OCTOBER 23, 2019

By Vijay Kumar

THE All Powerful GST Council has met 37 times so far. How much does "a" meeting cost us? An advocate obtained some information through RTI on the recently held 37th meeting of the Council.

Some interesting facts:

1.  The Goa Government spent over Rs 3,26,29,600 on the two day 37th  meeting of the GST Council which was held at a 5 Star hotel on Kadamba Plateau on 19th  and 20th  of last month.

2. A firm was engaged by the Goa State Tourism Development Corporation for a cost of Rs 1,95,60,000 as the event management agency for the two day meet which included all the advertisements, hoardings and Pole advertisements raised across Goa portraying the photos of Union Finance Minister Nirmala Sitharaman and Chief Minister Pramod Sawant.

3.   The 5 star Double Tree by Hilton where the meet was held has cost Rs 50,69,600 which includes accommodation and meals for the delegates including the Presidential Suite which cost the taxpayer Rs 59,500 a night while Rs 10,16,000 was towards food and beverage.

4.  Rs 50,00,000 was spent on the hiring of around 200 taxis to ferry the delegates over those two days.

5. Further bills are on the way.

This is the money spent by the Goa government. Each State Government and the Central Government must have also spent huge amounts to ensure that ministers and officers were comfortably taken to Goa and back.

GST doesn't come cheap.

And, if you still feel there is an economic downturn, just blame the millennials!

Filing of GST Returns - States Fare Better

The CBIC Chairman in his latest periodic communication to his staff, says,

The compliance behaviour for filing of return in respect of Form GSTR1 and Form GSTR3B was analysed. It has been observed that there was considerable gap in filing of returns in case of Centre administered assessees as compared to State administered assessees which requires immediate attention .

Why are the assessees under the CBIC administration more shy of filing returns than those under the administrative control of the State GST authorities. Are the State GST officers better than the Central GST officers? Not exactly as this story would reveal.

No Property – Seize Car and Mobile Phones

Not very long ago, there was a poor GST taxpayer who had no immovable property and was living in a rented house. One day he was called by the Assistant Commissioner of State Tax, for the purpose of inquiry and investigation and on the same day he had appeared before the officer. During the course of the inquiry, the Assistant Commissioner seized the car and the mobile phones of the taxpayer without drawing any panchnama and he was directly served with a seizure memo. The taxpayer orally and in writing made several requests to the Assistant Commissioner that he is ready and willing to give a bond for provisional release of the articles seized, but there was no response. When the officers are not responsive and responsible, the taxpayers, still have an option – approach the court and that is exactly what our taxpayer did. The Gujarat High Court came to the rescue of the harried taxpayer in a case reported by us yesterday - 2019-TIOL-2431-HC-AHM-GST .

In the Court, the Assistant Commissioner had the gumption to state that none of the fundamental rights of the petitioner have been violated because of any action or inaction on the part of the respondent. Having a car and a mobile phone is certainly not a fundamental right, especially when you are a GST assessee. The department defended its action of seizing the vehicle and the mobile phones for the simple reason that the petitioner did not possess any property viz. movable or immovable property in nature, and that in fact the petitioner was residing in rental premises.

The High Court was very kind when it observed,

Having regard to the gross abuse of powers on the part of the respondent No.4, merely setting aside the impugned order will not meet the ends of justice, inasmuch as, petitioner has been deprived of the use of his vehicle and his two mobile phones for a period of almost one year on account of such unauthorised action on the part of the fourth respondent and is therefore required to be adequately compensated in that regard. The officers acting under the GGST Act should well understand that they are required to act within the confines of the powers vested in them, that too, in a just and proper manner and should not exceed the powers vested in them or use the wide powers vested in them under the GGST Act as a tool for harassing the persons covered under that Act.

When an officer functioning under the GGST Act, acts in a highhanded and arbitrary manner in excess of the authority vested in him the same is required to be viewed very seriously. Justice demands that such citizen be compensated for the undue harassment faced by him on account of the unauthorised action of the concerned officer. This court is, therefore, inclined to award exemplary costs in favour of the petitioner.

But the good taxpayer was not inclined to get the good Assistant Commissioner punished. He requested the court not to pass any orders which may affect the Assistant Commissioner personally and stated that he is not interested in getting any compensation for the damage suffered by him on account of the arbitrary and unlawful action of the Assistant Commissioner. 

Why was he so kind to the Assistant Commissioner who deprived him of his car and phone? The court could easily understand when it observed,

It is evident as to why the petitioner has taken such a stand. The said request of the petitioner seems to emanate from the fact that the petitioner who is covered by the Goods and Services Tax Act has to deal with the officer concerned day in and day out and is, therefore, afraid of taking any action against him out of fear of facing reprisal for his action as the entire department would be up in arms against him and he would have to face untold harassment in future.

So, the audacious Assistant Commissioner, who illegally held the car and phone of the assessee was let off by the High Court, at the request of the victim, even though the Court held that it is, therefore, apparent that the entire exercise of seizing the car and the mobile phones of the petitioner is nothing but a farce under the guise of exercise of statutory powers without obtaining the necessary authorisation, and a blatant show of brute force by a high ranking officer in gross abuse of powers.

The premises where the search was conducted for seizing the vehicle and phones was the Rajya Kar Bhavan, the State Tax Office!

Be a Good and Submissive Taxpayer.

Are the Central Tax Officers more fair? Not exactly as this case would show.

Profiteering - Pejorative?

The strange facts in our recently reported case would make GST a Grossly Surprising Tax. In this case three members of the High Power Anti Profiteering Authority heard a case, but by the time the order came to be delivered, a fourth Member joined and he also signed the order. The fourth Member had not heard the assessee, but just signed along with the other three. Now, can a Member who had not heard the case at all and who was not even a Member at the time of hearing, sign the order? "Why not?", argued the Government on the grounds that:

1.  As per the Rules, no act or proceedings of the Authority shall be invalid merely on the ground of any irregularity in the procedure followed by the Authority not affecting merits.

2.  The Rules provides for a quorum of three members, signing the order by fourth member is superfluous.

3.  There was no illegality and at the most a mere irregularity and no prejudice has been demonstrated by the Petitioners.

4.  The Rules do not mandate oral hearing and the entire record was before the Authority to take a decision.

The High Court was not impressed and concluded that when the three members of the Authority had heard the Petitioner and participated in the entire hearing, the collectively signed decision, when the fourth member joined only for signing the order has resulted in violation of the principles of natural justice and fairness, and is liable to be set aside.

The Court referred to an earlier order of the Delhi High Court which observed,

1.  A fundamental premise on which our legal system rests is that no one can suffer an adverse order unheard, or be subjected to an unfair procedure. Procedural safeguards have, over the years, through precedents and court judgments, been recognized as a bulwark against executive excesses or apathy. These rules apply with equal vigour in the case of Tribunals responsible for dispensing justice within their sphere of activity.

2.  A basic component of fair hearing is that a man likely to be affected by a decision, should be heard by an unbiased or impartial tribunal or authority. The corollary to this – and perhaps equally so, is that the officer, or authority who hears the litigant or individual, should issue the order.

3.  The efficacy and existence of every organ of the state – no less, Courts and Tribunals rest on the public confidence they enjoy. Any act which tends to undermine that confidence has to be shunned, and wherever necessary, cured. To achieve this end, the Constitution makers envisioned a remedy under Article 226 of the Constitution. Any procedure or practice which suggests – even remotely, of unfairness, at one stroke undermines public confidence, and at the same time, sullies fair-play; here, there cannot be an overemphasis of the aphorism that justice must not only be done, but manifestly seen to be done.

The Court noted, " The term profiteering, under the Act and Rules, is used in a pejorative sense ." 

Kindly see 2019-TIOL-2419-HC-MUM-GST

Sanitary Napkins in Profiteering

The Anti Profiteering Authority has found that a Sanitary Napkins manufacturer has illegally obtained profiteering of more than Rs. 42.5 lakhs as he has failed to pass on the benefit of rate reduction to his customers and was directed to deposit this amount along with the interest @ 18%. As he has denied benefit of rate reduction to the buyers of the product "Sanitary Napkin" in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has thus resorted to profiteering, which is an offence under section 171 (3A) of the CGST Act, 2017 and therefore, he will be apparently liable for imposition of penalty under the provisions of the above Section.

Kindly see 2019-TIOL-51-NAA-GST

When the tax on sanitary napkins was removed, the then Finance Minister declared, "I have already instructed the department which looks after anti profiteering to investigate to ensure that either the rates would have come down on July 1,2017, or it should come down now. It cannot be that they have the cake and eat it too." No selling of napkins and profiteering?

Until Next Week