2020-TIOL-GST-342, Dated: Tuesday, April 20, 2020

HIGH COURT CASES

2020-TIOL-847-HC-P&H-GST

Rajinder Bassi Vs State Of Punjab

GST - Petitioners, who are alleged to have evaded payment of GST of about Rs. 20 crores seek grant of interim bail, mainly on account of the prevelant conditions of spread of COVID-19 virus.

Held: Present case is a case where the allegations against the petitioners are in respect of section 132 of GST Act 2017 which is punishable for a maximum sentence of 5 years and that as per the policy cases of under trials charged with offences punishable for a sentence of up to 7 years could be considered - However, the offence assumes gravity in view of the colossal amount involved in the present case which is Rs. 20 crores approx. and is certainly a factor to be borne in mind while considering the release of the petitioner on interim bail - Infact the allegations are to the effect that the petitioners had forged bills and other documents in furtherance of their designs to cause loss to State Exchequeuer which prima-facie would also attract an offence punishable under section 467 IPC which is punishable with imprisonment for life - primary object of the directions issued by Supreme Court is to protect the health of the prisoners and restrict transmission of COVID-19 by decongestion of prisons - The move certainly cannot be treated as a windfall for all the prisoners even when there is no imminent threat or apprehension within the jail premises as on date as regards spread of pandemic - It has been informed by State counsel that there is no reported case of COVID-19 within jail premises and that the fresh entrants, if any, are lodged separately - Since the Nabha Jail already stands decongested and there is no reported case of COVID-19 within the premises of jail, therefore, keeping in view the nature and gravity of offence and the amount involved, this Court does not deem it appropriate to grant interim bail to the petitioner - bail applications are dismissed - It is, however, clarified that dismissal of application for grant of interim bail shall not have any bearing on consideration of any application for grant of regular bail on merits: High Court [para 8, 9, 11, 13]

- Applications dismissed: PUNJAB AND HARYANA HIGH COURT

2020-TIOL-844-HC-KERALA-GST

Grace International Logistics Vs ASTO

GST - Petitioner challenges the order of detention made u/s 129(1) of the Act and the SCN issued u/s 129(3) of the Act - Petitioner contends that the subject matter of Exts.P7 and P8 is fully compliant with all the requirements of the Act and the petitioner was in a position to demonstrate within the time given by the authorities that Part B/E-Way Bill was also generated and produced for inspection - Counsel for Revenue objects to the maintainability of the petition and inter alia submits that the detention order cannot be treated as final and the petitioner has the option of furnishing of bank guarantee for the tax and penalty amount demanded for obtaining release of the goods.

Held: Issues raised are at preliminary stage and Court is not convinced to entertain the writ petition and adjudicate upon merits at this stage - Petition disposed of by mentioning that if the petitioner submits (within two days) bank guarantee for the tax and penalty as shown in Ext.P8 and applies for release of goods, the respondent shall release the goods detained and subjected to enquiry in Ext.P8 within twelve hours from the date and time of receipt of bank guarantee; that the respondent shall complete the enquiry within four weeks after affording fair and reasonable opportunity as evisaged under the Act; that the petitioner is not under obligation to keep the bank guarantee alive beyond six weeks if the respondent fails to pass the order as directed: High Court [para 5]

- Petition disposed of: KERALA HIGH COURT

2020-TIOL-843-HC-AHM-GST

Jay Bhavani Metal Mart Vs State Of Gujarat

GST - Writ applicant availed the benefit of the interim-order passed by this Court and got the vehicle, along with the goods released on payment of the tax amount and the proceedings, as on date, are at the stage of show cause notice, u/s 129 of the CGST Act and which proceedings shall go ahead in accordance with law - It shall be open for the writ applicant to point out the pronouncement of this Court in the case of Synergy Fertichem Pvt. - 2019-TIOL-546-HC-AHM-GST and in particular rely on the observations made by this Court in paragraph Nos.99 to 104 of the said judgment - It is now for the applicant to make good his case that the show cause notice, issued in GSTMOV- 10, deserves to be discharged – Petition disposed of: High Court [para 4 to 6]

- Petition disposed of: GUJARAT HIGH COURT

2020-TIOL-842-HC-AHM-GST

Kabir Enterprise Vs State Of Gujarat

- Petition disposed of: GUJARAT HIGH COURT

2020-TIOL-831-HC-KERALA-GST

Popular Auto Dealers Pvt Ltd Vs UoI

GST - Petitioner inter alia seeks a writ of mandamus or any other appropriate order or direction directing the respondents to accept the petitioner's manual filing of revised Form GST TRAN-1 and the resultant Form GST TRAN-2.

Held: On the ground that the taxpayer filed TRAN-1 within the time limit, i.e. on 17/11/2017 providing all the details of Input Tax to be credited but by mistake uploaded the details in Table 7(d) instead of uploading it in Table 7(b), it is to be taken as an error apparent on the face of records; that it is a fit case in terms of 32nd GST Council decision regarding extended scope of IT Grievance Redressal Committee for non-technical issues; that it is recommended to consider the case of the petitioner to allow them to rectify the mistake committed by them while filing the TRAN-1 form - In the light of the positive recommendation made by the Commissioner of State GST, it is ordered that the review petitioner shall be permitted either to manually or electronically upload the revised form GST TRAN-1 and TRAN-2, expeditiously and without any delay, at any rate, on any day on or before 28.02.2020 - Writ petition disposed of: High Court [para 5 to 7]

- Petition disposed of: KERALA HIGH COURT

2020-TIOL-827-HC-KAR-GST

UoI Vs LC Infra Projects Pvt Ltd

GST - Assessee had challenged notice of demand dated 4th March 2019 by which a demand for interest in accordance with sub section (1) of Section 50 of CGST Act was made and on which basis, consequential action was taken by the tax authorities on 7th March 2019 by which the account of the respondent-assessee was attached on account of non payment of interest - Single Judge held that issuance of a show Cause Notice is sine qua non to proceed with the recovery of interest payable under Section 50 of the GST Act and penalty leviable under the provisions of the GST Act and the Rules; that interest payable under Section 50 of the GST Act has been determined by the third respondent - Authority without issuing a show Cause Notice which is in breach of the principles of natural justice and, therefore, both the orders dated 4 th March and 7 th March were quashed - Revenue is in appeal against this order of Single Judge and submits that as the tax was payable as per the self-assessment made by the assessee, it was not necessary to issue a show cause notice to the respondent-assessee as the demand was only as regards to payment of interest under Sub Section (1) of Section 50 of the GST Act; that as the demand was not for a tax and only for interest, a notice under Sub Section (1) of Section 73 of the GST Act was not all necessary; that as a consequence of failure to pay interest, consequential action of attachment of the bank account has been taken.

Held: On the factual aspect, whether there was a failure on the part of the assessee to pay the tax or any part thereof within the period prescribed, the assessee is entitled to be heard as he could always point out on the basis of the material on record produced that there was no delay in payment of tax - On plain reading of sub section (1) of Section 73 of the GST Act, it is applicable when any tax has not been paid or short paid - It contemplates that a show Cause Notice is to be issued to the assessee calling upon him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under Section 50 of the GST Act - Assuming that sub section (1) of Section 73 is not applicable, in the view of the Division Bench, before penalizing the assessee by making him pay interest, the principles of natural justice ought to be complied with before making a demand for interest under sub section (1) of Section 50 of the GST Act since consequence of demanding interest and non-payment thereof is very drastic - Therefore, Single Judge rightly held in paragraph 6 of the impugned judgment that issuance of show Cause Notice is sine qua non to proceed with the recovery of interest payable in accordance with sub section (1) of Section 50 of the GST Act - The impugned demand has been set aside only on the ground of the breach of the principles of natural justice by granting liberty to the respondents to initiate action in accordance with law obviously for recovery of interest - Bench concurs with the ultimate view taken by the Single Judge that before recovery of interest payable in accordance with Section 50 of the GST Act, a show Cause Notice is required to be issued to the assessee, hence, no case for interference is made out - Revenue appeal is accordingly dismissed: High Court [para 10 to 14, 16]

- Appeal dismissed: KARNATAKA HIGH COURT

2020-TIOL-820-HC-ALL-GST

Skipper Ltd Vs UoI

GST - By the order dated 4th December, 2019, the petitioner was required to furnish a bank guarantee equivalent to the amount of his liability determined under Section 129 of the UPGST Act at the time of seizure of goods and conveyance in transit - Petitioner had furnished security in the form of a bank guarantee of the amount and in the manner required of him by the State Revenue Authorities u/s 129(1)(a) read with Section 129(1)(c) of the UPGST Act, 2017, even prior to the order dated 04.12.2019 - The security in the shape of bank guarantee remains deposited with the State Revenue - The seized vehicle and goods have been released on the strength of such security deposit, hence, the proceedings taken out under section 129 of the UPGST Act, 2017 are liable to be concluded in view of section 129 (5) of the UPGST Act, 2017 - notice under Section 129(3) of the UPGST Act, 2017 , dated 4th December, 2019 is infructuous and the proceedings taken thereunder are liable to be treated as concluded - Writ petition is, therefore, disposed of with the following directions - Revenue Authorities are directed to adjudicate the case on merits, expeditiously, preferably, within a period of three months; bank guarantee furnished by the petitioner to the State Revenue Authorities shall remain with the State Revenue Authorities and its invocation shall be subject to the result of the adjudication - writ petition is finally disposed of: High Court [para 11, 12, 14, 15]

- Petition disposed of: ALLAHABAD HIGH COURT

2020-TIOL-819-HC-MAD-GST

Choe Jae Won Vs Government Of Tamilnadu

GST - COVID-19 - Case taken up for hearing by means of ‘Video Conferencing' through Zoom App - Allegation against the Company is that it collected GST from their buyers, and has not remitted the same to the Government of India, since August 2017 - liability was assessed to the tune of Rs.40,00,37,447/- - Petitioners, General Manager and the Managing Director of the company were arrested on 24.06.2019 and remanded to judicial custody invoking the power of arrest under Section 69 of the Act, 2017 - It is the case of the Petitioners that, the 2nd Respondent has completed the investigation and filed a Complaint before the Additional Chief Metropolitan Magistrate, Chennai, which is numbered as EOCC No.1 of 2020, hence, they seek permission of this Court to allow them to stay at Belchem 804, Hiranandini Post, Oragadam, Kancheepuram, on the grounds that, the Authorities in the Special Camp at Tiruchirapalli have not taken proper measures of spraying any disinfectant in the Camp and that, social distancing is not properly maintained there - counsel for Revenue submitted that Petitioners alone cannot be shown any indulgence by permitting them to reside in their respective residences, and in the event of granting the relief sought by the Petitioners, there is every possibility of other inmates knocking at the doors of this Court seeking similar relief, in which event, a different yardstick cannot be applied.

Held: After seeing the photographs sent by the counsel for the Petitioners through e-mail, pertaining to the present condition of the rooms in the Special Camp and the inmates staying there, this Court intended to ascertain the veracity of the same and accordingly, one S.N.Suthanthira Rajan, Special Deputy Collector was connected through WhatsApp Video call and he took this Court to the maximum areas of the Special Camp in Tiruchirapalli District - After watching the same, this Court is able to visualize that, the Special Camp is maintained neatly and there are no stains in the Toilets - When sufficient space is available in the Special Camp in Tiruchirapalli District to accommodate 80 persons and that, only 73 inmates are staying there, this Court is of the view that, photographs furnished by the Petitioners to the effect that, more number of persons are detained in a single room without any sign of social distancing, have been taken by the Petitioners only for the purpose of this case - By doing so, Petitioners are inviting diseases and none can be blamed for their act - The cluster in the room is the act of the inmates and not on account of the Respondents - It is pertinent to note that, none detained in the Special Camp in Tiruchirapalli District is infected with COVID-19 - If the Petitioners are released and sent out to live in the address mentioned in Kancheepuram District, and after a few days, assuming that, they are tested positive for COVID-19 on account of shifting them, then, the entire area in which they reside will be sealed, and chances of spreading the virus to other people residing in Kancheepuram District, will be high - Instead of eradicating the pandemic, the Court will directly be responsible for spreading the virus to innocent persons - When the Central and State Governments are taking effective steps to prevent further spread of COVID- 19, public, as responsible citizens must extend utmost co-operation to the Government in eradicating this pandemic and shall not try to disrupt the functioning of the Government - battle is between human beings and nature; unless human beings sail with the nature, nature alone will win the war - Finding justification in the plea made by the Government Pleader and considering the fact that, several Non-Bailable Warrants have already been issued to the Petitioners and that, there is every possibility of the Petitioners fleeing away from the clutches of Law, this Court while declining the relief sought by the Petitioners, without prejudice to the rights of the parties in the pending Habeas Corpus Petitions, directs the learned Additional Chief Metropolitan Magistrate (Economic Offences-I), Egmore, Chennai to take up the case in C.C.No.1 of 2020, after normalcy is restored post COVID-19 lockdown, and proceed with the same on a day-to-day basis, without adjourning it beyond ten working days at any point of time - Writ Petitions are dismissed: High Court [para 17, 18, 21, 23, 25, 27]

GST - Bench wishes to emphasize that, there are advantages in hearing cases through Whatsapp Video Call, and the fact remains that, it is less time-consuming, and it will be helpful to analyze the exact scenario of each case, so as to arrive at a definite conclusion, as was done in the case on hand - The system of viewing disputed sites through "Whatsapp Video Call or any other Application through Video mode" can be implemented in cases pertaining to encroachments on roads, water bodies, poramboke lands, Tanks, illegal constructions, OSR, Parks, etc. to ensure that, the Officials/Authorities discharge their work without any extraneous consideration: High Court [para 26]

- Petitions dismissed: MADRAS HIGH COURT

2020-TIOL-818-HC-AHM-GST

Azad Sahid Khan Vs State Of Gujarat

- Petition disposed of: GUJARAT HIGH COURT

2020-TIOL-817-HC-AHM-GST

Sanjaybhai Laxmanbhai Gogara Vs State Of Gujarat

GST - Writ-applicant availed the benefits of the orders passed by the Co-ordinate Bench of this Court, in accordance with law, and got the goods and vehicle released - This is a case in which the final order in Form GST-MOV-11 has been passed - In such circumstances, Bench relegates the writ-applicant to prefer an appeal, against such order, under Section 107 of the Act, 2017 - Writ Application disposed of: High Court [para 4 to 6]

- Petition disposed of: GUJARAT HIGH COURT

2020-TIOL-816-HC-AHM-GST

Power Palazzo Pvt Ltd Vs UoI

GST - TRAN-1 – Counsel appearing for the State respondent informed that the Nodal Officer has addressed a letter to the authority Incharge of the portal stating that the claim of the writ applicant to carry forward the Cenvat credit is justifiable and for that purpose, the portal be opened to enable the writ applicant to file his TRAN-1 - In view of such statement being made, no further adjudication of this writ application on merits is now necessary - Exercise is to be undertaken at the earliest and the same is to be completed within a period of two weeks – petition disposed of: High Court [para 4, 5]

Petition disposed of: GUJARAT HIGH COURT

2020-TIOL-815-HC-AHM-GST

Kohitoor Transport Llp Vs State Of Gujarat

GST - Writ applicant availed the benefit of the interim-order passed by this Court and got the vehicle, along with the goods released on payment of the tax amount and the proceedings, as on date, are at the stage of show cause notice, u/s 129 of the CGST Act and which proceedings shall go ahead in accordance with law - It shall be open for the writ applicant to point out the pronouncement of this Court in the case of Synergy Fertichem Pvt. = 2019-TIOL-546-HC-AHM-GST and in particular rely on the observations made by this Court in paragraph Nos.99 to 104 of the said judgment - It is now for the applicant to make good his case that the show cause notice, issued in GSTMOV- 10, deserves to be discharged – Petition disposed of: High Court [para 4 to 6]

- Petition disposed of: GUJARAT HIGH COURT

2020-TIOL-814-HC-AHM-GST

Devasya Industries Vs State Of Gujarat

GST - Writ-applicant seeks to challenge the notice issued in the form GST MOV-10 for the confiscation of goods and conveyance with levy of penalty & fine under Section 130 of the Act - By virtue of the order of this Court dated 23rd May 2019, the truck as well as the goods have been released - So far as the notice in the form GST MOV-10 is concerned, the writ-applicant shall appear before the authority concerned and make good his case that the notice deserves to be discharged: High Court [para 3, 4]

- Petition disposed of: GUJARAT HIGH COURT

2020-TIOL-813-HC-KERALA-GST

Pittappillil Agencies Vs PR CCT & CGST

GST - Appeal filed against interim order of Single Judge - Issue pertains to the sustainability of a proceedings initiated for recovery of the amount of interest due under Section 50 of the CGST Act and the consequential garnishee proceedings initiated under Section 79 (1) (c) of the said Act - According to the appellant/petitioner the tax due has to be ascertained after considering the input tax credit, otherwise the object of the Goods and Services Tax law would be defeated; that, on the contrary if such input tax credit is not considered, it will have a cascading effect on the dealers; that, therefore, the liability calculated without taking into consideration of the credit due is unsustainable - The appellant/petitioner had also pointed out the amendments brought into Section 50 of the Act - Despite filing of the objections, the 3rd respondent had issued Ext.P20 notice to the 4th respondent - Bank, directing to pay a sum of Rs.1,78,08,455.36, which is the amount allegedly due from the appellant/petitioner to the public exchequer, in accordance with provisions contained in clause c (i) of sub-section (1) to Section 79 of the Act - the said notice which was under challenge in the writ petition and by virtue of the interim order passed by the Single Judge, operation of Ext.P20 garnishee notice was stayed, subject to condition of the petitioner paying 40% of the demand mentioned therein, within one month - this order is challenged in appeal.

Held: Bench is prima facie not at all convinced that there existed any legal ground to interfere with the impugned order passed by the Single Judge - Going by provisions contained in Section 50 of the CGST Act, Bench is of the opinion that the accrual of interest mentioned therein is automatic when the tax due as conceded in the return is not remitted along with the return, however, when the appellant/petitioner had raised contentions refuting their liability for payment of interest as calculated by the respondent, the theory of audi alteram partem would come into play and, therefore, Bench is of the opinion that a direction to the 3rd respondent for consideration of Ext.P18 and P19, before proceeding with the coercive steps, would suffice to meet the ends of justice - both the writ appeal as well as the writ petition are hereby disposed of by directing the 3rd respondent to consider Ext.P18 and P19 objections filed by the petitioner against the proposal intimated in Ext.P16, after affording an opportunity of personal hearing to the petitioner or to his representative, exercise to be completed within one month - In the meanwhile, freezing of the account held with the 4th respondent bank shall be lifted upon the appellant/petitioner furnishing Bank Guarantee to the satisfaction of the 3rd respondent, for the entire amount demanded under Ext.P20: High Court [para 6 to 8]

- Petition disposed of: KERALA HIGH COURT

2020-TIOL-812-HC-KERALA-GST

Majo Abraham Vs State Tax Officer

GST - Petitioner had challenged constitutional validity of Section 174 of the Act and the Single Judge had disposed of the writ petition by holding that the issue raised squarely stands covered against the appellant, through judgment dated 11.1.2019 in W.P(C). No.11335 of 2018 - 2019-TIOL-441-HC-KERALA-GST and connected cases - Petitioner challenges this judgement of Single Judge on the ground that other grounds raised in the petition had been omitted to be considered - counsel for Revenue fairly conceded with the submission of the petitioner - Division Bench is, therefore, of the considered opinion that the writ petition needs to be remanded for fresh consideration - writ appeal is allowed - impugned judgment is set aside and petition is restored to the files of the Court: High Court [para 5, 6]

- Appeal allowed: KERALA HIGH COURT

2020-TIOL-811-HC-AHM-GST

Gulf Oil Lubricants India Ltd Vs State Of Gujarat

- Petition disposed of: GUJARAT HIGH COURT

2020-TIOL-810-HC-AHM-GST

Raj Chamunda Roadlines Vs State Of Gujarat

GST - It appears that the writ-applicant availed the benefits of the orders passed by the Co-ordinate Bench, in accordance with law, and got the goods and vehicle released - This is a case in which the final order in Form GST-MOV-11 has been passed - In such circumstances, Bench relegates the writ-applicant to prefer an appeal, against such order, under Section 107 of the Act, 2017 - Writ application disposed of: High Court [para 4 to 6]

- Application disposed of: GUJARAT HIGH COURT

2020-TIOL-809-HC-AHM-GST

Singal Road Carrier Vs State Of Gujarat

GST - Writ applicant availed the benefit of the interim-order passed by this Court and got the vehicle, along with the goods released on payment of the tax amount and the proceedings, as on date, are at the stage of show cause notice, u/s 129 of the CGST Act and which proceedings shall go ahead in accordance with law - It shall be open for the writ applicant to point out the pronouncement of this Court in the case of Synergy Fertichem Pvt. - 2019-TIOL-546-HC-AHM-GST and in particular rely on the observations made by this Court in paragraph Nos.99 to 104 of the said judgment - It is now for the applicant to make good his case that the show cause notice, issued in GSTMOV- 10, deserves to be discharged - Petition disposed of: High Court [para 4 to 6]

- Petition disposed of: GUJARAT HIGH COURT

AAR CASES

2020-TIOL-71-AAR-GST

Moksh Agarbatti Company

GST - Applicant cannot claim ITC in respect of Inputs used for manufacture of Dhoop/purchase of Dhoop which is supplied free with a pack of Agarbatti - applicant cannot also claim ITC in respect of non-monetary incentives like Pressure Cooker given to distributors as sales promotion - applicant is not eligible to avail ITC in respect of insurance and maintenance of motor vehicle purchased for transport of Director and employees: AAR

- Application disposed of: AAR

2020-TIOL-70-AAR-GST

Mangaldas Mehta And Company Ltd

GST - Declared or published tariff is relevant only for determination of the tax rate slab - GST Rate for the 'Supply of Accommodation, food and beverage services' would be determined according to declared tariff for the room, and GST at the rate so determined would be levied on the entire amount charged - The rate of GST for other distinguished service provided by applicant shall be determined according to the respective entries of the Notification No.11/2017-Central Tax (Rate) dated 28.06.2017, as amended - In case the Restaurant situated in a hotel premises is having declared room tariff of less than Rs.7500/- per unit per day, applicant will be liable to pay GST @ 5% without ITC on restaurant services to the guest who stays at hotel as well as to any outsider who comes just to eat at the restaurant - Applicant is liable to pay GST @ 18% with ITC on airport pickup and drop charges collected from guest under 'Passenger transport services' - In case different room tariff is declared for different seasons or periods of the year, the tariff declared for the season in which the service is provided shall apply - GST Rate would be determined according to declared tariff for the room and GST at the rate so determined would be levied on the amount charged for restaurant services from the guest/customer: AAR

- Application disposed of: AAR

2020-TIOL-69-AAR-GST

Kandla Port Trust

GST - Applicant is not entitled to take credit of input tax charged in respect of (a) purchase of medicines for employees as prescribed by their doctor from outside on contractual basis, (b) Purchase of movable medical equipment at hospital, (c) AMC for repair and maintenance of residential colony and hospitals and school (other than new constructions, ITC for which is blocked u/s 15 of the Act, 2017; (d) Telephones & Mobiles at residence of officers and at hospitals and (e) Caretaking /housekeeping services at Guest House, as the same is not used in the course or furtherance of his business: AAR

- Application disposed of: AAR

2020-TIOL-68-AAR-GST

Aquaa Care Surat Ro Technologies Pvt Ltd

GST - Classification and HSN code of water is 2201 - Since purified water is excluded from Sr. No. 99 of Notification No. 02/2017 -Central Tax (Rate) dated 28-06-2017, it will not be eligible for NIL rate of duty - Selling water in containers is composite supply as the principal activity is selling of purified water only: AAR

- Application disposed of: AAR

2020-TIOL-67-AAR-GST

Gujarat Energy Transmission Corporation Ltd

GST - Cost of construction/erection of Bays/Sub-Stations, Overhead lines and Underground Cables and other charges including Pro-rata charges, supervision charges, proportionate line charges, registration fees and operation and maintenance charges, recovered by GETCO from the consumers, do not form part of the value of supply of service of "Transmission of Electricity" u/s 15 of the Act, 2017 - Applicant is liable to pay GST @ 18% (CGST @9% and SGST@9%) on amount recovered towards cost of the construction, erection, commissioning, or installation of infrastructure for extending electricity distribution network up to the premises of the consumers along with supervision charges under the service category of "Construction Services" (HSN Code- 9954/995423) - GETCO is also liable to pay GST @ 18% (CGST @9% and SGST@9%) on recovery of other charges viz. Pro-rata charges, Proportionate line charges, Registration fees and Operation and maintenance charges etc. under the residual category of services i.e. "999799- Other services nowhere else classified": AAR

- Application disposed of: AAR

NAA CASES

2020-TIOL-20-NAA-GST

Director General Of Anti-Profittering Vs Reckitt Benckiser India Pvt Ltd

GST - Anti-Profiteering - s.171 of the CGST Act, 2017 - Applicant alleges that the respondent had resorted to profiteering in respect of supply of ‘Dettol HW Liquid Original 900ml' inasmuch as they had not passed on the benefit of reduction in GST rate from 28% to 18% w.e.f 15.11.2017 and instead increased the base price of the aforementioned product; that the respondent had supplied ‘Dettol HW Liquid Original 900ml' to M/s Big Bazar, Inderlok on 07.11.2017 under Purchase Order with the MRP of Rs.189/- per unit, on 21.12.2017, under PO with MRP of Rs.209/- and on 20.06.2018 under PO with MRP of Rs.192/- and thus he had not reduced the price of the above product commensurately - respondent no. 2 M/s Big Bazar was also made a co-noticee in the proceedings already initiated to collect evidence necessary to determine whether the benefit of reduction in the rate of GST from 28% to 18% has been passed on by the respondents 1 and 2 to their recipients w.e.f 15.11.2017 - DGAP in its report dated 19.09.2019 has stated that whereas respondent no. 1 has profiteered by an amount of Rs.63,14,901/-, respondent no. 2 has profiteered by an amount of Rs.2,33,456/-.

Held: It cannot be accepted that the costs had suddenly increased on the intervening night of 14.11.2017/15.11.2017 when the rate reduction had occurred and which had forced him to increase his prices exactly equal to the reduction in the rate of the tax - such an uncanny coincidence is unheard of and hence there is no doubt that the respondent has increased his price for appropriating the benefit of tax reduction with the intention of denying the above benefit (of rate reduction) to the consumers - Respondent no. 1 & 2 has not only collected excess base price from customers which they were not required to pay due to the reduction in the rate of tax but has also compelled them to pay additional GST on the excess base price which they should not have paid - by doing so, the respondents no. 1 & 2 have defeated the very purpose of both the Central and State governments which aimed to provide the benefit of rate reduction to the general public - therefore, they have not only violated the provisions of the Act, 2017 but also acted in contravention of the provisions of s.171(1) of the Act as they have denied the benefit of tax reduction to their buyers by charging excess GST - Quantification of the profiteered amounts by DGAP is found to be correct - contention of the respondents that they have passed on the benefit of rate reduction by way of increasing the grammage to the recipients is not backed by any evidence on record, hence contention is not maintainable - Benefits mentioned in s.171(1) have to be passed on by way of commensurate reduction in prices only and the said section does not provide for any other method of passing on the benefit - respondents are directed to deposit the amounts in the CWF of the Central and State governments as the recipients are not identifiable, as per the provisions of rule 133(3)(c) of the Rules along with interest @18% - amounts to be deposited within three months failing which they shall be recovered by the CGST/SGST Commissioners concerned - penalty is imposable u/s 171(3A) of the Act for which purpose SCN is required to be issued - Commissioners to monitor this order under supervision of the DGAP and report compliance within a period of four months: NAA

- Application disposed of: NAA

2020-TIOL-18-NAA-GST

Director General Of Anti-Profittering Vs Cilantro Diners Pvt Ltd

GST - Anti-Profiteering - s.171 of the CGST Act, 2017 - Applicant alleged profiteering in respect of restaurant service supplied by respondent (a franchisee of Subway Systems India P Ltd.) inasmuch it is alleged that despite reduction in the rate of GST from 18% to 5% w.e.f 15.11.2017, respondent had increased the base prices of his products and had not passed on the commensurate benefit of reduction in GST rate - DGAP in its report dated 13.09.2019 has computed the profiteered amount as Rs.20,80,087/-.

Held: Welfare of the consumers who are voiceless, unorganised and scattered is the soul of the anti-profiteering provisions contained in s.171 of the Act - Authority has been working in the interest of the consumers as the trade is bound to pass on the benefit of tax reduction and ITC which becomes available to it due to revenue sacrificed by the Government - Authority does not, in any manner, interfere in the business decisions of the respondent and hence the functioning of the authority and the anti-profiteering machinery is within the confines of the four walls of the provisions of s.171 of the Act and in no way violates the tenets of Article 19(1)(g) of the Constitution - It is revealed from the DGAP's report that the ITC which was available to the respondent during the period July 2017 to October 2017 is 9.05% of the net taxable turnover of restaurant services supplied during the same period - with effect from 15.11.2017, when the GST rate on restaurant service was reduced from 18% to 5%, the ITC was not available to the respondent - in fact, the DGAP in its report has stated that the respondent had increased the base prices of different items by more than 9.05% i.e. by more than what was required to offset the impact of denial of ITC, supplied as a part of restaurant services to make up for the denial of ITC post-GST rate reduction - quantum of profiteering has been correctly computed as Rs.20,80,087/- in the DGAP report - respondent is directed to deposit the profiteered amount in two equal parts in the CWFs of the Central and State Government of Maharashtra, since recipients are not identifiable, along with interest @18% within a period of three months - SCN to be issued directing respondent to explain as to why penalty u/s 171(3A) read with rule 133(3)(d) of the Rules, 2017 should not be imposed - compliance report to be submitted within a period of four months by the SGST Commissioner concerned: NAA

- Application disposed of: NAA

2020-TIOL-17-NAA-GST

Director General Of Anti-Profittering Vs Bonne Sante

GST - Anti-Profiteering - s.171 of the CGST Act, 2017 - Applicant alleged profiteering in respect of restaurant service supplied by respondent (a franchisee of Subway Systems India P Ltd.) inasmuch it is alleged that despite reduction in the rate of GST from 18% to 5% w.e.f 15.11.2017, respondent had increased the base prices of his products and had not passed on the commensurate benefit of reduction in GST rate - DGAP in its report dated 13.09.2019 has computed the profiteered amount as Rs.7,33,043/-.

Held: Welfare of the consumers who are voiceless, unorganised and scattered is the soul of the anti-profiteering provisions contained in s.171 of the Act - Authority has been working in the interest of the consumers as the trade is bound to pass on the benefit of tax reduction and ITC which becomes available to it due to revenue sacrificed by the Government - Authority does not, in any manner, interfere in the business decisions of the respondent and hence the functioning of the authority and the anti-profiteering machinery is within the confines of the four walls of the provisions of s.171 of the Act and in no way violates the tenets of Article 19(1)(g) of the Constitution - It is revealed from the DGAP's report that the ITC which was available to the respondent during the period July 2017 to October 2017 is 7.39% of the net taxable turnover of restaurant services supplied during the same period - with effect from 15.11.2017, when the GST rate on restaurant service was reduced from 18% to 5%, the ITC was not available to the respondent - in fact, the DGAP in its report has stated that the respondent had increased the base prices of different items by more than 7.39% i.e. by more than what was required to offset the impact of denial of ITC, supplied as a part of restaurant services to make up for the denial of ITC post-GST rate reduction - quantum of profiteering has been correctly computed as Rs.7,33,043/- in the DGAP report - respondent is directed to deposit the profiteered amount in the CWFs of the Central and State Government of Maharashtra - compliance report to be submitted within a period of four months by the SGST Commissioner concerned: NAA

- Application disposed of: NAA

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