Digest No. 1
Amutha Metal Industries Vs. Deputy State Tax Officer & Anr.
[IN THE HIGH COURT OF MADRAS] : HON’BLE R.SURESH KUMAR, J. (WP No.7977 of 2022 and WMP No.7965 of 2022 (Dt. 4.4.2022.)
Determination of tax – Proceedings under sec. 74 – Adherence to procedure contemplated therein
HELD. The issue has already been settled in numbers of cases, where, as per the scheme under section 74 of the CGST Act, 2017 first notice should be given or option should be given to the dealer under section 74(5) of the CGST Act and if the option is not utilised or responded by the petitioner dealer, then only further notice under section 74(1) should be issued, thereafter, on receipt of reply or otherwise and considering the same, after giving personal hearing, the Revenue should continue to proceed with section 74 proceedings. In the instant, in the notice dated 1.11.2021, it was wrongly mentioned as Form GSTASMT-10 and that had been replied on 24.11.2021. Thereafter, straight away the order under section 74(1) was issued on 9.12.2021. Therefore, it is a clear case where procedure contemplated under section 74 especially, under section 74(5), has not been complied with. Therefore, on that ground, the matter is remanded back to the respondents for reconsideration and while reconsidering the same, the procedure contemplated especially in the context of section 74(5) and 74(1) should be strictly followed by giving an opportunity to the petitioner including personal hearing.
Digest No. 2
Pr. Comm. CGST & Anr. Vs. Electrosteel Castings Ltd.
[IN THE HIGH COURT OF CALCUTTA]: HON’BLE MD. NIZAMUDDIN, J. (WPA No. 17567 of 2021 with WPA No. 12676 of 2021 (Dt.10.6.2022)
Refund – Refusal – Justification – Definition of ‘non-taxable supply’ as defined in CGDT Act, 2017 – Non-consideration of.
GST authorities ignored expression ‘mutatis mutandis” appearing in sec. 2 (2) of Cess Act, also not given any justification as to why domestic supply of finished goods which are subject to nil rate of compensation cess cannot be construed as exempted supplies. Action of withholding of assessee’s claim of refund and not refunding same to assessee in spite of order of appellate authority, was arbitrary and unjustified.
From legislative scheme of the Cess Act it appears that the cess is an impost to counterbalance the loss of revenue of the States on account of sub-sumption of various taxes on commencement of the GST regime. Hence, cess is a levy which partakes the character of all the levies, which now are subsumed in GST. Cess is akin to the components of GST, which is a constitutionally approved amalgam of State taxes, which existed prior to the commencement of the GST regime. The goods and services Tax Compensation Cess Rules, 2017 were also framed and made effective from 1st July, 2017 wherein the CGST Rules, 2017 were adapted. Refund of ITC of Cess in cases of zero rated supply of goods is governed by the provisions of section 9(2) and Section 11 of the Cess Act read with section 54 of the CGST Act read with Rule 89 (4) of the CGST Rules. The formula prescribed under Rule 89 (4) of the CGST Rules categorically excludes value of exempt supplies other than zero rated supplies while calculation of adjusted total turnover. Since “exempt supply” has not been defined under the Cess Act, definition of exempt supply contained in Section 2 (47) of the CGST Act shall apply mutatis mutandis for computation of refund of ITC of Cess by application of provisions of Section 11, Section 9 and Section 2 (2) of the Cess Act.
There are no reason to interfere with the impugned order dated 5th February, 2021, for the reason that Appellate authority while passing the impugned order has neither committed any procedural irregularity nor any jurisdictional error nor any violation of principles of natural justice and the impugned order is based on cogent reasons and is speaking one and so far as findings of fact is concerned, in exercise of constitutional writ jurisdiction under Article 226 of the Constitution, this Writ Court is not inclined to act as an Appellate authority and differ with the same and substitute the said findings of the Appellate authority. Action of withholding of the petitioner/assessee’s claim of refund in question by the respondent CGST authority and not refunding the same to the petitioner in spite of the order of the Appellate authority dated 5th February, 2021, holding such claim in favour of the assessee company/petitioner, is arbitrary and unjustified.