Special Sessions Of Parliament, GST Council Mean Nothing If Assesses Are Unable To Get Timely Access: Bombay HC Rebukes Functioning Of GST Network [Read Order]

The Bombay High Court recently made some sharp observations regarding the functioning or the lack thereof the Goods and Services Tax network while hearing a petition filed by a company engaged in manufacture of robotic and automation equipment.

A bench of Justice SC Dharmadhikari and Justice Bharati Dangre was hearing a writ petition filed by Abicor and Benzel Technoweld Pvt Ltd.

Case background

The company contended in its petition that they have been granted a provisional registration number under the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 and they are unable to access their online profile on the Goods and Service Tax Network.

The Union of India, through the Commissioner of CGST, Pune, and State of Maharashtra, through the Commissioner of SGST, are respondents in the said petition. The petitioners contended that the respondents decided to put in place an automated and electronic system of accepting tax returns based on self-assessment.

Now, the Electronic Way Bills Rules have yet to come into force. Therefore, without access to the online profile, the petitioner cannot generate e-way bills.  Without such e-way bills, the petitioner will not be allowed to move the goods anywhere and that will paralyse the company’s business. Lack of access means that the petitioner is unable to file return or pay tax or undertake any other compliance required by the statute.

Such lack of access to the online profile also inhibits the petitioner from securing the final registration number. In the absence thereof, the petitioner is exposed to interest liability and may have to face even penal consequences. Importantly, the petitioner company as well as its customers are unable to avail of the input tax credit mechanism.

The petitioner also informed the court that after the said petition was filed, access was granted to their online profile. However, even this access is incomplete as the petitioner was granted a registration number and the profile is now operational, but the petitioner could not file the necessary return, particularly the return GST3B, and the payment of tax is not possible without this return. This return is not being accepted without payment of late fee for the period from October 2017 onwards.

Court’s Order

The bench enquired from Union of India’s counsel Jitendra Mishra regarding the averments in the petition and the difficulties faced by the petitioner. The bench also enquired as to what courts can do to redress a grievance of such nature. But, Mishra sought time to take instructions. Dissatisfied by his response, the court noted: “We do not think that these are satisfactory state of affairs. A tax like Goods and Services Tax was highly publicised and termed as popular.  We had yet not seen a celebration of New Tax regime, but that has followed with great hue and cry. These celebrations mean nothing. The special sessions of Parliament or special or extraordinary meetings of Council would mean nothing to the assessees unless they obtain easy access to the website and portals. The regime is not tax friendly. We hope and trust that those in charge of implementation and administration of this law will at least now wake up and put in place the requisite mechanism. This is necessary to preserve the image, prestige and reputation of this country, particularly when we are inviting and welcoming foreign investment in the State and the country. We hope and trust that such petitions are rarity and the court will not be called upon to administer the implementation of the law, leave alone monitoring and supervising the working of the individual officials, howsoever high ranking he may be.”

The court also pointed how a similar petition was filed before the Allahabad High Court and the respondents in that case was asked to reopen the portal and in case that was not done further, directions were given to entertain the application of the petitioner after due verification of credits.

For now, the Union of India has been directed to file an affidavit in reply on or before February 16.