RNM Alert (Indirect Taxes)
| Nature of Compliances | Due Date |
| GSTR-8 (Tax Collected at Source ‘TCS’) | March 10, 2024 |
| GSTR-1 | March 11, 2024 |
| IFF- Invoice furnishing facility (Availing QRMP) | March 13, 2024 |
| GSTR-6 Input Service Distributor | March 13, 2024 |
| GSTR-2B (Auto-Generated Statement) | March 14, 2024 |
| GSTR-3B | March 20, 2024 |
| GSTR-5 (Non-Resident Taxable Person) | March 20, 2024 |
| GSTR-5A (OIDAR Service Provider) | March 20, 2024 |
| PMT-06 (who have opted for the QRMP scheme) | March 25, 2024 |
Madras HC-100 % Penalty cannot be imposed if Show Cause Notice is issued under section 73
Facts:
K.S. Janarthanam (“the Petitioner”) is a civil works contractor registered under Central Goods and Service Tax Act 2017 on common portal of GST. The Petitioner received a notice in Form GST-ASMT-10 pertaining to discrepancies in returns filed by the Petitioner. Thereafter, the Petitioner was issued a notice under Section 73 of the TNGST Act.
Subsequently, the Revenue Department passed Assessment Order dated September 4, 2023 (“the Impugned Order”) against the Petitioner wherein 100 percent penalty was imposed.
Aggrieved by the Impugned Order, the Petitioner filed a writ petition before the Hon’ble Madras High Court.
Issue:
Whether Penalty could be imposed at 100 percent when Show Cause Notice is issued under Section 73 of TNGST Act?
Ruling:
The Hon’ble Madras High Court in W.P. No. 1848 of 2024 held as under:
Opined that, the Impugned Order is required to be interfered with as 100 percent penalty is imposed on the SGST dues when notice is issued under Section 73 of the TNGST Act.
Held that, the Impugned Order is quashed, thereby disposing the writ petition.
Directed that, the matter is remanded back to Assessing Officer for re-consideration with respect to the penalty imposed under the Impugned Order.
Relevant Provision:
Section 73(9) of the TGST Act:
“Section 73: 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.
(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?”
GSTN Issues Important Advisory on Enhanced E-Invoicing Initiatives and Launches Enhanced E-Invoice Portal
The GSTN issued Advisory No. 624 dated February 21, 2024 on the occasion of one year of the successful going live with the additional five new IRP portals, the e-invoice master information portal, and the e-invoice QR Code Verifier app, announces the launch of the revamped e-invoice master information portal https://einvoice.gst.gov.in . This enhancement is part of ongoing effort to further improve taxpayer services. New Features of the revamped E-Invoice Master Information Portal are as follows:
PAN-Based Search: Users can check the e-invoice enablement status of entities using their Permanent Account Number (PAN) in addition to search with GSTIN.
Automatic E-invoice exemption List: The portal now automatically publish updated list with all GSTINs that have filed for e-invoice exemptions at the start of the month and is available for users to download.
Global Search Bar: A comprehensive search tab has been introduced that allows for quick access to the information across the portal.
Local Search Capabilities: Enhanced search functionality within advisory, FAQ, manual, and other sections for efficient information access.
Revamped Advisory and FAQ Section: Now organized year-wise and month-wise for easier reference, offering comprehensive guidance.
Daily IRN Count Statistics: The portal now includes statistics on the daily Invoice Reference Number (IRN) generation count.
Dedicated Section on Mobile App: Information and support for the e-invoice QR Code Verifier app are readily available.
Improved Accessibility Compliance and UI/UX: Adhering to the GIWG guidelines, the portal now offers improved features such as contrast adjustment, text resizing buttons, and screen reader support for enhanced accessibility.
Updated Website Policy: The website policy has been thoroughly updated including the website archival policy, content management & moderation policy, and web information manager details. The Office of the Pr. Commissioner of Customs (NSI) vide Public Notice No. 13/2024 dated February 23, 2024 has issued a procedure for filing and processing of Bill of Entry amendment requests.
In the past year alone, more than 1.6 crore e-invoices were reported through the new IRPs, demonstrating the robustness and efficiency of the system. Furthermore, GSTN has introduced an internal e-invoice comprehensive health dashboard to further enhance monitoring of the e-invoice ecosystem. As a result of these improvements in the GSTN E-Invoicing System, today we have:
Expansion of IRP Portals: Today, GSTN operates a total of six IRP portals through its partners, running robustly alongside the centralized de-duplication system.
E-Invoicing Reporting Accessibility: All taxpayers who are eligible for e-invoicing can report e-invoices through any of these six IRP portals. The reporting can be done online, via APIs, or through a mobile app, all free of cost, making the process accessible and convenient for taxpayers nation-wide.
Hourly Auto population of e-invoices in GSTR-1 from new IRPs. Additionally, we are working with NIC-IRP to enable hourly auto-population of e-invoices in GSTR-1 reported on the NIC-IRP 1&2 portal.
E-invoice download for past six months for both buyers and sellers via e-invoice portals and G2B APIs.
E-invoice QR code verifier App for verification of e-invoice, and search IRN functionality for online verification of IRN.
Business Transfer Agreements having a non-compete clause cannot be classified as Declared Service for demanding Service Tax
The Hon’ble CESTAT, Bangalore, in the case of Naveen Chava v. Commissioner of Central Tax [Service Tax Appeal No. 20013 of 2021 dated January 30, 2024], held that in the current case, no evidence establishes that a substantial portion of the agreement refers to the obligations that are to be followed by the Appellants. Further, if any payment has been made for an independent activity of tolerating an act under an independent arrangement, such payments will not constitute ‘consideration.’ Therefore, business transfer agreements (“BTA”) entered by the Appellants having a non-compete clause cannot be classified as Declared Service under Section 66E (e) of the Finance Act, 1994 (“the Finance Act”) for demanding Service Tax.
Facts:
Naveen Chava and Others (“the Appellants”) were engaged in designing integrated sheets/circuits for the telecom industries. They entered into a BTA of a going concern as a whole with M/s. Altran Technologies India Pvt. Ltd. (“M/s. Altran”) on July 27, 2020. They agreed to sell, transfer, grant, assign, and deliver to M/s. Altran all their rights, title, and interests with respect to the business as a going concern, free and clear from all encumbrances on a slump sale basis as defined in Section 2(42C) of the Income Tax Act, 1961 (“the IT Act”).
The Director General of Goods and Service Tax Intelligence (“the DGGI”) investigated and alleged that the activities of agreeing to refrain from certain activities for 2 years were required to be treated as a Declared Service. Thereafter, a Show Cause Notice dated December 19, 2019 (“the Impugned SCN”) was issued to the Appellants wherein it was alleged that the services provided by the Appellants to M/s. Altran fall under the category of Service under Section 66E (e) of the Finance Act. Thereafter, the Adjudication Authority (“the Respondent”) passed an Order dated August 28, 2020 (“the Impugned Order”) and confirmed the demand of Service Tax and penalty on the Appellants.
Hence, aggrieved by the Impugned Order, the present appeal was filed by the Appellants.
Issue:
Whether the BTA entered by the Appellant had a non-compete clause can be classified as Declared Service for demanding Service Tax?
Held:
The Hon’ble CESTAT, Bangalore in Service Tax Appeal No. 20013 of 2021 held as under:
Observed that, as per the facts, the business transfers carried out by the Appellants were related to an ongoing concern and as per the Notification No. 25/2012-Service Tax dated June 20, 2012 (“the Exemption Notification”), service by way of transfer of a going concern is fully exempt from all of the Service Tax leviable thereon. In the current case, no evidence establishes that a substantial portion of the agreement refers to the conditions/obligations to be followed by the Appellants, like non-compete clauses, performance guarantee for two years, etc., for which they have received consideration of INR 1,06,79,67,816/- as held by the Respondent.
Opined that, non-compete clauses are normal in transfer of business and their condition cannot be separated from the contract that ended between the parties to bring the transaction under the ambit of Service Tax by denying the benefit of the Exemption Notification.
Relied on, Ishikawajma Harima Heavy Industries v. Director of Income Tax, Mumbai [2007 (3) SCC 481)] wherein it was held that in construing a contract, the terms and conditions thereof are to be read as a whole. A contract must be construed keeping in view the intention of the parties. No doubt, the applicability of the tax laws would depend upon the nature of the contract, but the same should not be construed keeping in view the tax provisions.
Relied on, M/s. Universal Medicare Pvt. Ltd. v. C.C.E. & S.T., [Service Tax Appeal No. 11161 of 2017-DB dated June 02, 2019] wherein the Tribunal held that an agreement has to be interpreted as per the language and intention of the parties to such agreement. Once an ongoing concern is transferred along with assets and liabilities by paying a huge amount, it is obvious that if such a non-compete clause is absent, the Appellants could immediately start the same business.
Held that, the CBIC vide Circular No. 178/10/2022 dated August 03, 2022 clarified that under Service Tax, the GST demand unless payment has been made for an independent activity of tolerating an act under an independent arrangement entered into for such activity of tolerating an act, such payments will not constitute ‘consideration.’ Hence, such activities do not constitute “supply”.
Therefore, the appeal was allowed, and the Impugned Orders were set aside.