the essay of 3 January 2024 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body> <p align="left"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">JANUARY 03, 2024</font></strong></p> <p align="center"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Have you erred? Are you doomed?</strong></font></p> <p align="center"><u><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By Vijay Kumar</font></strong></u></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>HAVE</strong> you erred? Are you doomed? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <em>Sun Dye Chem Vs. Assistant Commissioner - <strong><a href="https://taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTYxOTEw" target="_blank">2020-TIOL-1858-HC-MAD-GST</a></strong></em>, the Madras High Court considered a case wherein an error was committed by the petitioner in filing of details relating to credit. The error was to the effect that what should have figured in the CGST/SGST column was inadvertently reflected in the IGST column. It was not the case of the department that the error was deliberate and was intended to gain any undue benefit by the petitioner and in fact, by reason of the error, the customers of the petitioner were denied credit which they claim to be legitimately entitled to. It was also an error which was not initially noted by the petitioner, and on account of the error, the customers of the petitioner would be denied credit which they claimed to be legitimately entitled to, owing to the fact that the credit stands reflected in the wrong column. In these circumstances, after examining the relevant provisions, the High Court observed that in the absence of an enabling mechanism, the assessee should not be prejudiced from availing credit which they are otherwise legitimately entitled to. The Court observed that an error committed by the petitioner is an inadvertent human error and the petitioner should not be prevented from rectifying the same and accordingly, allowed the petition. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A similar case was decided by the Bombay High Court recently in<em> STAR ENGINEERS INDIA PVT LTD Vs UNION OF INDIA - <strong><a href="https://taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTc5NDg5" target="_blank">2024-TIOL-03-HC-MUM-GST</a></strong></em>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Court observed, </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFD7AE" span="span">The GST regime as contemplated under the GST Law unlike the prior regime, has evolved a scheme which is largely based on the electronic domain. The diversity, in which the traders and the assessees in our country function, with the limited expertise and resources they would have, cannot be overlooked, in the expectation the present regime would have in the traders / assessees complying with the provisions of the GST Laws. There are likely to be inadvertent and bona fide human errors, in the assessees adopting themselves to the new regime. For a system to be understood and operate perfectly, it certainly takes some time. The provisions of law are required to be alive to such considerations and it is for such purpose the substantive provisions of sub-sec. (3) of Sec. 37 and sub-sec. (9) of Sec. 39 minus the proviso, have permitted rectification of inadvertent errors. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFD7AE" span="span">We may also observe that the situation like in the present case, was also the situation in the proceedings before the different High Courts as noted by us above, wherein the errors of the assessee were inadvertent and bona fide. There was not an iota of an illegal gain being derived by the assessees. In fact, the scheme of the GST laws itself would contemplate correct data to be available in each and every return of tax, being filed by the assessees. Any incorrect particulars on the varied aspects touching the GST returns would have serious cascading effect, prejudicial not only to the assessee, but also to the third parties. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFD7AE" span="span">It is considering such object and the ground realities, the law would be required to be interpreted and applied by the Department. This necessarily would mean, that a bona fide, inadvertent error in furnishing details in a GST return needs to be recognized, and permitted to be corrected by the department, when in such cases the department is aware that there is no loss of revenue to the Government. Such free play in the joint requires an eminent recognition. The department needs to avoid unwarranted litigation on such issues, and make the system more assessee friendly. Such approach would also foster the interest of revenue in the collection of taxes. </font></p> </blockquote> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">When they err </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In another judgement we reported in the new year, the case made out by the petitioner was that the goods were detained by the Revenue Department while the goods were in transit from Patna to Aligarh on the ground that the goods were not accompanied by valid documents. It is to be noticed that in the detention order, the only ground that was taken by the Revenue Department was that no valid documents were accompanying the goods. However, it appears that in the show-cause notice, there is a complete silence with regard to the earlier reason given in the detention order and the same has been substituted by a different reason that in the GSTR 2A form, four out of other suppliers, that had been shown in the GSTR 2A, had their registrations suspended or cancelled. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court observed, (<em>JITENDRA KUMAR Vs STATE OF UP AND ANOTHER - <strong><a href="https://taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTc5NDg4" target="_blank">2024-TIOL-02-HC-ALL-GST</a></strong></em>) </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFD7AE" span="span">It is trite law, settled by a catena of Supreme Court judgments, that the Revenue cannot beat around the bush and keep changing the goal post at each stage. Once the Revenue had taken a particular stand, the same cannot be completely changed and/or supplemented by a different reason or ground. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFD7AE" span="span">In the present case, it is clear that the detention was made on the ground that the goods were not accompanied by valid documents. However, when the show-cause notice was issued, there is no whisper of any invalid document whatsoever. In fact, the stand was completely changed by the Revenue and this volte face cannot be countenanced by this Court. The detention of goods causes serious prejudice to an assessee and the same can only be done on the basis of specific, valid and reasonable grounds. In the present case, it is quite obvious that at the time of detention, the ground that was stated by the Revenue was incorrect. More so, there was no reason for the Revenue to have detained the goods and the consequential actions that followed, were obviously vitiated. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFD7AE" span="span">In light of the findings above, we are of the view that the detention order and the subsequent show-cause notice were bad in law, and accordingly, both are quashed and set-aside. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFD7AE" span="span">The Revenue is directed to release the goods and the vehicle of the petitioner within a period of 7 days from date. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFD7AE" span="span">Though this is an appropriate case for imposing cost upon the Revenue as the actions of the respondents appear to be mala fide in nature, we are restraining ourselves from doing so only on the earnest prayer made on behalf of learned counsel for the respondents. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the New Year, let us hope the GST becomes a really Good and Simple Tax </font></p> <p align="justify"><strong><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Happy New Year</font></strong></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until next week</font></p> </body> </html>