share of contribution -
(a) as a trade u n ion ;
(b) for the provision of carrying out any activity which is exempt
fro m the lev y of G oods and S e rvic e Tax; or
(c) up to an amount of five thousand ru pees per month per m ember
for sourcing of goods or s ervices fro m a third person for the
common use of its members in a housing society or a residential
complex.
18.1 Here, we note that as GIDC supply of subject service to GHB is

exempted, thereby vide Sr. no 77 to said Notification, GHB supply of subject
service to its members will be exempted if GHB was receiving consideration from
the units limited to reimbursement of charges of what GHB paid to GIDC.
However, we note that GHB acquired the lease of the plot from GIDC at the cost
of Rs. 225 per Sqm whereas GHB leased the plot to the members, such as, M/s.
P. Hirani Exports at the cost of Rs. 2712.83 per Sqm and to M/s. Soni Jewels at
Rs. 11960 per Sqm. It is on record that this amount recovered by GHB from its
members is not in the nature of reimbursement of charges of the amount which
GHB paid to GIDC as GHB has recovered the charges from its
applicants/members over and above the rate which it paid to GIDC. Thus we find
no merit to entertain the entry 77 of said Notification to GHB. We find that, the
competent authority, has laid down this path to exemption vide said entry 77 to
said Notification to GHB in this regard, which has not been satisfied by GHB.
19. We note that GHB has sought Ruling on interest applicability vide its
Question No 3. On reading of section 97(2) CGST Act, we find no explicit

mention in the statutory provisions that Question on interest applicability may be

raised before the Authority. However, we do not want to pass a Ruling without a
comment on this issue. The liability to interest is automatic and arises by the
operation of the statutory and mandatory provisions of the law. We hold that
interest liability is a statutory liability which accrues automatically.
20. We note that GHB has cited M/s Calcutta club ltd case law. We note that
said case law revolves the concept of ‘unincorporated association’ as mentioned
in explanation 3(a) to section 65(B)(44) of Finance Act, 1994, i.e., this case law
pertains to the service tax era. Whereas GHB is an incorporated company with
CIN U91110GJ2000NPL039065.
20.1 The present case presented before us for pronouncing the Ruling
pertains to the GST era wherein we are to pronounce our Ruling based on the
CGST Act, enacted by the competent legislature. We find that in GST despite
section 7(1)(aa) was inserted vide Finance Act 2021, with effect from 1.7.2017,
the pre Budget 2021 status of section 7 CGST Act and post budget 2021 status
of section 7 CGST Act with insertion of clause (aa) in section 7(1) CGST Act
remained the same, with no new provision in effect suddenly inserted, but the
same position of law continued as it was prior to the insertion of section 7(1)(aa)
CGST Act, with effect from 1.7.2017. Our thought process is explained as
follows:
a. Firstly, GHB is not an unincorporated association.
b. GHB is a Not for profit Company incorporated under erstwhile section
25 of Companies Act, now section 8 of Companies Act, 2013.
c. As per section 7(1)(a) CGST Act, Supply includes all forms of supply of
services, including lease, for consideration by a person in the course or
furtherance of business.
d. Person, as per section 2(84) CGST Act, includes, inter alia, a
Company; an association of persons or a body of individuals, whether
incorporated or not, in India or outside India.
e. Business, as per section 2(17) CGST Act, inter alia, includes-
(a) any trade, commerce, manufacture, profession, vocation,
adventure, wager or any other similar activity, whether or not it is
for a pecuniary benefit;
(b) provision by a club, association, society or any such body (for a
subscription or any other consideration) of the facilities or benefits
to its members.
f. Thus, from the conjoint reading of the provisions of GST law, in our
present case, Supply includes leasing of plots by GHB (a person) to its
members, either for a subscription or any other consideration.
g. further, what we find is, Supply of services even by unincorporated
association to its members for consideration is supply under GST
Scheme of law, as enacted by Competent legislature. Thus GHB
reliance on Service tax era case law is misplaced in the subject matter.
81
Even if we want to delve into the provision section 7(1)(aa) CGST Act,
which reads as: the activities or transactions, by a person, other than
an individual, to its members or constituents or vice versa, for cash,
deferred payment or other valuable consideration is Supply. So what
we find is, with this new insertion of clause (aa), the Pre Budget 2021
status of section 7(1) and post budget status of section 7(1) CGST Act
has not undergone change, but the said provision of law has been
fortified and clarified even further.
21. We note that GHB has cited Karnataka Advance Ruling of M/s. Bowring
Institute. As per section 103, CGST Act, the cited Ruling shall be binding only on
the applicant who had sought it and it’s concerned officer. Further, the facts of
Bowring case are not similar to the subject matter as M/s Bowring is not
supplying leasing of plot services.
22. In Conspectus of aforementioned findings, we pass the Ruling:
RULING
a. The subject consideration paid by industrial units to GHB is liable to GST.
The Subject activity by GHB is Supply of Service.
b. The consideration paid to GHB is not exempt under entry 41 to said
Notification.
c. Liability to GST arises from 1.7.2017. Thereby Statutory Interest is
payable. This issue has been expounded at paragraph 17 of subject Ruling.
**
Vital Point:
Contribution paid/payable by members of export promotion council
towards development cost of bourse for promotion of exports of
gem and jewellery - is supply and liable to GST.
***

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LATEST DECISIONS OF

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GST INFORMA TIONS

NO REFUND FOR ACCUMULATED ITC ON INPUT SERVICES—

GST on restaurant services—Restaurant serving in restaurant as well as

ARREST—BAIL—GST deposited of about 31 companies illegally —Having heard

IGST—REFUND—Claim for refund not processed on ground that investigation is

LEVY OF TAX—VALUATION OF SUPPLY—Management fee/ administrative

REFUND—INTEREST ON REFUND—Refund awarded by order—Application for

REGISTRATION—CANCELLATION—Revocation—Petitioner not carrying on

DEMAND OF INTEREST ON AVAILMENT OF INELIGIBLE ITC

GS T Informations, Dated. 20.10.2021. 9

it tantamount to non-availment of Input tax credit. Under Rule 14 of CENVAT

GS T Informations, Dated. 20.10.2021. 11

NO REFUND FOR ACCUMULATED ITC ON INPUT SERVICES—

GS T Informations, Dated. 20.10.2021. 13

Facts of the case before Apex Court.

sub-section (3) of section 54 and each of them is entitled to claim a refund

GS T Informations, Dated. 20.10.2021. 15

entitled to make policy choices and adopt appropriate classifications, given

GS T Informations, Dated. 20.10.2021. 17

GS T Informations, Dated. 20.10.2021. 19

REFRESHER ON GST ON IMPORT OF GOODS AND SERVICES.

GS T Informations, Dated. 20.10.2021. 21

* In case of imports of goods, set of import documents are required to be

GS T Informations, Dated. 20.10.2021. 23

CLASSIFICATION OF INDIAN SWEETS UNDER GST AND GST

12% as per SI No. 40 of Schedule II of Notification No.01/2017 Central Tax

GS T Informations, Dated. 20.10.2021. 25

GS T Informations, Dated. 20.10.2021. 27

GST Registration—Suo moto cancelled registration—How to

Due to shortage of cash/monetary liquidity during lockdown period many

GST Registration—Transfer of registration from one person to

GS T Informations, Dated. 20.10.2021. 29

Levy of IGST—Imports—Exemption of CVD & SAD between 13.10.2017

Refund of ITC transferred through Form ITC 02—Is admissible.

GST Registration—Cancellation—Revocation thereof—Failure of

GS T Informations, Dated. 20.10.2021. 31

GST on restaurant services—Restaurant serving in restaurant as well as

[2021] GTI 363 (Cal)

International Value Retail Pvt. Ltd. Vs. Union of India &

cause notice and subsequent final impugned adjudication order of rejection of

34 GST Informations, Dated. 20.10.2021.

[2021] GTI 365 (All)

Jagat Singh @ Jaggi Vs. Union of India

applicant was arrested following an interrogation by the G.S.T. officials and

36 GST Informations, Dated. 20.10.2021.

Savista Global Solutions Pvt. Ltd. Vs. Union of India &

REFUND—INTEREST ON REFUND—REFUND AWARDED BY