2019-TIOL-GST-288 Dated: Wednesday, June 26, 2019

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GST CASES

NAA CASES

2019-TIOL-41-NAA-GST

Director General Of Anti-Profiteering Vs Bhutani International Medicos

GST - Applicant alleging profiteering in respect of supply of ‘sanitary napkins' - DGAP submitted in its report that the respondent had not passed on the benefit of rate reduction to the recipients - respondent claimed that this act of negligence/mistake was not committed intentionally but was due to lack of knowledge; that the 12% GST which was wrongly collected was deposited with the Government along with interest; that to avoid litigation they have paid an amount of Rs.5,283/- by demand draft in favour of PAQ (HQ) CBEC; that penalty proceedings be dropped since the error was due to inadvertence.

Held: Rate of tax was reduced from 12% to NIL w.e.f 27.07.2018 - respondent has neither disputed the quantity nor the profiteered amount as arrived at by DGAP - profiteered amount of Rs.5283/- paid by respondent along with interest of Rs.900/- is taken on record; nonetheless, respondent is required to be issued with a SCN since they are liable for imposition of penalty u/s 122 r/w rule 133 of the Rules: NAA

- Application allowed: NAA

2019-TIOL-40-NAA-GST

Director General Of Anti-Profiteering Vs Pinky Sales

GST - Applicant alleges that he had purchased footwear at a price of Rs.699/- but the respondent had not passed on the benefit of GST rate reduction from 18% to 5% by commensurate reduction in price and thus profiteered.

Held: It is evident from the DGAP report that the respondent has increased the base price of the product from Rs.592.37 to Rs.665.71 when the rate of tax was reduced from 18% to 5% w.e.f 27.07.2018 - By increasing the base price of the product, the benefit of reduction in tax rate was not passed on to the recipients - hence respondent has contravened the provisions of s.171 of the Act - 1451 products were impacted by the rate reduction - out of these 1451 products, 620 were not sold prior to 27.07.2018 hence question of profiteering on these products does not arise - 439 products were sold prior to 27.07.2018 and 392 later - DGAP has correctly arrived at the profiteered amount of Rs.6,55,307/- for these 831 products which includes the profiteered amount of Rs.77/- in respect of the applicant and applicant has agreed to deposit the same - respondent is directed to deposit the remaining amount of Rs.6,55,230/- along with interest @18% in the Consumer Welfare Fund of the Central and the State Government concerned in the ratio of 50:50 within 3 months period; SCN to be issued for imposition of penalty for contravention of s.122 of the Act r/w rule 133 of the Rules: NAA

- Application allowed: NAA

AAR CASES

2019-TIOL-184-AAR-GST

Leprosy Mission Trust Of India

GST - Applicant seeks a ruling as to whether the services provided under vocational training courses recognized by National Council for Vocational Training (NCVT) or Jan Shikshan Sansthan (JSS) is exempt under Entry no. 64 of 12/2017-CTR or as an Educational Institution under sr. no. 66 of 12/2017-CTR.

Held: Applicant have been granted affiliation by the NCVT in respect of vocational skills and these courses viz. diesel mechanic, computer operator and programming assistance, welder and motor mechanic have been approved by NCVT - such services attract Nil rate of tax as per Sr. no. 66(a) - insofar as vocational training for 2/3 wheeler mechanic allegedly recognized by JSS, the applicant has not produced any evidence to support their submissions, therefore, benefit of exemption not available to such courses: AAR

- Application disposed of: AAR

2019-TIOL-183-AAR-GST

Cliantha Research Ltd

GST -Applicant provides services of clinical research and analysis to entities located within and outside India - they seek a ruling as to whether ‘Clinical Research' services provided by them to entities located outside India are liable to treated as export of service u/s 2(6) of the IGST Act.

Held: Supply of services is a Pilot study/research to test the efficacy of the subject product in healthy adult male subjects under fed conditions - prime importance is the product itself which is supplied to them in India by their sponsors - Authority does not agree with the applicant's contention that section 13(3)(a) of the IGST Act will be applicable only in those cases where a service in the nature of repair, testing etc. is performed on the goods sent by the recipient to the supplier of services - section does not give any exemption to goods that are consumed in the process of research - submission of applicant that they have been engaged by the sponsors only for the report and not for merely administering the drug and recording the results alone is a flawed one inasmuch as it is natural that in such cases the sponsors would like to know the efficacy of their drugs on subjects and for which the testing of the drugs themselves is important - since the goods are physically made available to the applicant by their sponsors, therefore, the place of supply of services is in India as per section 13(3)(a) of the IGST Act and since the place of supply is in a taxable territory it is clear that the provisions of s.2(6) of the IGST Act are fulfilled and hence the supply cannot be considered as Export of Services under the GST law - services are, therefore, liable to CGST and SGST as the location of ‘supplier of service' and the ‘place of supply' is in the same State: AAR

- Application disposed of: AAR

2019-TIOL-182-AAR-GST

Sanofi India Ltd

GST - Applicant seeks a ruling as to whether ITC is available on expenses incurred towards promotional schemes of Shubh Labh Loyalty program; whether ITC is available on expenses incurred towards promotional schemes goods given as brand reminders.

Held: Applicant is making contradictory submissions - if the Authority accepts the contention that the promotional items are supplied as a contractual obligation with an intention to increase the sale of the company; to serve as an advertisement tool and brand reminder to promote sale, then in view of s.7 of the CGST Act, it is a supply in the nature of barter - on the contrary the applicant has accepted that the impugned supply is without consideration, therefore, the transaction is nothing but a gift - in taxation it is not open to a person to take simultaneously different stands - Authority concludes that the applicants are not entitled to ITC of GST paid on expenses incurred towards promotional schemes of Shubh Labh Loyalty programme and goods given as brand reminders - s.17(5) of the Act blocks such credits: AAR

- Application disposed of: AAR

2019-TIOL-181-AAR-GST

Ashis Ghosh

GST - Applicant has procured contracts from M/s MBL for filling in the compound, tank, low land etc. with silver sand and earthwork in layers including spreading and compacting the same at the District Correction Home - applicant seeks a ruling on whether such supply is classifiable as ‘supply of sand' HSN 2505.

Held: Contract is not for the supply of goods but the transfer of property in such goods in the course of preparing the site for construction of the New Central Correctional Home - Earthwork constitutes less than 25% of the value of the applicant's contract with M/s MBL - M/s MBL is not a government authority or a government entity as defined in Explanation 4(ix) and 4(x) - Applicant's service is a Works Contract Service classifiable as site preparation service (SAC 99543) and taxable @18% under Sl. No. 3(xii) of 11/2017-CTR: AAR

- Application disposed of: AAR

2019-TIOL-180-AAR-GST

Industrial Handling

GST - Applicant leasing out cranes and equipment and locomotives etc. to several companies viz. Damodar Valley Corporation for placement/shunting of rakes/wagons/oil tankers from the siding or termination of Indian Railways to the factory premises of the company and vice versa - applicant seeks ruling on the classification of the said services and the applicable rate of tax.

Held: Applicant's service to DVC is classifiable as ‘railway pushing and towing service' (SAC 996731) and taxable @18% under Sr. no. 11(ii) of Notfn. 11/2017-CTR - not under SAC 997311 which covers ‘leasing or rental services concerning transport equipment, including containers with or without operator' - communication from East Central Railway which deals with GST applicable to different services that the Railways offer to customer is not relevant in the present context - Public carriage cannot be given any meaning that may add more exclusion than specifically provided u/s 2(31)(ii) of the Railways Act - purpose of carriage of goods is not recreation but producing public goods like electricity hence not excluded under s.2(31)(ii) of the Railways Act: AAR

- Application disposed of: AAR

2019-TIOL-179-AAR-GST

Mohana Ghosh

GST - Ruling was pronounced on 10.06.2019 but apparently suffers from legal errors that are apparent on the face of record, hence they need to be rectified - Authority amends order on its own accord u/s 102 of the Act as the rectification is not going to enhance the tax liability or reduce the amount of admissible Input Tax Credit from the original order - amended order issued, portion amended is indicated in brackets - It was held in that order dated 10.06.2019 that the Nature of applicant's service is derived from what is stated in the application and as can be ascertained from the invoices, applicant is providing cab rental services to institutions like West Bengal Postal Service - nature of service provided by applicant is classifiable under SAC 9966 as renting of a motor vehicle - Therefore, GST paid on Inward supply of motor vehicles for supplying rent-a-cab service is not admissible for credit in terms of s.17(5)(a) of the Act: AAR

- Order re-issued after rectification: AAR

HIGH COURT CASES

2019-TIOL-1326-HC-AHM-GST

Indusind Media Communications Ltd Vs UoI

CGST - Petitioner praying for a direction in the nature of mandamus directing the respondents to grant the benefit of Rs.5.21 crores to the petitioner which is not reflected in the electronic credit ledger; to extend the time for filing GSTR-3B after the benefit is granted; directing the respondents to refrain from demanding payment of taxes under the Act till resolution of the issues raised; to direct the respondents to not impose/waive any late fee, interest and penalty for the delayed filing of GSTR-3B and GSTR-1 for the period commencing January 2018 till the transition credit is made available; direct the respondents to allow the petitioners to avail ITC in respect of any invoice or debit note relating to the FY 2017-18 for the supply of goods or services or both by extending the due date of filing the return u/s 39 till such time the issues faced by petitioners are resolved.

Held: Identical petitions have been preferred in the High Court of Bombay and Delhi - In tune with the aforesaid order passed by the High Court of Delhi, Order dated 23rd January 2019 in the Writ Petition (C) No.8691 of 2018, Bench directs the Gujarat Commissionerate to verify the credit availed by the petitioner and issue a certificate in this regard; this exercise is to be undertaken and completed within four weeks of the receipt of this order - Matter posted on 24 th July 2019: High Court [para 3 to 5]

- Matter posted: GUJARAT HIGH COURT

2019-TIOL-1325-HC-AHM-GST

Cengres Tiles Ltd Vs State Of Gujarat

GST - Petitioner seeks to challenge the provisional attachment orders dated 26/11/2018 directing the attachment of the Bank Account No.30336873890 held by the writ applicant with the State Bank of India, Commercial Branch, Ahmedabad and also the Account No.910020038421143 held by the writ applicant with the Axis Bank, Sarkhej Gandhinagar Highway Branch, Ahmedabad, passed by the Assistant Commissioner of State Tax (Unit-33), Kadi, District Mehsana - Writ applicant also seeks to challenge the provisional attachment orders dated 30/10/2018 and 27/11/2018, respectively, directing attachment of the stock worth Rs.12,00,00,000/- and Rs.19,17,81,818/- respectively, held by the writ applicant in its factory premises on the respective dates.

Held: According to the scheme of the Act, section 83 would come into play only after the necessary action is taken under section 62 of the Act - It appears that much before the notice under section 46 came to be issued or rather, much before the assessment could be undertaken under section 62 of the Act, the authority straightway proceeded to pass orders of provisional attachment of the goods as well as two Bank Accounts, referred to above - Such action, in the opinion of the Bench, cannot be said to be in accordance with law - impugned orders of provisional attachment of the goods as well as the two Bank Accounts deserve to be quashed and the same are hereby quashed and set aside - Counsel for the respondents clarifies that the proceedings under section 62 have already been initiated in accordance with law and they are in progress and the liability of the writ applicant shall be assessed in such proceedings in accordance with law - counsel for the writ applicant also submits that in view of the undertaking filed, the petitioner will continue to deposit Rs.1.50 Crore every month, out of which Rs.1 Crore would be for the current running month's tax liability towards GST and Rs.50 Lac would be towards the outstanding dues of the GST of the writ applicant - Bench requests the authority concerned to expeditiously finalize the proceedings in accordance with law: High Court [para 11.03 to 11.05]

- Petition disposed of: GUJARAT HIGH COURT

ARTICLES

GST 2 - As I See It - Issues in GST - Points for consideration

All Well With GST

JEST GST by Vijay Kumar

All Well With GST