TOP NEWS

GST Collections continue to be on slide; logs only about Rs 92000 Cr in Sept

CGST CIRUCLARS

112/2019

Seeks to withdraw Circular No. 105/24/2019-GST dated 28.06.2019.

111/2019

Seeks to clarify procedure to claim refund in FORM GST RFD-01 subsequent to favourable order in appeal or any other forum.

110/2019

Seeks to clarify the eligibility to file a refund application in FORM GST RFD-01 for a period and category.

 

HIGH COURT CASES

2019-TIOL-2320-HC-AHM-GST

Montage Enterprises Pvt Ltd Vs State Of Gujarat

GST - Petitioner seeks release of goods being in the nature of packing materials / aluminum foil, which has been seized under the detention order dated 06.08.2019 issued under section 129(1) of the Act - Petitioner submits that they did not receive any notice for payment of tax and penalty, as envisaged under section 129 of the CGST Act - However, the petitioner received a notice dated 12.09.2019 issued under section 130 of the CGST Act for confiscation of the goods, wherein it was mentioned that the place of recipient did not exist, therefore, the present petition.

Held: Authorities do not dispute the fact that qua the aluminum foils, the conveyance possessed the mandatory documents - Since the present petition is filed only to release the goods being packing materials/aluminum foils, in the light of the averments made in the affidavit-in-reply filed on behalf of the respondents, wherein they do not object to the release of the goods in question, the petition deserves to be allowed: High Court [para 10, 11, 12]

- Petition allowed: GUJARAT HIGH COURT

2019-TIOL-2319-HC-AHM-GST

Noble Trading Company Vs State Of Gujarat

GST - Attachment of bank account of petitioner u/s 83 of the Act - Issue Notice returnable on 1st October, 2019: High Court

- Notice issued: GUJARAT HIGH COURT

2019-TIOL-2318-HC-AHM-GST

National Enterprise Vs State Of Gujarat

GST - Respondents are directed to release the Truck along with the goods, upon the petitioner depositing a sum of Rs.1,50,000/- with the authority concerned subject to the ultimate outcome of the petition - Petitioner shall also file an undertaking before the court on or before 10.10.2019 to the effect that in case the petitioner fails in the proceedings under section 130 of the CGST Act, he will pay the differential amount in accordance with law - petitioner directed to cooperate in the proceedings under section 130 of the CGST Act: High Court [para 2]

- Interim relief granted: GUJARAT HIGH COURT

2019-TIOL-2317-HC-AHM-GST

Prakashsinh Hathisinh Udavat Vs State Of Gujarat

GST - Petitioner challenges the order of seizure dated 25.10.2018 of his vehicle and two phones passed by the Assistant Commissioner of State Tax (1) (Enforcement), Division-1, Ahmedabad - Provisions of sub-section (2) of section 67 of the Act reveals that the same envisages authorisation by an officer not below the rank of Joint Commissioner where he forms an opinion that the goods liable to confiscation or any documents or books or things, which in his opinion shall be useful for or relevant to any proceedings under the Act, are secreted in any place - Assistant Government Pleader upon a perusal of the record of the case is not in a position to point out any authorisation having been issued by a person not below the rank of Joint Commissioner for carrying out search in accordance with the provisions of sub-section (2) of section 67 of the CGST/ GGST Act, 2017.

Held: Impugned action of the said Officer appears to be totally without any authority of law - Moreover, since the details of the premises as stated in the impugned order is Rajya Kar Bhavan, Ahmedabad, it is manifest that no officer would permit search on such premises in accordance with the powers under sub-section (2) of section 67 of the CGST/ GGST Act, 2017 - It is directed that Assistant Commissioner of State Tax (1) (Enforcement), Division-1, Ahmedabad shall be joined as respondent No.4 in these proceedings - Notice to be issued to the newly joined respondent to explain as to under what circumstances and in exercise of which powers he has issued the impugned order dated 25.10.2018, returnable on 10th October, 2019: High Court [para 5 to 7]

- Matter posted: GUJARAT HIGH COURT

2019-TIOL-2316-HC-AHM-GST

Suleman Valji Dayma Vs State Of Gujarat

GST - Petitioner submits that he is ready and willing to deposit a sum of Rs.3,00,000/- under protest for the release of the vehicle in question, namely the Truck and to file an undertaking that in case the petitioner fails in the proceedings initiated under section 130 of the Central Goods and Services Tax Act, 2017 read with other relevant statutes, he shall pay the differential amount.

Held: By way of interim relief, respondents to forthwith release the Truck upon the petitioner depositing the sum of Rs.3 lakhs with the authority concerned, which shall be under protest - they will also file an undertaking on or before 10.10.2019 as mentioned - petitioner to cooperate in the proceedings and also furnish details of place from where goods were loaded, about agent through whom he had booked the Truck and other details as may be sought by the authority - Issue rule, returnable on 17.10.2019: High Court [para 3]

- Interim relief granted: GUJARAT HIGH COURT

2019-TIOL-2315-HC-AHM-GST

Valimohammed Jusab And Company Vs State Of Gujarat

GST - Vehicle seized u/s 130 of the Gujarat GST Act, 2017 - Petitioner submits that they had a work order in respect of some job-work for which a Winch Machine was transported to Nirma Ltd., Kala Talav - However, on account of some defect in the machinery, the same was taken directly to Yadav Trading Co., namely, the dealer from whom the machinery had been purchased, for the purpose of repairs on 20.8.2019 - when the machine in question was being transported back to the premises of Nirma Ltd., the vehicle in question was intercepted and the same has been seized - Petitioner submits that vehicle came to be intercepted at 18:15 hours on 20.8.2019 and immediately thereafter, at 7.49 p.m., the e-way bill came to be generated; that since in the present case, the goods were merely being transported back to the premises of Nirma Ltd. for job-work and that no goods or services were leviable to tax in respect thereof in view of s.122 of the Act, more particularly, clause (xiv), where a taxable person transports any taxable goods without the cover of documents as may be specified, he shall be liable to pay a penalty of Rs.10,000/- or an amount equivalent to the tax evaded etc.; that since in the present case the petitioner is not liable to pay any tax, they would be liable to pay a fine of Rs.10,000/-.

Held: Based on the submissions made and the documents produced, it prima facie indicates that the old and used Winch machine was being transported from the premises of Yadav Trading Co. where it had been sent for repairs and was being transported back to Nirma Ltd. - there is substance in the submission made that, at best, the petitioner would be liable to pay fine of Rs.10,000/- as contemplated under clause (xiv) of section 122 of the GGST Act, 2017 - By way ad-interim relief, the respondents are directed to forthwith release Truck along with the goods contained therein subject to the petitioner depositing a sum of Rs.10,000/- with the respondent authorities - to issue notice, returnable on 17.10.2019: High Court [para 5, 6]

- Ad interim relief granted: GUJARAT HIGH COURT

2019-TIOL-2311-HC-MUM-GST

GST - The Petitioner sought a writ of mandamus directing the Respondent Nos.1 and 2 to allow their ISD unit to take credit of GST paid on reverse charge and distribute it to other units - This on the basis that its right to take GST credit and to distribute amongst its manufacturing units is not hit for period 1 July 2017 to 22 January 2018 by Rule 54(1) of CGST Rules, 2017 which was only introduced w.e.f. 23 January 2018 - Before this writ could be issued it would be necessary for petitioner to file a representation and demand justice from the appropriate authorities under the CGST Act, 2017 - The petitioner will file a representation within two weeks to the Nodal Officer Commissioner of Central Tax and Central Excise - This representation would be decided by the Nodal Officer as expeditiously as possible and preferably within period of 4 weeks from the date the application is made: HC

- Writ petition disposed of : BOMBAY HIGH COURT

2019-TIOL-2310-HC-KOL-GST

Lexus Motors Ltd Vs Joint Commissioner Of State Tax

GST - The present writ was filed seeking a declaration that the petitioner-company is entitled to avail ITC under GST before due date of monthly return and is not required to pay any interest u/s 50 w.r.t. such ITC, for any delay in filing monthly return - During the relevant period, demand for interest was also levied against the petitioner - The petition also assails such order.

Held - The hearing is interrupted since the computation sheet of interest issued to the petitioner has not been disclosed - The petitioner is granted leave to file supplementary affidavit, which would be accepted on the adjourned date - The matter be listed for hearing on September 26, 2019: HC

- Case deferred: CALCUTTA HIGH COURT

2019-TIOL-2309-HC-GUW-GST

Baril Marketing Pvt Ltd Vs UoI

GST - The present petition was filed to assail the action of the CGST authority concerned, in not allowing the petitioner to submit the GST TRAN-2 returns in relation to Part 7A, either electronically or manually, in terms of the statements made before this court by the authorities concerned - The petitioner had approached this court on an earlier occasion, raising such grievances, whereupon the authority concerned was directed to do the needful to ensure that the petitioner would be able to submit Form TRAN-2 manually or electronically - Presently, the petitioner claimed that despite such specific directions, the authorities concerned did not allow the petitioner to file such Form electronically or manually, on grounds that the petitioner was unable to show any genuine difficulty in being able to upload the same.

Held - If there is a provisioon made for filing returns electronically and because of certain technical glitches, the uploading could not be done in time, on such grounds, the person or entity concerned could not be put in a disadvantageous position - It is not the petitioner's case that it is not willing to file any return or is seeking time to file return - The petitioner was unable to file the Form TRAN-2 because the portal was not working - The petitioner had also approached the authorities seeking permission to submit the same manually and had also secured directives from the High Court to be permitted to file the form electronically or manually - In light of the same, the GST Council, which is a respondent here, is directed to look into the petitioner's grievances and permit manual or electronic filing of the Form TRAN-2, so that the petitioner is not deprived of benefit of ITC - Such exercise be conducted within three weeks' time: HC

- Writ petition disposed of: GAUHATI HIGH COURT

2019-TIOL-2308-HC-AHM-GST

Gohil Shaktisinh Girvansinh Transporter Vs State Of Gujarat

GST - Petitioner submits that as against the amount computed in the order of confiscation made u/s 130 of the CGST Act read with relevant provisions of the other Acts, the petitioner has already deposited an amount of Rs.2,67,236/- with the respondents.

Held: Respondent directed to forthwith release truck along with the goods contained therein subject to the final outcome of the present petition - Petitioner to also file an undertaking that he shall pay the differential amount in case he fails in the petition/proceedings under section 130 of the CGST Act: High Court [para 4, 4.1]

- Interim relief granted: GUJARAT HIGH COURT

2019-TIOL-2307-HC-AHM-GST

Ashok Laxmanbhai Mokariya Vs State Of Gujarat  

GST - Petitioner submits that they are ready and willing to deposit a sum of Rs.4,00,000/- under protest for the release of the vehicle in question, namely the Truck and to file an undertaking that in case the petitioner fails in the proceedings initiated under section 130 of the Act they shall pay the differential amount.

Held: By way of interim relief, respondents directed to release the Truck, upon the petitioner depositing the amount of Rs.4,00,000/- and also filing the undertaking as indicated - Issue rule returnable on 17.10.2019: High Court

- Interim relief granted: GUJARAT HIGH COURT

2019-TIOL-2306-HC-AHM-GST

Ankit Lokesh Gupta Vs State Of Gujarat

GST - Petitioner submits that the provisional attachment of the bank account of the petitioner is totally without any authority of law inasmuch as s.83 does not contemplate provisional attachment in respect of proceedings under section 71(1) of the GGST Act - Notice to be issued returnable on 01.10.2019: High Court [para 3]

- Notice issued: GUJARAT HIGH COURT

2019-TIOL-2305-HC-AHM-GST

Anil Bapulal Patil Vs State Of Gujarat

GST - Petitioner is ready and willing to deposit a sum of Rs.4,00,000/- under protest for the release of the vehicle (truck) in question and to file an undertaking that in case the petitioner fails in the proceedings initiated u/s 130 of the CGST Act, he shall pay the differential amount. Held: Issue rule returnable on 17.10.2019 – By way of interim relief, the respondents to release the truck upon deposit of the sum as agreed and also file the undertaking: High Court

- Interim relief granted: GUJARAT HIGH COURT

2019-TIOL-2294-HC-KAR-GST

AT And S India Pvt Ltd Vs UoI

GST - The petitioner company, engaged in manufacturing, trading and selling of high technology Printed Circuit Board, attempted to upload Form GST TRAN-1 for the relevant period - It then noticed an amount being unavailed credit of 50% in respect of the capital goods, which had not been entered in their electronic credit ledger - The petitioner filed a complaint with the help desk but got no response - After several entreaties, the authority concerned rejected the petitioner's request to revise the Form GST TRAN-1 - Hence the present writ.

Held - It appears that the figure mentioned in Form GST TRAN-1 appears to be a technical glitch arising out of the inadvertence of the petitioner - This court in M/s Kongovi Private Limited Vs. The Union of India and others had held that such technical glitches arising out of the petitioner's inadvertence were required to be addressed by the Nodal Officers appointed in terms of Circular instructions dated 03/04/2018 - Hence the proceedings are restored to the respondent authority concerned for redressal of the petitioner's grievances - The Nodal Officer is to redress such grievances in an expeditious manner: HC

- Writ petition disposed of: KARNATAKA HIGH COURT

2019-TIOL-2289-HC-DEL-GST

Aadinath Industries Vs UoI

GST - The petitioner-company attempted to file Form GST TRAN-1 during the relevant period, for availing ITC in the Electronic Credit Ledger - However, an error prompt stated that thee registered service tax number of the petitioner was invalid - The petitioner requested for an inquiry on the portal itself and later received a mail calling upon the petitioner to provide its GSTIN - The requisite information was furnished by the petitioner's CA - Thereafter, several attempts were made to file Form GST TRAN - 1 through the portal, with the same error message coming up - Besides, every time the petitioner sought for an inquiry, it received an automated response - Later, the petitioner received an email stating that in the mail received from the Nodal Officer, GSTN in respect of TRAN-1 and TRAN-2 cases received in the CGST Delhi Zone in terms of the SOP of IT Grievance Redressal Mechanism, the petitioner was listed as one of the parties whose case was approved for granting another opportunity for filing TRAN-1 by the ITGRC Committee - When the petitioner subsequently attempted to file Form GST TRAN-1, the same error message came up again stating that the registration number was invalid - Despite addressing several correspondences to the authorities concerned, the petitioner's grievances remained unredressed - Hence the present writ.

Held - The petitioner's counsel drew attention to several cases which cover the present facts and circumstances - The Revenue's counsel admitted that the issue at hand was covered under the decision in M/s Blue Bird Pure Pvt. Ltd. v. Union of India & Ors - It may be added that the credit standing in favor of an assessee is property and the assessee could not be deprived of such property save by authority of law in terms of Article 300(A) of the Constitution of India - There is no law which extinguishes such right to property of the assessee in credit standing in its favor - Hence the respondent is directed to either open the online portal so as to enable the petitioner to file the rectified TRAN-1 form electronically or else accept the same manually with correction on or before Oct 02, 2019 - The petitioner's revised claim be processed as per law: HC

- Writ petition disposed of: DELHI HIGH COURT

2019-TIOL-2279-HC-AHM-GST

Mohd Sahil Jakir Vs State Of Gujarat

GST - Detention of truck and goods - Referring to provisions of section 129 of the CGST Act, it was submitted by the petitioner that the same do not contemplate detention of goods on any ground other than the grounds stated therein and that, undervaluation of an invoice cannot be a ground for detention of goods under section 129 of the CGST Act when all the necessary documents as required under section 68 of the CGST Act read with rule 138(A) of the rules have been furnished - Attention is also invited to the to the report of valuation of stock of the petitioner as prepared by Value Team Professional (Government registered Valuer) prepared for Additional Commissioner of Commercial Tax to point out the basis on which, the market value has been computed by him and based on which the respondents sought to confiscate the goods of the petitioner.

Held: Valuation report dated 30.08.2019 does not inspire any confidence - Notice to be issued returnable on 3 rd October 2019 - By way ad-interim relief, the respondent-authorities are directed to forthwith release truck along with the goods contained therein - petitioners, however, shall file an undertaking to the effect that in case, ultimately, they fail in the case, they shall pay the amount of liability under the impugned order: High Court [para 3, 3.1]

- Ad interim relief granted: GUJARAT HIGH COURT

2019-TIOL-2278-HC-UKHAND-GST

PVR Ltd Vs State Of Uttarakhand

GST - Petitioners are running a multiplex in Dehradun and in Rudrapur and had opened their multiplexes in the cities of Dehradun and Rudrapur in pursuance of the order dated 07.06.2011, whereby a policy decision was taken by the State of Uttarakhand that for a new multiplex which will be opened in the State, no entertainment tax will be charged from it and it will be exempted from payment of entertainment tax for a period of five years or till the multiplex recovers its costs of construction, whichever is earlier - petitioners have already availed their entertainment tax for more than two and a half years and in the aeanwhile, since the Goods and Services Tax came into force w.e.f. 01.07.2017, the petitioners are subjected to GST regime and the earlier exemption granted to the petitioners will not operate - Petitioners would argue that in other States [States of Uttar Pradesh and Rajasthan] where a similar situation had come up and difficulties were being faced by the multiplex owners, the State has come forward for their help and they have applied a compensatory scheme in their favour - Counsel for the State argued that under the GST regime nothing can be done.

Held: Bench is of the view that since a new tax regime has come into force w.e.f. 01.07.2017, the earlier benefit which the petitioners were getting as per the Government Order dated 07.06.2011 will not operate now in their favour - However, the petitioners would be at liberty to apprise the State Government of these facts which they have raised before this Court in the present writ petitions, such as about the compensatory scheme made by the States of Uttar Pradesh and Rajasthan and in case the petitioners are able to convince the State Government for bringing a similar scheme here, the State Government may pass appropriate orders in the matter in accordance with law, as expeditiously as possible but preferably within twelve weeks - Petition disposed of: High Court [para 7 to 9]

- Petitions disposed of: Uttarakhand HIGH COURT

2019-TIOL-2277-HC-AHM-GST

Meena Agency Ltd Vs State Of Gujarat

GST - While the goods were being transported, the same came to be intercepted by the second respondent and were detained/seized on the ground that e-way bill was not tendered by the petitioner - second respondent issued impugned notice for confiscation of the goods under section 130 of the CGST Act and provisions of other relevant statutes - Petitoner submits that immediately upon the vehicle being seized on 17.09.2019, the petitioner paid the amount of tax and penalty on 18/19.09.2019, therefore, the goods and the conveyance seized by the respondents may be released subject to the final outcome of the proceedings under section 130 of the CGST Act; that the petitioner is an established agency and is not a fly-by-night operator and hence, the respondents have no reason to apprehend that if, ultimately, any order is passed against the petitioner, they would not be in a position to recover the differential amount.

Held: Court is of the opinion that the petitioner may respond to the notice issued under section 130 of the CGST Act and submit its response thereto - petition is partly allowed with a direction to the second respondent to forthwith release the truck along with the goods contained therein as the petitioner has already paid the amount of tax and penalty, subject to the final outcome of the proceedings under section 130 of the CGST Act and under other relevant statutory provisions - petitioner shall appear before the second respondent on 04.10.2019 at 10:00 a.m and the respondent shall pass a reasoned order as envisaged under section 130 of the CGST Act: High Court [para 8.1, 9, 9.1]

- Petition partly allowed: GUJARAT HIGH COURT

2019-TIOL-2276-HC-DEL-GST

Savan Retailers Pvt Ltd Vs UoI

GST - Petitioner submits that respondents have blocked the ITC of Rs.58,16,444.00/- of the petitioner without any showcause notice, hearing or reasons, and no provision of law has been cited to justify the said blocking of the credit due to the petitioner.

Held: Respondents to examine the petitioner's grievance and to unblock the petitioner's ITC balance, if the blocking is found to be unjustified - Decision in this regard should be taken positively within the next four working days - However, in case, the respondents have any justification for the said blocking of the ITC of the petitioner, they shall file their reply explaining the reasons therefor within ten days from today with advance copy to counsel for the petitioner, who will file a rejoinder thereafter - Matter to be listed on 15.10.2019: High Court

- Matter listed: DELHI HIGH COURT

 

AAR CASE

2019-TIOL-307-AAR-GST

Alligo Agrovet Pvt Ltd

GST - Products viz. Autus, SJ-Ninja, SJ-Eraser, Oprax, Telnar, VK's Nemo and Stressout are classifiable under HSN Code 3808 and chargeable @18% GST as per 1/2017-CTR - Product Shyam Samruddhi is an organic fertiliser classifiable under HSN 3105 and liable to GST @5% as per Sr. no. 182D of Schedule I of 1/2017-CTR: AAR

- Application disposed of: AAR

 

AAAR CASE

2019-TIOL-68-AAAR-GST

Bengal Peerless Housing Development Company Ltd

GST - Respondent is a JV of West Bengal Housing Board and The Peerless General Finance and Investment Company Limited for developing real estate projects - respondent is developing a residential housing project and supplying construction service to recipients for possession of dwelling units in the year 2023 - they also provide services like preferential location service, which includes services of floor rise and directional advantage - they had sought a ruling from the AAR as to whether such supply constitutes a composite supply with construction service as the principal supply and if so, whether abatement is applicable under sl. No. 3(i) r/w paragraph 2 of notification 11/2017-CTR on the entire value of the composite supply - AAR had held that Construction service is the dominant element in the bundle of services provided; that the buyers of the service of constructing dwelling units in such upscale residential complexes expect, apart from the preferential location (PLC) of the dwelling unit, the right to use car parking space and enjoyment of common areas and facilities like landscaped gardens, gym, conference hall, club with swimming pool etc. and which are usually bought as a bundle while booking the flat; that, therefore, it was reasonable to conclude that such services are naturally bundled and offered in conjunction with one another in the ordinary course of business and the other services are ancillary to the supply of construction service, which is the essential supply; that the applicant (now respondent) is, therefore, providing a composite supply, construction being the principal supply; that the entire value of composite service is to be treated, for the purpose of taxation, as supply of construction service, taxable under Sl. No. 3(i) r/w paragraph 2 of notification 11/2017-CTR - Revenue is aggrieved and before the Appellate authority.

Held: Respondent has submitted that they have been paying GST on the charges of floor rise and directional advantage without claiming any abatement in respect thereof - separate invoices have been raised on account of 'Unit sales', 'PLC charges' and 'Floor Rise charges' and which reinforces the conclusion that PLS can in no way be associated with land - PLS comes into being as the builder charges the buyer separately for providing a better location, which may be in relation to the direction in which the flat is constructed, the floor on which it is located and the views from the particular flat opted by the buyer etc. - therefore, abatement which is allowed on the value of construction service, as the plot of land on which construction is done is not liable to GST, cannot be deemed to be applicable in respect of PLS, which is altogether a separate service having no association with the land - Rate of GST and abatement on value of construction service have been stipulated in 11/2017-CTR and rate is provided in Sl. no. 3 of the Table - It is clear from the categorisation that Preferential Location Service (PLS) should come under category 3(iii) as the two other categories are clearly defined - Abatement to the extent of 1/3rd of the total amount charged for supply of the service mentioned under Sl. no. 3(i) of the Rate notification has been allowed under para 2 of the said notification, however, no abatement has been provided for service mentioned under Sl. no. 3(iii) of the Table - Appellate Authority notices that the respondent had sought a ruling only on the entitlement of abatement prescribed for supply of construction service in terms of Sl. no. 3(i) of 11/2017-CTR read with paragraph 2 appended thereto in respect of supply of services of Floor Rise and Directional Advantage being Composite Supply with the principal supply of Construction service, however, the AAR had passed its ruling in respect of right to use car parking space and common areas and facilities also, which was not prayed for in the applicant - Revenue viz. Assistant Commissioner has prayed for suitable order in respect of right to use car parking space along with PLS while filing the present appeal - AAAR holds that decision of AAR in respect of PLS would also hold for 'right to use car parking space' - AAR ruling modified to this effect - Appeal stands disposed of: AAAR

- Appeal disposed of: AAAR

 

NAA CASES

2019-TIOL-48-NAA-GST

Director General Of Anti-Profiteering Indirect Taxes And Customs Vs Lodha Developers Ltd

GST -  Anti-Profiteering - Applicant has alleged that the respondents have profiteered while he had purchased flat in Lodha Eternis, Andheri project launched by the respondents inasmuch as the respondents had not passed on the benefit of Input Tax Credit (ITC) although they had charged GST @12% w.e.f 01.07.2017 from him - DGAP has argued that the ITC as a percentage of the total turnover that was available to the respondents during the pre-GST period from April 2016 to June 2017 was 1.57% and during the post-GST period from July 2017 to August 2018, it was 7.32% which confirmed that post-GST the respondents had benefited from the additional ITC to the tune of 5.75% (7.32% - 1/57%) of the total turnover - accordingly, DGAP has stated that on the basis of the computation, the additional ITC of 5.75% of the taxable turnover should have resulted in commensurate reduction in the base price as well as cum-tax price in terms of s.171 of the CGST Act and the benefit of additional ITC was required to be passed on to the recipient; that the profiteered amount came to Rs.4,17,18,502/- which included 12% GST on the base profiteered amount of Rs.3,72,48,662/- - respondents stated that they had passed on the ITC benefit of Rs.3,89,90,084/- to their customers as against Rs.3,72,48,662/- determined by the DGAP in their report and hence, they had not profiteered and resultantly had not violated the provisions of s.171 of the Act; that the amount collected as GST should not be considered as a benefit to the respondents as the excess collection had duly been deposited with the Government and the respondents had not retained the same - DGAP in their revised report pursuant to examination of documents submitted by respondents during hearing on 10.01.2019 stated that the ITC as a percentage of the total turnover that was available to the respondents during the pre-GST period (April 2016 to June 2017) was 1.51% and during the post-GST period (July 2017 to August 2018) was 4.13% which clearly confirmed that post-GST the respondents had benefited from the additional ITC to the tune of 2.62% [4.13% - 1.51%] of the taxable turnover and accordingly the profiteered amount stood revised at Rs.1,90,04,456/-  which included the GST @12% on the base profiteered amount of Rs.1,69,68,264/-; that in respect of the applicant, the profiteered amount stood at Rs.37,065/- (including GST on base amount of Rs.33,093/-); that the respondent had passed on Rs.1,90,316/- to the applicant and, therefore, the respondent had passed on an excess amount of Rs.1,53,251/- which may be adjusted against the further demands from the applicant; that in totality, additional amount of Rs.1,90,04,456/- was required to be returned to the eligible recipients.

Held: By no stretch of imagination, the discounts given by respondents out of their own profit margins can be construed to have been given as the benefit of additional ITC, therefore, the amount of discount cannot be adjusted againt the ITC benefit - findings recorded by the DGAP cannot be accepted and it is held that the respondents had not passed any excess benefit to the home buyers - perusal of the credit note issued in favour of the applicant indicates that this amount has been paid as a discount which cannot be taken to be the benefit of ITC and hence no excess benefit of ITC has been passed on to him by the respondents - applicant is, therefore, entitled to an amount of Rs.37,065/- including the GST as benefit of ITC along with interest @18% from the date on which the above amount was realised by the respondents from him - ground taken by the respondent that the DGAP had included the GST which had been deposited by them in the government account is fallacious as by forcing the flat buyers to pay more price by not releasing the benefit of additional ITC and by collecting @12% tax on this additional realisation they had denied the benefit of additional ITC to them by not reducing the prices of the flat commensurately; that, had they not collected the additional GST, the buyers would have paid less price and by doing so they have denied them the benefit of additional ITC which amounts to violation of s.171 of the Act - Both the Central and State government had no intention of collecting the additional GST as they had sacrified their revenue in favour of the flat buyers to provide them accommodation at affordable prices and by compelling the buyers to pay the additional GST, the respondents have not only defeated the intention of the above governments but have also acted against the interests of the house buyers, therefore, contention of the respondents is unjustified inasmuch as the GST collected by them on the additional realisation has rightly been included in the profiteered amount by the DGAP - profiteering in each case has to be determined on the basis of the facts of each case and no straightjacket formula can be fixed for calculating the same as the facts of each case differ - methodology applied in the case where the rate of tax has been reduced and ITC disallowed cannot be applied in the case where the rate of tax has been increased and ITC allowed - methodology applied in the case of Fast Moving Consumer Goods (FMCGs) cannot be applied in the case of Construction Services - it would also be appropriate to mention that the Authority has the power to ‘determine' the methodology and not to ‘prescribe' it as per the provisions of Rule 126 of the CGST Rules and, therefore, no set prescription can be laid while computing profiteering - therefore, claims of the respondent that the profiteered amount could not be computed by applying ratio of ITC to turnover as they accrued at different periods of time is incorrect and frivolous – Respondents, by issuing credit notes had released discount to the applicant as well as to the other house buyers which cannot be considered as passing on of the benefit of additional ITC as the above discount has been given by the respondents from their own profit margins and not on account of the benefit of ITC - Entry ‘discount' made in the credit notes itself proves that this amount has not been paid on account of the ITC benefit, therefore, the discount of Rs.1,90,316/- paid to the applicant cannot be considered as benefit of ITC - the finding of the DGAP that the respondents had passed on the additional benefit of ITC as discount as mentioned in its revised report 22.01.2019 is not correct and cannot be accepted - DGAP has computed the profiteered amount by applying the additional benefit @2.56% whereas it should have been calculated by applying factor of 2.62%, therefore, an amount of Rs.1,90,04,456/- computed by applying additional benefit of @2.62% is determined as the profiteered amount including the GST as per provisions of rule 133(1) of the Rules - applicant shall be entitled to the ITC benefit of Rs.37,065/- including the GST and the rest of the house buyers would be eligible to get ITC benefit of Rs.1,89,67,391/- including the GST along with the interest to be calculated @18% from the date of realisation of the above amount till it is paid - respondents shall not adjust the amount of discount or the SGST or CGST credit offered by them out of their own profit margins on account of the reduction in the cost or due to slowdown in the market against the ITC benefit to be paid to the house buyers - DGAP to recompute the amount to be passed on to all the eligible house buyers and convey the same to the respondents and the Commissioners, SGST and CGST as well as the Authority: NAA

++ DGAP had in its report dated 28.11.2018 intimated that the respondents had profiteered an amount of Rs.4,17,18,502/- whereas in the revised report dated 22.01.2019 the figure has been revised to Rs.1,90,04,456/- - above contention of the DGAP shows that the team of his office which had investigated the present case had been careless and negligent while examining the returns and the list of the house buyers and had failed to verify and collect figures from the respondents - it is also revealed that the profiteered amount has been computed by applying the additional benefit of ITC @2.56% whereas it should have been calculated by applying the benefit of @2.62% which again shows carelessness and negligence on the part of the team - it is apparent that the team has not carried out its duties diligently and faithfully while investigating the above case which has resulted in submitting revised report in which the profiteered amount was drastically changed and wrongly calculated - DGAP is advised to look into it administratively and take necessary action: NAA

2019-TIOL-47-NAA-GST

Director General Of Anti-Profiteering Indirect Taxes And Customs Vs Paramount Propbuilt Pvt Ltd

GST - Any discount/benefit given by respondent out of his profit margin or due to cost reduction or on account of market conditions does not fall within the ambit of s.171(1) of the CGST Act and the Respondent cannot be compelled to pay the same discount to the applicant: NAA [para 79]

GST - National Anti-Profiteering Authority has mandate u/s 171 of the Act to ensure that the benefit of tax reduction as well as of additional ITC is passed on to the recipients and has no jurisdiction to decide which rate of tax should be charged on a particular goods or service or which of them should be construed to be a part of the composite supply or what should be treated to be a value of their taxable supply as per the provisions of s.15 of the Act or which reimbursements did not fall under the term supply - Applicant may approach the Advance Ruling Authority for settling the said issues: NAA [para 76]

GST - Applicant has claimed that the terms of the allotment were highly favourable to the respondent due to which he was charging all other taxes like Wealth Tax and Income Tax from allottees and there were a number of different terms of allotment for different house buyers - claim is untenable as respondent is entitled to charge the above taxes in case they form part of the agreement which had been duly executed by the allottees voluntarily - there is also no evidence on record that respondent had framed different terms of allotment for different allottees: NAA [para 77]

GST - DGAP report states that the ITC ratio to the turnover during the pre-GST period (April 2016 to June 2017) was 2.06% as compared to the post-GST period (July 2017 to August 2018) where it was 4.48% and which indicated that in the post-GST period  the respondent had benefited from additional ITC to the tune of 2.42% [4.48 - 2.06] of the turnover - DGAP has vide its report correctly assessed the additional ITC ratio as 2.42% and by applying this ratio to the payments made on or after 01.07.2017, has correctly computed the profiteered amount as Rs.3,69,26,963/- (which includes profiteered amount of Rs.15,231/- to be paid to applicant and Rs.3,69,11,732/- to be paid to all the other 1152 buyers) - Respondent is directed to pass on the benefit along with interest @18% to all the 1153 recipients from the dates from which the above amount was collected by him from the buyers till the payment is made, in terms of rule 133(3)(b) of the CGST Rules, 2017 - respondent to reduce the prices to be realised from the buyers of the flats commensurate with the benefit of ITC received by him - since the respondent has denied benefit of ITC to the buyers of flats being constructed by him and resorted to profiteering in contravention of s.171(1) of the Act, he has committed an offence u/s 171(3A) of the Act and is liable for imposition of penalty - SCM to be issued in this regard - in terms of rule 136 of the Rules, the Commissioners of CGST/SGST, Uttar Pradesh are directed to monitor this order under the supervision of DGAP by ensuring that the amount profiteered is passed on to all the eligible buyers, compliance report to be submitted within four months: NAA [14, 15, 85, 86, 87, 88]

- Application disposed of: NAA

 

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