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TMI Blog2024 (2) TMI 1354X X X X Extracts X X X X X X X X Extracts X X X X ..... ice. Further, it could be seen that under the demanding provisions of CGST/TNGST Acts, 2017, except for the provisions of Section 74(5), penalty under fifteen percent could not be found elsewhere under the said legal provisions. In the instant case, the fact that a penalty at 15% has been paid on the tax amount determined by the audit officers, goes to prove that the differential tax has been determined under the provisions of 74(5) of the CGST/TNGST Act, 2017, which in turn involves determination of tax by reason of wifful-misstatement or suppression of facts. That the subject goods have been mis-classified by the applicant initially, points to the fact that the applicant has resorted to willful -misstatement to evade tax, which came to light only when the transaction of the applicant s unit was taken up for audit - it becomes clear that the instant case has to be construed as a case of determination of tax by reason of willful-misstatement to evade tax, in spite of the fact that no show cause notice was issued, or no order was passed in the instant case. Under these circumstances, the differential IGST paid by the applicant docs not become eligible for availment of ITC as l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act. 1. The applicant submitted a copy of Electronic Cash Ledger evidencing payment of application fees of Rs. 5,000/ each under sub-rule (1) of Rule 104 of CGST Rules 2017 and SGST Rules 2017. 2.1 The applicant, a GST Registrant, is a Private Limited company under the Administrative control of STATE and they are a highly reputed premium brand and Global Leader in Electric and Electronic products equipment in the Air-conditioning Business, Factory Automation, Transportation systems, power semiconductors. 2.2 The applicant has submitted that,- They are eligible to avail ITC of IGST paid as a part of differential Customs duty for imports made during relevant period in terms of the timeline prescribed under Section 16(4) of the CGST Act, 2017. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o proceedings pending on the issue raised by the applicant. 4.1 The concerned State authority under whose administrative jurisdiction the taxpayer falls, have vide letter dated 27.02.2023 stated that on perusal of the Audit Report of the Deputy Commissioner of Customs, it is seen that on the misclassification being pointing out, the applicant had agreed to the lapse and paid the differential tax payable along with applicable interest and penalty on 28.07.2022. The concerned authority has reasoned out that the order passed by the Deputy Commissioner of Customs (Audit), New Delhi, based on the mis-classification of CTH and Basic Custom duty paid by the Applicant with interest, cannot be treated as revised Bill of Entries as per Rule 36(1)(d), as claimed by the Applicant. 4.2 The State authority further stated that as per Rule 36(3 ) No input tax credit shall be availed by a registered person in respect of any tax that has been paid in pursuance of any order where any demand has been confirmed on account of fraud, willful misstatement or suppression of facts , and accordingly, it was opined by the State Authority that the Applicant is not eligible to claim IGST on payment of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on availment of credit in respect of tax amount discharged pursuant to demand order confirmed on account of any fraud, willful misstatement or suppression of facts. Section 20 of the IGST Act, 2017 borrows the provisions from the CGST law in so far as it relates to (iv) input tax credit , amongst other issues, whereby it becomes clear that the said provisions apply mutatis mutandis in relation to Integrated tax, as they apply in relation to central tax, as if they are enacted under the IGST Act. As per Rule 2(62) of the CGST Rules, 2017, the term input tax shall include integrated tax paid on imports. Rule 2(66) of the CGST Rules, 2017, defines an Invoice , from which it could be understood that a Bill of Entry does not fall within the purview of the definition of tax invoice . In fact, a reference to Rule 36(1) of the CGST Rules, 2017, where both the documents have been specified separately, further affirms the fact that the legislature has contemplated different meanings for the two expressions. Further, while sub-rule (1) to Rule 36 specifics Bill of Entry as one of the documents for availing ITC, sub-rule (4) to Rule 36 specifics only invoices and debit no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... list of documents basis which CENVAT credit could be availed. One of the said documents was a supplementary invoice, which basically included challan or any other similar document evidencing payment of additional amount of additional duty leviable under Section 3 of the Customs Tariff Act, 1975. As per Section 17(5) of the CGST Act, 2017, ITC is restricted in eases where the tax has been paid in accordance with the provisions of Sections 74, 129 and 130 of the CGST Act, 2017. On a bare perusal of Sections 129 and Section 130 of the CGST Act, 2017, it can be concluded that the ease of the Company does not fall within the ambit of Sections 129 and Section 130 of the CGST Act, 2017, since Section 129 provides for detention and seizure of goods in ease they are being transported or stored while in transit and Section 130 provides for confiscation of goods in certain eases of contravention of the CGST Act, 2017. Accordingly, the point to be examined is whether the Company is barred from claiming ITC by virtue of Section 74 of the CGST Act, 2017, which deals with the determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely omitted so as to escape from payment of duty. In fact, proper intimation has been made by the Company to the Customs authorities by way of letter dated 17 June 2019. Moreover, no allegation of suppression has been made by the Department so far. Therefore, the Company is not liable for any suppression of facts in order to avoid payment of duty and accordingly does not get cover under the ambit of Section 74 of the CGST Act, 2017. Given this, the above provision on ITC restriction should not be applicable on the Company. Accordingly, ITC of IGST paid as part of differential Customs duty should be available. 5.2 Accordingly, the applicant interpreted that the different IGST paid should be available as ITC to the company and that the restriction on ITC as per the various provisions discussed above is not applicable in their case. They were also of the opinion that the time limit applicable to the availment of ITC based on the invoices and debit notes is not applicable to the Bill of Entry in general, and that the challans under which payment of differential IGST has been made by them, should be treated as proper documents for the purpose of availment of ITC. 6.1 The appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated that the payment of differential IGST can very well be linked to individual imports and BoEs, and that so far, no notice has been issued on the Company regarding this differential duty payment. 8.1 Out of the three queries raised by the applicant, initially the query referred at clause (c), i.e., (c) Whether the provisions prescribed under the Goods and Services Tax ( GST ) law imposes any restriction on availment of ITC of the differential IGST paid post on-site audit by Customs authorities? is taken up for discussion and analysis. 8.2 For ease of reference, the relevant legal provisions are reproduced herein as below : 8.2.1 Section 16 of the CGST Act stipulates the provisions or eligibility of input tax credit. The relevant portion is as under:- 16. Eligibility and conditions for taking input tax credit (1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and, in the manner, specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents, namely, - (a) an invoice issued by the supplier of goods or services or both in accordance with the provisions of section 31; (b) an invoice issued in accordance with the provisions of clause (f) of sub-section (3) of section 31, subject to the payment of tax; (c) a debit note issued by a supplier in accordance with the provisions of section 34; (d) a bill of entry or any similar document prescribed under the Customs Act, 1962 or rules made thereunder for the assessment of integrated tax on imports....... However, sub-rule (3) to Rule 36 of the CGST/TNGST Rules, 2107, reads as,- (3) No input tax credit shall be availed by a registered person in respect of any tax that has been paid in pursuance of any order where any demand has been confirmed on account of any fraud, willful misstatement or suppression of facts 8.3 It could be seen from the above that Sub-rule (3) to Rule 36 of the CGST/TNGST Rules, 2107 discusses about a situation where the tax is required to be paid in pursuance of an order by way of confirming a demand on account of fraud, willful misstatement or suppression of facts. Whereas, in the instant case, it is q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould avoid service of notice to them, if they come forward to pay the tax along with appropriate interest and a penalty equivalent to fifteen percent of such tax, as laid down under sub-sections (5) and (6) to Section 74 of the CGST Act, 2017, which is reproduced as below,- (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 per cent, 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. (6) The proper officer, on receipt of such information, shall not serve any notice under sub-section (1), in respect of the tax so paid or any penalty payable under the provisions of this Act or the rules made thereunder. 8.5 From the documents furnished, it is observed that the audit points relating to Mis-classification of Branch Pipe and Joint had been communicated to the applicant through a report on Exit Conference dated 27.07.2022 for PBA in r/o M/s. Mitsubishi Electric India Pvt. Ltd. (IEC - 0510059449) , wherein th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s an addition to, and in the same manner as, a duty of customs, but does not include the tax referred to in sub-section (7) or the cess referred to in sub-section (9). 8.7 Accordingly, it becomes clear that while the payment of differential duty of Customs gets covered under the legal provisions relating Customs, the differential IGST payable gets covered under the Integrated Goods and Services Tax Act, 2017. Further, as per Section 20 of the IGST Act, 2017, the provisions of CGST Act, 2014 applies mutatis mutandis to IGST, in so far as it relates to various aspects including (iv) Input Tax credit , (ix) Payment of tax , (xvi) demands and recovery, etc. 8.8 Under Chapter XV - DEMANDS AND RECOVERY , Section 73 talks about Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for any reason other than fraud or any willful-misstatement or suppression of facts and Section 74 talks about Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized by reason of fraud or any willful misstatement or suppression of facts 8.9 It could be seen that in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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