Latest news with #SCNs
Time of India
6 days ago
- Business
- Time of India
Canon India gets interim relief as Delhi HC stays coercive measures in Rs 2.24 crore GST dispute
The Delhi High Court has restrained the revenue authorities from taking any coercive action against Canon India for allegedly availing excess input tax credit ( ITC ) and short-payment of Goods and Service tax (GST). The court also issued notice to the Department of Revenue, Ministry of Finance, the Commissioner of Central Tax and others on a petition by Canon challenging the department's 2023 tax demand of Rs 2.24 crore for financial year 2017-18. The case will be further heard on September 25. Explore courses from Top Institutes in Please select course: Select a Course Category Data Science Technology Digital Marketing healthcare Cybersecurity Degree Project Management MBA Finance Artificial Intelligence Healthcare PGDM others Public Policy Data Analytics Product Management Design Thinking Leadership Data Science CXO Others MCA Management Skills you'll gain: Data Analysis & Interpretation Programming Proficiency Problem-Solving Skills Machine Learning & Artificial Intelligence Duration: 24 Months Vellore Institute of Technology VIT MSc in Data Science Starts on Aug 14, 2024 Get Details Skills you'll gain: Strategic Data-Analysis, including Data Mining & Preparation Predictive Modeling & Advanced Clustering Techniques Machine Learning Concepts & Regression Analysis Cutting-edge applications of AI, like NLP & Generative AI Duration: 8 Months IIM Kozhikode Professional Certificate in Data Science and Artificial Intelligence Starts on Jun 26, 2024 Get Details Senior counsel Tarun Gulati, appearing for Canon, argued that the short payment of excess ITC availed was suo moto paid by the company prior to the issuance of any show cause notice (SCN). However, the demand order had incorrectly confirmed the SCN's allegations, he added. The company said there was no fraud, suppression, misstatement with an intent to evade tax on its part and the SCNs invoking Section 74 of the Central Goods and Services Act, 2017 (CGST) were liable to be dropped. In 2022, an audit observation requisition was issued by the department to the assessee informing it of discrepancies related to excess ITC availed and short payment of goods and services tax. Even after Cannon had given its detailed explanation with supporting documents, the department in 2023 had issued SCNs, alleging suppression on the ground that if the department had not conducted enquiry, facts regarding the alleged discrepancies would not have come to light. While Cannon had paid back the excess ITC, the Commissioner of Central Tax in 2024 had upheld the demand.
Time of India
6 days ago
- Business
- Time of India
SC upholds GST exemption for electricity regulators, dismisses govt's plea
In a big relief to the regulatory bodies, the Supreme Court has upheld the Delhi High Court 's ruling that fees collected by the Central Electricity Regulatory Commission ( CERC ) and the Delhi Electricity Regulatory Commission ( DERC ) for the supply of electricity or grant of electricity distribution licences or as annual/other fees are exempt from Goods and Services Tax (GST). The HC had in January also quashed the show cause notices (SCNs) issued by the Directorate General of GST Intelligence demanding an 18% tax on fees received by CERC and DERC for discharging their regulatory functions. It held that the demand notices were 'arbitrary and unsustainable.' 'We do not find any good grounds to entertain these special leave petitions (by Directorate General of GST Intelligence), a SC bench comprising Justices J.B. Pardiwala and R. Mahadevan said, while endorsing the HC's view that the GST department had clearly failed to grasp the "indubitable fact" that these regulatory functions were being discharged by a quasi-judicial body which had all the trappings of a tribunal. The department had challenged the HC order alleging that the power regulators were not discharging their GST liabilities on amounts received as tariff and licence fees from various power utilities as these functions of the regulators fell under the category of "support services" to electricity transmission and distribution service providers. The GST authorities in the SCN's had also alleged that CERC had even failed to carry out a correct self-assessment of its tax liability, thus failing to discharge its integrated GST of Rs 113 crore between April 2019 to March 2023. A similar notice was issued to the Delhi power regulator. However, the HC had rejected the GST authorities' stand, saying it found 'unable to accept, affirm, or even fathom the conclusion that regulation of tariff, inter-state transmission of electricity, or the issuance of licence would be liable to be construed as activities undertaken or functions discharged in the furtherance of business." According to HC, "the grant of a licence to transmit or distribute (electricity) is clearly not in furtherance of business or trade but in extension of the statutory obligation placed upon a commission to regulate those subjects," the high court had said. The Electricity Act, 2003, makes no distinction between the regulatory and adjudicatory functions vested in and conferred upon an electricity commission, it had added. Those functions are placed in the hands of a quasi-judicial body enjoined to regulate and administer electricity distribution, it had said. "Electricity, undoubtedly, is a natural resource which vests in the State. We have thus no hesitation in observing that the SCNs (show cause notices) infringe the borders of the incredible and inconceivable," the January order stated.
Time of India
6 days ago
- Business
- Time of India
SC upholds GST exemption for electricity regulators, dismisses govt's plea
In a significant win for regulatory bodies, the Supreme Court has upheld the Delhi High Court's decision, exempting the fees collected by the CERC and DERC from GST. This ruling dismisses demands for an 18% tax on regulatory fees, affirming that these bodies perform quasi-judicial functions, not support services. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads In a big relief to the regulatory bodies, the Supreme Court has upheld the Delhi High Court 's ruling that fees collected by the Central Electricity Regulatory Commission ( CERC ) and the Delhi Electricity Regulatory Commission ( DERC ) for the supply of electricity or grant of electricity distribution licences or as annual/other fees are exempt from Goods and Services Tax (GST).The HC had in January also quashed the show cause notices (SCNs) issued by the Directorate General of GST Intelligence demanding an 18% tax on fees received by CERC and DERC for discharging their regulatory functions. It held that the demand notices were 'arbitrary and unsustainable.''We do not find any good grounds to entertain these special leave petitions (by Directorate General of GST Intelligence), a SC bench comprising Justices J.B. Pardiwala and R. Mahadevan said, while endorsing the HC's view that the GST department had clearly failed to grasp the "indubitable fact" that these regulatory functions were being discharged by a quasi-judicial body which had all the trappings of a department had challenged the HC order alleging that the power regulators were not discharging their GST liabilities on amounts received as tariff and licence fees from various power utilities as these functions of the regulators fell under the category of "support services" to electricity transmission and distribution service GST authorities in the SCN's had also alleged that CERC had even failed to carry out a correct self-assessment of its tax liability, thus failing to discharge its integrated GST of Rs 113 crore between April 2019 to March 2023. A similar notice was issued to the Delhi power the HC had rejected the GST authorities' stand, saying it found 'unable to accept, affirm, or even fathom the conclusion that regulation of tariff, inter-state transmission of electricity, or the issuance of licence would be liable to be construed as activities undertaken or functions discharged in the furtherance of business."According to HC, "the grant of a licence to transmit or distribute (electricity) is clearly not in furtherance of business or trade but in extension of the statutory obligation placed upon a commission to regulate those subjects," the high court had said. The Electricity Act, 2003, makes no distinction between the regulatory and adjudicatory functions vested in and conferred upon an electricity commission, it had added. Those functions are placed in the hands of a quasi-judicial body enjoined to regulate and administer electricity distribution, it had said. "Electricity, undoubtedly, is a natural resource which vests in the State. We have thus no hesitation in observing that the SCNs (show cause notices) infringe the borders of the incredible and inconceivable," the January order stated.
Economic Times
01-07-2025
- Business
- Economic Times
GST's 8th Anniversary: With disputes piling up, India pushes for faster, fairer resolution framework
The Goods and Services Tax (GST) is arguably India's most significant tax reform. It has simplified compliance and administration by replacing multiple indirect tax levies within a single unified system, thus harmonising tax across states. Although this reform has made considerable strides in digital compliance, the GST system is now facing a critical challenge: a rising number of tax disputes and a growing backlog within the adjudication system, that is delaying dispute resolution. While Government has taken several notable measures, as GST completes eight years, it might be the opportune time to look at the evolution of the GST adjudication system. Also Read: GST @8: India's tax landscape has changed but key reforms are still pending Pending GST cases have more than doubled—from 10k cases involving disputed demands of INR 22k crore in 2021-22 to 22k cases amounting to INR 1.14 lac crore in 2023-24. Alongside this, the cash amount blocked in pending indirect tax appeals has more than doubled over the same period, rising from INR 3.67 lac crore to INR 7.40 lac crore. Further compounding the issue is the extended timeline for dispute resolution. In 2023-24, approximately 22k indirect tax appeals have been pending across forums for over five years. For many taxpayers, particularly MSMEs, these blocked funds represent vital working capital frozen due to unresolved disputes, impacting operational liquidity. Several factors such as differing legal interpretations across states have contributed to the challenge. Initially, businesses were not familiar with the laws and divergent positions were adopted, with minimal clarity and precedents. In adjudication, although the law imposes strict timelines for issuing Show Cause Notices (SCNs) and initial orders, the timelines for appellate decisions at first-level appeals or tribunal remain suggestive rather than binding. This has resulted in inconsistent adherence and rising case pre-deposit requirement - mandating taxpayers to deposit 10% of the disputed tax upfront before filing appeals is another constraint. While intended to filter out frivolous cases, this requirement restricts cash flow for legitimate taxpayers, particularly smaller businesses with limited liquidity. While the Government has constituted the GST Appellate Tribunal and initiated the e-filing process, its operationalization is eagerly awaited. The Government has introduced multiple measures aimed at reducing disputes and addressing systemic challenges. These include the issuance of FAQs, circulars, and advance rulings to clarify complex GST provisions and reduce misinterpretations leading to National Litigation Policy was also introduced to rationalise government litigation by discouraging redundant appeals, thereby focusing resources on significant cases. Additionally, monetary thresholds for departmental appeals were established to prevent compulsive appeals by tax department from overburdening the recognition of cash flow challenges faced by taxpayers, pre-deposit requirements have been relaxed. Additionally, Section 11A in the CGST Act was introduced, allowing regularisation of cases involving short levy or short payment of tax due to established trade practices on 'as is/ where is'. Once implemented, it will offer a mechanism to resolve disputes on controversial sectoral issues. These measures undoubtedly point to Government's intention of addressing the backlog and improve dispute resolution. As next wave of reforms in dispute resolution, the operationalisation of GSTAT will enable faster, specialised resolution of Government may consider possibility of mandating timelines for passing of appeal orders, to reduce adjudication delays. Awaited procedural guidelines for implementation of Section 11A will promote its use as an effective tool for reducing litigation step worth consideration is the establishment of a National Authority for Advance Ruling (National AAR), to harmonise legal interpretations across states, eliminate conflicting rulings, and reduce disputes caused by inconsistent legal ease the burden on departmental infrastructure, perhaps ADR mechanisms like arbitration may offer complementary path for dispute resolution beyond the existing adjudication process. Incorporating arbitration within GST framework would provide taxpayers and authorities with a mechanism for settling disputes in a faster, cost-effective and flexible manner. While this would not replace current adjudication, its adoption can significantly reduce litigation volumes, expedite resolution, and improve taxpayer satisfaction. The GST framework faces a critical challenge of managing the rising volume of disputes and the growing backlog in the adjudication system. Government initiatives to clarify interpretation, rationalise litigation, relax pre-deposit norms, and introduce measures for dispute regularisation are laudable. Now swift operationalisation of GSTAT, enforcement of binding appellate timelines, establishment of a National AAR will further compliment these initiatives. Further, a broader adoption of arbitration as an ADR mechanism can also aid GST dispute resolution. Fair to say that these reforms will create a more transparent, efficient, and fair dispute resolution structure - key to supporting GST's objectives of simplicity, fairness, and ease of doing business. Saurabh Agarwal and Divya Bhushan are Tax Partners at EY India. Tanmay Chaturvedi, Tax Professional, EY India also contributed to the article.
