the essay of 6 November 2019 · the untouched capture
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<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NOVEMBER 06, 2019</strong></font></p>
<p align="center"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">The Saga Of a Non- Adversarial Litigation</font></strong></p>
<p align="center"><u><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>By Vijay Kumar</strong></font></u></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> few months after GST was introduced in 2017, the Sales Tax Bar Association filed a writ in the Delhi High Court seeking certain remedies relating to the functioning of GST. In its order dated 30.10.2017, the Delhi High Court observed, </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Counsel for the respondents submits that the present writ petition would be treated as a representation and examined and considered by the authorities. He assures that the respondents would not treat the present writ petition as an adversarial litigation and would take due notice of any genuine problems and difficulties and resolve the same. It is stated that three office bearers or representatives of the petitioner association could meet and interact with Ms. Kajal Singh, EVP (Services), GSTN on 6th November, 2017 at 11:00 A.M. The respondents would ensure that legal and technical experts are also associated in the said meeting. Meetings can be held on further dates as per the convenience of the respondents and representatives of the petitioner. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Relist on 11th December, 2017. </em></font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In its order dated 11th December, 2017, the High Court noted, </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>It is stated that the meeting was held in terms of the order dated 30th October, 2017. It is pointed out by the respondents that an excel sheet has been prepared with regard to the queries raised, answered and remedial steps taken. The respondents would place on record a copy of the report on the deliberations. Learned counsel for petitioner submits that some issues are still unresolved. </em></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The petitioner submits that there should be a help desk so that the queries raised by the assessee, receive response and issues are resolved. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Resolution of issues is an ongoing process and the same would continue irrespective of the pendency of the present writ petition. It is open to the respondents to call for meeting, if required and necessary with the petitioner. </font></em></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In its order dated 15.05.2018 <strong><a href="https://taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTM3NTEy" target="_blank">2018-TIOL-2790-HC-DEL-GST</a></strong>, the High Court noted three submissions of the petitioner: </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. the grievance mechanism set up in terms of Circular No.<strong> <a href="https://taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MjQyMzg=" target="_blank">39/13/2018-GST</a></strong> dated 03.04.2018 is ineffective for the normal reply given is that the problem has been resolved though in fact the problem persists. The reply furnished should be effective and must disclose the method and manner in which the issue has been resolved. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. non credit/payments of electronic cash ledger. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Central and State Acts permit rectification of mistakes. However, GSTN portal does not permit rectification of a return already filed. Rectification is to be made in the subsequent return. Nevertheless, authorities are issuing notices to the assessees whenever rectification is made, treating rectification as a discrepancy between GSTR1 and GSTR3B. A large number of assessees are facing this problem. </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Prima facie, the Court found merit in the submission that reply under the grievance mechanism should specifically deal with the issue raised and indicate the manner in which the same has been resolved and addressed. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On 13.12.2018, the Court observed, </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>It was submitted by Ms. Maninder Acharya, learned Additional Solicitor General on behalf of the Central Government, firstly, that with respect to the rectification of returns, suitable amendments have been carried out in Section 39(9) to facilitate at least two rectifications within a specified period. </em></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Learned counsel for the petitioners pointed out however, that Section 39(9) is subject to Section 37 – which deals with the general power of rectification and that provision does not indicate any cap. It is pointed out that both, Sections 37 and 39(9) are to be read with Rules – in this case Rule 71 – sub-rules (2) and (3) which in fact indicate that there can be "rectification for a month", thus implying that a rectification within a month is not necessary but that as many rectifications, as are necessary, for the dealers to correct the mistakes discerned later not merely on account of its errors but on account of the errors, in receipt of inputs or from the buyers' transactions would also be admissible. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Given these provisions, this Court is of the prima facie opinion that placing a quantitative cap over a specified period may not be permissible. Learned ASG submitted that certain instructions would be sought in this regard. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It was submitted by the learned ASG, secondly, that the date for filing annual return has now been extended to 31.03.2019 in exercise of power under Section 172 of the <strong><a href="https://taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=29&filename=notification/gst/cgst_act/2017/cgst_act_index.htm" target="_blank">Central Goods and Services Tax Act, 2017</a></strong> read with the Removal of Difficulties Order, 2018. In these circumstances, that issue does not survive. </font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Learned counsel for the petitioners pointed out that apart from the routine rectifications, other corrections such as inadvertent reflection of a mandatory GST registration form, as voluntary or vice versa, which can lead to serious consequences cannot be rectified in the existing format in the GST portal. Learned ASG submitted that on this aspect, instructions would have to be obtained. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>List on 18.02.2019. </em></font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On 30.07.2019 <strong><a href="https://taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTUwNzU3" target="_blank">2019-TIOL-1659-HC-DEL-GST</a></strong> , the Court observed, </font></p>
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. The Court is informed by the learned ASG that since the previous date of hearing there have been two meetings held with the counsel for the Petitioners in order to understand and resolve the issues raised by them. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. The Respondents shall also place on record on the next date the data/logs which would show what is the broad nature of the complaints about the functioning of the GST system over the past three months and how they have been sought to be resolved. This will give an idea whether the solutions suggested by the Respondent have been successful. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. It is made clear that on the issues where a consensus has been arrived at between the Respondents and counsel for the Petitioners pursuant to the above meetings, the changes should be implemented by the Respondents without waiting for further orders by this Court. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. List on 18th September, 2019. </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On 18th September 2019 - <strong><a href="https://taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTUyNDk5" target="_blank">2019-TIOL-2197-HC-DEL-GST</a></strong><a href="https://taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTUyNDk5"> ,</a> the Court observed, </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>During the course of hearing, learned counsel for the petitioner has highlighted several grievances with regard to the functioning of the GSTN system. Some of the issues highlighted relates to the technical and procedural aspects. The respondents must resolve these issues after understanding the difficulties that they are posing to the users. </em></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Learned counsels for the respondent Nos. 3 and 4 states that the said respondents are ready and willing to address all procedural and technical issues. This Court vide order dated 12.09.2019 in W.P. (C) 10284/2018, has already directed the petitioners to raise all their grievances in relation to the working of the GST Network, including those not raised in that petition, in bullet points and to place the same before the respondents, following which meetings would be held between the representatives of all stakeholders including the petitioners, with a view to resolve all such issues. Therefore, we direct to petitioners to incorporate all the technical and procedural issues raised in the present writ petition as well in their bullet point presentation. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In relation to some of these issues, the stand of the respondents is that they are legal issues, which would need determination of this Court. Learned counsel for the petitioner and Mr. Harpreet Singh state that he shall identify the legal issues which require determination by this Court. Let the legal issues be identified and placed before this Court on the next date. </font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>The grievance of the petitioner is that there is no effective IT Grievance Redressal Mechanism in place, and whenever the assessee/members of the petitioner's association have sought to address their grievances, they were met with disappointment. </em></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The respondents have issued a circular No. <strong><a href="https://taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MjQyMzg=" target="_blank">39/13/2018-GST</a></strong> dated 03.04.2018 for the purpose of setting up an IT Grievance Redressal Mechanism to address the grievances of tax payers due to technical glitches on GST Portal. It also provides in the mechanism for resolution by the IT-Grievance Redressal Committee and appointment of Nodal Officers. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mr. Harpreet Singh, learned Sr. Standing Counsel states that the Nodal Officers and the Committee notified as per the above noted circular are competent, and have the necessary infrastructure to address the issues that may be raised by the petitioner and others including individuals, from time to time. He submits that the scope of the circular is not confined only to grievances related to filing of TRAN-1 Forms. It also covers other related issues. Taking into consideration the nature of the difficulties being faced by the petitioner; its members, and, other tax payers, we direct the respondents to circulate on their website the enlarged scope of IT-Grievance Redressal Committee. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The committee shall look into, even individual grievances related to the working of the GST Network because, though they may be raised by individuals, they may relate to many others similarly situated. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#DFF3CB" span="span">The e-mail IDs and telephone numbers of the nodal officers should be widely circulated including on the GST Website; Delhi GST website and CBIC website. The grievances which are received at the level of the Nodal Officer should be compiled, and a status report in relation to the said grievances should be displayed on the concerned websites on a fortnightly basis. The same should contain information with regard to the substance of the grievances made; the date on which it is made; the action taken on the said grievance, the status as to whether the same is resolved, pending, or not; and if the same is not resolved, the reason for it not being so resolved. It should also indicate the approximate time in which the grievance is likely to be resolved. If the grievance is rejected, for whatever reason, the status of it being rejected, and the reason for rejection should also been indicated. The grievances raised by the public at large or by the petitioner association should be redressed as early as possible, and preferably within two weeks of the same being so raised. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">List on 15.10.2019. </font></em></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On 31.10.2019<a href="https://taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTUzOTE1" target="_blank"> <strong>2019-TIOL-2525-HC-DEL-GST</strong></a> , the Court observed, </font></p>
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<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#DFF3CB" span="span">The whole purpose of directing the holding the meetings between the representatives of the trade and the concerned Senior officers, who are involved in the process of implementation of the GST system, was to enable the representatives of trade to put across the day-to-day practical difficulties being faced by them, face to face to the policy makers, so that they are able to address all such issues with the ultimate objective of achieving smooth operation of the GST system. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We have, therefore, put it across to the learned counsels that one way could be to direct holding of future meetings under the Chairmanship of a Retired Judge of this Court, so that the parties come across, as open to making and receiving suggestions, and the issues are not approached with hardened stands. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, before we take a decision on the aforesaid aspect, we consider it appropriate to hold a meeting on 16.11.2019 at 11.30 am in our Chamber with the CEO of the GSTN and a member of the CBIC who is a part of the GST Policy Wing dealing with GST system. In the said meeting, Mr. Aggarwal, who represents the Petitioner, Mr. Sanjay Sharma, Mr. Harpreet Singh and Ms. Nidhi Parashar, Advocates shall also remain present. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the meantime, we direct Respondents to take steps to implement all the decisions which have been taken in the aforesaid two meetings by issuing necessary circulars and notifications, or carrying out appropriate changes in the portal without any further delay. </font></em></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Let us hope the meeting on 16.11.2019 will solve some problems. </font></p>
<p align="justify"><font color="#FF3333" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Cenvat Credit into the GST Regime – Courtesy Courts:</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Gujarat High Court in in the case of <em> Siddharth Enterprises Vs The Nodal Officer </em>- <a href="https://taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTUxOTY1"><strong>2019-TIOL-2068-HC-AHM-GST</strong> </a>observed, </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>In our opinion, it is arbitrary, irrational and unreasonable to discriminate in terms of the time-limit to allow the availment of the input tax credit with respect to the purchase of goods and services made in the pre-GST regime and post-GST regime and, therefore, it is violative of Article 14 of the Constitution. </em></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is legitimate for a going concern to expect that it will be allowed to carry forward and utilise the CENVAT credit after satisfying all the conditions as mentioned in the Central Excise Law and, therefore, disallowing such vested right is offensive against Article 14 of the Constitution as it goes against the essence of doctrine of legitimate expectation. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By not allowing the right to carry forward the CENVAT credit for not being able to file the form GST Tran-1 within the due date may severely dent the writapplicants working capital and may diminish their ability to continue with the business. Such action violates the mandate of Article 19(1)(g) of the Constitution of India. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The liability to pay GST on sale of stock carried forward from the previous tax regime without corresponding input tax credit would lead to double taxation on the same subject matter and, therefore, it is arbitrary and irrational. </font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>The respondents are directed to permit the writ applicants to allow filing of declaration in form GST TRAN-1 and GST TRAN-2 so as to enable them to claim transitional credit of the eligible duties in respect of the inputs held in stock on the appointed day in terms of Section 140(3) of the Act. It is further declared that the due date contemplated under Rule 117 of the CGST Rules for the purposes of claiming transitional credit is procedural in nature and thus should not be construed as a mandatory provision." </em></font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Punjab and Haryana High Court fully agreed in its order dated 04.11.2019 - <strong><a href="https://taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTUzOTA3" target="_blank">2019-TIOL-2519-HC-P&H-GST </a></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Will the Government follow the directions of the High Courts or take the matter to the Supreme Court? </font></p>
<p align="justify"><font color="#FF3333" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DIN IN CBDT, WHY NOT IN CBIC? </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In these columns, on <a href="https://taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=37303"><strong>02.10.2019 </strong></a>, I mentioned, <em>"Why can't we have a similar system for GST? Here, we have even junior officers sending all kinds of unofficial letters and emails to the taxpayers." </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBIC in its Circular No.<strong> <a href="https://taxindiaonline.com/RC2/pdfnoti/gst/gst_circular/2019/cgst_circular_122.pdf">122/41/2019-GST</a></strong> , dated 05.11.2019 has stated, </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>In keeping with the Government's objectives of transparency and accountability in indirect tax administration through widespread use of information technology, the CBIC is implementing a system for electronic (digital) generation of a Document Identification Number (DIN) for all communications sent by its offices to taxpayers and other concerned persons. To begin with, the DIN would be used for search authorization, summons, arrest memo, inspection notices and letters issued in the course of any enquiry. This measure would create a digital directory for maintaining a proper audit trail of such communication. Importantly, it would provide the recipients of such communication a digital facility to ascertain their genuineness. Subsequently, the DIN would be extended to other communications. Also, there is a plan to have the communication itself bearing the DIN generated from the system. </em></font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board has emphasised that that any specified document that is issued without the electronically generated PIN shall be treated as invalid and shall be deemed to have never been issued. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Next time you get a letter from the department, see that it is DINNED. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until next week </font></strong></p>
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