Tax Authority Compliance With Court Decisions

As a buyer, you can claim ITC despite the seller’s errors in GST filings. In landmark judgment of UOI vs Brij Systems Ltd. [SLP (C) Diary No. 6334/2025], Hon’ble Supreme Court reaffirmed that businesses have fundamental right to rectify clerical/arithmetical errors in GST filings. It was held that bonafide mistakes of sellers shouldn’t lead to denial of ITC for buyers, especially when the tax has already been paid to government. Court’s decision and observations: → Supreme Court recognised that human errors in tax filings are inevitable, especially in online systems. Minor errors in tax compliance due to software glitches or portal lock-ins should not penalise taxpayers. → Rectification of such errors is integral part of business operations and shouldn't be denied due to procedural constraints. → Court upheld Bombay High Court’s ruling in Aberdare Technologies Pvt. Ltd. vs CBIC & Ors. [W.P. No. 7912 of 2024] and directed Central Board of Indirect Taxes and Customs (CBIC) to re-examine timelines for rectifications under Sections 37(3) and 39(9) of CGST Act, 2017. Implication of judgment: → Department cannot deny ITC due to bonafide clerical mistakes and put unnecessary burden on businesses and purchasers. → In case of system limitations that prevent corrections, manual rectifications are now to be considered. → Authorities must provide an opportunity for a hearing before denying rectification.

The Kenya Revenue Authority (KRA) has no powers to deactivate tax PINs. The High Court has recently held that the KRA does not have powers to deactivate a taxpayer's PIN since the Tax Procedures Act (TPA), 2015 does not confer the KRA such powers. Consequently, the high court held that the KRA acted beyond its powers (ultra vires) in deactivating the tax PINS of the petitioners in that case. This decision casts doubts on the validity and status of the VAT Special Table which is a mechanism implemented on iTax to enhance VAT compliance where certain categories of VAT registered taxpayers are restricted from performing certain processes including filing of VAT returns. More specifically, the decision casts doubts on the status of the Guidelines for Taxpayers under VAT Special Table recently issued by the KRA and the restrictions specified there-in. This will sound a sweet melody for taxpayers who have, for one reason or another, found themselves listed in the VAT Special Table especially where the listing happened without any formal notification by KRA beforehand. #tax

Case Law Update: 2023(8) TMI 46- ALLAHABAD HIGH COURT This post is about the Ruling of Allahabad High Court which gives us insights on some basic principles which a Tax Consultant or a Law Learner should embrace while interpreting the Law or advising the client for his business in context of taxation environment of India. The principles are: <> Sincere Compliance over mere Procedures <> Non-functionality of Portal cannot be used by Revenue to debar a Taxpayer from fulfilling his compliances This Ruling has certainly made clear that GST compliances should not be made too draconian that GST would be considered a hindrance in Strategic Business Planning in India forcing contributing taxpayers to exit India and thus Indian GDP and Tax Revenue. Facts & Associated Provisions: <> The taxpayer has transferred his business and therefore, the provisions of Section 18(3) of the Act read with Rule 41 come into scope of GST compliance. <> In GST Law, Transfer of business requires intimation of transfer and transfer of Unutilized ITC (proportionate to the value of assets) in the Form GST ITC-02 (which was inactive due to nascency of newly onboarded GST though with same stubborn officers) <> The taxpayer could not wait for the portal to function and transfer the ITC (ITC marks a significant portion of Working Capital of Business) and therefore, transferred the same through GSTR-3B. Due intimation was made to the Jurisdictional officer but he could not response due to his prior responsibilities or pending trainings (seems so busy) Where is the Litigation👨✈️ Litigation in a transaction is always a matter of concern in tax advisory. <> After five years, AO issues Show Cause Notice for non-reversal of such ITC as it was not appearing in GSTR-2A of the transferee of the business (certainly it would not as it is not required to be reported in GSTR-1). <> Taxpayer has comprehensively explained the rationale of such ITC availment but Orders were issued subsequently without meriting the reply. <> Revenue wanted Taxpayer to file a grievance first (Revenue admitted the non-functionality of Portal) and then, wait for the portal to response. (I don't know if Gita💁♀️was employed at that time of transfer of business, I was pursuing my Class 12 studies) Now Writ is preferred before Allahabad High Court and the Ruling is pronounced in favour of the Assessee ruling that "…rejecting the claim of the petitioner in the wake of the admitted fact that the GST common portal was not online cannot be justified" Tax Neutrality in Compliance by Taxpayer: Compliance of ITC Transfer to the e-Credit Ledger of Transferee, but through different mechanism (GSTR-3B) and Intimation through Letter does not depict NON-COMPLIANCE with Section 18(3) of the CGST Act, 2017. This Ruling could certainly lay precedence for matters concerning initial years of GST when portal was not functioning properly. #gst #litigation #legalinsights #compliance #highcourt