GST WEEKLY UPDATE : 32/2023-24 (DATED : 05.11.2023) By CA Vipul Khandhar

By Vipul Khandhar

1. Advisory for Pilot Project of Biometric-Based Aadhaar Authentication and Document Verification for GST Registration Applicants of Gujarat and Puducherry:

This is to inform taxpayers about recent developments concerning the application process for GST registration. It is advised to keep the following key points in mind during the registration process.

1. Rule 8 of the CGST Rules, 2017 has been amended to provide that an applicant can be identified on the common portal, based on data analysis and risk parameters for Biometric-based Aadhaar Authentication and taking photograph of the applicant along with the verification of the original copy of the documents uploaded with the application.
2. The above-said functionality has been developed by GSTN. It was launched in Puducherry on 30th August 2023 and will be rolled out in Gujarat on 7th November 2023.
3. The said functionality now also provides for the document verification and appointment booking process. After the submission of the application in Form GST REG-01, the applicant will receive either of the following links in the e-mail,

      (a)    A Link for OTP-based Aadhaar Authentication OR

      (b)    A link for booking an appointment with a message to visit a GST Suvidha Kendra (GSK) along with the details of the GSK and jurisdiction, for Biometric-based Aadhaar Authentication and document verification (the intimation e-mail)

4. If the applicant receives the link for OTP-based Aadhaar Authentication as mentioned in point 3(a), she/he can proceed with the application as per the existing process.
5. However, if the applicant receives the link as mentioned in point 3(b), she/he will be required to book the appointment to visit the designated GSK, using the link provided in the e-mail. Once the applicant gets the confirmation of appointment through e-mail (the appointment confirmation e-mail), she/he will be able to visit the designated GSK as per the chosen schedule.
6. At the time of the visit of GSK, the applicant is required to carry the following details.

         (a)    a copy (hard/soft) of the appointment confirmation e-mail

         (b)    the details of jurisdiction as mentioned in the intimation e-mail

         (c)    Aadhaar Number

         (d)    the original documents that were uploaded with the application, as communicated by the intimation                        e-mail.

7. The biometric authentication and document verification will be done at the GSK, for all the required individuals as per the GST application Form REG-01.

8. The applicant is required to choose an appointment for the biometric verification during the maximum permissible period for the application as indicated in the intimation e-mail. In such cases, ARNs will be generated once the Biometric-based Aadhaar Authentication process and document verification are completed.

9. The feature of booking an appointment to visit a designated GSK is currently available for the applicants of the Gujarat State and it will be extended to the other notified States/UTs shortly.

10. The operation days and hours of GSKs will be as per the guidelines provided by the administration in your respective state.

2. CBIC issued Instructions for Monetary Limits in Government Litigation Appeals:

The Ministry of Finance, Department of Revenue, CBIC (Judicial Cell), issued instructions vide F. No. 390/Misc/30/2023-JC dated November 2, 2023, to reduce government litigation, setting monetary limits for filing appeals before CESTAT, High Courts, and the Supreme Court.

In exercise of the powers conferred by Section 131BA of the Customs Act, 1962 and in partial modification of earlier instruction issued from F. No. 390/Misc./163/2010-JC dated August 17, 2011, the Central Board of Indirect Taxes & Customs (hereinafter referred to as the Board) fixes the following monetary limits below which appeal shall not be filed in the CESTAT, High Court and the Supreme Court:

Adverse judgments relating to the following should be contested irrespective of the amount involved:

1. a) Where the constitutional validity of the provisions of an Act or Rule is under challenge;
2. b) Where Notification/ Instruction/ Order or Circular has been held illegal or ultra vires;
3. c) Classification and refund issues which are of legal and/ or recurring nature.

Withdrawal process in respect of pending cases in above forums, as per the above revised limits, will follow the current practice that is being followed for the withdrawal of cases from the Supreme Court, High Courts, and CESTAT.

3.  AAR & Important Judgements:

(i) Skill vs Betting: Vision11 and Twelfth Man fantasy obtain stay on GST retrospective tax proceedings from Gujarat HC

Gujarat High Court bench comprising of Justices Biren Vaishnaw and Mauna Bhatt vide order dated 3 November 2023 stayed a show cause notice issued to fantasy operator Vision11 under section 74(1) of the CGST Act. The tax department has proposed to raise a demand of over Rs.

 1700 crores alleging the services provided are in the nature of betting and gambling.

Vision11 relying on past precedents in Varun Gumber vs. UOI and other cases has challenged the notice on the ground that it only provides a platform for playing skill-based games and is not engaged in any activity of betting and gambling. The Company argued that it holds all the winnings and credits in trust and that it has no lien over the same.

Under the show cause notice, the tax department has alleged that Vision11 provides an online betting platform and has further proposed to levy GST on the ‘face value’ of total bets.

The matter was tagged along with another similar case involving the Twelfth Man Fantasy. The petitioner Twelfth Man Fantasy have also challenged the constitutionality of Rule 31A of CGST Rules on several grounds, including that the rule is manifestly arbitrary and goes beyond the statutory mandate.

Both the companies pointed out that while with effect from 1 October this year, the law is amended, however, the same cannot be made applicable for the period prior to its insertion.

The Directorate General of Goods and Services Tax Intelligence (DGGI) has so far issued show cause notices for retrospective tax dues for the period 2017-2022 to over 40 online real money gaming companies totalling a staggering amount of over Rs. 1.5 lakh crores, plus interest and penalty, based on the interpretation that the platforms are offering gambling and betting services, and hence every bet or entry fee on the platform is subject to 28% tax.

After hearing the parties, the Gujarat High Court granted a stay on further proceedings and the matter may now be heard in January 2024.  Similar cases were filed in a few other High Courts including the Bombay High Court (Goa Bench) and Sikkim. A special leave petition on similar matter is pending before the Supreme Court involving skill gaming operator Gameskraft.

(ii) Gujarat HC Halts Dues Enforcement Due to Inactivity of GSTAT in the case of  Rajkalp Mudranalya Private Limited Through Kalpesh Maneklal Patel Versus Superintendent:

The Gujarat High Court has halted the enforcement of dues, citing that despite the establishment of the GST Appellate Tribunal (GSTAT), it remains inactive.

Justices noted that even though the Tribunal exists, it remains non-operational, yet authorities are proceeding with orders for debt recovery. They are demanding information from taxpayers regarding whether they have filed an appeal at all, leading to a contradiction among these authorities.

A petitioner contested a decision made by the Appellate Authority under the CGST. Given the absence of a functioning tribunal, the challenge against the decision was raised through a petition. Consequently, the office of the Superintendent, AR-V, Division-VI, began penalty recovery in line with the order.

The order explicitly required the petitioner to inform the authority whether an appeal or a stay application had been lodged against the OIA dated July 31, 2023, and whether the Appellate Authority had granted a stay of the order.

 The authority’s stance was that in the absence of a stay on the recovery of dues, the petitioner was instructed to settle the outstanding amount.

Acknowledging the inactive state of the constituted tribunal, the court issued a notice and put a hold on the order that initiated the recovery process until the next scheduled hearing.

Disclaimer:

This publication contains information for general guidance only. It is not intended to address the circumstances of any particular individual or entity. Although the best of endeavour has been made to provide the provisions in a simpler and accurate form, there is no substitute to detailed research with regard to the specific situation of a particular individual or entity. We do not accept any responsibility for loss incurred by any person for acting or refraining to act as a result of any matter in this publication.

THANKING YOU.

( The author is a well known Chartered Accountant practicing at Ahmedabad )