NAA CASES

2019-TIOL-30-NAA-GST

Director General Of Anti-Profiteering Vs Puri Constructions Pvt Ltd

GST - Anti-Profiteering - S.171 of the CGST Act, 2017 - Applicant alleges that the respondent builder had profiteered by not passing on the benefit of Input Tax Credit (ITC) to him upon purchasing the flat in the Anand Vilas Project, Faridabad, although he had charged GST @12% w.e.f 01.07.2017 - applicant claiming that the respondent had completed approximately 60% of the project work using inputs which were liable to higher GST @18% or 28% due to which additional ITC benefit had accrued to him - applicant had sent an email to the respondent as to why he was not being given the benefit of ITC when GST was being charged from him @12% and in response it was communicated that the benefit of ITC would be calculated at the time of completion of the project and, if due, would be proportionately passed on to the applicant - respondent had also informed his buyers that he intended to compute the benefit of additional ITC at the time of handing over the possession so that correct amount of benefit could be passed on as it was not certain that the customers would take possession or leave the project or transfer the booking after availing the benefit of additional ITC etc.; that no additional benefit of ITC had accrued after coming into force of GST and the benefit of ITC on all taxes charged was available to him viz. VAT and Service Tax - DGAP in its report submitted that it was evident that the ITC as a percentage of the total turnover that was available to the respondent during the pre-GST period was 6.91% and during the post GST period it was 13.70% and, therefore, it was clear that the respondent had benefited from additional ITC to the extent of 6.79% of the total turnover; that the additional ITC should result in commensurate reduction of cum-tax price from Rs.3956.25 per square feet to Rs.3914.82 per square feet; that the benefit of additional ITC which had accrued to the respondent was required to be passed on to the flat buyers but since the same was retained, the respondent had violated the provisions of s.171 of the CGST Act, 2017; that during the period from 10.07.2017 to 30.06.2018, the profiteered amount comes to Rs.3,42,31,077/- which included 12% GST on the basic profiteered amount of Rs.3,05,63462/-.

Held: Both the Central as well as State government had no intention of collecting the additional GST as they had forfeited their revenue in favour of the flat buyers to provide them accommodation at affordable prices and by compelling the buyers to pay the same the respondent has not only defeated the intention of the governments but also acted against the interest of the house buyers and, therefore, the GST collected by him on the additional realization has been rightly included in the profiteered amount, by the DGAP -Incidentally, DGAP has submitted a revised investigation report in which they stated that the ratio of CENVAT/ITC to the taxable turnover, pre-GST was 2.21% and during post GST period, it was 4% which continues to show that post-GST the respondent had benefited from the additional ITC to the tune of 1.79% as against the earlier figure of 6.79% - revised ratio since not challenged by the respondent is being treated as correct - accordingly, as per the DGAP revised report, the amount of ITC benefit which has not been passed on by the respondent to the customers/the profiteered amount comes to Rs.1,01,06,773/- which includes GST (@12% or 18%) on the base profiteered amount of Rs.89,68,979/- and which also included an amount of Rs.49,169/- (including GST on base amount of Rs.43,655/-) which was profiteered by the respondent from the present applicant - ITC benefit is required to be passed by the respondent to the 155 buyers from whom he has received consideration post GST - respondent has also realized an additional amount of Rs.15,90,239/- which includes both the profiteered amount @1.79% of the taxable amount and GST on the said profiteered amount from 92 other flat buyers and since these buyers are identifiable as per the documents, the profiteered amount is required to be passed to them along with interest @18% p.a- Authority u/r 133(3)(a) of the Rules orders that the respondent shall reduce the prices to be realized from the buyers of the flats commensurate with the ITC received by him - as the respondent has denied benefit of ITC to the buyers of the flats being constructed by him in his Anand Vilas Project in contravention of the provisions of s.171(1) of the Act and has realized more price from them than what he was entitled to collect and has also compelled them to pay more GST on the additional realization than what they were required to pay by issuing incorrect tax invoices, he has committed an offence u/s 122 of the Act and is, therefore, liable for imposition of penalty - SCN to be issued in this regard: NAA

- Application dismissed: NAA

2019-TIOL-29-NAA-GST

Kerala State Screening Committee On Anti-Profiteering Vs TTK Prestige Ltd

GST - Anti-Profiteering - Section 171 of the CGST Act, 2017 -Allegation is that the respondent on the supply of ‘Glass Kit Hood Curved Black - 90cm GHK 900CS Electric Chimney' did not pass on the benefit of reduction in GST from 28% to 18% w.e.f 15.11.2017.

Held: It is revealed that the Central Government had vide notification 41/2017-CTR reduced the rate of GST from 28% to 18% in respect of the subject product w.e f 15.11.2017, the benefit of which was required to be passed on to the recipients by the respondents as per s.171 of the CGST Act, 2017 - submission of the respondent that the price of the product was not increased at the time of introduction of GST when the rate of tax was increased to 28% (from earlier VAT liability of 14.5% plus CVD @3%) and hence the question of reducing the prices when the rate of tax was decreased from 28% to 18% does not arise, is legally unsustainable since s.171 clearly specifies that the benefit of reduction in tax has to be necessarily passed on to the recipient by commensurately reducing the prices - argument that pre-GST prices and the post reduction prices should have been compared will also not hold good - respondent has confirmed that they would deposit the profiteered amount of Rs.9,75,078/- along with interest @18% into the Consumer Welfare Fund as recipients were not identifiable - respondent directed to pay the same in the ratio of 50:50 along with interest within a period of 3 months in the respective States Consumer Welfare Fund - as the respondent had issued incorrect invoices while selling the product to the customers and had compelled them to pay additional GST, same is an offence u/s 122 of the Act and, therefore, the respondent is liable for imposition of penalty u/r 133 of the CGST Rules - notice to be issued accordingly: NAA

- Application dismissed: NAA

 

HIGH COUT CASES

2019-TIOL-1033-HC-KERALA-GST

Asian Paints Vs Assistant State Tax Officer

GST - Detention notices challenged but pending the writ petition, Petitioner has been imposed penalty u/s 129(1)(a) and 129(1)(b) of CGST Act, 2017 and it is their contention that penalty under both sections cannot sustain together.

Held: Goods detained shall be released on furnishing bank guarantee in terms of order passed u/s 129(1)(a) - Petitioner to file appeal within one month and which appeal is required to be disposed within a further period of three months - bank guarantee not to be invoked pending appeal - Petition disposed of: HC [para 3]

- Petition disposed of: KERALA HIGH COURT

2019-TIOL-1032-HC-AHM-GST

Bharat Vijay Transport Company Vs State Of Gujarat

GST - In case of two lorry receipts issued to M/s Standard Sales Corporation, the owner of the goods has not turned up for getting the goods released - Upon inquiry it is found that the GSTN stated in the e-way bill etc. have been obtained on the basis of the Aadhar card, PAN and mobile number of one Mahendrabhai Venilal Solanki who had permitted one Vipulbhai to use such documents for obtaining GST registration upon payment of some amount to him - However, though the statement of Mahendrabhai has been recorded in January, 2019 no criminal proceedings have been instituted against him nor has any complaint been filed before the police in respect of such offence - order of confiscation made under section 130 of the Goods and Services Tax Act, 2017.

Held: It appears that such GSTN has been given without proper inquiry as contemplated under the Act and the rules, which is on account of default on the part of the concerned authorities - However, it appears that instead of tracing out the real culprit, the respondents are seeking the easy way out by penalising the transporter who prima facie does not appear to have doubted the person who engaged it for transport of the goods as an invoice and e-way bill were produced by him, and recovering the tax, penalty and fine from him - It is evident that the authority concerned has not applied its mind to the objections raised by the petitioner and has perfunctorily passed the impugned order confiscating the conveyance of the petitioner - petitioner has made out a strong prima facie case for grant of interim relief - respondents are directed to forthwith release the conveyance subject to the petitioner filing an undertaking as specified: HC [para 5]

- Interim relief granted: GUJARAT HIGH COURT

2019-TIOL-1031-HC-KAR-GST

Sri Sai Balaji Diggers Vs State Of Karnataka

GST - Petitioner providing Earth moving services - Excavator was being transported and upon interception by competent authority, order of detention u/s 129(1) was passed due to mismatch in e-way bill - Petitioner has challenged the seizure order passed by respondent u/s 129(3) of the CGST Act - an order was also passed quantifying the tax/penalty amount of Rs.5,18,400/- - Petitioner informs that they have preferred an appeal u/s 107 of the Act against the said order before the Appellate authority by paying 10% of the disputed penalty/tax and requested that the vehicle be released, but in vain, so the Writ Petition.

Held: Without going into the merits or demerits of the case, Court finds it appropriate to direct the Appellate Authority to dispose of the appeal in accordance with law after hearing the parties, in an expedite manner, preferably within a period of two weeks - petitioner is at liberty to do the daily inspection and maintenance of the excavator and conveyance detained by the respondent No.4 till the release of the same - Petition disposed of: High Court [para 7, 8]

- Petition disposed of: KARNATAKA HIGH COURT

2019-TIOL-1030-HC-P&H-GST

Nikunj Steel Vs State Of Punjab

GST - Petitioner prays for issuing a writ of mandamus directing respondent to release the goods and the truck - Petitioner informs that they have deposited the tax and penalty and moved a representation for release of goods but no response was received.

Held: Without expressing any opinion on the case, Bench disposes of the petition by directing that the respondent take a decision on the representation within a period of one week: HC [para 4]

- Petition disposed of: PUNJAB AND HARYANA HIGH COURT

2019-TIOL-1029-HC-MAD-GST

Kumar Auto Agency Vs CCT

GST - Petitioner is entitled to the benefit of Input Tax Credit (ITC) which is to be availed of by filing Form TRAN-1 - However, on account of certain technical difficulties, the petitioner has not been in a position to upload the said Form, as a result of which, he is unable to utilize the Credit - Petitioner seeking a writ of mandamus directing the respondent to enable the petitioner to file GST TRANS-1 electronically and treat the same as filed in accordance with law.

Held: Respondent admits that there have been certain glitches in the working of the system and undertakes that the same will be rectified within a period of two weeks - High Court directs that technical difficulties faced by the petitioner in uploading GST TRAN-1 be rectified within a period of two weeks from the date of receipt of a copy of the order - Petition disposed of: HC [para 8]

- Petition disposed of: MADRAS HIGH COURT

2019-TIOL-1028-HC-ALL-GST

Gupta Agencies Vs UoI

GST - Petitioner seeks writ of mandamus directing GST Council to make recommendations to Commissioner to extend the time period for filing GST TRAN-1 as despite making several efforts on the last date of filing the application, they were unable to; that the petitioner is likely to suffer loss of credit.

Held: Respondent directed to open the portal before 31 st March 2019 and in the event they do not do so, they will entertain the GST TRAN-1 of the petitioner manually and pass orders on it after due verification of credits as claimed - respondent to also ensure that petitioner is allowed to pay its taxes on the regular electronic system - Matter to be listed: HC

- Matter listed: ALLAHABAD HIGH COURT

2019-TIOL-1022-HC-DEL-GST

Sonka Publication India Pvt Ltd Vs UoI

GST – Applicant had sought a ruling before the AAR as to whether the books ‘Sulekh Sarita Part-A', ‘Sulekh Sarita Part-B' and ‘Sulekh Sarita Part 1-5' are classifiable as ‘Printed Books' falling under HSN 4901 [exempted] or as children's ‘Drawing Books' under HSN 4903 [exempted] or as ‘Exercise Books' under HSN 4820 [chargeable to 6% tax] – AAR had by its order dated 9 th April 2018 held that the products supplied by the applicant are correctly classifiable under HSN 4820 and not under HSN 4901 or 4903 and that they are not covered under Entry no. 119 or 121 of Notification 02/2017-CTR – Petitioner has challenged this order before the High Court.

Held: Court must ask what purpose will the book serve? - In this case, a question to be asked is whether the books in question merely help the child in improving the child's handwriting by providing space in a book by copying from a written text or does it pose questions to the child to answer and whether the teacher then can evaluate, on the basis of such answers, the child's ability and understanding? In the present case, the 'work books' or 'practice books' printed and sold by the Petitioner certainly fall in the latter category i.e. they test the child's knowledge, ask questions which the child has to answer, and facilitate evaluating the child's understanding - These books are not 'exercise books' as understood by the trade - Petitioner has produced before the Court samples of such 'exercise books/ exercise note books' as understood in trade parlance and which are simply bound volumes of blank pages which may contain lines to facilitate writing and they do nothing more than providing space for writing - Court is satisfied that in the present case, the books published and sold by the Petitioner are classifiable under HSN 49.01 and not HSN 48.20. In terms of Notification No. 2/2017-Central Tax (Trade) dated 28th June, 2017 i.e. Entry No.119 thereunder, such goods classifiable under HSN 49.01 i.e. 'printed books, including Braille books' are wholly exempted from tax – Impugned order dated 9th April 2018 of the AAR to the extent above is set aside - Petition allowed: High Court [para 13, 16 to 18, 20]

- Petition allowed : DELHI HIGH COURT

2019-TIOL-1021-HC-MAD-GST

Jayachandran Alloys Pvt Ltd Vs Superintendent Of GST & CE

GST - The premises of the assessee-company were subjected to Search proceedings during the relevant period - Such operations carried on over several days, whereupon voluminous amount of documents were seized - Statements of various persons, including the assessee-company's Managing Director, were recorded - During the investigation, the assessee sought copies of the statements recorded as well as of other material seized - However, the assessee received no response from the Revenue - Hence the present writ petition was filed seeking that directions be issued to the Revenue to provide the material sought for by the assessee - A Miscellaneous Petition was also filed by the assessee seeking that interim injunction be granted, restraining the Revenue from taking coercive steps against the assessee such as arrest u/s 69 of the Act, pending disposal of the writ.

Held - The GST law subsumes several enactments such as the Central Excise Act, the Finance Act & the State VAT Acts - Thus the interpretation given to the provisions of these statutes would equally govern the functioning of the GST law as well - While the Revenue's interests are paramount & must be protected, the actions of the Revenue draw their power only from a holistic interpretation of the legal provisions - Any excess in this regard vitiates the legitimacy of the exercise - Through the discussions and conclusions rendered in the Finance Act 1994, it is seen that they are equally applicable to the provisions of the CGST Act as well - Section 132 of the Act imposes punishment on an assessee who commits an offence - The term commits clarifies that the act of committal of the offence is to be fixed first before punishment is imposed - The Revenue's allegation is that the assessee contravened provisions of Section 16(2) of the Act by availing excess ITC without movement of goods & existence of bogus transactions - Hence determination of excess credit as per procedure u/s 73 or 74 is prerequisite for recovery thereof - When recovery is made subject to determination in an assessment, the Revenue's argument that punishment for the offence alleged can be imposed even prior to such assessment, is clearly incorrect and amounts to putting the cart before the horse - The exceptions to this rule of assessment are only those cases where the assessee is a habitual offender penalized for violating legal provisions - Only then is the Revenue justified by pre-empting assessment to initiate action u/s 132 - There is no allegation that the assessee is an offender, leave alone a habitual one - Considering the facts & circumstances, the Revenue attempted to intimidate the assessee with the possibility of punishment u/s 132 & such action is contrary to the scheme of the CGST Act - While an assessee's activities being contrary to the Act must be addressed swiftly & effectively, they do not give a warrant to the Revenue to act in excess of such authority vested by the Act - Hence the power to punish is triggered only after establishing that an assessee committed an offence that has to necessarily be post-determination of the demand due from an assessee, that itself has to necessarily follow the process of an assessment: HC (Para 2,3,33,36-40)

- Writ petition allowed: MADRAS HIGH COURT

2019-TIOL-1016-HC-DEL-GST

Abbott Healthcare Pvt Ltd Vs UoI

GST - The petitioner-company is a leading company engaged in manufacturing medicines & cosmetic products - The present petition challenges an order passed by the National Anti-Profiteering Authority in respect of the Melaglow Rich product manufactured by the petitioner - The Authority had held that the petitioner had contravened the provisions of the CGST Act by issuing incorrect invoices - It was held that the same was an offence u/s 122(1)(i) of the CGST Act - The petitioner had also been found liable for penalty u/r 133(3)(d) of the CGST Rules - Thus the present petition seeks to challenge the vires of Section 171 of the CGST Act and Chapter 15 of the CGST Rules and in particular Rule 126, 127 and 133.

Held - It is noted that there happen to be other petitions pending in this court, which raise similar challenges to the constitutional validity of these provisions apart from contesting the orders passed by the NAA - In the present case, the petitioner's counsel points out that petitioner agreed to pay the duty demands with applicable interest within 10 days of the date of the order passed by the Authority - Such payment is being made on the premise of there being no further investigation by the Authority and that no further penalty would be imposed on it - In view of the same, stay is granted on further proceedings arising from the order passed by the National Anti Profiteering Authority against the petitioner - Replies be filed within 6 weeks - List on August 22 2019: HC

- Case deferred: DELHI HIGH COURT

2019-TIOL-1017-HC-DEL-GST

Jubilant Foodworks Ltd Vs UoI

GST - The petitioner company operates a chain of fast food restaurants under the brand name of Dominos Pizza - It challenged an order passed by the National Anti Profiteering Authority, alleging that the petitioner resorted to profiteering by charging more price than what could have been charged by issuing wrong tax invoices - The present petition also challenges the vires of Section 171 of the CGST Act as well as of Rules 126, 127 and 133 on grounds of being violative of Articles 14 and 19 of the Constitution - The petitioner also challenges the constitution of the NAPA, alleging there to be no Judicial Member in it & that there is no appellate body which would review the orders passed by the NAPA - Another grievance raised was that through the petitioner dealt with about 393 products & even as per the NAPA, it was compliant in respect of the price of many of these products - However, the NAPA had been selective in drawing adverse conclusions in respect of the prices charged for a few products.

Held - The petitioner company has made out a prima facie case and the balance of convenience stands in its favor for an interim order being passed - The NAPA order directs the petitioners to deposit about Rs 41.42 crores with the CWF in 50:50 ratio - Hence the petitioners are directed to deposit a sum of about Rs 20 crores within 4 weeks' time - Pursuant to payment of the same, stay would be granted on the NAPA order - Reply to the writ petition be filed within 6 weeks' time - List on 22nd August 2019: HC

- Case deferred: DELHI HIGH COURT