GST Calendar –Compliances for the month of July’2023
| Nature of Compliances | Due Date |
|---|---|
| GSTR-7 (Tax Deducted at Source ‘TDS’) | August 10, 2023 |
| GSTR-8 (Tax Collected at Source ‘TCS’) | August 10, 2023 |
| GSTR-1 | August 11, 2023 |
| IFF- Invoice furnishing facility (Availing QRMP) | August 13, 2023 |
| GSTR-6 Input Service Distributor | August 13, 2023 |
| GSTR-2B (Auto-Generated Statement) | August 14, 2023 |
| GSTR-3B | August 20, 2023 |
| GSTR-5 (Non-Resident Taxable Person) | August 20, 2023 |
| GSTR-5A (OIDAR Service Provider) | August 20, 2023 |
| PMT-06 (who have opted for the QRMP scheme) | August 25, 2023 |
- Service Tax Refund Granted for Cancelled Contract: Legal Interpretation
- An Appellant, the developer of a residential complex, received part payments from two customers along with service tax as per the contractual terms. The Appellant duly remitted the collected service tax to the exchequer. Subsequently, both customers cancelled their bookings, and the Appellant proceeded to refund the consideration. Seeking a refund of the service tax deposited, the Appellant approached the authorities, contending that the collected service tax ought to be reimbursed due to the cancellation of the bookings. However, the authorities issued two show cause notices rejecting the refund claims on the grounds of being time-barred under Section 11B of the Central Excise Act.
- Aggrieved by the Commissioner (Appeals)’s decision upholding the rejection order, the Appellant filed an appeal before the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT).
- In its ruling, CESTAT analyzed the provisions of the Service Tax Law, emphasizing that service tax liability only arises, when taxable services are provided with a discernible service element. Absent the provision of any taxable service, the assessee cannot be held liable for service tax. In such circumstances, any amount deposited by the assessee with the exchequer is to be deemed a “deposit,” exempt from the application of Section 11B of the Central Excise Act. Refraining from refunding such an amount would be in violation of Article 265 of the Constitution of India, which necessitates that taxes should be levied only by authority of law.
- Based on this interpretation, CESTAT concluded that the cancellation of bookings led to the termination of the service contract, resulting in the absence of any service being provided by the Appellant. Consequently, the service tax amount deposited by the Appellant was deemed eligible for refund.
- Calcutta High Court denies interim relief to assessee in ongoing cartel case.
Summary:
- The Calcutta High Court dismissed the assessee and its officers’ application seeking a stay on the summons issued by the Director General for recording their statements, as part of an ongoing investigation, in an interim application filed by the Petitioners, who challenged the summons through a writ petition.
Background:
- In March 2021, the Coimbatore Corporation Contractors Welfare Association filed a complaint with the Central Bureau of Investigation (CBI) alleging price manipulation and supply restrictions by steel companies for illegal profits. After receiving no response from the CBI, the complainant approached the Madras High Court seeking directions for the investigation. The CBI informed the Madras HC that it had shared the complaint with the Director General (DG). Subsequently, in compliance with the Madras HC’s order, the DG initiated an investigation even without a prima facie order from the Competition Commission of India (CCI). During the investigation, the DG issued summons to the assessee and its officers’ for recording their statements. The assessee challenged the summons before the Calcutta HC, arguing that the DG could not investigate the matter without a prima facie order from the CCI and that assessee name was not mentioned in the Madras HC’s order.
Calcutta HC Order:
- The Calcutta High Court dismissed the Interim Application and stated that the Madras High Court,
- in its extraordinary jurisdiction, had the authority to bypass the requirement of a Prima Facie Order. Consequently, the Director General (DG) was obligated to act on the direction of the Madras HC. Section 26(1) of the Competition Act allows for investigations into a broader ‘matter’ related to anti-competitive activities, not necessarily limited to a specific company or group of companies. Therefore, the DG was justified in including the assessee in the investigation.
- The Andhra Pradesh High Court has affirmed the legality of the time limit set for claiming ITC under GST regime.
Summary:
- The assessee started its business in March’ 2020 and filed GSTR-3B for that month on November 27, 2020, albeit with late filing fees. The revenue authority disallowed the ITC claimed in the return, since it was filed beyond the statutory time limit specified under Section 16(4) for claiming ITC.
- The aggrieved assessee then filed a writ petition before the HC, challenging the constitutional validity of the aforementioned provision (Section 16(4)) and also contending that the non-obstante clause in Section 16(2) should take precedence over Section 16(4).
Background
- The business, which was established during the COVID-19 pandemic, filed the return for March 2020 on 27 November 2020, accompanied by a late fee of INR 10,000.
- The assessee argues that the acceptance of the return with the late fee implies that the Revenue has condoned the delay in claiming ITC beyond the statutory time limit prescribed under Section 16(4).
- The assessee believes that ITC is a statutory right and imposing a time limit for claiming this right violates Article 14, 19(1)(g), and 300A of the Constitution of India and also assert that Section 16(2) takes precedence over Section 16(4) due to its non-obstante clause. This means that if the conditions mentioned in Section 16(2) are met by the assessee, they should be entitled to claim ITC without being bound by the time limit prescribed under Section 16(4).
- The revenue contention that the collection of late fees pertains solely to the issue of belated filing of returns and does not exempt other aspects, such as payment of output tax or the demand for interest on belated payments, or claiming ITC beyond the stipulated time period.
- ITC is merely a statutory rebate or concession provided to taxpayers, as confirmed in various court judgments. The legislature, exercising its judgment, has imposed conditions, including the prescription of a time limit under Section 16(4) of the CGST Act.
- Even if ITC is considered a legal right, the legislature still retains the authority to set a time limit for claiming it, just as the Indian Limitation Act, 1863 prescribes time limits against statutory rights, like filing appeals. Without a time limitation, taxpayers could endlessly claim ITC, which would be impractical.
- The scope of Article 14 and 19(1)(g) of the Constitution is different from that of Section 16(4), and thus, one cannot assert that the latter has infringed upon the former, even in the most imaginative scenario.
Ruling
- Section 16 of the CGST Act outlines the eligibility conditions for claiming Input Tax Credit (ITC). While Section 16(2) establishes the essential eligibility criteria for claiming ITC, sub-sections (3) and (4) impose specific conditions and limitations for claiming the credit.
- In simpler terms, even if an assessee fulfills the basic eligibility criteria mentioned in Section 16(2), they may still not be entitled to claim ITC if their case falls within the limitations prescribed under sub-sections (3) and (4).
- The purpose of a non-obstante clause has been extensively explained in various legal decisions, which states that it is a legislative mechanism used in a statute to give overriding effect to certain provisions.
- Section 16(2) solely overrides the ITC enabling provision, which is Section 16(1). This is evident from the wording and structure of the said provision. The principle of overriding effect cannot be applied unless there is a clear inconsistency between two provisions. In this case, both Section 16(2) and Section 16(4) are separate provisions with distinct restrictions, and there is no inconsistency between them. The mere filing of a return with a delay fee does not automatically allow the claiming of Input Tax Credit (ITC). Late fees are collected to facilitate the verification process of returns. The argument made by the assessee that Section 16(4) violates Articles 14, 19(1)(g), and 300-A of the Constitution is not valid. ITC is not a statutory or constitutional right but a concession or rebate, and thus, imposing a time limit for claiming it does not violate any constitutional or statutory provision.
- The High Court dismissed the writ petition and concluded:
- The time limit prescribed under Section 16(4) for claiming ITC is not in violation of Articles 14, 19(1)(g), and 300-A of the Constitution of India. Section 16(2) of the CGST Act does not override Section 16(4) as both provisions are not contradictory and operate independently. Mere acceptance of the GSTR-3B return with late fees does not excuse the delay in claiming ITC beyond the period specified under Section 16(4).
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