NAA CASES

2019-TIOL-51-NAA-GST

Director General Of Anti-Profiteering Vs Glenmark Pharmaceutical Ltd

GST - Anti-profiteering - Applicant has alleged that in the bill raised for ‘Sanitary Napkin' after exemption of GST from 12% to Nil w.e.f 27.07.2018 by 19/2018-CTR the old stock was being sold at the pre-rate reduction MRP - DGAP in its report that pursuant to the notification the respondent company had sent a communication to all its distributors announcing reduction in MRP of his product and the new reduced price for each pack was also conveyed to distributors, stockists and retailers and further that the inventory sold by them after 27.07.2018 was at a price lower than the MRP of the products and that they had also advertised in one of the leading newspaper informing the public at large about the reduction in the MRP of the product - however, based on the applicant no.1's field inspection, it was noticed that the old stocks were being sold at the same MRP prevailing prior to reduction of GST rate; that neither the GST rate nor the price was indicated on the invoice except the MRP of the product and this MRP did not indicate that there was commensurate reduction in price charged from ultimate consumers - DGAP in its report stated that due to reduction in GST rate from 12% to Nil w.e.f 27.07.2018, the ITC which was not available to the respondent became part of his cost and thus the commensurate base price of the product post GST rate reduction would be higher to the extent of loss of ITC; that after taking into account the loss of ITC @8.39% the DGAP has assessed the commensurate price for each stock keeping unit (SKU) and compared it with the base prices at which the respondent had actually sold each SKU during the period from 27.07.2018 to 30.11.2018; that the DGAP has computed the profiteered amount as Rs.42,52,370/-.

Held: On the one hand the respondent claims that his prices were increased to the extent of denial of ITC and other costs but at the same time he has claimed that a communication was sent to all the distributors directing them to sell the products at reduced prices which appears to be baseless as the fact remains that the base prices were increased beyond 8.39% denying the benefit of exemption to the recipients - decision relied upon by respondent of the case of Kumar Gandharv vs. KBRL Ltd. is distinguishable since in that case the provisions of s.171 were not attracted because the rate of tax had in fact increased and hence the question of profiteering did not arise but in the present case undisputedly the prices of the product ought to have been reduced as the rate of tax had decreased from 12% to Nil - Since the actual prices are available for the post rate reduction, the DGAP has correctly followed the methodology and arrived at the profiteering amount - respondent is directed to reduce his prices by way of commensurate reduction keeping in view the reduced rate of tax and benefit of ITC which has been availed by him - respondent is directed to deposit the amount of Rs.42,52,370/- as per the provisions of rule 133(3)(c) in the ratio of 50:50 in the Central and State CWFs of the State of Madhya Pradesh along with interest @18% - respondent is liable to be imposed with penalty since they have denied the benefit of rate reduction to buyers of Sanitary Napkin in contravention of s.171(1) of the Act and thus resorted to profiteering which is an offence u/s 171(3A) of the Act and for which purpose a SCN is to be issued: NAA

- Application allowed: NAA

2019-TIOL-50-NAA-GST

Director General Of Anti-Profiteering Vs Shree Infra

GST - Anti-Profiteering - Applicant has alleged that the respondent had not passed on the benefit of ITC by way of commensurate reduction in price in respect of purchase of two flats in the respondent's project ‘River View Heights' - DGAP has in its report mentioned that the ITC pertaining to unsold units might not fall within the ambit of his investigation and the respondent was required to recalibrate the selling price of such units to be sold to prospective buyers by considering the net benefit of additional ITC available to them post GST - DGAP concluded that the amount of benefit of ITC not passed on to the recipients viz. the profiteered amount came to Rs.2,13,468/- which included 12% GST on the base profiteering amount of Rs.1,90,596/- and the computation of profiteering was in respect of 26 home buyers from whom payments had been received by the respondent during the post-GST period from 01.07.2017 to 31.10.2018 and that the construction service has been supplied by respondent in the State of Gujarat only.

Held: Respondent has raised no objection regarding computation of the amount of profiteered amount as made by DGAP - accordingly an amount of Rs.2,13,468/- computed by applying additional benefit @0.28% is determined as profiteered amount including GST as per rule 133(1) of the Rules - Applicant shall be entitled to the ITC benefit of Rs.36,786/- including GST and rest of the house buyers would be eligible to get ITC benefit of Rs.1,76,682/- including GST along with interest to be calculated at 18% from date of realisation of above amount till it is paid within a period of three months - respondent cannot adjust the amount of discount or the SGST/CGST credit offered by him out of their own profit margins on account of reduction in the cost or due to slowdown in the market against the ITC benefit to be paid to the house buyers - DGAP shall recompute the amount to be passed on to all the eligible house buyers and convey the same to the respondents and the Commissioner SGST/CGST as well as the Authority - since the respondent has resorted to profiteering, they are liable for imposition of penalty and a SCN is required to be issued u/s 171(3A) of the Act r/w rule 133(3)(d) of the Rules - RERA certificate indicates that the investigation has been restricted only to Phase II of the project - there might be some more phases of the project and in that context the aspect of profiteering has not been investigated and may require to be investigated by DGAP and who are directed to undertake the same and submit a report in terms of rule 133(5) of the Rules: NAA

- Application allowed: NAA

HIGH COURT CASES

2019-TIOL-2431-HC-AHM-GST

Prakashsinh Hathisinh Udavat Vs State Of Gujarat

GST - Petitioner has challenged the action of the respondents of seizing the petitioner's car as well as his two mobile phones vide order of seizure dated 25.10.2018 and seeks release of the above vehicle and the mobile phones so seized; that though a period of more than six months has passed since the car and the mobile phones came to be seized, neither has the petitioner been served with a notice under sub-section (7) of section 67 of the GGST Act nor has he been served or any order affixed at his residential premises for extension of the period of seizure by a further period of six months; that he has orally made several requests to the respondents that he is ready and willing to give a bond for provisional release of the articles seized, but till date, there is no response from the respondents.

Held: Court had vide its order dated 27.09.2019 directed that the Assistant Commissioner of State Tax (1) (Enforcement), Division-1, Ahmedabad who passed the order of seizure be joined as respondent no. 4 in the proceedings; that no authorisation seemed to have been given by an officer not below the rank of the Joint Commissioner and, therefore, the impugned action of the said Officer appeared to be totally without any authority of law and moreover, since the details of the premises as stated in the impugned order is Rajya Kar Bhavan, Ahmedabad, it was 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 - in the affidavit-in-reply filed by the respondent No.4 or even on the basis of the record, no material has been produced before the Court to show that respondent No.4 was authorised by the proper officer to search any premises or seize any goods, documents, books or things under sub-section (2) of section 67 of the GGST Act in the case of the petitioner - Thus, it is an admitted position that the respondent No.4 - Assistant Commissioner was not conferred any power under sub-section (2) of section 67 of the GGST Act to carry out any search or inspection as stated in the order of seizure dated 25.10.2018 - The impugned order has therefore, been passed without any authority of law - Consequently, the seizure of the car and the mobile phones belonging to the petitioner is illegal, arbitrary and is not backed by any authority of law - From the order of seizure, it is not possible to ascertain the make or model or the condition of the vehicle seized - A perusal of the impugned order further reveals that against the name of person to whom the premises where the search is carried out belong, nothing has been stated and it has been left blank and against the names of witnesses, the petitioner's name and address has been shown - At the end of the order, the names of the witnesses are shown without complete addresses, making it impossible to identify the witnesses - not only has the order of seizure been made without any authority of law, the order of seizure also suffers from various deficiencies - 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 explanation given in the affidavit-in-reply as regards the illegalities alleged to have been committed by the petitioner, does not give the fourth respondent a licence to act in excess of the powers vested in him - Such action on the part of the respondent No.4 cannot be countenanced even for a moment - respondent No.4 has not thought it fit to release the vehicle of the petitioner without specific directions being issued by this court on 25.09.2019 and has continued with the illegal action of the seizure of the petitioner's car and the mobile phones - in the affidavit-in-reply, the respondent No.4 has 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 said respondent - impugned order of seizure made by the respondent No.4 is not relatable to any provision of the GGST Act - inescapable conclusion is that the respondent No.4 has acted without any authority of law and in gross abuse of powers, which renders the impugned order of seizure, unsustainable - petition succeeds and is accordingly allowed - The impugned order of seizure dated 25.10.2018 passed by the respondent No.4, is hereby quashed and set aside and the respondent NO.4 is directed to forthwith release the vehicle as well as to mobile phones of the petitioner and hand them over to him.: High Court [para 7, 14, 15, 16, 17, 18, 19, 25]

GST - S.157 of the CGST Act, 2017 - Protection of action taken under the Act - 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 - an officer is u/s 157(2) of the Act protected provided he is authorised to do something under the GGST Act and provided such act has been done in good faith, therefore, it was incumbent upon the respondent No.4 to show whether he has been authorised by a person not below the rank of Joint Commissioner to carry out the search and that the action taken by him was in good faith failing which, he is not entitled to the immunity provided under section 157 of the GGST 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: High Court [para 20, 21, 22, 23]

GST - Awarding of costs - Petitioner has requested this court not to pass any orders which may affect the respondent No.4 personally and has further 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 respondent No.4 - 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 - Therefore, at the request of the petitioner, the court refrains from passing any order of exemplary costs - However, the registry is directed to forthwith communicate this order to the Chief Secretary of the State to bring it to his notice the manner in which the provisions of the GGST Act are being implemented by the officers functioning thereunder - It is also expected that appropriate action will be taken in this regard: High Court [para 24, 26]

- Petition allowed: GUJARAT HIGH COURT

2019-TIOL-2429-HC-MUM-GST

Rochem India Pvt Ltd Vs UoI

GST - The present writ petition assails an order passed by the jurisdictional Additional Commissioner (Appeals) under the CGST Act - The petitioner claimed to be unable to exercise alternate remedy of appeal to challenge the order before the GSTAT, on account of the Tribunal not yet being constituted and being non-functional - As the petitioner is left without any remedy, it is also apprehensive of the Revenue taking coercive proceedings to recover its dues.

Held - In light of such facts, the petition is adjourned by three months, in the hope that in the intervening period, the Tribunal u/s 109 would be constituted and become functional, enabling any appellant aggrived by orders passed by the appellate authorities, to file appeals - Meanwhile, the Revenue is also restrained from adopting any coercive steps pursuant to the order in challenge: HC

- Writ petition disposed of: Bombay High Court

2019-TIOL-2430-HC-AHM-GST

Insha Trading Company Vs State Of Gujarat

GST - Petitioner has challenged the order passed by the third respondent u/s 130 of the CGST Act whereby the vehicle together with the goods contained therein have been ordered to be confiscated and tax, penalty and fine in lieu of confiscation of goods and conveyance have been levied.

Held: Conveyance in question was transporting brass electrical parts from Jamnagar to Delhi and when the conveyance came to be intercepted on 14.01.2019, the driver of the conveyance had duly produced the e-way bill as well as the invoice in connection with the goods that were transported, however, the third respondent issued an order in Form GST MOV-02 for physical verification/inspection of the conveyance, goods and the documents on the ground that the genuineness of the goods in transit (its quantity etc.) and/or tendered documents requires further verification - despite the fact that no discrepancy appears to have been found after the inspection of the goods and conveyance, the proper officer has not issued a release order in Form GST MOV-05 - In the affidavit-in-reply, there is not even a whisper regarding any discrepancy having been found in bilty No.15615 after verification, despite the fact that the conveyance has been detained for that purpose - Despite the aforesaid position, the third respondent has proceeded further and issued a notice under section 130 of the CGST Act in Form GST MOV 10, and has thereafter, passed an order of confiscation under section 130 of the Act in Form GST MOV-11 - Reason for passing such an order has got nothing to do with the reasons for which, the goods and conveyance were initially detained - The reasons for issuance of the notice for confiscation under section 130 of the CGST Act in Form GST MOV-10 are that upon preliminary verification of the dealer online, 42 e-way bills have been generated in December 2018, wherein, IGST has been shown to Rs.3,64,30,800/- and it appears that, dealers has not paid the same or that the purchases are not genuine - If that be so, nothing prevents the respondents from taking appropriate action against petitioner in accordance with law under the relevant provisions of the CGST Act - However, when the conveyance in question was carrying the goods which were duly accompanied by documents and no discrepancy was found in connection therewith, there was no reason for the third respondent to confiscate the same - Impugned order of confiscation passed by the third respondent under section 130 of the CGST Act, therefore, cannot be sustained - petition succeeds and is accordingly, allowed - order dated 08.04.2019 issued by the third respondent under section 130 of the CGST Act as well as the order of demand of tax and penalty dated 29.01.2019, issued in Form GST MOV-09 are hereby quashed and set aside and the third respondent is directed to forthwith release the conveyance and goods in question: High Court [para 7.1, 7.2, 7.3, 7.4, 8]

- Petition allowed: GUJARAT HIGH COURT

2019-TIOL-3014-CESTAT-ALL

LG Electronics India Pvt Ltd Vs CC & CE

Cus - The assessee-company manufacturers Air Conditioners - It uses Aluminium-Manganese-Silicon based and/or Aluminium-Magnesium-Silicon based alloys in the heat exchangers and the same were imported from China - During the relevant period, the Govt issued a notification u/s 8C(2) of the CETA 1975, imposing provisional Safeguard Duty based on preliminary determination on all goods falling under Heading 7606 & 7607 imported into India from China - Later, the DG (Safeguard) concluded in final findings that the increased imports of Aluminium Flat Rolled Products and Aluminium Foil from PRC, had threatened to disrupt the domestic industry manufacturing these items in India and so necessitated imposition of Safeguard Duty on such imports - Hence Safeguard Duty was imposed - The assessee claimed to have paid Customs duty for import and clearance of Aluminium Foil - It also deposited Safeguard duty - Thereafter, the assessee claimed that certain goods imported by it during the relevant period were excluded from the ambit of the Notfn and so were exempted from Safeguard Duty - Refund claim was filed u/s 8C(2) of the Act - Subsequently, the adjudicating authority rejected the refund claim - On appeal, the Commr.(A) sustained such findings - Hence the present appeal.

Held - It is a fact that the assessee did not specifically describe the product imported from China in the bill of entry and only referred to the bill of lading and the invoices - The O-i-O mentions it to be necessary that the goods been cleared from Customs and were not available for cross checking the authenticity of technical specifications - No documentary evidence existed to verify the technical specifications prescribed in the notification at the time of import, particularly when the thickness specified was an important aspect to be considered - The Commr.(A) observed that the supporting documents furnished by the assessee did not correlate with the bill of entry in respect of the chemical properties and physical specification for claiming exemption from levy of Safeguard Duty - From the O-i-A, it emerges that the supporting documents were examined but no specific reasons were assigned as to why the chemical properties did not satisfy the requirements of relevant parts of the Notfn - Only a bald statement is made - Supporting documents filed by assessee require examination to determine whether the product imported would fall under the exemption - Hence the matter be remanded to the Commr.(A) for recording findings to such end: CESTAT

- Case remanded: ALLAHABAD CESTAT

TII

I-T - When assessment proceedings are going on in pursuant to remand made by Tribunal, then Writ Court should not express any view on merits of claim made by taxpayer: HC

TP - Corporate guarantee extended by Indian taxpayer entity to its overseas AE would come within ambit of 'international transaction', if there was no factor to comfort lenders to grant commercial loans at competitive rates: ITAT

TP - Determination of ALP which is pending consideration, merits to be concluded on basis of Advance Pricing Agreement decided between CBDT and Taxpayer entity: ITAT

TP - Price of comparable uncontrolled transaction merits to be adjusted, so as to account for differences which could materially affect prices in open market: HC

TIOL CORPLAWS

Companies Act, 2013 - Restoration of company's name is possible after being struck off from register if there are tax arrears recoverable by the Income Tax Department : NCLT

Trademarks Act, 1999 - Make My Trip avert defences of suppression & acquiescence to get permanent injunction against Make My Travel: HC

Trade Marks Act, 1999 - Trade Marks Rules, 2017 cannot do way with statutory obligation of Registrar to communicate refusal of Trademark application with grounds of rejection : HC

PCA, 1988 - High Court cannot deny bail to P Chidambaram merely on speculation that witnesses are being influenced without any material basis: SC Larger Bench