10 Landmark GST Case Laws | 2022 | Expert Analysis and Explanations

There are several significant rulings in year 2022 which taxpayers and revenue will need to remember. Our editorial board has analysed all the judgments/orders throughout the year and reported on taxmann.com.

Here is the list of top 10 cases of GST reported at taxmann.com:

1. SC upheld Gujarat HC judgment of Mohit Minerals’ wherein GST on ocean freight was held as ultra vires

Case Details: Union of India v. Mohit Minerals (P.) Ltd.
Citation: [2022] 138 taxmann.com 331 (SC)

Judiciary and Counsel Details

• Dr Dhananjaya Y Chandrachud, Surya Kant & Vikram Nath, JJ.
• N. Venkataraman, ASG, Mukesh Kumar Maroria, AOR, Ms Nisha Bagchi, Rupesh Kumar and Akshay Amritanshu, Sharath Narayan Nambiar, Ms Meena Devi, Advs. & B. Krishna Prasad, AOR for the Petitioner. 
• J.K. Mittal, Ms Neeha Nagpal, Advs., Malak Manish Bhatt, AOR, Ms Vandana Mittal, Ms Aashna Suri, Joseph Pookkatt, Prashant Kumar, Nilesh Sharma, Dhawesh Pahuja, Uchit Sheth, Advs., Santosh Krishnan, AOR, Dr C. ManickamAdv., Ranjan Kumar, AOR, Sanjay Kumar, Kapil Dev Yadav, Rishabh Sancheti, Sharad Kothari, Ms Padma Priya, Anchit Bhandari, Sushant Rao, Advs., K. Paarivendhan, Devendra Singh, AOR’s, Prasad Paranjape, Arun Jain, Jasdeep Singh Dhillon, Advs., Rahul Gupta, AOR, Prabhat Kumar Chaurasia, Devashish K. Trivedi, Advs., Ms Shagufa Salim, AOR, Jatin Chaudhary, Adv., Shamik Shirishbhai Sanjanwala, AOR, Tarun Gulati, Sr. Adv. Kumar Visalaksh, Gopal Mundhra, Udit Jain, Parth Parekh, Archit Gupta, Arihant Tater, Ms Ruchita Shah, Ajitesh Dayal Singh, Advs., Abhishek Vikas, AOR, V. Sridharan, Sr. Adv., Aditya Bhattacharya, Ms Apeksha Mehta, Sriram Sridharan, Anand Nainawati, Sahil Rarghi, Ms Mounica Kasturi, Advs., Ms Charanya Lakshmikumaran, AOR, Ms Hemantika Wahi, AOR, Ms Jesal Wahi, Simranjeet Singh, Ms Rhea Dube, Ms Rudrakshi Deo, Mizan Siddiqui, Advs., Sudhir Kumar Gupta, AOR, Manish Gupta, Adv., Vikram Nankani, Sr. Adv., Mahesh Agarwal, Anshuman Srivastava, Rohan Talwar, Abhinabh Garg, Advs., E.C. Agarwala, AOR, Abhishek A Rastogi, Pratyushprava Saha, Mahir Chablani, Rohit Ghosh, Ms Kanika Sharma, Shashank Shekhar, Tushar Joshi, Pranav Bansal, Aman Bansal, Advs., Rajat Mittal, Parijat Sinha, AOR’s, Devesh Mishra, Ms Pallak Bhagat, Ms Reshmi Rea Sinha, Akriti Jain, Advs., Arvind Datar, Sr. Adv., Harish Bindumadhavan, Adv., Karthik Sundaram, Advs., Pawanshree Agrawal, AOR, Vinay Shraff, Adv., Ravi Bharuka, AOR, Ankit Kanodia, Ankit Agarwal, Prateek Gattani & Sparsh Bhargava, Advs. for the Respondent

In CIF contract of import, an Indian importer cannot, on a reverse charge basis, be subjected to levy of IGST separately on component of ocean freight paid by foreign seller to foreign shipping line

Specification of Indian importer as recipient of service by Notification No. 10/2017-Integrated Tax (Rate) is only clarificatory; this notification does not specify taxable person different from recipient prescribed in section 5(3) IGST Act for reverse charge

Mere payment of consideration by foreign exporter to foreign shipping line in CIF imports does not mean that there was no supply of freight service to importer

Importer of goods in India is to be considered as recipient of service of transportation of goods by vessel from outside India to a place in India as he is ultimate beneficiary though shipping service is provided by foreign shipping line to foreign exporter in CIF contract

Levy of GST on supply of transportation service by foreign shipping line to foreign exporter to import goods into India is not extra-territorial as services are rendered for benefit of Indian importer and transaction has nexus with territory of India

Recommendations of GST Council are not binding on legislation; they only have pursuasive value

Article 246A of Constitution provides Parliament and State Legislatures with equal and concurrent power to legislate on GST

Facts of the Case

The assessee had challenged the IGST levy on reverse charge basis on the Ocean Freight in respect of import of goods under CIF contracts for which it was already paying the IGST at the time of import with the value of imported coal under the Customs laws. The Hon’ble Gujarat High Court held that IGST levy on ocean freight is ultra-vires the levy provisions of the IGST Act. Against the said order, the Government filed the appeal before the Apex Court.

The Apex Court has observed that the ocean freight from foreign location to customs station in India in CIF import contracts has sufficient territorial nexus for levying IGST under reverse charge. On an interpretation of Sections 5(3) and 5(4) of the IGST Act, read with Section 2(93) of the CGST Act, it is clear that the importer can be classified as the ‘recipient’ of the services. On this interpretation, the validity of the notifications levying GST under RCM on ocean freight has to be upheld.

Supreme Court Held

The Apex Court held that there is no legal fiction or power to bifurcate the composite supply into supply of goods and supply of services and to levy reverse charge GST on supply of services component under section 5(4) of the IGST Act. Given this, the GST on reverse charge basis can’t be levied on ocean freight in CIF contracts as it is part of ‘composite supply’ attracting section 2(30) and section 8 of CGST Act.

In view of the above, it was held that the impugned notifications are validly issued under Sections 5(3) and 5(4) of the IGST Act, but it would be in violation of Section 8 of the CGST Act and the overall scheme of the GST legislation as no such power can be noticed with respect to interpreting a composite supply of goods and services as two segregable supply of goods and supply of services.

2. SC directs GSTN to open portal for filing TRAN-1 for all taxpayers

Case Details: Union of India v. Filco Trade Centre (P.) Ltd.
Citation: [2022] 142 taxmann.com 89 (SC)

Judiciary and Counsel Details

• S. Abdul Nazeer & V. Ramasubramanian, JJ.
• N. Venkatraman, ASG, Mukesh Kumar Maroria, AOR, Zoheb Hussain, Ms Alka Agarwal, Ms B.Sunita Rao, Ms Seema Bengani, Ms Vimla Sinha, Ms Shradha Deshmukh, Akshay Amritanshu, Advs. & B. Krishna Prasad, AOR for the Petitioner. 
• Santosh Krishnan, AOR, Abhishek A. Rastogi, Pratyushprava Saha, Advs., Nikhil Jain, AOR Ajay Aggarwal, Adv. & Rajan Narian, AORfor the Respondent.

Supreme Court grants one month extension to Goods and Services Tax Network (GSTN) to open common portal for filing concerned forms for availing Transitional Credit through TRAN-1 and TRAN-2; Window will start from 1-10-2022

Facts of the Case

The Revenue filed SLP before the Supreme Court as various High Courts had allowed writ petitions filed by the registered taxpayers seeking directions to avail Transitional Credit beyond statutory time limit.

Supreme Court Held

The Apex Court has issued the following Tran-1 directions:

1. GSTN to open common portal for all assesses to claim transitional credit for 60 days preferably from 01.09.2022 till 30.10.2022
2. All assesses can claim benefit whether they have filed writ or not
3. GSTN to make sure no technical glitch during this time
4. The concerned officers are given 90 days thereafter to verify the claim of credit on merits and pass appropriate order. Also, the opportunity of hearing to be granted.
5. Thereafter, credit to reflect in Electronic Credit Ledger
6. If required, the GST Council may issue directions to field officers.

Thereafter, the revenue requested the Honorable Supreme Court to provide extension of one month to open GSTN Portal. The Supreme Court has extended the time for opening the GST Common Portal for further period of four weeks. The Court directed GSTN to open common portal for filing concerned forms for availing Transitional Credit through TRAN-1 and TRAN-2 from October 1st, 2022.

3. Time period to file appeal would start only when order was uploaded on GST portal: HC

Case Details: Navya Foods (P.) Ltd. v. Superintendent of Central Tax
Citation: [2022] 142 taxmann.com 444 (Andhra Pradesh)

Judiciary and Counsel Details

• C. Praveen Kumar & Smt. V. Sujatha, JJ.
• P. Karthik Ramana, Adv. for the Petitioner. 
• B.V.S. Chalapati Rao, Sr. Standing Counsel for the Respondent.

Time period to file appeal would start only when order was uploaded on GST portal even if physical copy of adjudication order was handed over to petitioner earlier

Facts of the Case

The petitioner was a Private Limited Company engaged in manufacture of jams, fruit jellies etc. The department found that GST returns were filed beyond due dates and a show cause notice was issued to the petitioner demanding payment of interest and penalty.

High Court Held

Subsequently, a physical assessment order was served which confirmed the amount of interest and penalty higher than the amount actually proposed in the show cause notice. The petitioner filed appeal against the order but the same was rejected as appeal was filed beyond the period of limitation. It filed writ petition against the same.

The Honorable High Court observed that the appeal is required to be filed in electronic mode only and if any other mode is prescribed, then the same is required to be notified by way of a notification. There was nothing on record to show that any notification was issued prescribing any other mode by which an appeal could be filed.

Therefore, the time period for filing appeal would start only when the order is uploaded on GST portal. Thus, the order of Appellate Authority was to be set aside and matter was remanded for adjudication on merits.

4. Writ jurisdiction against assessment order can’t be exercised if alternative remedy of appeal available: HC

Case Details: Pride Constructions v. Deputy/Assistant Commissioner of STGST, Nellore
Citation: [2022] 139 taxmann.com 465 (Andhra Pradesh)

Judiciary and Counsel Details

• Ahsanuddin Amanullah & Ms. B.S. Bhanumathi, JJ.
• Suribabu, Adv. for the Petitioner. 
• Y.N. Vivekananda, Government Pleader for the Respondent.

Alternative remedy of appeal was available, writ jurisdiction against assessment order cannot be exercised in absence of circumstances required for invoking writ jurisdiction

Facts of the Case

The petitioner entered into an agreement with the land owner to develop 25 flats and in consideration thereof, he would receive 11 flats whereas the land owner would get 14 flats. The assessment order was passed against the petitioner raising demand of GST on services rendered under the development agreement.

High Court Held

The petitioner filed writ petition and challenged the impugned assessment order of levying GST on Transferable Development Rights in respect of joint development of land and construction of flats on it on the ground that all the objections raised by the petitioner were rejected.

The Honorable High Court observed that the Assessing Authority had given vivid reasons as to why the objections of the assessee were rejected. As per the decision of Hon’ble Supreme Court in Asstt. CST v. Commercial Steel Ltd. [2021] 130 taxmann.com 180/88 GST 799, a party can move before High Court, when alternative remedy is available if:

1. a breach of fundamental rights;
2. a violation of the principles of natural justice;
3. an excess of jurisdiction; or
4. a challenge to the vires of the statute or delegated legislation.

However, in the instant case, the petitioner could not satisfy any of the circumstances enumerated above and there was an effective alternative remedy before the appellate authority. Therefore, the Court held that the matter would not require any interference and petition was liable to be dismissed.

5. Pre-deposit of 10% of disputed tax can be paid from credit available in Electronic Credit Ledger: Bombay HC

Case Details: Oasis Realty v. Union of India
Citation: [2022] 143 taxmann.com 5 (Bombay)

Judiciary and Counsel Details

• K.R. Shriram & A.S. Doctor, JJ.
• Prakash Shah, Jas Sanghavi, Mihir Mehta, Yash Prakash, Rahul C. Thakar, Vishal Agrawal, Akshit Malhotra & Ms Hima Doshi for the Petitioner. 
• Ms Jyoti Chavan, AGP, Jitendra B. Mishra & Ms Sangeeta Yadav for the Respondent.

For filing appeal before Appellate Authority under section 107, assessee can pay 10 per cent of disputed tax from credit available in Electronic Credit Ledger

Facts of the Case

Section 107 of CGST Act, 2017 requires mandatory pre-deposit before filing of appeal. According to Revenue, the appellant can utilise the credit available only in the Electronic Cash Ledger. The question before the High Court was whether a taxpayer can pay the amount of pre-deposit of 10% of disputed tax amount by utilising the credit available in the Electronic Credit Ledger.

High Court Held

The Honorable High Court noted that as per CBIC Circular F. No.CBIC-20001/2/2022-GST dated 6^th July 2022, any payment towards output tax, whether self-assessed in the return or payable as a consequence of any proceeding instituted under the provisions of GST Laws, can be made by utilization of the amount available in the electronic credit ledger of a registered person.

Since, the CBIC has already clarified that credit ledger can be used for payment of output tax payable under any proceedings, therefore it was held that the pre-deposit of 10% of disputed tax can be paid from credit available in Electronic Credit Ledger.

6. Supplier can’t give extra grammage of product instead of reducing prices for passing benefit to consumers: Delhi HC

Case Details: L’Oreal India (P.) Ltd. v. Union of India
Citation: [2022] 143 taxmann.com 131 (Delhi)

Judiciary and Counsel Details

• Manmohan & Dinesh Kumar Sharma, JJ.
• Mukul Rohatgi, Sr. Adv. V. Lakshmikumaran, Karan Sachdev & Agrim Arora, Advs. for the Petitioner. 
• Ms Uma Prasuna Bachu, Zoheb Hossain, Sr. Standing Counsel Vivek Gurnani & Ms Niharika Kuchhal for the Respondent.

Under section 171 any benefit of reduction in rate of taxes or benefit of input tax credit on any supply of goods or services can only be by way of commensurate reduction in prices. When a statute clearly provides for a manner in which something is to be done, and a duty is cast upon supplier to extend benefit of rate reduction by way of commensurate reduction in prices, supplier cannot insist that instead of reducing prices, he will give extra grammage of product

Facts of the Case

The National Anti-Profiteering Authority (NAA) found that the petitioner had not only collected excess base prices from his customers after reduction in rate of tax but also compelled them to pay additional GST. The petitioner contended that instead of reducing prices, it had given extra grammage of product. However, the NAA directed the petitioner to deposit profiteered amount as it denied the benefit of tax reduction to the ordinary buyers by charging excess GST. The petitioner filed writ petition against the same.

High Court Held

The Honorable High Court observed that the petitioner had not only collected excess base prices from his customers after reduction in rate of tax but also compelled them to pay additional GST and thereby failed to grant commensurate reduction in prices.

Under Section 171 of CGST Act, 2017, any benefit of reduction in rate of taxes or benefit of input tax credit on any supply of goods or services can only be by way of commensurate reduction in prices. The Court noted that when a statute clearly provides for a manner in which something is to be done, and a duty is cast upon supplier to extend benefit of rate reduction by way of commensurate reduction in prices, then the supplier can’t insist that instead of reducing prices, he will give extra grammage of product.

Therefore, the Court held that the petitioner had acted in contravention of provisions of section 171(1) and directed to deposit principal profiteered amount after deducting GST imposed on net profiteered amount in six equated instalments.

7. Mandatory deduction of 1/3rd of total consideration towards the value of land is arbitrary: Guj. HC

Case Details: Munjaal Manishbhai Bhatt v. Union of India
Citation: [2022] 138 taxmann.com 117 (Gujarat)

Judiciary and Counsel Details

• J.B. Pardiwala and Ms Nisha M. Thakore, JJ.
• Uchit N Sheth for the Petitioner. 
• Devang Vyas, Utkarsh Sharma, AGP & Priyank P. Lodha for the Respondent.

In computing taxable value in construction contract, prescribing mandatory uniform rate of deduction of one third of total amount towards land value in terms of paragraph 2 of Notification No. 11/2017-Central Tax (Rate) instead of available actual price of land which can be determined, is ultra vires CGST Act and is discriminatory, arbitrary and violative of article 14 of Constitution of India as well

Fixed deduction towards sale of land cannot be provided by way of notification where actual price is available; prescription under section 15(5) of CGST Act has to be by way of rules and not by notification

GST is not payable on sale of developed land if such development activity has been undertaken before getting into an agreement with prospective buyer

Facts of the Case

The writ applicant was a practicing advocate and he entered into an agreement to purchase bungalow. A separate and distinct consideration was agreed upon between the parties to the agreement for the sale of land and construction of a bungalow on the land. He received an invoice levying tax at the rate of 9% CGST and 9% SGST on the entire consideration payable for land as well as construction of bungalow after deducting 1/3rd of the value towards the land. It filed writ petition to challenge the mandatory deduction of 1/3rd of total consideration towards the value of land as sale of land is neither supply of goods nor services.

High Court Held

The Honorable High Court observed that the paragraph 2 of the Notification No. 11/2017-Central Tax (Rate) dated 28.6.2017 provides for a mandatory fixed rate of deduction of 1/3rd of total consideration towards the value of land. Such deeming fiction is not only contrary to the scheme of the GST Acts but mandatory uniform rate of deduction is discriminatory, arbitrary and violative of Article 14 of the Constitution of India. It was also observed that when detailed statutory mechanism for determination of value is available then the impugned deeming fiction can’t be justified on the basis that it is meant to curb avoidance of tax when in fact such fiction is leading to arbitrary consequences. Thus, it was held that the mandatory deeming fiction for deduction of value of land was liable to be quashed and set aside.

8. Proper officer has no jurisdiction to issue SCN on a person whose taxable turnover is less than threshold limit: HC

Case Details: Kishore Kumar Arora v. Union of India
Citation: [2022] 140 taxmann.com 160 (Delhi)

Judiciary and Counsel Details

• Rajiv Shakdher & Ms Tara Vitasta Ganju, JJ.
• J.K. Mittal, Mrs Vandana Mittal & Ms Aashna Suri, Advs. for the Petitioner. 
• Harpreet Singh, Sr. Standing Counsel, Arunesh Sharma & Jatin Gaur, Advs. for the Respondent.

Taxable turnover is less than threshold limit fixed for supply of tobacco products, neither show cause notice could be issued nor adjudication order could be passed

Facts of the Case

The petitioner was engaged in business of tobacco products. A show-cause notice was issued against the petitioner and based on an incorrect advice rendered by the petitioner’s Chartered Accountant, it deposited amount determined in the notice. It filed writ petition against the notice on the ground that the show cause notice issued, order-in-original and order-in-appeal passed were outside the jurisdiction of proper officers.

High Court Held

The Honorable High Court observed that the taxable turnover of petitioner after excluding taxes and cesses was less than threshold limit of Rs. 20,00,000 fixed for tobacco products and the same was evident from the annexure-1 appended to impugned notice. Therefore, the concerned officer did not have jurisdiction to issue show cause notice or pass orders as the taxable turnover was less than the threshold limit. Thus, the impugned show cause notice, order-in-original and order-in-appeal were set aside and the department was directed to refund amount deposited along with interest at 6%.

9. HC allowed petitioner to amend GSTR-1 & rectify mistake of wrong GSTIN mentioned against invoices as no loss to revenue

 Case Details: Mahalaxmi Infra Contract Ltd. v. Goods and Services Tax Council
Citation: [2022] 144 taxmann.com 138 (Jharkhand)

Judiciary and Counsel Details

• Aparesh Kumar Singh & Deepak Roshan, JJ.
• Kurmy, Nitin Pasariand Sidhi Jalan, Advs. for the Petitioner. 
• Amit Kumar, Sr. S.C. Rajesh Lala, Kumar Nishant, Kumar Sundaram, Abhijeet Tushar, Rajarshi Singh & Ashok Kr. Yadav, Advs. for the Respondent.

HC allows assessee to amend GSTR-1 to rectify mistake of wrong GSTIN mentioned against invoices raised on purchaser

Facts of the Case

The petitioner-company was engaged in business of mining. There was error in GSTR-1 filed for January 2019 of inadvertently mentioning GSTIN Number due to employee’s mistake and this error was noticed only during settlement of accounts in 2021. The purchaser withheld payment in respect of the invoice as the invoice was not reflected in GSTR-2A return for the said period. It filed writ petition seeking relief by way of rectifying GSTR-1.

High Court Held

The Honorable High Court noted that the purchaser had reversed entry of ITC wrongly availed based on entries in books of account since the invoice was not reflected in his GSTR-2A return for the said period. Moreover, the party whose GSTIN was wrongly mentioned had not availed ITC wrongly reflected in its GSTR-2A. Therefore, it was held that there was no loss of revenue to Government and interest of justice would be served if the petitioner would be allowed to make the necessary correction in GSTR-1. Thus, the petitioner was allowed to rectify its GSTR-1 within period of 8 weeks from date of order.

10. Interest on delay in filing of GSTR-3B to be paid even if tax was already deposited in electronic cash ledger: HC

Case Details: RSB Transmissions (India) Ltd. v. Union of India
Citation: [2022] 145 taxmann.com 1 (Jharkhand)

Judiciary and Counsel Details

• Aparesh Kumar Singh & Deepak Roshan, JJ.
• M.S. Mittal, Sr. Adv. & Salona Mittal, Adv. for the Petitioner. 
• P.A.S. Pati, Adv. for the Respondent.

Petitioner denied liability to pay interest on delay in filing of GSTR 3B for disputed periods on ground that amount of tax had already been deposited prior to filing of GSTR 3B return in its electronic Cash Ledger, since any deposit in Electronic Credit Ledger prior to due date of filing GSTR 3B does not amount to discharge of tax liability on part of petitioner, petitioner was requested to pay interest on delayed filing of returns

Facts of the Case

 The department levied interest due to delay in filing of GSTR-3B returns by the petitioner. However, the petitioner denied to pay interest on delay in filing of GSTR 3B for disputed periods on ground that amount of tax had already been deposited prior to filing of GSTR 3B return in its electronic Cash Ledger.

The question before the High Court was whether the amount deposited as tax through valid challans by a registered person in the Government Exchequer prior to the filing of the GSTR 3B returns could be treated as discharge of the tax liability.

High Court Held

The Honorable High Court noted that Electronic cash ledger is just an e-wallet where cash can be deposited at any time by creating requisite challans. The assesse can claim refund of the amount deposited in Electronic cash ledger any time by following procedure prescribed under GST Act and the computation of interest liability is dependent upon delay in filing of returns beyond due date. Therefore, it was held that revenue had rightly computed interest on delayed payment since petitioner had delayed in filing returns for disputed period.

Also Read:
10 Landmark Income Tax Case Laws | 2022 | Expert Analysis and Explanations