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GST CASES

GST AAAR CASES

2019-TIOL-23-AAAR-GST

RB Construction Company

GST - AAR has held that the applicant (now appellant) is engaged in the activity of construction of pipeline network for Rajkot Municipal Corporation (RMC) and which becomes immovable property wherein transfer of property in goods is involved, hence activity falls within the definition of ‘Works Contract' u/s 2(119) of the Act; that, that part of supply wherein time of supply is on or after the appointed date, GST is required to be paid; that applicant is not entitled to avail ITC u/s 140(6) of the Act - appeal to AAAR.

Held: Entire quantity of pipe was supplied by the appellant to RMC before the appointed date -Work of supply of pipes at location specified by RMC and work of excavation of trenches and laying of pipes had already been completed before the appointed date and only the work of testing and commissioning of network of pipeline was pending on the appointed date and which would be completed in the GST regime - In view of this factual position, the appellant cannot be said to be holding pipes in stock as inputs or inputs contained in semi-finished or finished goods, on the appointed day - provisions of s.140(3) and 140(6) do not envisage entitlement of transitional Input Tax credit on proportionate basis - since construction of pipeline network becomes immovable property, even if the contract of the appellant was on work-in-process stage on the appointed day, the same would not be covered within the term ‘semi-finished or finished goods' as the term ‘goods' cover movable property and not immovable property - Appellant is, therefore, not entitled to avail ITC of CEX duty and VAT paid on pipes - AAR ruling upheld and appeal dismissed: AAAR

- Appeal dismissed: AAAR

2019-TIOL-22-AAAR-GST

Sapthagiri Hospitality Pvt Ltd

GST  - AAR held that supplies made by applicant, a SEZ Co-developer, from their hotel located in non-processing zone of Dahez Special Economic Zone to the clients located in Special Economic Zone for authorized operations will be treated as zero-rated supplies under the provisions of Section 16(1) of IGST Act, 2017 read with Section 2(m) of SEZ Act, 2005; that Applicant is liable to pay GST on the services from their hotel located in non-processing zone of Dahez Special Economic Zone to the clients located outside the territory of Special Economic Zone under the provisions of Section 5(1) of Integrated Goods and Service Tax Act, 2017 - Appeal to AAAR Held: Purpose of appointing any port, airport etc. u/s 7 of the Customs Act, 1962 is quite different than the purpose of licensing any warehouse under Section 57, 58 or 58A of the Customs Act, 1962, therefore, the clarification issued for customs bonded warehouse are not applicable to the appellant even if a SEZ is deemed to be a port etc. - the appellant is engaged in providing services whereas the customs port etc. are appointed under Section 7 of the Customs Act, 1962 and customs bonded warehouses are licensed under Section 57, 58 or 58A of the Customs Act, 1962 in respect of import of export of goods and not of services - reliance placed by appellant on s.53(2) of the SEZ Act, 2005 and Circular 46/2017-Cus and 3/1/2018-IGST is not applicable - AAR ruling confirmed and appeal rejected: AAAR

- Appeal rejected: AAAR

2019-TIOL-21-AAAR-GST

House Of Marigold

GST - AAR held that product Marigold Butterfly bridal with watch and similar other products are classifiable under heading 9101 - appeal to AAAR on the ground that the products are appropriately classifiable as ‘article of jewellery' under heading 7113 and attract GST @3% under Entry no. 13 of Schedule V to n tification 1/2017-CTR.

Held: Delay of 21 days in filing appeal condoned in view of the fact that the GST is a new tax regime and there may be a bonafide mistake on the part of the registered person - It is a settled principle of law that judgment rendered in different context cannot be applied to another fact scenario - Chapter note 3(l) of Chapter 71 of CTA specifically excludes articles of Chapter 91 (clocks and watches) - Ch. Note of Ch.91 as well as Explanatory notes of HSN of heading 9101 and 9102 covers watches with case wholly of precious metal or of metal clad with precious metal etc. - On the basis of relevant chapter notes of Customs Tariff Act, 1975 and Explanatory Notes to HSN, products supplied are appropriately classifiable under chapter heading 9101 attracting GST @18%, Schedule III - AAR order upheld and Appeal rejected: AAAR

- Appeal rejected: AAAR

2019-TIOL-20-AAAR-GST

GST - Automatic Identification System (AIS), NAVTEX and SART are mandatory requirements for Ships for its safety at sea - covered by Sl. no. 252 of Notification 1/2017-CTR, as part of ship; attract GST @5%: AAAR

GST - SONAR & Fish Finder, Voyage Data Recorder, and Two way RT Walkie-Talkie are used for general application and cannot be said to be specific for functioning of ship - not covered by Srl no. 252 of Notification 1/2017-CTR; attract GST @18%: AAAR

- Appeal disposed of: AAAR

2019-TIOL-19-AAAR-GST

GST -  Appellant is a company incorporated as a Special Purpose Vehicle (SPV) and registered under the provisions of the Companies Act, 2013 for the purpose of undertaking two-laning/intermediate laning of the sections of the State Highway on Design, Build, Operate/maintain and Transfer basis (DBOT) under a contract with PWD - Appellant is engaged as a Concessionaire wherein the PWD, Government of Rajasthan has granted concession to construct, operate and maintain the project during the Construction period which shall commence from the appointed date and will end on Commercial Operation Date (COD) and operate and maintain it for a further period of ten years from the COD –AAR held that Appellant is rendering taxable services during the construction of roads which is liable to tax, hence they are entitled to claim full ITC under the provisions of s.16(1) of the CGST Act, 2017; that 50% of the project cost received as annuity is not exempted under entry no. 23A of 12/2017-CTR as the said entry 23A pertains to SAC 9967 which is for support services of transport services whereas the services provided by appellant is classifiable under SAC 9954 which is liable to tax at applicable rate; that Applicant is also entitled to claim ITC on supplies of goods and services or both procured for use in outward suppy of O&M (Operate and Maintain) service purpose as they are paying GST on 100 per cent of the amount received on account of O&M of the project – Appeal toAAAR.

Held: Annuity is an amount paid by the National & State Highways Construction Authorities to concessionaires for construction of roads in order that the concessionaire did not charge toll for access to a road or a bridge – after discussion, the GST council decided to treat annuity at par with toll and to exempt from tax, service by way of access to a road or bridge on payment of annuity and hence the entry 23A was introduced - Whole project can be divided into two parts – one is construction phase and second is O&M phase – activity of appellant i.e Concessionaire having nexus with annuity is classifiable under SAC 9967 and activity of appellant having nexus with construction payments during construction phase is Works Contract which is taxable under SAC 9954 under notification 11/2017-CTR; therefore, there is no hitch in providing the benefit of Entry no. 23A to the annuity payments i.e. road construction payment received after COD (during O&M phase) but this comes with a rider that only 50% ITC of the GST paid on the Input and Input Service used in construction phase is available to appellant because annuity (50% of construction payment) is not taxable and appellant is not having any other non-business and/or exempted supply – contention of appellant that ITC is admissible as per s.17(2) read with rule 42 is not tenable because annuity payments (exempted supply) are to be taken into consideration for taking proportionate ITC during construction leg of project and not during O&M leg of the project – Appeal disposed of: AAAR

- Appeal disposed of: AAAR

2019-TIOL-18-AAAR-GST

GST - Applicant was awarded the National Franchisee for the whole of India to conduct UCMAS (Universal Concept Mental Arithmetic System) - They had sought a ruling as to whether the activity provided qualifies for exemption from payment of GST under Sl. No. 80 of notification 12/2017-CTR - AAR had held that training imparted does not make the activities of the applicant as training or coaching in recreational activities relating to arts or culture and hence not qualified for the exemption - appeal to AAAR.

Held:  It is a settled principle of law that exemption notification has to be read strictly insofar as eligibility is concerned - when the words of the notification are clear and unambiguous, they must be given effect to - by a strained reasoning, benefit cannot be given when it is clearly not available - Activity of appellant cannot be construed as training or coaching in recreational activities relating to arts - Ruling by AAR dated 23.08.2018 upheld and appeal rejected: AAAR

- Appeal rejected: AAAR

2019-TIOL-17-AAAR-GST

GST - Applicant (now appellant) wanted the Authority for Advance Ruling to decide whether the benefit of notification 03/2017-CTR was available to them or not in respect of supply of Power Cables - AAR had by order dated 01.08.2018 held that Electrical Cables do not fall under the Entry no. 24 of list as 'material', 'accessories', 'consumables', and/or 'stores' of Sl. No. 1 of notification 03/2017-CTR and are not entitled for the concessional rate of tax - Appeal to AAAR.

Held: - From the definition of "Advance Ruling" given under s.95(a) of the CGST Act, 2017, it is very much clear that the scope of the Advance ruling for both i.e. the AAR and AAAR is limited to transactions being undertaken or proposed to be undertaken - Since in the instant csae, the application seeking advance ruling was filed on 09.05.2018 before the AAR with respect to supplies undertaken in the month of January 2018, actual date of transactions being 22.01.2018 and 24.01.2018 as per GSTR-1, it is out of the purview of Advance Ruling - If the lower forum has committed any error, the forum of AAAR is not bound to carry the burden of that error being an independent forum - AAAR is at a higher pedestal than that of AAR and so it has all the powers to modify the ruling of the AAR the way it deems fit - If the AAR has entertained and pronounced its ruling on any issue which was outside the scope of the Advance Ruling, the AAAR has every power to undo the job done by the AAR while disposing of the appeal and this can be done even if neither party i.e the applicant/appellant or department pleaded for the same during the proceedings of the appeal filed before it - No ruling can, therefore, be given by the AAAR on the question posed - Appeal dismissed: AAAR

- Appeal dismissed: AAAR

2019-TIOL-16-AAAR-GST

GST -  Amount charged as Interest on transaction based short term loan given by Del Credere Agent (DCA) (the applicant) to buyers of material -AAR held that service provided by applicant is by way of extending short term loans and that insofar as the consideration is represented by way of interest, same is covered under Sl. No. 27 of Notification 12/2017-CT(R) and hence exempted from payment of Goods and Services Tax - Appeal filed against this order before the AAAR by Assistant Commissioner, Central Goods and Services Tax, Division-VII(Satellite), Ahmedabad.

Held:

Per: Ajay Jain , Member

++ Once the DCA makes payment to the principal on behalf of the customer, the DCA enters into the shoes of the principal and becomes entitled to recover the amount from the customer - submission of the applicant that the interest charged by the DCA from customers is not for delayed payment of consideration of any underlying supply is not found to be correct - argument that the obligation of the DCA to make payment to the principal on failure of the customer to make payment on due date has been termed by the applicant as ‘short term loan' to the customer and it is contended that the interest charged towards such loan given to the customer will be exempted under sr.no.27 of notfn. 12/2017-CTR, although appears attractive is not without any merit - such an interpretation would make the clause (d) of sub-section (2) of section 15 otiose - looked at from another angle, in case of direct transaction between supplier and customer, where the customer makes delayed payment with interest, the amount of interest would be charged to GST - therefore, an interpretation which would make the leviability of GST on the interest/late fee/penalty for delayed payment of consideration by the customer dependent upon the nature of transaction is untenable - held, therefore, that interest or late fee or penalty for delayed payment of consideration by the customer would be leviable to Goods and Services Tax - AAR ruling is, therefore, erroneous and is required to be set aside.

Per: Dr. P.D.Vaghela, Member

Held:

++ In the present case, goods are supplied directly from the principal to the buyer (recipient) and in case the buyer (recipient) is not in position to pay to the principal in due date, DCA extends loan to the buyer (recipient) and makes payment of such supply to the principal on behalf of the customer - The said loan is repaid by the buyer to DCA along with interestagreed between DCA and buyer (recipient) - The amount of interest received by DCA on supply of services in form of loan or advances cannot be included in value of supply of goods by the principal as the following two transactions are separate (a) supply of goods from supplier (principal) to buyer (recipient) and (b) supply of service from DCA (loan giver) to buyer (recipient) by way of extending loan to buyer (recipient) with interest agreed between them - AAR order upheld and appeal dismissed.

- Appeal dismissed: AAAR

2019-TIOL-15-AAAR-GST

GST - In respect of a contract given by one of their customers for catering services to be provided to the staff, premises being made available by customer, Applicant had sought a ruling as to whether it is taxable @12% GST and the AAR had held that the expression ‘Outdoor catering' is not defined under the CGST Act/GGST Act, 2017 or the notifications issued thereunder and in view of the decision in Indian Coffee Workers Co-op Society -  2014-TIOL-499-HC-ALL-ST such services are to be treated as 'Outdoor catering' and covered under Serial no. 7(v) of Notification 11/2017-CT(R) attracting CGST @9% + SGST @9% - AAR ruling upheld, hence appeal rejected: AAAR

- Appeal rejected: AAAR

2019-TIOL-14-AAAR-GST

GST   - Applicant, engaged in providing computer training services to the Government aided secondary and higher secondary schools across the State of Maharashtra to implement theInformation and Computer Technology ICT @ School Project had sought a ruling on the applicability of exemption under Entry no. 72 of notfn. 12/2017-CT - AAR had ruled that i t was incorrect to dub the entire project as training programme and that it was rather a composite supply of goods and services, not naturally but artificially bundled; that as per paragraph 1(c) of Schedule II of the Act, any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of full consideration as agreed is a supply of goods and not a service, therefore, the second condition of the notification is also not satisfied; nonetheless, the source of funding the expenditure is the State government, so except for fulfillment of this condition, the other two conditions are not satisfied; that therefore, Supply of goods and services as made by the applicant under ICT@School project is not in compliance of all the conditions of the exemption, hence the benefit of exemption 12/2017-CT is not available - Appeal toAAAR.

Held: As per section 2(30) of the Act, a supply will be a composite supply only when it is naturally bundled - Education Guide at paragraph 9.2.4 clarifies that whether services are naturally bundled in the ordinary course of business would depend upon the normal or frequent practices followed in the field of business to which such services relate - From the website of the Ministry of Human Resource Development, insofar as the ICT Scheme is concerned, it is clear that the ICT is a Central government driven project and the training along with supply of computers is an inherent part of the project and the project is imagined as such, therefore, a major pre-requisite for a supply to be a composite supply, that the same should be naturally bundled is satisifed here - supply of computers along with training is itself envisaged and conceived as such by the Ministry of HRD and, therefore, by its very nature, the supply can be said to be naturally bundled - Even if there is an associated supply of computer hardware and software and connected accessories, it is clear from the preamble to the agreement itself that the intention is of ‘education of students' - Training provided by appellant is advanced training or training aided by technology which helps in easy delivery of the contents to the student through the visual medium - Project is nothing but a training project aided by technology - Merely because hardware and software is provided by the appellant, it does not mean that the training to be done is not a principal supply -AAR ruling is, therefore, modified to hold that the supplies of goods and services by the appellant to the Director of Education (S&HS) qualifies for exemption in terms of Entry no. 72 of Notification 12/2017-CTR - Appeal allowed: AAAR

- Appeal allowed: AAAR

2019-TIOL-13-AAAR-GST

GST - Appellant is engaged in providing various retail financial services like stock broking, share broking, marketing of IPOs of companies and mutual funds, corporate advisory services etc. which were not taxable under the earlier VAT law - based on transitional provisions, they claimed Input Tax Credit on closing stock of computers, laptops and other goods lying in their physical possession as on 30 th June 2017 - they had soughtan advance ruling as to whether computers, laptops etc. would qualify as Inputs for the purpose of availing transitional ITC u/s 140(3) of KSGST Act; if the goods are physically available as closing stock on 30.06.2017, can they avail ITC for the VAT paid - AAR had held that computers, laptopsused for rendering of services are ‘capital goods' and stood excluded in terms of section 2(x) of Kerala Value Added Tax Act; thatthe appellant being a service provider is not eligible to avail Input Tax credit on computers and laptops during the transition period; that proviso to section 140(2) is specific to the point that Input Tax credit, if not available under the erstwhile law, cannot be claimed as transitional credit - also section 140(3) of the GST Act covers "credit of eligible duties in respect of inputs held in stock as held on the appointed day"; that, therefore, ITC is not eligible for the VAT paid - Appeal before AAAR.

Held: Appellant being a service provider had no tax liability under the erstwhile KVAT Act and thereby was not eligible to avail Input Tax credit on computers and laptops held during the transition period - Hence, transitional ITC claim of the appellant in respect of the capital goods is not admissible as per the transitional provisions of KSGST Act - no reason to modify the ruling of AAR - Appeal rejected: AAAR

- Appeal rejected: AAAR

GST - AAR had held that supply of medicines and allied items provided by the hospital through the pharmacy to the in-patients is part of composite supply of health care treatment and hence not separately taxable; that clarification given in letter F.No. 354/17/2018-TRU dated 12.02.2018 in the matter of supply of food to in-patient is applicable in the case of dispensing of medicines also; that, however, supply of medicines and allied items by hospital through the pharmacy to the out-patients is taxable - appeal filed with the plea that the ruling of AAR be modified by ruling that the supply of medicines and allied items to the outpatients through the pharmacy attached to the hospital and run by the appellant is a part of healthcare services and exempted under the notification.

Held: In case of outpatients, it is the choice of the patient whether to follow the medical advice given by the doctor or not - neither the hospital nor the consulting doctors can coerce the patient to follow the medical advice given by the doctor - neither the consulting doctor nor the hospital has any control on the patients medical care - doctor prescribes medication and the charges for doctor's consultation is billed separately - it is up to the outpatient to decide whether to buy the medicines from the hospital run pharmacy or from outside - It is not compulsory for the outpatients to buy medicines from the hospital run pharmacy and it is not mandated by the hospital - as such, in the case of outpatients the healthcare service provided by the hospital is restricted to the consultation of the doctor and these are not naturally bundled together to be considered as composite supply - even if the outpatient decides to buy medicines from the pharmacy run by the hospital, the charges for supply of medicines is billed separately and cannot be considered as composite supply to extend the exemption - supply of medicines and allied items to outpatients is, therefore, liable to GST being a taxable supply - AAR ruling upheld and appeal rejected: AAAR

- Appeal rejected: AAAR

GST - Appellant adopted the business model of placing their own medical instruments at the premises of hospitals or laboratories and supplied the pharmaceutical products, reagents, diagnostic kits etc. to be used in such equipments by executing an agreement with the hospital/laboratories containing minimum purchase obligation -They had sought a ruling as to whether such placement of medical instruments to unrelated customers like hospitals, labs etc. for their use without any consideration, for a specific period, constitute supply and whether such movement of goods constitutes, otherwise than way of supply, under GST - AAR had held that s uch supply constitutes "composite supply", the principal supply is the transfer of right to use of any goods for any purpose and is liable to GST under Sl. No. 17(iii), Heading 9973 [Transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other consideration] of Notification 11/2017-CTR - Appeal to Appellate authority.

Held: Order upheld: AAAR

2019-TIOL-10-AAAR-GST

GST -  Applicant, Indian Institute of Management, Bengaluru had sought a ruling on whether the long duration post graduate diploma/ degree granting programmes offered by them, other than specifically mentioned at Sl.No.67 of Notification No. 12/2017-CTR as amended by 2/2018-CTR, are exempted from the GST output liability in the light of enactment of the Indian Institute of Management Act, 2017 - They had also sought a ruling on whether supply of online educational journals or periodicals to them is exempted from reverse charge liability of GST under Sl. No.66 of Notification No.12/2017-CTR as amended by Notification No. 2/2018-CTR - AAR had held that both Serial no. 66 and 67 are related to all educational services covered under the same Heading 9992; that Serial Number 67 had been carved out specifically and only for the educational services provided by the Indian Institutes of Management; that, therefore, insofar as educational services provided by Indian Institutes of Management are concerned, the provisions contained in Serial no. 67 alone shall apply; that the constitution of the Notification does not allow selective application of Serial No. 67 in respect of educational programmes like (a) two year full time Post Graduate Programmes in management for the Post Graduate Diploma in Management, to which admissions are made on the basis of Common Admission Test (CAT) conducted by the Indian Institute of Management; (b) fellow programme in Management; (c) five year integrated programme in Management and application of Serial number 66 for the rest of the educational programmes; that when Notification 12/2017-CTR provides for a specific entry for the Indian Institutes of Management at serial no. 67, the provisions of serial number 66 shall not apply to them, both questions were answered in the negative- Appeal to AAAR.

Held: IIM Act, 2017 has come into force from 31 st January 2018 and, therefore, since IIMs can award degrees recognized by law w.e.f 31.01.2018, they are now considered as ‘educational institution' as defined under clause 2(y) of notification 12/2017-CTR - during the period 1 st July 2017 to 30 th January 2018, IIMs cannot be termed as ‘educational institutions' since they were not qualified to award degrees which were recognised by law and, therefore, they were not covered by entry no. 66 of notification 12/2017-CTR as is also clarified by CBIC Circular 82/01/2019-GST dated 01.01.2018 - Post 31 st January 2018, exemption under sl. No. 67 loses its relevance since the IIMs are now covered under the entry Sl. No. 66 - however, entry Sl.no. 67 was deleted only w.e.f 01.01.2019 by notification 28/2018-CTR - Therefore, during the period 31 st January 2018 to 31 st December 2018, both entries Sl. No. 66 and 67 were in force granting exemption to services provided by IIMs - It is trite law that if there are two or more exemptions available to an assessee, he can claim the one which is more beneficial to him, therefore, during the period 31.01.2018 to 31.12.2018, IIMB can avail exemption under either Sl. No. 66 or 67 - Insofar as the ruling sought, the long duration post graduate programs w.e.f 31.01.2018 will be exempt from GST under Sl. No. 66 of Notification 12/2017-CTR - IIMB is also eligible for exemption from payment of IGST in respect of supply of online journals and periodicals received from a person located in a non-taxable territory in terms of Sl.No. 10 of Notification 9/2017-IT(R) as amended - AAR ruling dated 25.10.2018 set aside: AAAR

- Appeal allowed: AAAR

 

GST AAR CASES

2019-TIOL-68-AAR-GST

Udayan Cinema Pvt Ltd

GST - Line producer to be engaged for the shooting of a feature film in Brazil is supplying motion picture production service - classifiable under SAC 999612 - Applicant liable to pay IGST @18%: AAR

- Application disposed of: AAR

2019-TIOL-67-AAR-GST

Shiva Writing Company Pvt Ltd

GST - "Tips and Balls" of ball point pens are classifiable under Tariff Heading 9608 99 90 and are included under Sl. No. 453 of Schedule III of Notification 1/2017-CTR and chargeable to GST @18%: AAR

- Application disposed of: AAR

 

GST HIGH COURT CASES

2019-TIOL-574-HC-AHM-GST

Madhav Gopaldas Shah Vs State Of Gujarat

GST - Hitendra Shah, Prakashsinh Udavat and Madhav Shah in collusion with other persons set up firms in the name of economically backward persons, obtained GST number, misused the said numbers and obtained Input credit illegally for invoices of stock worth crores of rupees without actual physical transaction and caused huge loss to government revenue - apart from the firms Om Enterprise, Avi Enterprise and Shivay Enterprise, accused Madhav Shah has admitted that he has also committed billing scam in Parshvanath Engineering and S.K.Enterprise - accused Madhav Shah has also stated detailed facts about commission received by him in lieu of billing scam - bogus bills amounting to Rs.106.40 crores have been issued till July 2018 in one case and in another, turnover of sale is shown as Rs.173.58 crores in which tax amount due is Rs.21.12 crores - Application filed by Madhav Shah under section 439 of the Code of Criminal Procedure, 1973 for regular bail on the ground that he is in custody since 30.12.2018; is a young person pursuing studies in Chartered Accountancy and was employed by the co-accused Hitendra Shah; that he was acting under the instructions of Hitendra Shah and had not derived any financial gain.

Held: Role of applicant appears to be restricted to a limited extent as compared to that of the co-accused - considering the period of incarceration and the maximum sentence that can be imposed and the Public Prosecutor being unable to bring on record any special circumstances against the applicant and in view of the law laid down by the apex court in the case of Sanjay Chandra vs. CBI [2012] 1 SCC 40, prima facie , Court is of the opinion that it is a fit case to exercise the discretion and enlarge the applicant on a regular bail - application is, therefore, allowed and the applicant is ordered to be released on regular bail on executing personal bond of Rs.10,000/- with one surety of like amount and subject to conditions that he shall not take undue advantage of liberty or misuse liberty; not act in a manner injurious to the interest of the prosecution; surrender passport to the lower court within one week; not leave the State of Gujarat without prior permission of the Sessions Judge concerned; mark presence before the police station concerned once every English calendar month for a period of six months; furnish present address of his residence to the investigating officer and also to the Court and not change the residence without prior permission of the High Court - in case of breach of any of the conditions, the Sessions Judge would be free to issue warrant or take appropriate action in the matter - Application allowed: High Court [para 5, 6, 7, 8, 11]

- Application allowed: GUJARAT HIGH COURT

2019-TIOL-546-HC-AHM-GST

Synergy Fertichem Pvt Ltd Vs State Of Gujarat

CGST - SCN dated 01.03.2019 has been issued u/s 130 of the CGST Act calling upon the petitioner to show cause as to why the goods in question as well as the vehicle should not be confiscated for non-payment of an amount of Rs.60,72,639/, as detailed therein - Petitioner submits that it is only if there is no compliance of the order passed u/s 129 of the Act that the provisions of s.130 of the Act can be resorted to - On a query by the Court, the Assistant Government Pleader was not in a position to point out that the procedure, as contemplated under sub-sections (3) and (4) of section 129 of the CGST Act, had been followed.

Held: Prima facie, it appears that the show cause notice under section 130 of the CGST Act has been issued without complying with the requirements of section 129 of the CGST Act - It is also an admitted position that the goods in question are perishable in nature - Court is, therefore, of the opinion that the petitioner has made out a strong prima facie case for the grant of interim relief - Accordingly, by way of interim relief, the respondents are hereby directed to forthwith release the goods in question and the Truck detained/seized - petitioner directed to file an undertaking before the Court within a week to the effect that in case the petitioner, ultimately, does not succeed in the petition, he shall duly cooperate in the further proceedings - Matter posted to 27.03.2019 to enable the respondents to file an affidavit-in-reply: High Court [para 5 to 7]

- Interim relief granted: GUJARAT HIGH COURT

 

GST NAA CASES

2019-TIOL-19-NAA-GST

Kerala State Screening Committee On Anti-profiteering Vs Asian Paints Ltd

GST - Anti-Profiteering - Section 171 of the CGST Act, 2017 - Allegation is that the respondent had profiteered in the supply of "Paint (AP Woodtech Wood Stain Walnut 500ml (HSN Code 3213))” by not passing on the benefit of rate reduction w.e.f 15.11.2017, invoices relied upon are dated 08.11.2017 and 28.11.2017.

Held: It is apparent from the DGAP report and the documents on record that the respondent had maintained the same base price post reduction in the rate of tax w.e.f 15.11.2017 resulting in reduction in the cum-tax price from Rs.175.40 to Rs.161.70 - since benefit of tax reduction has been passed on by the respondent by commensurate reduction in the price, respondent cannot be held guilty of profiteering u/s 171 of the Act - application is, therefore, dismissed, since being devoid of merits: NAA

- Application dismissed: NAA

2019-TIOL-18-NAA-GST

Kerala State Level Screening Committee On Anti-profiteering Vs Somany Ceramics Ltd

GST - Anti-Profiteering - Section 171 of the CGST Act, 2017 - Allegation is that the respondent profiteered in the supply of 'Ceramic Glazed Wall Tiles, Printex Crema, PRM 300x600 MM HSN Code 6907 2300' by not passing the benefit of reduction in the rate of tax w.e.f 15.11.2017, invoices relied upon are dated 03.08.2017 and 30.11.2017. Held: It is apparent from the DGAP report that there has been a reduction in the rate of tax on the above product from 28% to 18% w.e.f 15.11.2017 - It is also revealed from the records that the respondent has not increased the discounted per M 2 price of the above product which had remained at Rs.374.74 before and after the tax reduction and, therefore, the benefit of tax reduction has been duly passed on to the customers by the respondent - Allegation of profiteering is not established as there has been no change in the base price of the product after reduction in the GST rate - no merit in the application, hence dismissed: NAA

- Application dismissed: NAA

2019-TIOL-17-NAA-GST

State Level Screening Committee On Anti-profiteering kerala Vs Ramraj Handlooms

GST - Anti-Profiteering - Section 171 of the CGST Act, 2017 - Allegation is that the respondent had profiteered in the supply of "Little Stars Dhoti (5-6)' by not passing on the benefit of reduction in the rate of tax at the time of implementation of the GST w.e.f 01.07.2017, invoices relied upon are one dated 09.05.2017 and other dated 24.10.2017. Held: DGAP has in its report stated that in the pre-GST era, the rate of tax applicable on the product was CST @2% and there was no CEX duty in view of exemption notification 30/2004-CX; that post GST, the product attracted IGST @5%; that the unit base price of Rs.265/- had remained unchanged even after introduction of GST w.e.f 01.07.2017; that since the incidence of IGST post GST was @5% inasmuch as same being higher than the pre-GST incidence of @2%, the provisions of s.171 are not attracted - in view of the findings as reported, allegation of profiteering is not sustainable in terms of s.171 of the Act as there has been no reduction in the rate of tax - no merit in the application, hence dismissed: NAA - Application dismissed: NAA

2019-TIOL-16-NAA-GST

Director General Anti-Profiteering Vs Cloudtail Pvt Ltd

GST - Anti-Profiteering - Allegation is that the respondent has not passed on the benefit of reduction in the GST rate applicable to printing cartridges (HSN 8483) [HP 678 L0S24AA Combo Pack Ink Advantage Cartridges (Black & Tri-color) B00UHG8BFI] from 28% to 18% w.e.f 15.11.2017 and had increased the base price, therefore, there was no reduction in the price (inclusive of GST @18%) charged from recipients - applicant has submitted copies of two sale invoices dated 04.10.2017 and 09.12.2017 issued by respondent -In response to the notice by the DGAP, the respondent submitted that he was a retailer and sold the products manufactured by other vendors; that he had no control over the MRP affixed by the manufacturer/importer; that the manufacturer/brand-owner (HP) had changed the MRP during the period between July to December 2017; that HP had first increased the MRP on account of increase in the tax rate from 5% (VAT) to 28% (GST) and also on account of imposition of Customs duty @10% on cartridges w.e.f 01.07.2017; that subsequently HP had decreased the MRP to pass on the benefit reduction in GST rate w.e.f 15.11.2017 and that he had not sold any product above the MRP fixed by the manufacturer/importer; that probably the sale made on 04.10.2017 was from pre-GST stock and the sale made on 09.12.2017 was from the stock imported/manufactured after 15.11.2017; that the invoice issued on 04.10.2017 had been raised during the 'Great Indian Festival Sale', a promotional event run by M/s Amazon whereas the invoice dated 09.12.2017 was raised during the course of routine business when there was no promotion and no exceptional discounts were offered; that the margin earned by him on the sale effected on 09.12.2017 was reasonable and within the entitled and negotiated margins agreed with HP and that the Authority had in the case of Flipkart 2018-TIOL-04-NAA-GST observed that the withdrawal of discount would not amount to profiteering - DGAP in its report has noted that the two invoices referred showed that the respondent has offered similar discount of 5% as earlier on the increased base price after GST rate reduction w.e.f 15.11.2017; that by increasing the base price of the goods and also by increasing the cum-tax price charged from the recipients post GST rate reduction the benefit of GST rate reduction was not passed on by the respondent to the recipients; that the profiteered amount during the period 15.11.2017 to 31.07.2018 came to Rs.10,79,813.28; that in respect of the supply of the 1 unit of printer cartridge covered by the impugned invoice dated 09.12.2017, the profiteered amount is Rs.214.76 but the beneficiary could not be identified as the invoice did not show the name and address of the buyer. Held: + Respondent's contention that the proceedings initiated should be deemed to be infructuous as the complaint was not against him but against HP India who was the brand owner and who controlled the MRP and he being a retailer had no say in fixing the MRP is untenable as the fact remains that the invoices quoted by the applicant have been issued by the respondent on the e-commerce platform; that since he is registered under GST his obligation to pass on the benefit of rate reduction still remained and holds good; that Rule 127(ii) of the Rules states that the Authority has to identify the registered person who has not passed on the benefit to the recipient and in this case the respondent was clearly that registered person; Rule 137(c) states that anyone who alleges profiteering can file a complaint so it is not necessary that the complainant has to purchase the goods/products, therefore, the Standing Committee has rightly forwarded the same to the DGAP and the DGAP has accordingly completed its investigation and filed his report. + GST envisages that every supplier is to be registered and every registered supplier is bound by s.171 of the Act to pass on the benefit of reduction in tax - supplier here is the respondent who has increased the price even after reduction in the GST rate of tax; passing of the benefit by the distributor or retailer does not rest on the fact that the manufacturer or his supplier should have first passed on the same benefit to him. + Statistics clearly show that when the MRP reduced from Rs.1239/- to Rs.1158/-, the procurement price remaining the same and with GST rate being reduced from 28% to 18%, the respondent had increased his selling price by Rs.13.39 per unit and on this increased price GST of 18% has been collected. + Respondent has not only increased his base price but has also collected GST on the increased base price, therefore, the recipient has to be given the benefit of the increased base price and the increased tax collected from him - profiteered amount has been correctly computed at Rs.10,79,813.28 by the DGAP - respondent is, therefore, directed to reduce the price of the said product as per provisions of rule 133(3)(a) of the CGST Rules by making commensurate reduction in prices keeping in view the reduction in the rate of tax - respondent is also directed to deposit the profiteered amount along with interest @18% - as the applicant has admitted that the product has not been purchased by him hence the question of refund does not arise - the entire profiteered amount is directed to be deposited into the Consumer Welfare Fund of the Centre and the respective States in the ratio of 50:50 within a period of three months - since respondent has profiteered by increasing his base price, he is liable for penalty under section 122(1)(i) of the CGST Act, 2017 for issuing incorrect invoices, notice to be issued accordingly: NAA

- Application dismissed: NAA

 

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