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GST CASES

NAA CASES

2019-TIOL-35-NAA-GST

Director General Anti-Profiteering Vs Salarpuria Real Estate Pvt Ltd

GST - Anti-Profiteering - Applicant alleges profiteering by the Respondent in respect of purchase of flat in the project �East Crest' - applicant alleges that the respondent had charged 12% GST on 2/3 rd agreement value and 12% GST on additional charges on which there was no service tax prior to GST and the benefit of ITC had not been passed on to him by way of commensurate reduction in the price of the flat after GST implementation w.e.f 01.07.2017.

Held: DGAP has stated that the project did not fall under the Affordable Housing Scheme but was a residential project attracting GST @12%; that the project was 55% complete before 01.07.2017; 79% complete as on 30.06.2018 and estimated time of completion of the entire project was March 2019; that the respondent had accepted that there had been profiteering post GST and he was committed to determine the accurate quantum of ITC and pass on the benefit to the recipients at the time of giving possession; that ITC pertaining to the unsold units was outside the purview of investigation; that the profiteering has to be established at a given point of time in terms of rule 129(6) of the CGST Rules, 2017; that the ITC as a percentage of the total turnover (as computed by the DGAP) that was available to the respondent stood at 3.06% during the pre-GST period and during the post GST period it was 4.51% which confirmed that post-GST the respondent had benefited from additional ITC to the tune of 1.45% of the taxable turnover; that the profiteered amount has been computed by comparing the applicable tax rate and the ITC available for the pre-GST period when service tax @6% and VAT @4% was payable whereas during the post-GST period the effective GST rate was 12%; that the additional ITC should have resulted in commensurate reduction in the base price and, therefore, in terms of s.171 of the Act, the benefit of additional ITC had accrued to the respondents and which was required to be passed on to the recipients; computation arrived at by DGAP indicates that during the period 01.07.2017 to 30.06.2018, an amount of Rs.19,69,991/- has not been passed on to the recipients and which included 12% GST on the base profiteered amount of Rs.17,58,921/- which pertained to only 51 home buyers; and insofar as the applicant is concerned, the profiteered amount is Rs.67,816/- (which includes 12% GST on the base amount of Rs.60,550/-); that the other buyers being identifiable, the profiteered amount of Rs.19,02,175/- needs to be refunded to them; respondent has produced credit notes issued to all customers for a total amount of Rs.19,69,991/-; since the respondent though aware of the fact that the net benefit of ITC had to be passed on to his buyers had not passed on the entire benefit till the completion of investigation by DGAP, the same appears to be a deliberate and conscious violation of the provisions of the CGST Act, 2017 and they are liable for imposition of penalty; fresh notice to be issued to the respondent as to why penalty prescribed u/s 122(1) of the Act read with rule 133(3)(d) of the Rules should not be imposed as he had issued incorrect invoices - authority also directs the respondent to pay interest @18% to all those 51 buyers to whom the benefit of net ITC has already been paid - authority also directs the DGAP to investigate the benefit of ITC to the passed on for the balance flats sold by respondent and the 42 flats sold by land owner and submit a report within 3 months- as the Delhi High Court in the case of Pyramid Infratech P Ltd. has directed the petitioner to deposit Rs.5,11,60,450-/- without giving any findings on merits, the question of keeping the present case pending does not arise - moreover, admittedly the net benefit of ITC had accrued and partial amount has already been passed on to the home buyers - Authority directs the Commissioners of CGST/SGST of Karnataka State to monitor this order under supervision of DGAP by ensuring that the profiteered amount as ordered is passed on to all the home buyers by the respondent: NAA

- Application allowed : NAA

2019-TIOL-34-NAA-GST

Director General Of Anti-Profiteerin Vs Eldeco Infrastructure And Properties Ltd

GST - Anti-Profiteering - Applicant has alleged that the respondent has illegally charged Rs.10,61,460/- as GST on 90% of the basic sale price and Rs.44,227/- as Service Tax on 10% of the basic sale price on the sale of a built up house located in �Eldeco Country' project launched by the respondent - it is also alleged that the said ready-to-move-in villa was sold at a base price of Rs.98,28,312/- at the time of execution of agreement on 15.07.2017 but the respondent had charged GST on the base price of Rs.98,28,312/- and the benefit of Input Tax Credit was not passed on to the applicant by way of commensurate reduction in price after implementation of GST.

Held: DGAP in its report has stated that the respondent had suo motu computed the benefit of ITC to be passed on @2% of the amount paid by the applicant and other home buyers during the period from 01.07.2017 to 31.08.2018; that the ITC pertaining to the units which were under construction but not sold was provisional ITC which needed to be reversed by the respondent in terms of s.17 of the Act; that prior to 01.07.2017 the respondent was eligible to avail CENVAT credit of Service Tax paid on Input Services but the CENVAT credit on CEX paid on inputs and VAT paid on inputs was not available; that post GST, the respondent was eligible to avail ITC of GST paid on inputs and input services including on the sub-contracts; that the ITC as a percentage of the total turnover that was available to the respondent during the pre-GST period was 0.61% and during the post GST period it was 3.45% and thus the respondent had benefited from an additional ITC to the tune of 2.84% of the taxable turnover; that the profiteered amount had been arrived at by comparing the applicable tax rate and the ITC for the pre-GST period when Service Tax @4.5% and VAT @1% were payable (total 5.5%) with the post-GST period when the effective GST rate was 12% (GST @18% along with 1/3 rd abatement on value) on construction service; that the benefit of additional ITC of 2.84% of the taxable turnover which had accrued to the respondent was required to be passed on to the applicant and other recipients and hence the provisions of s.171 of the Act had been contravened by the respondent; that the respondent had realized an additional amount to the tune of Rs.2,83,026/- from the applicant which included the profiteered amount @2.84% of the taxable amount and GST on the said profiteered amount @12% or 18% and the respondent has also realized an additional amount of Rs.38,99,172/- which included both the profiteered amount @2.84% of taxable amount and GST on the said profiteered amount from the 124 other recipients (90 home buyers and 34 plot owners) who were not applicants in the present proceedings and were identifiable as per the documents; respondent has submitted list of 152 home buyers along with copies of cheques to whom the profiteered amount of Rs.41,82,198/- has been passed along with interest of Rs.6,30,818/-; details of payment made to the applicant viz. profiteered amount of Rs.2,83,154/- along with interest of Rs.61,301/- - Authority notes that the respondent has raised no objection against the computation of the profiteered amount by the DGAP -since the respondent has not only collected extra amount from the buyers but also compelled them to pay more GST on the additional amount realised, it appears to be a deliberate and conscious violation of the provisions of s.171 of the Act and, therefore, offence is punishable u/s 122 of the Act and liable for imposition of penalty - notice to be issued accordingly: NAA

- Application allowed : NAA

SUPREME COURT CASES

2019-TIOL-217-SC-GST

UoI Vs Sapna Jain

GST - The present petitions contest the power of the Revenue to make arrests for contravention of the provisions of the GST Act.

Held - As the different High Courts took divergent views in this regard, the position of law must be clarified - Hence notices be issued to the parties, returnable within 4 weeks - Moreover, as the respondent-assessees were allowed anticipatory bail in the orders being challenged, such orders do not warrant interference - Nonetheless, while entertaining any such requests in future, the order of the Telangana High Court be kept in mind, wherein the court had taken a view contrary to that of the other High Courts - The present matters as well as connected matters be listed before a Larger Bench: SC

- Case deferred : SUPREME COURT OF INDIA

2019-TIOL-216-SC-GST

PV Ramana Reddy Vs UoI

GST - The petitioner had approached the High Court, challenging summons issued by the Superintendent (Anti Evasion) u/s 70 of the CGST Act as well as invokation of penal provisions u/s 69 of the Act - In a plea akin to one seeking anticipatory bail, the petitioner and others sought that directions be issued to the Revenue to not arrest them through exercise of powers u/s 69(1) of the Act - The main allegation of the Revenue was that the petitioners were guilty of circular trading by claiming ITC on materials never purchased & that the petitioners passed on such ITC to companies to whom the goods were never sold - The High Court observed that to say that prosecution could be launched only after completing assessment would run contrary to provisions of Section 132 - The list of offences u/s 132 are not co-related to assessment - It was also noted that issuing invoices or bills without supplying goods & availing ITC by using such invoices were made offences u/s 132(1)(b) & (c) & that the prosecution for these offences was not dependent upon completion of assessment - The High Court also rejected the petitioner's contention of there being no necessity to arrest a person for an alleged offence which is compoundable - All technical objections raised by the petitioners were rejected - The High Court then observed that despite the petitions being maintainable & that protection u/s 41 & 41A of CrPC being available to the persons who are said to have committed cognizable & non-bailable offences & despite the findings of incongruities within Section 69 & 132 of the Act, it was not inclined to grant relief to the petitioners.

Held - No intervention is warranted in this case - The SLP and pending interlocutory applications stand dismissed - In respect of Diary No. 15477/2019, SLP(Crl.) Nos. 4322- 4324/2019, SLP(Crl.) No. 4571/2019 and SLP(Crl.) No. 4546/2019, the matter be listed on May 29, 2019: SC

- Special Leave to Petition dismissed : SUPREME COURT OF INDIA

 

HIGH COURT CASES

2019-TIOL-1146-HC-MUM-GST

Sapna Jain Vs UoI

GST - The counsel for the assessees sought that directions be issued to the Revenue to not take coercive steps against them.

Held - The issue raised in this petition was also raised in several other petitions pending before this court - These matters are listed for hearing on April 18, 2019 - Hence the Revenue is directed to take no coercive steps against the assessee till next date of hearing: HC

- Writ petition disposed of : BOMBAY HIGH COURT

2019-TIOL-1140-HC-DEL-GST

Landmark Lifestyle Vs UoI

GST - Petitioner points out that the calculation of the interest payable for the delayed payment of GST as determined by Respondent Revenue is erroneous inasmuch as the interest has been calculated even on the amount constituting the Input Tax credit (ITC) which is, in fact, to be adjusted against the tax liability; that on the actual tax liability, interest has been paid by the petitioner; that against the total tax liability of Rs.3.31 crores, the interest liability works out to Rs.8.19 crores which makes it unreasonable and erroneous.

Held: Till the next date of hearing, no coercive action to be taken against the petitioner for non-payment of the interest amount - Matter to be listed before the Court on 30th September 2019: High Court [para 4, 6]

- Matter listed : DELHI HIGH COURT

2019-TIOL-1139-HC-DEL-GST

Gsi Products Vs UoI

GST - The present petitions were filed on account of the Revenue's failure to grant refund - On an earlier occasion, the court was informed that the refund had been sanctioned but other issues such as interest were yet to be considered - The Court had been informed that a Refund Approval Committee was set up and that the refund would be processed in the following days - The matter was adjourned, with directions to the effect that if there was no definite decision taken in respect of refund application, then provisional refund u/r 91 of CGST Rules & Delhi GST Rules be sanctioned - In the present proceedings, it was seen that the RAC did not take a call in respect of the refund application or even grant provisional refund.

Held - While the Revenue's counsel claimed that the officer concerned who was responsible for passing the refund order, was away on election duty, on account of which the RAC had directed that the matter be put up for disposal after the elections - No refund order was passed or provisional refund sanctioned - The same is clearly disobedience of the High Court's order passed earlier - If the officer concerned had to go on election duty, another officer could have been deputed to appear before the RAC - On its part, the RAC ought to have scrupulously complied with the court's order - Hence notices are issued to certain members of the RAC who had appeared before the Court on the earlier date of hearing, to show cause why proceedings should not be commenced against them for wilful disobedience of the court's orders - Besides, it is seen that though the RAC had been re-constituted, the new team also included 2 officers who were on leave or on election duty at that time - Hence the new RAC was unable to function despite being re-constituted - Hence notice be issued to the VAT Commissioner concerned who re-constituted the RAC, for disobedience with this court's orders - Such breach of statutory provisions has been observed in many cases - Apparently, the constitution of RAC worsened matters instead of improving compliance - Matter be listed on May 29, 2019: HC

- Case deferred : DELHI HIGH COURT

2019-TIOL-1136-HC-ALL-GST

Atin Krishna Vs UoI

GST - The present public interest litigation was filed seeking proper implementation of the provisions of the CGST, SGST & IGST Act in respect of Duty Free Shops at the Lucknow Airport - It is alleged that the mis-interpretation of the provisions of these Acts results in huge financial loss to the State Exchequer, on account of various exemptions being enjoyed by such shops - The petitioner claimed that the operator of the Duty Free Shops is liable to pay IGST on the goods imported into India, but the same was not paid - It is also claimed that goods were sold to international passengers without charging the applicable CGST & SGST on sale of goods - Lastly, it was alleged that the authority overseeing the functioning of the shops incorrectly claimed refund of accumulated ITC of GST paid on service of renting of immovable property by AAI & on procurement of domestic goods & services - It was also stated that sale invoice issued to international passengers was incorrectly passed off as proof of export of goods.

Held - The Duty Free Shops are located in the Custom area as per Section 2(11) of the Customs Act 1962 - Supply of imported goods to & from the duty free shops do not cross the Customs frontier & hence such supplies classify as inter-State supply u/s 7(2) of the IGST Act - Hence the same cannot attract CGST and SGST u/s 9 of either Act: HC

Held - Point of time - It is one essential ingredient for levying IGST on supply of goods imported into India & governed by proviso to Section 5(1) of the IGST Act r/w provisions of the Customs Act 1962 - From the Apex Court's judgment in Garden Silk Mills Ltd. Vs. Union of India it is clear that the effective taxable event for levying Customs duty is the time only when the goods cross the Customs frontier & bill of entry for home consumption is filed - Hence when imported goods are kept in Customs warehouse & then exported therefrom, the stage for payment of Customs duty does not arise - Thus neither Customs nor IGST is payable: HC

Held - The supply of warehoused goods by the duty free shops at the departure terminal is made to departing international passengers who are destined for some foreign location - Hence the goods supplied are never cleared for home consumption & the warehoused goods are exported - Hence no Customs or IGST duty is leviable - IGST is not payable on the supply either to or from the DFS located at the arrival or at departure terminal: HC

Held - Export of goods - Clearly, the goods sold to passengers at the international departure terminal duty free shops are not cleared for home consumption or for removal to another warehouse or otherwise provided in the Customs Act - Hence they are cleared without payment of duty only for export u/s 69 of the Customs Act under an invoice which is deemed to be a shipping bill - Thus the sale at such shops would be export of goods under Customs - Ergo, the same classifies as export of goods under the GST Act, since both legislations habe the same definition for export and export of goods - Hence the exemptions have rightly been allowed: HC

- Writ petition dismissed : ALLAHABAD HIGH COURT

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