KSCAA X Taxmann's GST Appellate Mechanism | Key Aspects and Procedures

PREFACE Ǧϐ are reaching appellate levels. Non-constitution of Tribunal even after ϐ ǡ ϐ litigants by initiating recovery proceedings. As the Tribunal mechanism is non-functional, many matters have gone to High Courts and have increased the docket load.

This booklet is an attempt to provide insights on key aspects and ȋ ϐ Ȍǡ which would be useful for Chartered Accountants, Lawyers and other tax practitioners. The basic procedures and underlying principles ϐ the readers.

As compared to the past regime, in GST there has been a paradigm ϐ ϐ procedural prescription. Some of the appellate provisions relating to constitution of GST Appellate Tribunal, payment of pre-deposit and ϐ ǡ quick and smooth disposal of appeals. The appeal provisions under the GST law are accordingly aimed at streamlining and standardizing the appellate procedures.

Though not intended to be a treatise on the subject, it would certainly serve as a ready reckoner for those who are concerned with litigation at the appellate level. We hope that the book would serve both the professionals and litigants and as the law develops and unfolds itself, more content would be added in future editions. We thank our seniors and mentors for all their support and guidance. We thank our team CA. Gangadhar Chitgopaker and CA. Manjunath Sonnad for assisting us in Ǥ ǡ ϐ bearers for this initiative and entrusting this pleasant task to us. We are grateful to KSCAA and Taxmann for jointly publishing this booklet.

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GST Appellate Mechanism (Key Aspects and Procedures)

Now that the booklet has been placed in the hands of the esteemed readers, we seek your valuable feedback and suggestions, which would help us to update and improve the quality and content. Ǥ Ǥ Ǥ Ǥ Place: Bengaluru

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CONTENTS PAGE

About KSCAA Foreword President Message Message by Chairman, Publication Committee KSCAA Preface About the Authors Karnataka State Chartered Accountants Association (R) - Executive Committee Members 2023-24 KSCAA Publications Committee 2023-24

I-3 I-5 I-7 I-9 I-11 I-13 I-15

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Chapter 1:

Introduction

1

Chapter 2:

Types of Notices and Appealable Orders

4

Chapter 3:

Revisionary Authority

10

Chapter 4:

Provisional Attachment

15

Chapter 5:

Basic Provisions of First Appeal

24

Chapter 6:

Pre-Deposit for Filing Appeal and Interest on Pre-Deposit

38

Chapter 7:

Practical Aspects and Common Errors

44

Chapter 8:

ϐ

51

Chapter 9:

Refund Arising Due to Favourable Order

55 62

Chapter 10: Appeal to Advance Ruling Appellate Authority Chapter 11: GST Appellate Tribunal Chapter 12: Doctrine of Merger with GST illustrations

78

Chapter 13: Relevant Judicial Pronouncements Chapter 14: Frequently Asked Questions

94

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66 82

GST Appellate Mechanism (Key Aspects and Procedures) PAGE

ANNEXURES ͳǣ

Illustartive Formats

104

ʹǣ

ϐ

111

Annexure 3:

ϐ

115

Annexure 4:

Abbreviations and Reference Sections

144

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7 C H A P T E R

PRACTICAL ASPECTS AND COMMON ERRORS (I) Few Practical aspects while drafting the reply to the Show Cause Notice since it has a bearing on further progress of the case including appeal: The reply should be drafted keeping in mind the following: 1. It should be addressed to the concerned officer to whom the notice requires filing of response.

2. Reference of Notice number and date should be given.

3. The reply should be drafted within the time limit specified in the notice.

4. It is advisable to request for an opportunity of being heard and liberty to file additional evidence or additional submissions at the time of hearing.

5. The issues raised by the department should be addressed chronologically and in seriatim.

6. While drafting the reply issue-wise, reference to Sections, Rules, Provisions, Notifications, Circulars, Case laws should be given along with the content in brief.

7. The pleadings should seek closure of proceedings in the light of the submissions made in the reply.

8. The language used should be clear, specific and unambiguous while addressing the issues raised.

9. The computation and quantification as made by the department in the notice should be checked/verified and recomputed as per the figures available in the books of accounts.

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Practical Aspects and Common Errors

10. If a similar issue has been raised by the officer of different jurisdiction or if a similar issue has been raised for a different year then in such instance the reference should be added in the reply for the information of the department and the tax pay can plead for closure of proceedings.

11. Wherever required while addressing the issues raised in the Notice, reference of other allied laws may be drawn e.g.: Transfer of Property Act, Finance Act, Income Tax Act, Service Tax Law, etc. Precedent under those allied laws also assume significance.

12. Supporting documents/Annexure reference should be given in the reply. Even the notice received from the department should be enclosed particularly when the notice issuing authority is different from the Adjudicating Authority. Wherever there is a need to submit bulky documents a proper index showing list of documents with the page numbers should be made available to facilitate ready reference.

13. The relevant paras should be highlighted in bold or capital letters if required.

14. The reply or contentions should be drafted in detail and not in a cryptic manner so that it can be of use during the appeal proceedings as well.

(II) Few practical aspects while drafting the Appeal before First Appellate Authority: The orders of the assessing authority would generally be concerned with legal issues such as disallowance of credits, disallowing the turnover as per records, non-consideration of payments, etc. Hence the following steps would be of use while drafting the appeal:

Discussion with the client on the nature of business, collection of documents like returns, supporting documents like invoices, challans, on which reliance is placed.

Discussion with client on strong and weak areas in the order and intimating the client the chances of success in each of these areas and the exposure involved.

Comparison of tax demanded, tax as per returns and tax as per books. Remittance of 10% of the disputed tax.

Remittance of undisputed tax.

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GST Appellate Mechanism (Key Aspects and Procedures)

Drafting should be in a chronological order which would facilitate easy comprehension by the Appellate Authority:

Preparation of Form APL-01 with disputed amounts with breakup of individual issues.

Facts of the case should contain brief details of a. Dealer (hereinafter referred as Appellant). b. Dealer’s nature of business. c. Details of inspection, statements given, notice served, reply to notice, points dropped by authority after considering the reply, taxes paid at the stage of reply to notice and finally the points raised in the order. d. The detailed facts of the case including the facts not brought out at the stage of replying to the notice. e. The statement of facts should not be argumentative and should be supported by documentary evidence. The facts should only narrate the sequence of events and circumstances leading to the appeal. The documents annexed to the appeal should support the facts narrated by the appellant. f. The Issues and demands raised should match the break-up of disputed amounts mentioned in the Form of Appeal.

The Grounds of Appeal should bring out the following: a. Capitalise on errors contained in the order like failure of Assessing Authority to enter findings though tax has been demanded. b. The grounds should support the facts narrated. There should be simplicity of language, clarity of expression, short sentences, brevity and concise form of pleadings. c. Case laws should be cited wherever required. Only relevant case laws should be given along with gist of the relevant paragraphs in the case law. Thorough research should be made to find the relevance to the current case. In case there are many supporting case law, the same can be listed under a separate annexure. d. The prayer should be exhaustive, clear and should match the disputed amount break up in the Form to appeal as well as the issued raised in the appeal.

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Practical Aspects and Common Errors

e. The appeal should be filed within three months from the date of receipt of order and in case there is a delay, an application for condonation of delay should be submitted stating the reason for delay. It is the discretionary power of the First Appellate Authority (FAA) whether to admit the appeal or not after condoning the delay. f. It is mandatory that 10% of the disputed amount should be remitted before the assessing authority as a pre-condition for filing appeal. For the balance disputed amount, it is deemed that the stay is granted. g. The appeal may be drafted with adequate line spacing. The memorandum shall set forth the grounds concisely, under distinct heads, consecutively numbered, grounds of objection. h. The paper book should contain an index. All the pages in the Appeal Paper book should be consecutively numbered.

The index should correlate to the number on the pages. i. Three sets of the paper book should be prepared. The numbers on all the 3 sets should be uniform.

The Appeal Paper book should contain the following: a. Notice of the Adjudicating Authority (Copy). b. Reply to Notice by the Dealer/Service Provider (Copy). c. Order and Demand Notice of the assessing authority in original/attested copy. d. Power of Attorney or Vakalatnama. e. Documents supporting the facts of the case. f. Case Laws extract of the relevant page. g. Relevant documentary evidence. h. Condonation of delay application (if any). i. Affidavit (notarised) to support the condonation application. j. Payment proof of undisputed tax. k. Additional documents should be filed by memo. l. Supporting computation sheet. m. 10% tax payment details (mandatory pre-deposit).

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GST Appellate Mechanism (Key Aspects and Procedures)

n. The appeal should be drafted preferably using green bond legal sheets and spiral bound or fastened with thread.

The appeal filed manually should be signed by the Appellant’s representative in all the pages along with seal of the concern/ entity.

If the appellant is a company or a firm then in such instance the authorised signatory can sign the Appeal papers.

The authorised signatory should appear in person on the date of hearing notified by the office of the FAA. Alternatively, he can depute his Counsel.

The facts of the case should be reiterated to the FAA.

The record of personal hearing should be signed by the authorised representative or Counsel.

The final order will be served the FAA after hearing the case.

The final order should be reviewed for ascertaining the benefit allowed to the Appellant and to assess whether further appeal should be preferred before the Tribunal.

Identify the errors on records so that rectification application can be filed if there is any mistake apparent on record.

Common Errors to Avoid – SCN stage: 1. Ignoring the notice and leave it unattended.

2. Not raising objections on time limit for issuance of notice.

3. Not preserving the postal cover indicating the date of receipt, if it is served by post.

4. Ignoring the hearing notices.

5. Filing a cryptic reply without proper grounds.

6. Not producing the evidence on record.

7. Not taking alternative submissions on merits, limitation, quantification, penalty, interest etc.

8. Not objecting to jurisdiction at the first available opportunity.

9. Not obtaining acknowledgment for filing the reply.

10. Not taking legal assistance for participating in the proceedings particularly when the issues are complex and interpretative.

11. Not adhering to the time limits prescribed for filing the reply.

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Practical Aspects and Common Errors

12. All allegations/charges may not be addressed. It may be considered as admitted position.

Common Errors to avoid – Appellate stage: 1. Not noting the date of receipt or communication of the orders.

2. Not checking the mails, portal etc. where orders may be hosted.

3. Not taking the relevant grounds on merits and legal aspects.

4. Questions of law arising out of the order may be missed.

5. Binding precedents may be lost sight of while preparing the grounds.

6. Not rebutting the adverse findings in the order.

7. Condonation application may not contain adequate reasons and may not be supported by adequate evidence.

8. In case of delay beyond condonable period the authority may not have powers to condone. Hence the Appellant has to be vigilant in exercise their appellate remedy.

9. Appeal paper book may not contain the relevant annexures.

10. Not taking precautions to prepare the paper book neatly with index and numbering.

Common Errors while drafting the replies or grounds of appeal: 1. In many instances, reference to favourable Circulars/Trade notices are not included.

2. Adequate evidence is not presented to substantiate the contentions/ submissions.

3. Reference to relevant provisions is not drawn while addressing the contentions. Further, development of case law, which is referred to in the reply/appeal is ignored and the favorable decisions relied upon by the lower authority is taken to be final without considering the reversal of such decisions by a higher forum.

4. Wrong provisions of law abstracted or referred to, while drafting the submissions without noticing the period of dispute.

5. The head notes of case law alone may be considered without noticing the facts and circumstances of the case and applied like an Euclid Theorem.

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GST Appellate Mechanism (Key Aspects and Procedures)

6. Wrong precedents may be applied while drafting the submissions.

7. The submissions/contentions may be repeated in different paragraphs, which may lead to prolixity.

8. Expert opinion is not adduced wherever required in support of the submissions/contentions particularly in matters involving valuation (like CA certificate) or classification (like Chartered Engineer or Technocrat’s certificate).

9. Technical literature on functionality of the goods not considered especially in cases involving classification of goods.

10. Relevant case laws/circulars/notifications/supporting documents/ evidence are not given in compilation form during hearing.

11. Narration of facts and reference to documents may be missing while submitting the reply/appeal for e.g.: reference to Annexures.

Sometimes the notice may not bring out accurate facts and hence the litigant should ensure that proper facts are brought on record with evidence.

12. The documents filed in respect of different allegations may be self-contradictory and taking contrary stands.

13. Neither studying the nature of business nor knowing the past background of the taxpayer/noticee.

14. Not taking sufficient grounds while drafting the submissions. If crucial grounds are missed then it may become an impediment at a later stage.

15. Non-rebuttal of allegation on facts may be inferred as admissions of facts, which would cause serious prejudice.

16. Similarly, narration of facts should be made with proper application of mind based on evidence.

17. Missing out prayer or relief sought, while drafting the reply/ appeal and not seeking opportunity of personal hearing may cause prejudice.

18. Not taking new grounds involving questions of law or mixed question of facts and grounds would affect the litigant’s prospects in litigation.

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GST Appellate Mechanism | Key Aspects and Procedures AUTHOR :

PUBLISHER : DATE OF PUBLICATION : EDITION : ISBN NO : NO. OF PAGES : BINDING TYPE :

KARNATAKA STATE CHARTERED ACCOUNTANTS ASSOCIATION, K.S. NAVEEN KUMAR ANNAPURNA KABRA TAXMANN MARCH 2024 2024 EDITION 9789357788755 164 PAPERBACK

Rs. 400 | USD 5

Description This book is a comprehensive guide on the procedural and substantive aspects of GST appellate mechanisms in India. The book addresses the critical need for understanding GST appeals, which is vital due to the evolving nature of GST litigation and the lack of a fully functional GST Appellate Tribunal. It thoroughly analyses the GST appellate procedures underpinned by the latest legal provisions, rules, and case law, ensuring readers can access current and relevant information.

Aimed at professionals like Chartered Accountants, lawyers, and tax practitioners, the book is also accessible to those new to GST litigation, making it a valuable resource for a broad audience.

The Present Publication is the Latest 2024 Edition, authored by Adv. K.S. Naveen Kumar and CA. Annapurna Kabra. It is published exclusively by Taxmann for KSCAA. The noteworthy features of the book are as follows: u [Content Structure]  The book is structured to facilitate easy understanding, starting from basic principles to more complex appellate procedures  Key chapters cover a range of topics, including the basics of the first appeal, the nuances of pre-deposit requirements, and practical tips on avoiding common errors in the appeal process u [Practical Insights]  Real-world case studies and examples are integrated throughout the text, offering readers practical perspectives on navigating the appellate system  Detailed coverage of procedural steps, from notice types to electronic appeal filing, provides a hands-on guide for practitioners u [Additional Features]  The book includes a variety of annexures, such as illustrative formats and a summary of relevant notifications and circulars, serving as a quick reference tool  A dedicated chapter on frequently asked questions addresses common queries, aiding in quick problem-solving u [Authoritative Guidance] The authors, with their extensive experience and expertise, provide fresh perspectives and detailed coverage of various steps and provisions crucial for litigants u [Updated Content] It includes the latest provisions, rules, circulars, and case decisions related to GST Appeals, ensuring readers have access to the most current information u [Accessible Format] Designed as a handbook, it is a ready reckoner for those involved in GST litigation, offering simple and concise explanations of procedures and principles

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