Article
Blocking of ITC ledger: The havoc of Rule 86A
The article in this issue of Indirect Tax Amicus discusses Rule 86A of the Central Goods and Services Tax Rules, 2017 which empowers the Revenue department to block ITC ledger in cases involving fake ITC, so that the amount is not available for utilization against output tax liability or for claiming refund. Observing that the greater the power, the more dangerous the abuse; and it is no different in the case of Rule 86A, the authors deliberate on various case law as decided by different High Courts on number of issues including on ‘borrowed satisfaction’, ‘temporary measure’, ‘negative blocking’, etc. According to the authors (Shrishti Agarwal and Narendra Singhvi), tax administrators must respect and follow the evolving judicial opinions on the subject and use their powers fairly, preserving both - the interests of the revenue and the rights of taxpayers.
Goods and Services Tax (GST)
Ratio decidendi
- Investigations – Transfer from State Authorities to Central Authorities permissible – CGST Section 6 and CBIC Circular dated 5 October 2018 do not cover all situations – SC approves Delhi HC decision – Supreme Court
- Secondment of employees – Demand and penalty set aside relying upon CBIC Circular 210/4/2024-GST – Delhi High Court
- Appeal – Pre-deposit under Section 107(6) can be paid by utilizing Electronic Credit Ledger – Madras High Court
- Transitional credit – Pendency of enquiry on eligibility of Cenvat credit cannot disentitle transition of credit to GST regime – Andhra Pradesh High Court
- Interest for delayed refund on exports is payable even for time-period during which exporter was in ‘risky exporters list’ – Bombay High Court
- ITC in case of advance payments – Restrictions under Sections 16(2)(b) [receipt of goods/services] and 16(2)(a) [possession of tax invoice] are not applicable – Bombay High Court
- No provision to issue letter advising assessee to make voluntary payment – Department directed to be cautious – Allahabad High Court
- Demand proceedings under Section 74(1) are wrong if assessee subsequently informed that their reply to notice under Section 61(1) was satisfactory – Punjab & Haryana High Court
- Refund – Second application filed after rectification of defects is not barred by limitation even if filed after the prescribed time-period – Kerala High Court
- Audit permissible for prior period even if registration stood cancelled on date when audit ordered – Bombay High Court
- GST payable on royalty paid for mining concession granted by State – Himachal Pradesh High Court
- Classification of hand sanitizers – Union not competent to direct judicial/quasi-judicial authorities to decide classification in a particular manner – Finance Ministry’s Press Release dated 15 July 2020 quashed – Bombay High Court
- Demand – Summary of show cause notice is not a substitute of show cause notice – Gauhati High Court
- Appeal – Insistence on submission of certified copy of impugned order is regressive if same can be obtained directly from website of judicial and quasi-judicial bodies – Gujarat High Court
- Revisional Authority’s order, placing in abeyance refund order, based on intelligence inputs (on ITC claims) received after the refund order, is not sustainable – Delhi High Court
Customs
Notifications and Circulars
- Investigation of customs evasion cases – Guidelines issued for investigating cases related to commercial intelligence and fraud
- IGCR and MOOWR – Simultaneous availment permissible; MOOWR unit can be intermediate goods manufacturer and claim benefit of IGCR for further supply
- IGCR Returns – Manual filing allowed till 31 January 2025
- QCOs notified by Ministry of Heavy Industries need not be complied for imports by Advance Authorization holders, EOUs and SEZs
- Clear float glass having only a tin layer on one side is classifiable under Customs TI 7005 29 90
- Coking and non-coking coal – Mandatory additional qualifiers notified in import declarations
- Synthetic or Reconstructed Diamonds – Mandatory additional qualifiers notified for export/import declarations
Ratio decidendi
- DRI’s jurisdiction to issue show cause notice under Customs Act – Supreme Court reviews its earlier decision – Supreme Court
- Social Welfare Surcharge is not payable when BCD paid using MEIS scrips – Duty liability is not discharged when exemption obtained – Orissa High Court
- Exemption – Effect of non-use of terms ‘only’, ‘exclusively’, ‘wholly’ or ‘entirely’ before the words ‘for medical use’ – CESTAT Mumbai
- Speaking order is required under Customs Section 17(5) in respect of each Bill of Entry – CESTAT Mumbai
- Drawback – Computation of brand rate of drawback – Reverse calculation based on SION when correct – Non-furnishing of data on actual quantity is not fatal – CESTAT Chennai
- SAD refund – Parts imported sold as such or in different form – CESTAT Ahmedabad
- Processing of amended shipping bills at DGFT portal – HC imposes costs on DGFT and directs it to tune its electronic handling systems – Bombay High Court
- MEIS benefit when revised ITC HS Codes not included in Table 2 of Appendix 3B – Gujarat High Court
- Conversion of shipping bill – Examination which led to sanction of drawback can be relied upon for Advance Authorisation – Kerala High Court
Central Excise, Service Tax & VAT
Ratio decidendi
- Cenvat credit available on mobile towers and pre-fabricated buildings installed for providing output services – Tests for immovability and credit eligibility reconstructed – Supreme Court
- Value for re-packing of cosmetic products when not includible – SC affirms CESTAT decision – Supreme Court
- Sabka Vishwas (LDR) Scheme – Quoting of higher figure in application is not fatal – Bombay High Court
