CA. & ADV. Jatin Harjai / Safeguarding Taxpayer Rights

GST is a revolutionary step which the government of India has taken to simplify the taxation process, but, as with any bold new step, it comes with its challenges. How do taxpayers navigate this complex new system and safeguard their interests while ensuring that they remain compliant with the law? To answer such burning queries, Jatin Harjai, Partner & Founder J. Harjai & Associates, Chartered Accountants, highlights certain cases and court judgements which rule in the favour of the taxpayer. Corporate Citizen brings you snippets from his riveting talk at “GST Gyan Manthan”, held at Sri Balaji University, Pune (SBUP)

Jatin Harjai is a practising advocate, who has over 15 years of experience as a Ca before getting into the legal field. In a short span of time, he has become a luminary in the field of financial consultancy and tax advisory. With core expertise in indirect taxes, he has been serving entrepreneurs and various corporates in various areas like compliance, consulting, structuring, and litigation, spanning several industries. He is also a consultant in the World Bank Project for GST Implementation for the government of rajasthan. He is also guest faculty on various educational, professional and industrial platforms. He is actively engaged in representing the industry before the tax department at various levels. He talks about how taxpayers should know their rights as they navigate the bold new world of GST.

Jatin -I am sure everyone is doing good with GST (laughs). The topic I am going to be speaking today is both legal and procedural. I am also going to be talk about the best ways to be handle ItC issues. There are two sections on ItCs which are cumulative. I will talk about whatever has happened in ItC for a past transaction and then about new return mechanism and e-invoice. Let’s start with some of the facts. Lately, some people, especially in specific states have been highlighted for GST discrepancies. Some states, like rajasthan, Gujarat, Kerala, tamil Nadu have been highlighted. The government is trying its best to stop people from taking undue benefits and close the loopholes and stop scams from happening. One of the chief objectives of GST was said to be ‘Free flow of credit’.

Let’s start with 138e. The rule states that ‘no person shall be allowed to furnish the information of Part a of the e-way bill’. If you are not in compliance for two consecutive periods. The idea was to promote 3B. Let me go into the legal aspects. First of all, it says ‘two consecutive periods and not two consecutive months. If you have not filed the return on 20th December, then this provision will be triggered after one month and one day (two consecutive periods). Who will be impacted? Not only the supplier but also the buyer is impacted. even if the transporter is registered in GST, even he will be impacted. If the e-way bill has already been generated and the goods are on the way, then it’s fine. Because you cannot make changes specifically in Part a. The government is trying to facilitate compliance. The moment you will file a return, if you have been blocked it will be reversed. But we cannot expect anything in real-time in GSTN. So there is an option that if you have any immediate transaction, you can go on the portal to update blocked status. If even that doesn’t happen, there is a third option. you can approach the online department stating your problems which are genuine in nature, and ask them for permission to issue e-way bill. For example, if there was any reason why the return could not be filed and I approach the court, which orders me to file a manual return. In that case, since the returns are not filed electronically, the system will not accept the changes. In that case, you can approach the commissioner. The Department will definitely help in case of such genuine concerns.

Let us come to the next point. Let’s say that the return has not been filed in GSTr 3B, because the client did not have funds. What to do now? let’s say that five crores is the output tax. My eligible ItC is four crores. One crore I need to pay in cash, which I don’t have. In this case, can I go to the department asking them to consider my case? Is there a provision in GST law which says that you have to pay tax before filing the return? I have not found any such provision. In the GST aCt, Gujarat High Court has iterated as such. But the portal does not allow me to do so. So this is a GSTN limitation. In a case which set a precedent, the Gujarat High Court allowed a company to file a return manually in such a case.

In the minutes of a meeting of the GST council, it says that the law permits furnishing of the return without payment of full tax as self-assessed as per the self-return. But the portal doesn’t allow us to file it. Is this not a genuine concern? In my opinion, this is a fit case to approach the department to remove the blocking. If the department still doesn’t listen, then the courts are always an option.

"We all know that rules can be made when the Act enables them, But the Act says that rules can be made to carry out the provisions of the Act. But you can’t create a new law by a rule"

I have discussed in brief about the provision for blocking. One thing comes to mind. Is it legal to stop someone’s ability to generate the e-way bill? If a person’s entire business depends on the movement of goods, the government, by blocking e-way bill, is indirectly telling the person that they cannot carry on with their business. We all know that rules can be made when the act enables them, But the act says that rules can be made to carry out the provisions of the act. But you can’t create a new law by a rule. I couldn’t find any provision to enable such a rule. Nowhere is it written that the person’s business can be stopped. In a case where a person is late in filing the return, he will have to pay late fees. If you don’t file a return for six periods, your registration can be cancelled. But your business can’t be shut down. Prima facie, stopping the business of the assessee, through a rule, without having any substance from the act, is not correct.

In many cases, the assessee has applied for a road permit or declaration form, but the department has not granted it. Meanwhile, the goods are moving from the seller to the buyer. When the vehicle has been stopped for a check, the authorities were told that the permit was applied for but the department hasn’t yet granted it. In my experience, in each and every case, the department lost the case. The reason was the appellate had done his duty by applying for the form. It was the department’s job to grant it. The same analogy is followed

It has been approximately two and a half years since GST has been implemented. what approach can we formulate for the issues that have come forward during this time? Let us look at input tax credit. a question emerges whether the input tax credit is a benefit given to the taxpayer or a right? I will put forward some major judgments announced in this regard. In 1999, the court observed that this is a scheme. The right to credit has become absolute in any rate when the input is used in the manufacture of the final product. In the same year, another case came up in the Supreme Court. The court said ‘Credit is as good as tax paid. Credit is therefore indefensible. In another Vat related case, the Delhi High court said ‘Credit is a right’.