2019-TIOL-GST-283 Dated: Friday, May 24, 2019

GST CASES

NAA CASES

2019-TIOL-33-NAA-GST

Director General Of Anti-Profiteering Vs Conscient Infrastructure Pvt Ltd

GST - Anti-Profiteering - Applicant alleges profiteering by respondent in respect of purchase of a flat in the respondent's project ‘Habitat-78' - applicant alleges that the respondent had charged 12% GST on the demand raised on 17.04.2018 i.e. after 25.01.2018 when the rate was reduced from 12% to 8% in case of affordable housing projects and also the benefit of ITC had not been passed on to them by way of commensurate reduction in price.

Held: DGAP has submitted that the project ‘Habitat-78' was not in existence before the implementation of GST and was launched only in the GST regime and the agreement was executed on 17.11.2017 with the applicant; that there was no price history of the units sold in the pre-GST era which could be compared with the post-GST base price to determined whether there was any profiteering or not; that the draw of lots, allotment of unit and receipt of payment had taken place post-GST and the construction also commenced in January 2018, therefore, no comparison could be arrived at insofar as price and ITC is concerned; that the respondent must have taken into considering the benefit of ITC while fixing the base price; that the respondent had reduced the GST rate from 12% to 8% w.e.f 25.01.2018 and, therefore, the provisions of section 171 of the CGST Act, 2017 would not be attracted since no profiteering observed - from the demand letter dated 16.04.2018, it is seen that the total value was shown as Rs.3,21,124/- and the taxable value was shown as Rs.2,14,083/- (i.e. 2/3 rd of the total value separately) for computing the GST tax liability and the respondent had charged GST @12% which shows the effective GST rate was 8% - based on the said clarification, the applicant admitted her mistake and withdrew her complaint - applicant also declined to be heard as she had surrendered the flat - as it is cleaarly established that the Respondent had not contravened the provisions of s.171 of the Act, no merit found in the application, same is dismissed: NAA

- Application dismissed: NAA

2019-TIOL-32-NAA-GST

Director General Anti-Profiteering Vs Shrivision Homes Pvt Ltd

- Application dismissed: NAA

AAAR CASES

2019-TIOL-45-AAAR-GST

US Polytech

GST - AAR held that “PP Non-woven Bags” specifically made from non-woven Polypropylene fabrics are plastic goods classifiable under SH 3923 29 and attract GST @18% - appeal to AAAR.

Held: It is seen from the sample suppliers' invoices that the goods are being procured as ‘Non-woven fabric' under HSN 5603 in the form of rolls and then cut into desired sizes according to customer requirements - in terms of explanation (iii) and (iv) to notification 1/2017-CTR, the rules for interpretation of the First Schedule to the Customs Tariff Act, 1985 is required to be applied including the section and chapter notes - from explanatory notes to heading 6305 it is clear that PP Non-woven bags manufactured from non-woven fabric falling under 5603 is classifiable under HSN 6305 33 00 and applicable rate for bags of value not exceeding Rs.1000/- per piece is 5%: AAAR

- Appeal allowed: AAAR

2019-TIOL-44-AAAR-GST

ITD Cementation India Ltd

GST - Appellant entered into an agreement with Inland Waterways Authority of India (IWAI) for construction of multi-modal IWT terminal at Haldia on EPC basis - they sought a ruling on applicability of notification 24/2017-CTR and 31/2017-CTR viz. the rate at which GST should be charged on the Works Contract Service to be supplied for construction of above terminal - AAR observed that IWAI was clearly not the Government of India but a Government entity having no sovereign authority to collect Government Revenue - moreover, the user fees that IWAI collected was not credited to the Consolidated Fund of India and was, therefore, not Revenue but proceeds from business as defined u/s 2(17) of the Act; that, therefore, since Applicant was supplying Works Contract Service for an original work that is meant for commerce and business, it did not satisfy the conditions laid down under Sr. no. 3(vi)(a) of the Notification 11/2017-CTR; consequently Services would attract GST @18% under Sr. no. 3(xii) of Notification 11/2017-CTR - appeal to AAAR.

Held: It has already been established by the AAR that IWAI is a Government entity - It is clear from the very nature of the project that it creates infrastructure for commercial utilisation of the national waterway - though the multi-modal IWT terminal will facilitate commerce and business in and around Haldia, its creation is not for propogating any business or commercial interests of IWAI inasmuch as IWAI is facilitating the vision of GOI's “Jal Marg Vikas Project” for creating infrastructure for economic development of the country - the Inland Waterways Authority of India Act, 1985 empowers IWAI to levy and collect fees and charges from the users of the infrastructural facilties - It is clear from the certificate issued by the Senior Accounts (Control), Ministry of Shipping that remittances from IWAI are being credited to the Consolidated Fund of India so the remittances are part of government revenue and not part of business proceeds - appellant is, therefore, supplying Works Contract Services to IWAI, a government entity, for an original work that is meant for infrastructural development of waterways of India and is not meant for commerce and business - since appellant satisfies the conditions laid down under serial no. 3(vi)(a) of the Rate notification, the rate of GST payable is 12% - Appeal allowed: AAAR

- Appeal allowed: AAAR

HIGH COURT CASES

2019-TIOL-1112-HC-AHM-GST

Sonal Products Vs State Of Gujarat

GST - Petitioner submits that although appellate remedy of appeal has been provided under s.100 of the CGST Act, appellate authority has not been appointed as yet; that in respect of application made for advance ruling on 07.10.2017, order was passed on 22.02.2019 although s.98(6) mandates that order is to be passed within 90 days; that during the interregnum various authorities have decided issue in favour of applicant holding that goods are classifiable as ‘papad' CTH 1905 9040.

Held: Issue notice, returnable on 24.04.2019. [para 3]

- Notice issued: GUJARAT HIGH COURT

2019-TIOL-1111-HC-JHARKHAND-GST

Megotia Construction Pvt Ltd Vs GST

GST - Petition seeking extension of the date of submitting FORM GST TRAN-1.

Held: Looking into facts and circumstances of the case, petitioner is directed to prefer a representation before the GST Council as also before the Nodal Officer for extending the time - decision to be taken by respondent authorities within a period of four weeks - Petition disposed of: HC [para 2, 3]

- Petition disposed of: JHARKHAND HIGH COURT

2019-TIOL-1106-HC-KAR-GST

Sri Sharada Ganapathi Cold Storage Pvt Ltd Vs CCT

GST - Petitioner is providing service of renting space in the cold storage to the agriculturists and traders for storage of agricultural produce like ground nut seeds, lentils, ginger, chillies, onion seeds, coriander seeds, toor, moong, etc. - upon inspection of the business premises, the Assistant Commissioner of Commercial Taxes (Enforcement) viewed that that some goods are not agricultural produce and are liable to tax under the GST, pursuant to which, the petitioner has obtained registration under the CGST/KGST Act, 2017 and appears to have paid the taxes relating to the said activity carried on by it - It is the grievance of the petitioner that respondent No.2 violating the principles of natural justice issued the notice dated 21.03.2019 proposing to confiscate the goods and has simultaneously passed the prohibition order detaining the goods without affording an opportunity to file written reply and arbitrarily detaining the perishable goods belonging to third parties without there being any liability to make the payment of taxes on the said detained goods by the petitioner.

Held: In view of the enquiry proceedings having been initiated by respondent No.2 to ascertain the genuineness of the ownership of the goods stored in the cold storage in question and certain release orders being passed, Court is of the considered opinion that the ends of justice would be sub-served in directing respondent No.2 to conclude the enquiry relating to the goods in question in an expedite manner, in any event, not later than two weeks - petitioner to co-operate for the service of summons on the unserved persons/dealers - Petition disposed of: High Court [para 7, 8]

- Petition disposed of: KARNATAKA HIGH COURT

2019-TIOL-1096-HC-DEL-GST

Bharatiya Vitta Salahkar Samiti Vs UoI

GST - Court directs that the Respondents shall not, without prior intimation to the Court, proceed to appoint persons to the GST Appellate Tribunal till the next date - Matter listed on 26th July 2019: HC

- Matter listed : DELHI HIGH COURT

2019-TIOL-1095-HC-AHM-GST

Indus Projects Ltd Vs UoI

GST - Pursuant to assessment for the relevant period, duty demand had been raised against the petitioner - The petitioner was then required to pre-deposit 20% of the duty demanded, but then the same was whittled down to 5% of the tax dues - On an earlier occasion, the High Court had extended the time limit for payment of the same.

Held - Where some amount of the duty already has been deposited, the interests of justice would be served if the assessee is enabled to deposit the rest of the duty in seven monthly instalments: HC

- Writ petition disposed of : GUJARAT HIGH COURT

2019-TIOL-1094-HC-AP-GST

Magma Fincorp Ltd Vs State Of Telangana

GST - The petitioner-company is engaged in leasing & financing of vehicles - As on the bifurcation of the composite State of Andhra Pradesh, the petitioner had credit of about Rs 1.79 crores - The Commissioner of Commercial Taxes had issued a circular to deal with the issue if transfer of ITC between the bifurcated states coming into existence - The Circular stated that those dealers who migrated to the State of Telangana may claim Net Credit Carried Forward (NCCF) in the State in the State to which they may have migrated - Upon migration to State of Telangana, the petitioner claimed to have credit of about Rs 1.77 crores of which about Rs 1.43 crores was remaining as on June 2017 - Later when the GST law was enacted, the registered dealers were made entitled u/s 140 of Telangana GST Act to take in electronic ledgers the credit amount carried forwards in returns - The petitioner filed Form TRAN-1 for transferring ITC of about Rs 1.43 crores - Later, the petitioner was advised by the Revenue to not claim transitional credit and also to produce documentary evidence for transitional relief - Later the jurisdictional Asst Commr. (State Tax) rejected the claim for transitional relief and demanded payment of an equivalent amount on grounds of it being excess claim - Hence the present writ.

Held: From the facts on record, it is clear that the petitioner is not making any illusory or stale claim and is in fact claiming something to which the petitioner is entitled - It is not the Revenue's case that the petitioner is claiming something for which the latter is disentitled - It is not stated in the order in challenge that the Section 140 of the CGST Act pertaining to provisions for transitional relief, is inapplicable to the present case - There is no complaint by the Revenue that the petitioner failed to furnish the requisite returns as per the existing law for the 6-month period immediately preceding the appointed day - While rejecting the claim for transitional relief, the Revenue only admitted the availability of excess credit in favor of the petitioner and also conceded that the petitioner may either claim refund or adjust the liability against pending assessments under the VAT or CST Acts - But as no VAT or CST assessment is pending, the only way for the petitioner to use such credit is to claim refund - Thus, once it stands admitted that credit is available on date of switch over from VAT regime to GST regime & if admitted that petitioner is entitled to claim credit in other modes, the Revenue should have given a purposive interpretation to Section 140 r/w Sections 16-21 of Telangana GST Act - Matter warrants remand as such exercise was not carried out - The order in challenge is quashed: HC

- Writ petition allowed: ANDHRA PRADESH HIGH COURT

2019-TIOL-1092-HC-AHM-GST

Sanjaykumar Hargovindbhai Bhagde Vs State Of Gujarat

GST - The petitioner had applied for registration under GST but received no reply from the Revenue - Hence the present writ was filed seeking directions to the Revenue to grant final registration - The petitioner stated that such non-reply from the Revenue entailed a lot of difficulties for him.

Held - It is most unfortunate for the petitioner to have to approach this court to seek such relief - The Revenue's counsel states that the petitioner's application would be processed and then disposed off within three weeks from the date of this order - The officials concerned are directed to act accordingly: HC

- Writ petition disposed of: GUJARAT HIGH COURT

2019-TIOL-1089-HC-AHM-GST

Ghanshyamlal And Company Vs UoI

GST – The assessee submitted that a similar question of facts and law was addressed by the coordinate bench in Mohit Minerals Pvt Ltd vs UOI .

Held: Following such ruling, notice issued, returnable on June 19, 2019. Hence order dated April 27, 2019 is stayed: High Court

- Notice issued : GUJARAT HIGH COURT

2019-TIOL-1088-HC-ORISSA-GST

Safari Retreats Pvt Ltd Vs CCCGST

GST - Petitioners have challenged the action of the respondent whereby they have, without considering the provisions of s.17(5)(d) of the CGST Act have held that the provisions of the CGST Act is not applicable in the case of Construction of Immovable Property intending for letting out for rent - case of the petitioner is that they are mainly carrying on the business activity of constructing shopping malls for the purpose of letting out the same to numerous tenants and lessees; that huge quantities of materials and other inputs in the form of Cement, Sand, Steel, Aluminium, Wires, plywood, paint, lifts, escalators, Air-conditioning plant, chillers, electrical equipment, special façade, DG sets, Transformers, building automation systems and also services in the form of Consultancy, Architecture, legal and professional, engineering etc. are required for the aforesaid construction purpose - Petitioner having accumulated Input credit of GST of Rs.34,40,18,028/- and are desirous of availing and utilizing the same to discharge and pay CGST and Orissa GTA on the rentals received, approached the Revenue authorities - however, the petitioner was advised to deposit the CGST and OGST collected without taking Input credit in view of restrictions placed as per section 17(5)(d) and was warned of penal consequences if it did not do so, hence the writ.

Held: The very purpose of the Act is to make uniform provision for levy, collection of tax, intra state supply of goods and services, both Central or State and to prevent multi-taxation - Contention which has been raised by petitioners keeping in mind the provisions of section 16(1)(2) where restriction has been put forward by the legislation for claiming eligibility for input credit has been described in section 16(1) and the benefit of apportionment is subject to s.17(1) and (2) - while considering the provisions of section 17(5)(d) the narrow construction of interpretation put forward by the department is frustrating the very objective of the Act inasmuch as the petitioner in that case has to pay huge amount without any basis - further the petitioner would have paid GST if it disposed of the property after the completion certificate is granted and in case the property is sold prior to completion certificate, he would not be required to pay GST - But, here he is retaining the property on which he is covered under the GST, but still he has to pay huge amount of GST, to which he is not liable - in that view of the matter, Court is of the considered view that the provision of section 17(5)(d) is to be read down and the narrow restriction as imposed in reading of the provision by the Department is not required to be accepted, keeping in mind the language used in Eicher Motors Ltd. - 2002-TIOL-149-SC-CX-LB the very purpose of the credit is to give benefit to the assessee - in that view of the matter, if the assessee is required to pay GST on the rental income arising out of the investment on which he has paid GST, it is required to have the input credit on the GST, which is required to pay u/s 17(5)(d) of the CGST Act - Prayer (a) is granted, however, Court is not inclined to hold it to be ultra vires as prayed in prayer (b), which prayer is not accepted - Petition allowed to the aforesaid extent: High Court [para 19 to 21].

- Writ petition partly allowed: ORISSA HIGH COURT

2019-TIOL-1082-HC-RAJ-GST

Imarti Lakdi Vyapari Sansthan Jodhpur Vs State of Rajasthan

GST - Petitioner seeks a declaration to the effect that the respondent State has no power to charge tax/cess payable under the provisions of the Rajasthan Agriculture Produce Marketing Act, 1961 from its members; that the Cess on purchase and sale of timber from the members of the petitioner society is illegal as the same is not an agricultural produce; that after introduction of the Goods and Services Tax Act, 2017, the impugned cess cannot continue; that since the shops and godowns of the members are not situated in the Mandi yard and because they do not avail any of the facilities or services provided by the respondent-Agriculture Market Committee, such levy and recovery of Mandi Cess from members is arbitrary and violative of the Article 14 of the Constitution.

Held: Entire edifice of the petitioner's case is based on the assumption that the impugned levy under the Act of 1961 is a 'Cess'; such foundation is clearly contrary to the very provisions of the Statute and law on the subject; that levy u/s 17 of the Act is a ‘fee'; that it is a settled proposition of law that the State can levy market fee under the relevant provisions of a statute enacted in exercise of the powers available to it under Entry 66 of the second list of the VII th Schedule; that in view of the apex court decision in Sreenivasa General Traders AIR 1983 SC 1246 irrespective of the fact whether the dealer carries on business or trade in the market yard or not, the agriculture produce brought by such dealer in the notified area is exigible to market fee leviable under the Act; Product ‘Timber' has been specifically enumerated at Serial no. 9 of the Schedule appended to the Act and this being the fact situation, the timber of ‘Imarti Lakadi' is unquestionably an agricultural produce exigible to Mandi fee under the Act of 1961 - Even the argument that after promulgation of the CGST Act, the levy of Cess under the Act of 1961 cannot continue is also misconceived; by a combined effect of Section 174 of the CGST Act, 2017 and RGST Act, 2017 , the levy governed by only those enactments have been abolished which have been enlisted in the said sections; Market fee leviable under the Act of 1961 neither finds mention in any of the repeal and saving provisions nor can it be so done as the market fee is leviable under a separate enactment under the State's power to legislate under Entry 66 of the List-II of the VII Schedule - no substance in the petitioner's case from any angle, hence the Writ Petition is dismissed in limine: High Court [para 6 to 9, 11, 14, 15]

- Petition dismissed : RAJASTHAN HIGH COURT

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