The Goods and Services Tax rulings in 2023 were among the important legal decisions that shaped India’s taxation environment.
Presenting Five Significant GST Rulings
Below are the details of five significant cases related to input tax credit matching, hostel GST rate, registration cancellation, etc.
Resolution of Hindustan Unilever’s Input Tax Credit Issues by Rajasthan High Court
The Rajasthan HC responded to Hindustan Unilever Ltd.’s query about the lacking system for aligning supplier credit notes with the reversal of input tax credit.
There is no effective way to link the credit notes – documents that show the reduction in what a company owes from the suppliers with the procedure of ITC reversing, a tax advantage provided to the businesses for the taxes they would have paid on their purchases.
Essentially, they delved into how effectively the paperwork reconciles when a company receives credit from its suppliers and how this aligns with the anticipated tax benefits. The court scrutinized this aspect to ensure fairness and operational coherence.
Beforehand, Section 43 of the Central Goods and Services Tax Act and the Rajasthan Goods and Services Tax Act mandated these reconciliation exercises, but this requirement has been removed.
The FMCG company contended that obtaining certificates from recipients as evidence of ITC reversal is unfeasible for them. They proposed that the onus of matching should rest with the tax department. Consequently, the court instructed the Union of India to present a resolution to this problem, emphasizing the necessity for a practical mechanism.
| Case Title | Hindustan Unilever Limited Vs Union Of India |
| Citation | No. 13617/2023 |
| Date | 05.10.2023 |
| Petitioner by | Mr. Sanjeev Nair, Ms. Mahi Yadav |
| Respondent by | Mr Devesh Yadav, Mr R.D. Rastogi, Mr Sandeep Pathak, Maj. R.P. Singh, Mr. Jaivardhan Singh Shekhawat |
| Rajasthan High Court | Read Order |
Separate GST Ruling on Hostel Accommodation from Hotels
The Authority for Advance Ruling in Tamil Nadu has differentiated between hostel services and hotel accommodations concerning tax treatment.
They stipulate that hostels, intended for longer stays and providing essential amenities at affordable rates, should not be subject to the GST rates applicable to hotels. As per a specific notification, the AAR determines that the supply of hostel accommodation services falls under a tax rate of 9% CGST + 9% SGST.
Additionally, it clarified that serving in-house meals to hostel residents constitutes a composite supply, and the tax rate applies to the principal supply, or the hostel accommodation which is to be used.
This ruling tackles inquiries concerning tax exemption eligibility, registration requisites, and the relevant tax rates for hostel services in Tamil Nadu.
| Name of Applicant | M/S. Subiksha Hostcl |
| GSTIN Number | Un-Registered |
| Date | 05.09.2023 |
| Tamil Nadu AAR | Read Order |
Clear Articulation of Fraud Allegations Required in GST Cancellation Notice
Put plainly, the Delhi High Court stated that any notice aiming to cancel a person’s GST registration must explicitly outline accusations of fraud.
In a particular instance, the court determined that the cancellation notice failed to specify clear reasons or details regarding the purported fraud, misrepresentation, or concealment of facts by the petitioner.
The court concluded that the notice didn’t offer sufficient information for the petitioner to respond effectively. Consequently, the court nullified both the show cause notice and the cancellation order, instructing the authorities to reinstate the petitioner’s GST registration.
| Case Title | M/s Sk Enterprises Vs Principal Commissioner |
| Citation | W.P.(C) 16452/2023 and CM APPL. 66279/2023 |
| Date | 20.12.2023 |
| Petitioner by | Mr Pranay Jain, Mr Karan Singh |
| Respondent by | Mr. Akshay Amritanshu |
| Delhi High Court | Read Order |
Bombay High Court Nullifies GST Order Absent Personal Hearing
The Bombay High Court has declared invalid a GST order issued without affording the affected party, Kuehne Nagel Pvt. in this case, an opportunity for a personal hearing.
Emphasizing the significance of adhering to principles of natural justice, which mandate a hearing before issuing such orders, the court underscored this necessity.
Kuehne Nagel, a company engaged in freight forwarding and logistics, contested an order seeking taxes, interest, and penalties following an audit. The court determined that issuing the order without providing the requested personal hearing to Kuehne Nagel infringed upon statutory provisions.
Read Also: A to Z Guide to GSTN Portal For GST Registered Taxpayers
Consequently, the court revoked the order and instructed the tax authorities to grant a personal hearing to the company, reevaluating the matter in compliance with the law.
| Case Title | Kuehne Nagel Private Limited Vs State of Maharashtra |
| Citation | Writ Petition No.15210 of 2023 |
| Date | 06.12.2023 |
| Petitioner by | Mr. Yash Prakash |
| Bombay High Court | Read Order |
Madras High Court Disapproves GST Notice Delivered via Closed Portal
The High Court invalidated an order that dispatched a notice via the GST portal to a taxpayer whose registration had already been revoked. It was determined that serving the notice exclusively through the e-portal, without any physical communication, lacked validity.
Due to the cancellation of their GST registration, the taxpayer couldn’t access the e-portal. The court deemed this a breach of natural justice principles, annulling the order. The taxpayer was given another chance to present their case.
| Case Title | M/s. Thirumalai Sales Corporation Vs Assistant Commissioner |
| Citation | W.P.No.8860 & 8861 of 2023 and W.M.P.No.9018 & 9022 of 2023 |
| Date | 06.12.2023 |
| Petitioner by | Mr.G.Natarajan |
| Respondent by | Mrs.E.Ranganayaki |
| Madras High Court | Read Order |
