Ranjan Mehta

(Chartered Accountant)

2021
July Volume -07
 Editor's Desk

lkou dh gkfnZd ‘kqHkdkeuk;sa---!!!

Dear Professional Colleagues,

I wish that this year the Sawan brings enough rain showers that
nobody's thirst remain unquenched be it humans or earth or
govt. With the reduction in the Covid-19 infections the
Government agencies specially Anti Evasion wings have
started widespread searches in GST. The audit wings have also
started conducting audit at a good pace are now in continuous
CA RANJAN MEHTA
flow of doing the same. So now we have a wider responsibility
to check the records of the assessees before they go under the scanner of these agencies. A
careful look at the records, details, information, returns can save the assessee from various
audit paras and also could save a lot of penalty since as soon as the department raises a para
under the law they make it necessary for an assessee to pay a penalty of 15% along with interest.
This penalty of 15% can atleast be saved by way of a pre-audit of books of accounts of the
assessee from the Departmental GST audit angle wherein the standard points can easily be
tracked down and complied with.

On the GST front there are not much developments apart from this circular no.
157/13/2021-GST dated 20.07.2021 wherein the department took a very narrower
interpretation of the suo moto writ petition taken up by the Hon'ble Supreme Court. The Supreme
Court in the said order extended the due dates of various
applications/appeals/petitions/suits/all other proceedings under the laws till the further orders
on the said account are issued by them in the wake of Covid-19 2nd wave. As per the said order
of the Supreme Court the due dates of any application/appeal/petition or proceeding has been
extended under the law. As per this order the assessees and consultants were hopeful that for
the purpose of GST some deadlines were extended at least such as period of application
revocation of registration, Relevant period for refund and due date to file the refund, due date for
submission a reply to a notice or Show Cause Notice. However, the department took a very
narrower interpretation stating that only time period related to submission of appeal has been
extended and nothing else. They stated that due to the order of the SC the proceedings of the
department cannot come to a standstill and therefore the proceedings are to be completed in
the same manner as were done before.

They clearly denied that all the other due dates have not been extended. This is
incorrect interpretation of the law as laid down by the Hon'ble SC. All the applications which
were time bound and the time of which exhausted due to non-availability of the remedy on
account of Covid-19 should be extended by the Govt. Many issues were faced by the taxpayers
due to covid such as non-availability of the officers' interface, consultants etc. during the entire

www.doyouknowgst.com +91-9460382075 [email protected]

 Editor's Desk

period starting from March 2020 till date. Thus, such dates should be extended by the Govt. Only
such cases where the proceedings have already been concluded should be protected rest all the
cases where the proceedings could be taken to the next level or conclusion is pending should be
allowed to be taken the benefit of the judgment in the interest of the justice. However still the
assessees can now take the benefit of this circular in a way that wherever the appeals time
period was elapsed, now for those cases at least the benefit can be taken and appeals could be
filed.

CA Ranjan Mehta

www.doyouknowgst.com +91-9460382075 [email protected]

 Clarifications

Clarification on applicability of Supreme Court order dated 27.04.2021, on

restoring the order dated 23.03.2020, regarding extension of the period of
limitation under various laws.

Hon'ble Supreme Court had taken suo moto cognizance of Covid-19 situation and
addressing the difficulties and challenges faced by the litigants in filing
petitions/applications/suits/appeals/all other proceedings within the period of
limitation prescribed under the general law of limitation or under any special laws
(both Central or State), issued an order dated 27th April 2021. The order, restoring
and continuing previous orders, directs that the period(s) of limitation, as
prescribed under any general/special laws in respect of all judicial or quasi-judicial
proceedings, whether condonable or not, stand extended till further orders.

To clarify the applicability of the said order regarding extension of limitation under
GST Law, CBIC issued Circular No. 157/13/2021-GST dt. 20th July 2021. After
deliberations with the GST Council and solicitation of legal opinion, it observed and
clarifies the following:

The order extends to:

The timeline stands extended as per the order only in case of appeals
required to be filed before Joint/ Additional Commissioner (Appeals),

www.doyouknowgst.com +91-9460382075 [email protected]

 Clarifications

Commissioner (Appeals), Appellate Authority for Advance Ruling,

Tribunal and various courts against any quasi-judicial order or Order
Revision/Rectification proceedings.

The order does not extend to:

Proceedings/compliances at the part of taxpayers like returns related

compliances, invoicing related compliances, registration compliances
etc. and actions would continue to be governed as per GST Law.

Original adjudications under GST Law.

Tax authorities performing functions as Quasi-Judicial Authority such as

disposal of refund applications, registration revocation/cancellation
applications, adjudication proceedings of deemed notices, etc. and same
can be continued.

Pending proceedings, judicial or quasi-judicial, that cannot come to a

standstill, and same will be governed by extensions of time granted by
notifications under the statute, if any.

Actions such as scrutiny of returns, issuance of summons, search,

enquiry or investigations and consequential arrest in accordance with
GST law.

Issuance of show cause notice, granting time for replies and passing
orders, even though they are quasi-judicial proceedings, as order is
applicable only to matters relating to petitions/applications/suits, etc.

Does not extend to every action or proceeding under the CGST Act, as the
order is regarding grant of extensions only with reference to judicial and
quasi-judicial proceedings in nature of appeals/ suits/ petitions etc.

www.doyouknowgst.com +91-9460382075 [email protected]

 Article

ANALYSIS OF YASHO INDUSTRIES LTD. AND CANON INDIA PVT. LTD.

JUDGEMENTS

Relevant Provisions:

The term 'proper officer' is defined under Section 2(34) of the Customs
Act,1962, as any officer of customs who is assigned certain functions by
the Board or the Principal Commissioner/Commissioner of Customs.

Section 2 (91) of Central Goods and Services Tax Act, 2017 defines
proper officer' as the Commissioner or the officer of the central tax who is
assigned that function by the Commissioner in the Board.

Section 3 of the CGST Act states that Government, by notification,

appoint certain classes of officers for the purpose of this Act and that the
officers of Central Tax shall be deemed to be the officers appointed under
this Act.

Section 5 of the CGST Act, states the powers of officers, and reads as,
an officer of central tax may exercise the powers and discharge such
duties conferred upon him with such conditions and limitations as
imposed by the Board. An officer of central tax may exercise the powers
and discharge the duties conferred/imposed under this Act, to any other
officer of the central tax subordinate to him. Under the same section, the
Commissioner may delegate his powers to any other officer who is
subordinate to him subject to conditions and limitations as specified.

www.doyouknowgst.com +91-9460382075 [email protected]

 Article

Section 70 - Power to summon person to give evidence and produce

documents:

- 70(1) – The proper officer under this Act shall have power to
summon any person whose attendance he considers necessary
either to give evidence or to produce a document or any other thing
in any inquiry in the same manner, as provided in the case of a civil
court under the provisions of the Code of Civil Procedure, 1908.

- 70(2) – Every such inquiry referred to in sub-section 1 shall be

deemed to be “judicial proceedings” within the meaning of Section
193 and Section 228 of the Indian Penal Code.

Section 74 - Determination of tax not paid/short paid/erroneously

refunded or ITC wrongly availed/utilized by reason of fraud/willful
-misstatement/suppression of facts:

- 74(5) – The person chargeable with tax may, before service of

notice under sub-section (1), pay the amount of tax along with
interest payable under Section 50 and a penalty equivalent to fifteen
percent of such tax on the basis of his own ascertainment of such
tax or the tax as ascertained by the proper officer and inform the
proper officer in writing of such payment.

Section 167 – Delegation of powers:

- The Commissioner may, by notification, direct that subject to such

conditions, if any, as may be specified in the notification, any power
exercisable by any authority or officer under this Act may be
exercisable also by another authority or officer as may be specified
in such notifications.

Analysis of Relevant Cases:

Let us first discuss the earlier decision of Supreme Court in the case of
Commissioner of Customs v. Syed Ali on the issue concerning ‘proper officer’.

www.doyouknowgst.com +91-9460382075 [email protected]

 Article

The Court held that only a customs officer who has been authorized to assess
or re-assess, is competent to issue a notice under Section 28 of the Customs
Act. However, the Central Board of Excise and Customs issued a Notification
assigning functions of ‘proper officers’ to DRI officers under Sections 17 and
28 of the Customs Act. Consequently, Section 28(11) was inserted to
empower all persons appointed as officers of customs before 06.07.2011 as
‘proper officers.’ Notably, DRI officers were also appointed as officers of
customs before 06.07.2011vide various notifications.

In the case of Canon India v. Commissioner of Customs, Canon India Pvt. Ltd.
and others filed bills of entry with a technical write-up on goods, for import of a
consignment of cameras. The Customs authorities examined the goods,
reviewed the write-up of goods, and after first check, allowed clearance of the
goods, with an exemption from payment of Customs duty. Subsequently, the
importer received a show cause notice issued under Section 28(4) of the Act
by the DRI, alleging that Customs authorities were induced to clear the
consignment of cameras by willful misstatement and suppression of facts
about the cameras. The SCN was issued by the Additional Director General,
DRI, while the decision to clear the goods was taken by Deputy Commissioner
of Customs, Appraisal Group, Delhi Air Cargo.

In this respect, the Supreme Court held that DRI can be considered to be a
proper officer only if it is shown that officer was a Customs officer under the
Customs Act and that he was entrusted with the functions of the proper officer
under Section 6 of the Act. The Court observed that the Notification conferring
power on the DRI officers, was unjustified and groundless as it was issued in
exercise of powers under Section 2(34) of the Act which concerns the
definition and therefore does not confer any power as such. Further, the
Supreme Court held that a proper officer is required to be “the proper officer”
as well and not any proper officer to exercise the power of recovery.

Laying emphasis on the word ‘the’ which brings in the specificity, the Court
concluded that the legislative intention is apparent from usage of article ‘the’
and therefore DRI cannot assume inherent power in a matter concerning the
authority of another official. Therefore, through this decision, the Supreme
Court brought in the principle of comity under consideration by holding that for

www.doyouknowgst.com +91-9460382075 [email protected]

 Article

a matter that is being dealt with under the authority of ‘the proper officer’, no
other proper officer can intervene.

In the recent judgement delivered by the hon'ble Gujarat High Court, in case of
Yasho Industries Ltd. Vs. Union of India, it was held that the Directorate
General of Goods and Services Tax Intelligence (DGGI) holds the power to
issue summons considering the provisions of the GST Act, 2017 and the
relevant circulars that were issued by the Central Board of Indirect Taxes and
customs.

The petitioner prayed in the hon'ble Gujarat High Court that a directive should
be issued to the GST Department to refund/allow recredit of Rs 3 crore that has
been paid through form GST DRC-03. Further, the petitioner company was
seeking the direction to quash the impugned Circular that was associated with
the assignment of functions to the officials as the ‘proper officials’ in relation
to the various functions of the CGST Act and the Rules made thereunder.

A contention was also put forth that the aforesaid assignment of function has
to be performed by issuing of notification and not by issuing of Circular
considering the provision of section 167 of the CGST Act. The aforesaid
function is related to the delegacy of the powers by the Commissioner that is
exercisable by any authority or concerned officer as may be mentioned in the
Notification.

The petitioner emphasized that CBEC under Section 2(91) of the CGST Act and
Section 20 of the IGST Act had issued Circular 3/3/2017, to assign
Superintendent of Central Tax the functions of ‘proper officer’ under Section
70(1) of the CGST Act.

The High Court, in furtherance of the thesis of law laid down by the Supreme
Court in case of Canon India Pvt. Ltd, noted that since the Board assigned the
officers to perform the function as proper officers as per relevant provision of
CGST Act i.e., Section 2(91) and the Rules thereby, the question of issuing
Notification under Section 167 will not arise.Crucially, the Court noted that
DGGI held the designation of Senior Intelligence Officer vide Notification
No.14 of 2017-CT dated 1.7.2017,and by Circular dated 5.7.2017 DGGI was

www.doyouknowgst.com +91-9460382075 [email protected]

 Article

assigned the powers of the proper officer by the Board. For this reason, the
DGGI was held to be proper officer and entitled to issue summons under
Section 70.

Yasho Industries Ltd. & Canon India Pvt. Ltd. – Comparison & Analysis of the two
judgments:

The judgment of Canon India Pvt. Ltd. observes that, “no fiscal statute has
been shown to us where the power to re-open assessment or recover duties,
which have escaped the assessment has been conferred to any officer other
than the officer of the rank of the officer who initially took the decision to
assess the goods,” the same statute confers power of recovering the same
escaped duty to the DRI officers by the virtue of Section 28(11), the legislative
intent of which has been completely overlooked in the same judgment.

The Hon'ble Supreme Court in the case of CC vs. Sayed Ali & Ors. had held that
only those officers who have been assigned function of assessment/ re
-assessment under Section 2(34) of the Customs Act will be "the proper
officer" for the purpose of issuance of SCNs under Section 28 thereof. Further
the Hon'ble Apex Court has also explicitly observed that if Collector of
Customs (Preventive) becomes a "proper officer" under the Customs Act, the
situation will lead to a situation of utter chaos and confusion. However, the
Hon'ble Supreme Court of India in the matter of Canon India Private Limited,
put the issue to rest and had held that the Additional Director General of DRI
was not the proper officer to exercise power under Section 28(4) of the
Customs Act where the goods were cleared at the time of import by
jurisdictional Deputy Commissioner of Customs. It was also held that where a
particular officer has exercised his power of assessment, the power to order
re-assessment must also be exercised by the same officer or his successor
and not by another officer of another department (referring to DRI) though he is
designated to be an officer of the same rank.

In an opinionated view, before concluding on the lack of jurisdiction of the DRI

officers, the Supreme Court should have considered the effect of Section
28(11) in the present context and dealt with the issue, given the fact that the
said sub-section was inserted to overcome the decision of Sayed Ali. However

www.doyouknowgst.com +91-9460382075 [email protected]

 Article

merely based on this section alone the judgment given by the Hon'ble SC
cannot be ignored as the contention of the order that section 2(34) is not a
section granting power under the Customs law to appoint the officers, is still
standing tall and creates infirmity in appointments of officers.

Though reliance was placed on Canon India Pvt. Ltd.'s judgment by the
Petitioner - Yasho Industries Ltd. in its case before the Gujarat High Court, yet
many angles were overlooked and it was concluded that DRI is a proper officer
under GST Law.

Section 3 – Appointment of Officers - necessitates a notification to be issued

by Government and not by Board, to appoint a class of officers as enumerated
in the Section.

A corrigendum was issued later by the Principal Commissioner on 29.7.2019

amending that the notification was issued by “Government” and not by the
“Board” under Section 3 of the CGST Act.

Principal Commissioner issued a Corrigendum dated 29.07.2019 to the

notification dated 1.07.2017, the said corrigendum was issued after a period
of two years from issuance of the notification and that too by Principal
Commissioner was overlooked.

Section 3 and Section 5 of the Act shall be complied with, in order to appoint
proper officers under the CGST Act. The notification was initially issued by the
Board 'in exercise of the powers conferred under section 3 read with section 5
of the CGST Act'. But, considering the Corrigendum, the Government issued
the notification under Section 3 and no notification was issued by the Board for
appointing the proper officer in accordance with Section 5(1) read with Section
167 of the Act.

Section 5(1) grants power to the Board to delegate the powers of proper officer
to any other officer, and power to appoint officers under Section 3 lays with the
Government. In Yasho Industries Ltd. Vs. Union of India, though the
government issued notification under Section 3, two strikingly different
statutory requirements under Section 3 and Section 5 were merged that were

www.doyouknowgst.com +91-9460382075 [email protected]

 Article

required to be fulfilled separately by Government and the Board respectively.

The clubbing of two distinct statutory requirements by the Government, by

issuing the Notification No. 14/2017-GST 'in exercise of the powers conferred
under section 3 read with section 5 of the CGST Act' was erroneous.

Appointment of the proper officer under Section 5(2) by way of issuance of a

Circular by the Board is erroneous in nature because under Section 5(1) the
Board may confer or delegate power of proper officer and not Section 5(2).
Section 5(2) only authorizes the officer to exercise the power delegated in
accordance with Section 5(1).

The authority to delegate power is with the Board by virtue of Section 5(1) as
evident from the Order no. 2832/GST-II, dated 8th December 2017 issued by
Commissioner of State, Haryana who issued the said order in accordance with
the power conferred under Section 5(1) of the Haryana Goods and Services
Act. Therefore, the appointment of proper officer through the circular
3/3/2017 under Section 5(2) is erroneous.

In furtherance of Canon India Case's decision, writs were filled before certain
High Courts, including Madras High Court in Quantum Coal Energy Ltd. and in
Shri Sathya Jewellery. In the Quantum's case, the Court heavily relied on Canon
India's decision, quashed OIO by DRI under Section 28 of the Customs Act on
the ground that Show-Cause Notice was already issued by ADG. Madras High
Court noted that once an officer who has the authority of 'proper officer' has
exercised the said authority, no other proper officer of another department is
designated to re-assess the same. Similarly, in Madras High Court in the case
of Shri Sathya Jewellery noted that in furtherance to Canon decision, Courts
are expected to ensure that the parties are adjudicated before the proper
Forum.

The judgment of Canon India has not only directly impacted on the working of
the board and various departments thereunder, it has also sealed the fate of all
the demand notices which have been issued by the DRI officers.

In an opinionated view, considering the Canon India Pvt. Ltd. judgement by the

www.doyouknowgst.com +91-9460382075 [email protected]

 Article

Supreme Court, if all the previous Show Cause Notices issued by the DRI are
challenged, the Department will incur heavy revenue losses in absence of any
corrective measures. However, the final decision of the Apex Court in Mangali
Impex is still pending which would likely overtake the shortcomings of Canon
India and speak on the constitutional validity of Section 28(11) and its
retrospective operation thereof.

Under the GST law, it is the “the proper officer” under Section 73 and 74 of the
GST Act who has the power to issue SCN. The principal of comity would hold
good under GST regime as well.

Similar series of amendments might be looked for which followed after the
ruling of Sayed Ali or a robust mechanism to grant DRI its long-debated due.
Though it is relatively easier for the Government to bring in another set of
retrospective amendments, revisiting the existing structure and
administration and alter it with a modern tax system as it aims to do is the
need.

www.doyouknowgst.com +91-9460382075 [email protected]

 Judicial decisions

1.) M/s TVH Lumbini Square Owners Association vs UOI

Resident Welfare Associations (RWAs) liable to pay GST on monthly

contribution by members, only on amount exceeding Rs.7500, Hon'ble
Madras High Court quashes the order of Authority of Advance Ruling.

Held that: - The conclusion of the AAR as well as the Circular to the effect
that any contribution above Rs.7,500/- would disentitle the RWA to
exemption, is contrary to the express language of the Entry in question
and both stand quashed. To clarify, it is only contributions to RWA in
excess of Rs.7,500/- that would be taxable under GST Act.

After introduction of GST, exemption was granted vide Notification 12/17-CT dated
28.06.2017 in case of certain services, exemption was also granted where a
contribution was made by the members to RWAs upto an amount of Rs 7500/-
(Amended to Rs.7,500/- vide Notification No.2/18 dated 25.01.2018).
www.doyouknowgst.com +91-9460382075 [email protected]
 Judicial decisions

A clarification was issued by GST department clarifying that in case of amount

exceeding 7500/- GST will be applicable only on the excess amount over 7500/-,
which also covered contribution made by members to RWAs.

In 2019 one of the petitioners approached Authority of Advance Ruling for

further clarification on the said matter where AAR in the order dated 1.06.2019 held
an adverse ruling that the exemption was conditional upon the contribution being
an amount of Rs 7500/- or less.

Circular No.109/28/2019-GST was issued by the department after the said

order by AAR, clarifying that the exemption on maintenance charges charged by
RWAs from its members would be available only if the same does not exceed Rs
7500/-per month per member. Where such charges exceed Rs 7500/- then GST
@18% would be applicable on the whole amount and no exemption would be
available.

Aggrieved by the Circular dated 22.07.2019 bearing Reference

No.109/28/2019-GST, writ petition was filed by the petitioners under Article 226 of
the constitution of India to call for the records relating to the impugned circular and
quash the same.

Petitioner's side emphasized on the word “upto” used in the original entry to
grant the exemption, it used “upto 7500/-”. Respondent stressed on the provision of
section 15 of the GST Act which provides that the transaction value is liable to GST.

Hon'ble court observed that :-

“no ambiguity presents itself on a plain reading of the Entry and the intention
is clear, so as to remove from the purview of taxation contribution upto an
amount of Rs.7,500/-.”

“The plain words employed in Entry 77 being, 'upto' an amount of Rs.7,500/-

can thus only be interpreted to state that any contribution in excess of the
same would be liable to tax.”

“The term 'upto' hardly needs to be defined and connotes an upper limit. It is
interchangeable with the term 'till' and means that any amount till the ceiling

www.doyouknowgst.com +91-9460382075 [email protected]

 Judicial decisions

of Rs.7,500/- would exempt for the purposes of GST.”

With this the petition was allowed and the order was passed quashing the AAR
order and circular issued thereon. As per the order it can be concluded that the
exemption limit in case of charges paid to RWAs is upto Rs 7500/- and tax is
applicable on the amount over and above Rs. 7500/- and not the whole
amount.

2.) Yasho Industries Ltd. Vs. Union of India,

Gujarat High Court

The Judgement in this case was a contrast to the judgement given by Hon'ble
Supreme Court in case of Canon India Pvt. Ltd. Vs. Commissioner of Customs,
where the outcome of the case was that the power to issue SCN or recover duties
which have escaped assessment must be exercised by the same officer or his
successor and not by another officer of another department though he is
designated to be an officer of the same rank.

Held That: In the instant case, the Board has assigned the officers to perform the
function as proper officers in relation to various Sections of CGST Act and the Rules
made thereunder by issuing the Circular in question, the question of issuing
Notification for delegation of powers by the Commissioner as contemplated under
Section 167 of the CGST Act does not arise. Petitioner appears to have misread the
powers of the Board to assign the officers to perform the function as proper officers
in relation to the various Sections of the CGST Act, as the delegation of powers by
the Commissioner to the other authority or the officer as contemplated in Section
167 of the CGST Act. The Court, therefore, does not find any substance in the
submission of petitioner that the respondent was not the 'proper officer' as per the
definition contained in Section 2(91) of the CGST Act, and therefore, had no powers
to issue summons under Section 70 of the CGST Act.

www.doyouknowgst.com +91-9460382075 [email protected]

 GST Returns Due Dates

GST Forms Particulars Due Dates (extended)

GSTR-1(July Details of outwards supplies of taxable goods/or services affected 11th August, 2021
2021)

GSTR-1 (July- Details of outwards supplies of taxable goods/or services affected 13th October,2021
Sept 2021)

IFF (July 21) Invoice Furnishing Facility under QRMP Scheme 13th August,2021

GSTR-3B (July Summary of outward supplies with ITC is declared and payment of tax is 20th August,2021
2021) affected by taxpayer (Turnover<Rs 5 cr)

GSTR-3B (July Summary of outward supplies with ITC is declared and payment of 20th August,2021
2021) tax is affected by taxpayer (Turnover>Rs 5 cr)

GSTR-3B (July- Opted for QRMP 24thOctober, 2021

Sept 2021)

GSTR-4 (FY 20- Composition Scheme 31st July, 2021

21)

GST-5 (July Return for Non-Resident foreign taxable person 20th August, 2021
2021)

GSTR-6 (July Return for an Input Service Distributor (ISD) 13th August, 2021
2021)

GSTR-7 (July Return for authorities deducting tax at source (TDS) 10th August,2021
2021)

GSTR- 8 Filed by E-commerce operators liable to deduct TCS 10th August, 2021

www.doyouknowgst.com +91-9460382075 [email protected]

 Contact Us

This publication contains information for general guidance only. It is not intended to address the
circumstances of any particular individual or entity. Although the best of Endeavour has been
made to provide the provisions in a simpler and accurate form, there is no substitute to detailed
research with regard to the specific situation of a particular individual or entity. We do not accept
any responsibility for loss incurred by any person for acting or refraining to act as a result of any
matter in this publication. This is a private circulation for clients and professionals only.

Source: Notifications and circular issued by CBIC.

CONTACT US

Email us with any questions or query or call 9460382075,

-Team, Do You Know GST

– CA RANJAN MEHTA –
– NIKSHUBHA SHARMA –
– ADV KOMAL SUTHAR –
Email: [email protected]
offi[email protected]
Mobile No: +91-9460382075

www.doyouknowgst.com +91-9460382075 [email protected]