Kushal Ltd Vs UoI

GST - The petitioner-company manufactures and sells paper and paper waste and is also engaged in trading in various commodities - The petitioners were also duly registered under the GST Acts and regularly filed returns and discharged tax liability - The petitioner claimed to have entered into transactions on as is where is basis in the relevant year - The goods were purchased from registered persons under the GST Acts on payment of tax and were in turn sold to other registered persons - ITC was claimed of tax paid on purchases which was utilized towards payment of output tax liability and differential tax amount was paid through electronic cash ledger - Thereafter search proceedings were conducted at the petitioner's premises whereupon enquiry was made into the trading transactions and evidence regarding sales and purchases was called for - The petitioners claimed that since the goods were sold on as is where is basis, there was no evidence of their movement - While it was not disputed that the goods were purchased from registered vendors who had paid the taxes due - Later, summons were issued to the petitioner & statements were recorded - The petitioners submitted the documents as called for and claimed there to be no evasion of GST - The Revenue officers visited the petitioner's premises again for scrutiny of the same transactions whereupon the second petitioner was called to the commissionerate and was arrested immediately - The second petitioner was later granted bail u/s 167(2) of the CrPC 1973 - The petitioner claimed to have been issued no notice u/s 73 or 74 of the GST Acts - It was also claimed that no proceedings were pending u/s 62, 63, 64, 67, 73 or 74 of the GST Acts, yet the Revenue provisionally attached the petitioner's bank accounts in exercise of powers u/s 83, which in such circumstances, was wholly without jurisdiction.

Held - A reading of Section 83 of the CGST Act makes it clear that a sine qua non for exercising powers under this provisions is that proceedings should be pending u/s 62, 63, 64, 67 or 74 of the CGST Act - Presently, the proceedings u/s 67 are no longer pending and pursuant to search, proceedings under any of the other sections mentioned in Section 83 were not initiated - In these circumstances, on the date when the orders of provisional attachment came to be passed, the basic requirement for exercising powers u/s 83 have not been satisfied - Hence the provisional attachment is not in consonance with the provisions of Section 83 and cannot be sustained - In such circumstances, it is also not necessary to enter into merits of the petitioner's contentions and the same are left open to be raised in appropriate proceedings before the appropriate forum - Hence the orders attaching the petitioner's bank accounts are unsustainable and merit being quashed: HC

- Writ petitions allowed: GUJARAT HIGH COURT

2019-TIOL-77-NAA-GST

Director General of Anti-profiteering Vs Johnson and Johnson Pvt Ltd

GST - Anti Profiteering - The DGAP had received a reference from the Standing Committee on Anti Profiteering for investigating the respondent-company, which allegedly did not pass on benefit of reduction in rate of GST on products supplied by it, considering that the GST rate had been reduced from 28% to 18% w.e.f. 15.11.2017 - Based on the data furnished by the respondent, the DGAP computed the total profiteered amount at about Rs 230,40,74,132/- on account of increase in base prices of the products subsequent to reduction in GST rate - Earlier, the NAA issued notice to the respondent, proposing to accept the report as furnished by the DGAP and to fix liability for profiteering u/s 171 of the CGST Act - Penalty was also proposed to be imposed u/s 29, 122-127 of the CGST Act r/w Rule 21 and 133 of the CGST Rules 2017.

Held: The respondent's allegations of violation of principles of natural justice do not have merit since the respondent has been afforded due opportunity of defending itself and has been heard in detail - The respondent also alleged that the DGAP's computations of profiteered amount were arbitrary and followed a method not prescribed in the CGST Act or Rules - However it is seen that it was not possible to compare the actual pre-rate reduction prices with post rate reduction prices for every customer as the same customer may not have bought the same goods during pre and post reduction periods - The DGAP had to compare pre-rate reduction prices with actual post rate reduction prices as the benefit was required to be passed on to each buyer and it could not have been calculated by computing the average base prices post rate reduction - Hence the mathematical methodology adopted by the DGAP is logical, reasonable and correct - Moreover, it is seen that the respondent added the tax costs and losses which it had allegedly incurred at time of introduction of GST and then arrived at the pre-rate reduction ideal base prices - The respondent gave no justification for adding the tax costs - The respondent could not have added the alleged losses in the pre-rate reduction base prices which it stated to have incurred when the GST rate was increased - Such claim of the respondent is incorrect as the GST rates were fixed to take into account the pre-GST central and state taxes and were almost equal to the tax rates which were prevalent during the pre-GST period - In any case, if the GST rates exceeded the pre-GST rates, the respondent had full liberty to raise his prices w.e.f. 01.07.2017 - Not having done so is the own business call taken by the respondent for which it cannoty deny benefit of tax rate reduction to the customers when the GST rates had been reduced w.e.f. 15.11.2017 - The respondent did not add the tax cost and the losses incurred in the price of products between the period from 01.07.2017 to 14.11.2017, but surprisingly chose to add them w.e.f. 15.11.2017 when it was required to reduce its prices commensurate with the tax reduction - Hence, it is clear that the respondent did not commensurately reduce its prices but in fact increased them by adding the tax costs and losses w.e.f. 15.11.2017 on the base prices which it was already charging on 14.11.2017 - The respondent arbitrarily computed the pre rate reduction base price of its products by taking into consideration the highest selling base prices instead of average base selling price, although admittedly selling products to different customers at different prices - Therefore, it is clear that the respondent had no intent to pass on benefit of rate reduction to its customers - It is thus established that the respondent indulged in profiteering in contravention of the provisions of Section 171(1) of the CGST Act - The illogical, unreasonable and arbitrary methodology adopted by the respondent when computing the benefit of tax reduction cannot be accepted - Moreover, less benefit passed on product cannot be set off against excess benefit passed on another product - The profiteered amount has to be calculated on those products on which no benefit or less than commensurate benefit has been passed on - Besides, the NAA as per Section 171(2) is required to ensure that benefit of tax rate reduction is passed on and is not mandated to act as a price regulator or controller - The respondent is free to fix its prices and earn profit conditional upon it passing on benefit of rate reduction, which has been given to the respondent by the Central and State Governments by sacrificing their own revenue - Hence Section 171 does not violate the provisions of Article 19(1)(g) and Article 300A of the Constitution of India - Therefore, as the respondent denied benefit of tax rate reduction to customers in contravention of Section 171(1) of the CGST Act and has profiteered from such activity, it is liable to face penalty u/s 171(3A) of the Act - The profiteered amount be deposited into the CWF - Penalty be issued to the respondent, proposing to impose penalty on it: NAA

- Application disposed: NAA

2019-TIOL-3629-CESTAT-DEL

Aryas Grains Pvt Ltd Vs CCE & ST

ST - The assessee-company paid service tax under reverse charge basis for GTA service - The assessee filed refund claim on grounds of having paid service tax on GTA under the reverse charge mechanism in respect of transportation of rice from its rice mill to the godown of the Food Corporation of India, during the relevant period - The transportation of rice is exempted under the Notfn No 25/2012-ST - The Revenue issued SCN proposing to reject refund on grounds of limitation as well as on grounds of unjust enrichment - While the refund was sanctioned by the adjudicating authority, such findings were reversed by the Commr.(A) - Hence the present appeal.

Held - The issue at hand is to decide as to whether the time limit as prescribed u/s 11B r/w provisions of Section 83 of the Finance Act is applicable in this case - This issue is settled in favor of the assessee through the Apex Court's decision in Union of India vs. ITC limited as well as by the Tribunal's decision in Ambiance Hospitality Pvt Ltd. vs. CCE, Delhi-IV - Such issue also stands settled by the Bombay High Court in Parijat Construction vs. CCE, Nasik - Hence the findings of the Commr.(A) are not sustainable and merit being set aside: CESTAT

- Assessee's appeal allowed: DELHI CESTAT

2019-TIOL-3628-CESTAT-HYD

WS Industries India Ltd Vs CC & CT

ST - The short point to be decided is, whether the Assistant Commissioner/Deputy Commissioner was correct in rejecting the request of assessee for condonation of delay in filing the refund claim under Notfn 17/2011-ST when the notification has provided for such condonation - The case of the department is that the assessee had not adduced sufficient grounds for allowing the refund claim - Revenue asserted that the refund claim beyond the period of limitation cannot be sanctioned - Assessee on the other hand prays for a lenient view in view of the difficulties which they were going through during the relevant period including a reference of their company to BIFR - They were not able to keep track of all relevant matters and therefore there was a delay in filing the refund claim which should have been condoned - In similar cases with respect to Exemption Notfn 7/2011 available to SEZ developers, this Bench had taken a liberal view and condoned the delay as was available under Exemption Notfn - The decisions relied upon by revenue pertain to claim of refund under Section 11B of Central Excise Act and Section 27 of the Customs Act read with Notfn 102/2007 which do not provide for any condonation of delay - In respect of such refund claims, the statutory time limit has to be adhered to and once the refund claim is hit by limitation, no refund claim could be sanctioned - In this factual matrix, considering the situation of assessee during the relevant period as explained by assessee, the delay in filing the refund claim is condoned and the original authority is directed to sanction refund claim to the extent admissible on merits: CESTAT

- Appeal allowed: HYDERABAD CESTAT