Indirect Tax – February 2023

GST Calendar –Compliances for the month of February’2023

Nature of Compliances	Due Date
GSTR-7 (Tax Deducted at Source ‘TDS’)	March 10, 2023
GSTR-8 (Tax Collected at Source ‘TCS’)	March 10, 2023
GSTR-1	March 11, 2023
IFF- Invoice furnishing facility (Availing QRMP)	March 13, 2023
GSTR-6 Input Service Distributor	March 13, 2023
GSTR-2B (Auto Generated Statement)	March 14, 2023
GSTR-3B	March 20, 2023
GSTR-5 (Non-Resident Taxable Person)	March 20, 2023
GSTR-5A (OIDAR Service Provider)	March 20, 2023
PMT-06 (who have opted for QRMP scheme)	March 25, 2023

Case Law-1 Rejection of Revocation Application to Restore Cancelled Registration solely on ground of delay in moving such application was not sustainable

• Background
  • A Writ petition has been filed against the order dated 14-5-2019 cancelling the registration of the petitioner under the U.P. Goods and Services Tax Act, 2017 and the order dated 25-3-2021 passed by the First Appellate Authority upholding the order of cancellation of registration.
  • Due to non-filing of the return by the petitioner, a show cause notice was issued by the Department which remain unattended by the petitioner and the registration of the firm stood cancelled by the order dated 14-5-2019 as stated in the show cause notice dated 29-4-2019.
  • The show cause notice further stated that there was an outstanding Central Tax amounting to Rs.3, 21,205/- and State Tax/UT Tax amounting to Rs.3, 21,205/- The petitioner deposited the amount on 30th January, 2021.
  • On 3^rd February,2021, a revocation application was preferred by the petitioner as required under Rule 23 of U.P. GST Rules, 2017 (hereinafter referred to as the ‘Rules, 2017), in FORM GST REG-21
  • On 17^th February, 2021, the Taxing Authority rejected the revocation application of the petitioner on the ground that he has not filed the return within time
  • Against the order rejecting the revocation application, an appeal was filed by the petitioner before the Additional Commissioner, Grade-2 (Appeal), Commercial Tax, Muzaffarnagar. By the order impugned dated 25.3.2021 the first appeal has been dismissed.

• Issue

Whether the rejection of revocation application to restore cancelled registration solely on ground of delay in filing of return is valid or not?

• HELD:
  • The Hon’ble Allahabad High Court has held as under-
    • That the purpose of including the provision under Rule 23 regarding service of notice on the assessee is to give him the opportunity to move a revocation application so as to save the registration from being cancelled permanently and his business being hampered
    • As the petitioner has come with the case that he has deposited the entire tax and has filed return in the year 2021, the said Act having not been denied by the State, the rejection of registration solely on the ground of delay in moving the revocation application, is not sustainable in law.
    • Moreover, the Appellate Authority has not recorded any categorical finding as to the service of notice and merely on the ground that the application was time barred, proceeded to uphold the order of rejection of revocation application.[in favor of assessee]

Case Law-2 Whether treated water obtained from Common Effluent Treatment Plant (CETP) is exempted from GST

• Background
  • CETP has been set up to treat and recycle effluent for conveyance, treatment and disposal of waste water generated from industries which is suitable for industrial use.
  • Applicant contended that treated water is not purified and therefore exemption is available

• Issue
  • Whether treated water obtained from CETP (classified under Chapter 2201) will be eligible for exemption from GST by Virtue of SI. No. 99 of the exemption notification No. 02/2017-Integrated Tax (Rate) dated 28-06-2017 (as amended) as Water (other than aerated, mineral, purified, distilled, medical, ionic, battery, demineralized and water sold in sealed container)’? Or
  • Whether ‘Treated Water’ obtained from CETP (classifiable under Chapter 2201) is taxable at 18 per cent by virtue of SI. No.24 of Schedule – III of Notification No. 01/2017- Integrated Tax (Rate), dated 28-6-2017 (as amended) as ‘Waters, including natural or artificial mineral waters, and aerated waters, not containing added sugar or other sweetening matter nor flavored (other than Drinking water packed in20 liters bottles)

• Order:

The Hon’ble GAAR hereby pass the ruling:

• Water is exempted from GST as mentioned under heading 2201- Other type of water like aerated, mineral, distilled, medicinal, ionic, battery, de-mineralized and water sold in sealed container are liable to GST as they are not covered under entry in Sl No. 99 of Notification No.2/2017- CT (Rate) – Only safe drinking water which is usually consumed by public is exempted
• Treated water obtained from CETP is not purified water and cannot be used for drinking but can be used in industries for their manufacturing process – CETP screens out solid waste, dust, disinfect water and purify it on a molecular level thus by various process de-mineralized water is obtained and same is taxable at 18 per cent [Section 11 of Central Goods and Services Tax Act, 2017/Gujarat Goods and Services Tax Act, 2017] [Paras 28.9 and 28.10] [In favour of revenue]

Case Law-3 Demand of tax and imposition of penalty on detention of vehicle is sustainable when e-way bill was not extended before expiry and no proof was produced to show vehicle suffered breakdown

• Background
  • This writ petition has been filed against the imposition of SGST and the penalty passed by the Assistant Commissioner, Bureau of investigation (North Bengal) Headquarter.
  • Vehicle suffered from breakdown and it was detained on the ground that e-way bill expired on 9^th March 2022 and authority demanded tax and imposed penalty.
  • Petitioner contended that there was no intent to evade tax as same was paid and tax authority in originating State has no jurisdiction when goods are meant for inter-State supply.
  • Department argued that petitioner’s consignment was found lying within territory of originating State when e-way bill had expired and they did not extend e-way bill and driver did not produce document to prove vehicle had mechanical defect .
• Issue

Whether the respondent authority is permitted to impose penalty under section 129 as well as the SGST as the goods were found in the territory of the state .

• HELD:

The Hon’ble High Court of Calcutta has held as under-

• Under the fact and circumstances of the case this Court finds that the respondent authority is lawfully permitted to impose penalty under Section 129 as well as the SGST as the goods were found to be detained in the territory of the State.
• The writ petition is dismissed on contest however, without any costs.

Case Law-4 No GST exemption available on works contract service provided to Bio Centers, Dept. of Horticulture & Center of Excellence:

• Background

The applicant is a proprietorship concern registered under the provision of Central and service Tax Act, 2017 as well as  Karnataka Goods abd Service Tax Act . The applicant states that  they are bidding for a tender called by Department of Horticulture which includes the supply of manpower for Bio-Centre , Department of Horticulture, Center of Excellence  of floriculture, Tunga Horticulture Farm, Shivamogga, for maintenance of plant , Tissue culture , production of mushroom and also for cleaning of office .

The applicant has sought advance ruling in respect of the following question

• Whether works contract service provided to Bio Centers, Department of Horticulture and Center of Excellence are exempt from payment of GST
• Whether GST is payable on supply of service by way of supplying manpower for tissue culture production and for handling research on flowers, planting and growing conducted by Horticulture Department.
• Whether supply of materials like fertilizers, soil and sand for use in Bio Centers is exempt from GST.

• Order:

The Hon’ble KAAR hereby pass the ruling:

• No specific exemption has been given for supply of any works contract service under the exemption notification –Works contract service provided to Bio Centres, Department of Horticulture and Centre of excellence are not exempt from payment of GST [Section 11 of Central Goods and Services Tax Act,2017]
• As manpower services supplied are to Horticulture Department and does not include any supply of goods, said supply is in nature of pure services – Tissue culture is not same as agriculture and there is no direct nexus to items listed under Eleventh Schedule and Twelfth Schedule to Constitution of India – Supply of manpower for such purposes is not provided by way of any activity in relation to any function entrusted to Panchayat or to any function entrusted to municipality – Impugned supply of manpower is subject to GST at 18 % [Section 11 of Central Goods and Services Tax Act, 2017/Karnataka Goods and Services Tax Act, 2017]
• No specific exemption has been given for supply of materials like fertilizers, soil and sand supplied for use in Bio Centers under the exemption notification – Materials like fertilizers, soil and sand supplied for use in Bio Centers are not exempt from payment of GST [Section 11 of Central Goods and Services Tax Act, 2017/Karnataka Goods and Services Tax Act, 2017] [Paras 12 & 13(iii)] [In favour of revenue]