GST CASES
SUPREME COURT CASE
2019-TIOL-221-SC-GST
Kesoram Industries Ltd Vs Assistant Commissioner CGST & CE
GST - Petition filed before the Telangana High Court against inter alia the order of attachment of bank account was held to be highly misplaced on the ground that Section 107 of the Act provided an efficacious alternative remedy to the petitioner to approach the appellate authority; that the writ jurisdiction cannot be invoked in case the efficacious alternative remedy is available; that the petitioner had approached the High Court in order to circumvent the efficacious alternative remedy; that the High Court was not inclined to invoke the writ jurisdiction and, therefore, Writ petition was dismissed - appeal to Supreme Court.
Held: Counsel for petitioner submitted that they would file an application in the High Court for review of the impugned order - Special leave petition is, therefore, dismissed as not pressed: Supreme Court
- Petition dismissed: SUPREME COURT OF INDIA
HIGH COURT CASES
2019-TIOL-1236-HC-MUM-GST
JSW Energy Ltd Vs UoI
GST - Petitioner challenges the orders of the AAR and the AAAR - the AAR had held that the proposed arrangement by the applicant with JSW Steel Limited did not qualify as 'job work' primarily because the same amounted to 'manufacture' as defined under Section 2(72) of the CGST Act and, therefore, the Advance Ruling Authority ruled that the proposed arrangement attracted GST - the AAAR disagreed with the reasoning of Advance Ruling Authority that the proposed arrangement did not amount to 'job work' because the same amounted to 'manufacture', however, the Appellate Authority, upheld the ultimate conclusion of Advance Ruling Authority relying upon two different and distinct grounds which the petitioner claims are “new grounds” and that the Appellate Authority, in any case, clearly exceeded jurisdiction in introducing or relying upon 'new grounds', which were never raised before Advance Ruling Authority by the Revenue and that such exercise of introducing or relying upon 'new grounds' was ex facie in excess of jurisdiction.
Held: Bench makes it clear that it does not propose to examine the impugned orders on their substantive merits or demerits, merely because Statutes in question have not provided for any further appeal against the decision of the Appellate Authority and that any such attempt, would virtually amount to converting these proceedings under Article 226/227 of the Constitution of India, which are essentially proceedings seeking judicial review, into appellate proceedings - the moot question which arises in this matter is whether the Appellate Authority, in relying upon the 'new grounds', has violated the principles of natural justice, by not putting the petitioner to any notice that such 'new grounds' were proposed to be considered or by not affording the petitioner opportunity to place on record the documentary evidences or clarifications in order to meet such 'new grounds' ? - in the facts and circumstances as presented from the record, Bench is satisfied that the ground of failure of natural justice and the consequent vitiation of the decision making process, has been made out - Since the Appellate Authority, in the present case, agreed with the petitioner's contention emphasized in the appeal memo that the expressions 'job work' and 'manufacture' are not mutually exclusive, the Appellate Authority, should have atleast put the petitioner to notice that 'new grounds' were proposed to be considered for nevertheless upholding the conclusion of the Advance Ruling Authority - absence of any indication by the Appellate Authority that it proposed to take into consideration the 'new grounds' or the failure on the part of the Appellate Authority to afford the petitioner an opportunity to produce documents or documentary evidences having direct bearing on the 'new grounds', in the opinion of the Bench, amounts to failure on the part of the Appellate Authority to adhere to the principles of natural justice - Such failure, vitiates the decision making process and affords a good ground for interference in the exercise of powers of judicial review - petitioner had no opportunity to seek time to produce such documents or complain about failure of natural justice because the Appellate Authority did not even put the petitioner to notice that 'new grounds' were proposed to be considered at appeal stage - Appellate Authority was required to adhere to the principles of natural justice in arriving at its decision - This requirement of adhering to the principles of natural justice is in fact required to be read into, in the absence of any specific stipulations in the Statute to the contrary - failure to do so has not only resulted in violation of principles of natural justice, but also occasioned serious prejudice to the petitioner - impugned order dated 2 July 2018 made by the Appellate Authority is set aside and the petitioner's appeal is remanded to the Appellate Authority for reconsideration on its own merits and in accordance with law - petitioner may produce such additional material or documentary evidences within a period of one month from today - Appellate Authority is requested to dispose of the petitioner's appeal as expeditiously as possible and in any case, within a period of six months: High Court [para 15, 16, 26, 27, 28, 30, 33, 36, 37, 38, 39]
- Matter remanded: BOMBAY HIGH COURT
2019-TIOL-1227-HC-AHM-GST
Swaminarayan Traders Through Savanbhai Menpara Vs State Tax Officer
GST - Issue with regard to the legality and validity of notice under Section 130 of the Act is being issued is looked into by the High Court in allied matters - Taking into consideration the fact that the goods in question i.e. groundnut is a perishable commodity, the authorities are directed to release the vehicle as well as the goods at the earliest on the writ applicant depositing an amount of Rs.1,60,000/- with the authority concerned at the earliest- To be heard with Special Civil Application No. 9897 of 2019 and allied matters: High Court
- Matter posted: GUJARAT HIGH COURT
2019-TIOL-1226-HC-AHM-GST
Jainam Cables India Pvt Ltd Vs UoI
GST - Principal issue raised is with regard to the legality and validity of the notice issued by the department under Section 130 of the Act - There are many petitions pending on this issue, more particularly, whether Section 129 would apply or Section 130 could straightway be invoked by the authorities - The principal issue will be decided by this Court along with the other petitions, which are pending - However, authorities are directed to release the conveyance as well as the goods on the petitioner depositing an amount of Rs.1,44,180/- with the department - On deposit of the said requisite amount, the conveyance as well as the goods shall immediately be released - Matter posted for hearing along with other allied petitions on 19 June 2019: High Court [para 3]
- Matter posted: GUJARAT HIGH COURT
2019-TIOL-1225-HC-AP-GST
Kesoram Industries Ltd Vs Assistant Commissioner CGST & CE
GST - Petitioner is aggrieved by two orders passed by respondent - first one, directed the petitioner to workout the interest payable on the entire amount of ITC availed and also penalty payable u/s 122(iii) of the Act and the second order directed them to pay interest failing which recovery proceedings were to be initiated - Petitioner submits that the orders have been passed without providing an opportunity of personal hearing and the bank account has ben attached.
Held: Present writ petition is highly misplaced for Section 107 of the Act clearly provides an efficacious alternative remedy to the petitioner to approach the appellate authority - It is, indeed, a settled principle of law that generally, a writ jurisdiction cannot be invoked, in case the efficacious alternative remedy is available - petitioner has approached this Court in order to circumvent the efficacious alternative remedy - Even if the petitioner is of the opinion that the principles of natural justice have been violated, he is free to raise the said plea before the appellate authority - Court is not inclined to invoke the writ jurisdiction, therefore, Writ petition is dismissed: High Court [para 5 to 8]
- Petition dismissed: TELANGANA HIGH COURT
2019-TIOL-1224-HC-AP-GST
VS Ferrous Enterprises Pvt Ltd Vs UoI
GST - The present writ petitions challenge the Constitutional validity of Sections 67(10), 69(1), 70, 132(5) and 135 of the CGST Act - The petitioners also claim that powers of arrest u/S 69(1) can be exercised only upon completion of assessment under the CGST Act - It is also claimed that such powers could be exercised only upon failure to comply with summons issued by the authorities - Such arguments had been raised by the petitioners before the writ court on earlier occasions, but the petitions had been dismissed - The petitioners then approached the Apex Court, which also dismissed the SLPs.
Held - When the arrest of the petitioners is not prohibited prior to completion of assessment, any coercive action lesser lesser than arrest also cannot be said to be prohibited - Hence interim order granted in an earlier matter stands vacated - The petitions be listed on June 03, 2019: HC
- Case deferred: HYDERABAD HIGH COURT
AAR CASES
2019-TIOL-163-AAR-GST
Western Concessions Pvt Ltd
GST - The applicant company is engaged in the re-gasification of LNG and delivering the same to its customers - The applicant is setting up an LNG re-gasification project, whose development consists of two legs, namely - i) setting up of infrastructure facility, i.e., jetty, on-shore receiving facility close to the jetty for enabling Floating Storage Re-gasification Unit to regasify the LNG; and ii) connecting the terminal with the cross-country gas pipeline to enable supply of regasified LNG to the customer - The applicant approached the AAR seeking clarification on eligibility for ITC on Tie-in pipeline used to supply LNG to the ulitmate customers.
Held - It is clear that there are some ships which happen to be categorized as factories in the commercial world - Hence it is incorrect to infer that the FRSU is not a factory - The pipeline cannot exist in a vacuum without a factory - The term pipelines outside the factory signifies that the pipeline is to transport some product from the factory to the end user - Presently, the LNG re-gasified in the ship is transported through the pipeline, which is outside the factory ship - Hence the pipeline in the present case classifies as pipeline outside the factory - Where the FRSU is found to classify as factory & that the pipeline is outside the factory & does not qualify as an equipment, apparatus or machinery for purpose of claiming ITC, the restriction on availment of ITC u/s 17(5)(c) & 17(5)(d) is applicable herein: AAR
- Application disposed of: AAR
2019-TIOL-162-AAR-GST
Multiples Alternate Asset Management Pvt Ltd
GST - The applicant is an investment advisory firm - It proposed to set up a new investment vehicle - AIF Fund wherein funds from various domestic & overseas investors will be pooled in & invested in various portfolio companies in India as per AIF Regulations - The proposed AIF Fund is a contributory trust registered with the SEBI - Before setting up the fund, the applicant undertakes fund raising activities - Later, the applicant is appointed as Investment Manager of the AIF Fund & provides several services - For the Investment Advisory & Management Services rendered, the applicant raised invoices at regular intervals & hence approached the AAR seeking to know the appropriate taxation of goods or services or both.
Held - The Advisory & Management Fees received by the applicant are for financial services rendered to the AIF - As the location of both the applicant as well as the AIF is in India, the place of supply must be determined by applying provisions of Section 12 of the IGST Act - As both parties are within taxable territory & the services rendered by the applicant to AIF are taxable, hence GST is payable u/s 12(12) of the IGST Act: AAR
Held - From the aforementioned conclusion, the applicant's contention that the transaction with foreign investors must be determined u/s 13 of the IGST Act cannot be accepted - The transaction also does not qualify as an export of service as the condition u/s 2(6)(ii) of the IGST Act that service recipient must be located outside India is not satisfied & so is not a zero-rated supply - Hence GST is payable on the Advisory & Management Fees received in foreign currency from overseas contributors located outside India for the services rendered by the applicant: AAR
- Application disposed off: AAR
AAAR CASE
2019-TIOL-46-AAAR-GST
Vedika Export Tea Pvt Ltd
GST - Appeal filed by Revenue against Advance Ruling dated 28.01.2019 wherein it was observed that Applicant's service to HUL for manufacturing tea bags is service for manufacturing a product classified under TI 0902 40 40 and where the physical inputs are owned by the recipient and, the supply is, therefore, to be classified under SAC 9988 and taxed under sl. No. 26(f) of the rate notification 11/2017-CTR; that the applicant also provides service of packaging the manufactured tea bags in cartons, wraps them and puts them in specially designed boxes and which is a composite supply to HUL where the service of manufacturing tea bags from the physical inputs owned by HUL is the principal supply; that such service is classifiable under SAC 9988 @5% under sl. No. 26(f) of notfn. 11/2017-CTR.
Held: Member Ms. Smaraki Mahapatra held that the service offered by the Respondent to M/s Hindusthan Unilever Ltd. is classifiable under Sl. No. 26 (i) (f) of the Notification No. 11/2017-CT(Rate ) dated 28.06.2017, as amended vide Notification No. 31/2017-CT (Rate) dated 13.10.2017. and taxable @5% whereas Member Mr. APS Suri concluded that service offered by the Respondent to M/s Hindusthan Unilever Ltd. is classifiable under SAC 9985 41 and taxable @18% under Sl. No. 23(iii) of the Notification No. 11/2017- CT(Rate) dated 28.06.2017 - in view of difference of opinion, it is deemed that no Advance Ruling can be issued in respect of the questions under Appeal as per provisions of section 101 sub-section (3) of the GST Act - Advance Ruling No. 36/WBAAR/2018-19 dated 28.01.2019 is, therefore, deemed to be not in operation: AAAR [para 13, 14]
- Difference of opinion: AAAR
NAA CASE
2019-TIOL-38-NAA-GST
Director General Of Anti-Profiteering Vs Sattva Developers Pvt Ltd
GST - Applicant alleges that the respondent had not passed on the benefit of Input Tax Credit by way of commensurate reduction in the price of the flat on introduction of GST w.e.f 01.07.2017 - DGAP in its report mentioned that prior to 01.07.2017 the respondent was eligible to avail CENVAT credit of service tax paid on Input services and deduction of the payment made to the registered contractors and sub-contractors on which VAT @4% was being levied and he was not eligible for the benefit of CENVAT credit on Central Excise duty paid on inputs; that during the post GST period the respondent was eligible to avail ITC benefit of GST paid on all the inputs and input services including the GST levied on the sub-contractors and accordingly, the ITC ratio to the turnover during the pre-GST period was 5.13% as compared to 7.79% during the post GST period (GST 18% - effective rate 12% in view of 1/3 rd abatement on land value); that taking into consideration the ITC benefit available to the respondent, the DGAP arrived at the profiteered amount of Rs.99,20,246/-; that total profiteered amount of Rs.80,55,955/- includes GST @12% on the base profiteered amount of Rs.71,92,817/- and includes the amount of Rs.18,563/- being the profiteered amount in respect of the applicant; that based on the joint developer's turnover as given in the GST returns the profiteered amount is arrived at Rs.18,64,290/- which includes GST @18% on the base profiteered amount of Rs.15,79,907/- and, therefore, the total profiteered amount in the present case has been arrived at Rs.99,20,246/- which includes GST @12% or 18% on the base profiteered amount of Rs.87,72,724/- - Respondent inter alia submitted that since the projects in construction business were spread over a period of time there could not be any co-relation between the inward supplies and the input taxes; that after obtaining the occupancy certificate any flat sold will not be liable to GST and hence he would be required to reverse ITC availed against such unsold flats; that the methodology adopted in the case of Pyramid Infratech P Ltd. or in his case was incorrect and should not be adopted; that based on his own calculation he has arrived at the benefit of ITC derived by him and accordingly has passed on the same to the customers with whom agreements were entered into on or before 30.06.2007; that based on this methodology Rs.9/- per sq. ft. has been passed on to his customers and details were submitted.
Held: Submissions of the respondent are totally baseless and devoid of any merit - DGAP has correctly analyzed the ITC ratio as 2.66% [7.79% minus 5.13%] and applying this ratio to the payments made on after 01.07.2017 the profiteered amount is determined as Rs.99,20,246/-; the said amount includes the profiteered amount of Rs.18,563/- to be paid to the applicant and Rs.80,37,392/- to all the other 231 buyers; that the respondent has also to pass on the benefit of profiteered amount of Rs.18,64,290/- to the land owner who will in turn pass on the benefit to his buyers along with interest @18% to all the 232 flat buyers from the dates from which the amount was collected from all buyers till the date the payment is made - since the respondent has denied the benefit of ITC to the buyers of the flats being constructed in his project “Laurel Heights” in contravention of the provisions of s.171(1) of the CGST Act and has thus 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, they have committed an offence u/s 122(1)(i) of the Act and are, therefore, liable for imposition of penalty, SCN to be issued accordingly - compliance report to be submitted to the Authority by the Commissioners CGST/SGST Karnataka within a period of four months: NAA
- Application allowed: NAA
