Director General of Anti-Profiteering Vs Manas Vihar Sahakari Awas Samiti 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 construction services related to purchase of a house under the PMAY in the respondent's project Mayur Residency Extension; also that the respondent had charged GST @18% on the construction service/works contract service and had not passed on the benefit of ITC by way of commensurate reduction in the price after implementation of GST - DGAP has submitted its report as well as a supplementary report concluding that the respondent had profiteered.

Held:  It is apparent from the DGAP's report that there has been no reduction in the rate of tax in the post GST period hence the only issue to be determined is as to whether there was any additional benefit of ITC with the introduction of GST which has accrued to the respondent and which he was required to pass on to his buyers - DGAP report mentions that the ITC as a percentage of the turnover that was available to the respondent during the pre-GST period from April 2016 to June 2017 was Nil and during the post-GST period from July 2017 to March 2019 it was 11.97% and which confirms that post-GST the respondent has benefited from additional ITC to the tune of 11.97% and the same was required to be passed on by to the applicant as well as the other buyers/recipients - DGAP has calculated the amount of ITC as Rs.35,98,596/- which is required to be passed on to all the recipients - claim of respondent that they had passed on the benefit of ITC by reducing the rate on the cost of construction/by way of cash or bank transfers is not supported by any reliable and cogent evidence - it is, therefore, concluded that the benefit of ITC to be passed on to the buyers during the period 01.07.2017 to 30.03.2019 is determined as Rs.35,98,596/- which includes GST @18% on the base profiteered amount of Rs.30,49,658/- as detailed in the DGAP report dated 30.08.2019 - insofar as the applicant is concerned, the profiteered amount is determined as Rs.19,953/- with also includes GST @18% - accordingly, respondent is required to refund to the recipients/buyers the profiteered amount along with interest @18% from the date when the amount was collected till the date of payment as per provisions of rule 133(3)(b) of the CGST Rules - such amount is to be paid within a period of three months and a compliance report is to be submitted by the jurisdictional Commissioner within a period of four months - respondent is liable for imposition of penalty u/s 171(3A) of CGST Act, 2017 and a SCN needs to be issued accordingly - other projects being executed also need to be examined from the angle of profiteering and the DGAP is directed to investigate in this regard: NAA

- Application allowed: NAA

2020-TIOL-15-AAAR-GST

JSW Energy Ltd

GST -   Applicant (now Appellant) company M/s JSW Energy Limited (M/s JEL) is engaged in the business of power generation - Its related party is Jindal Steel Limited (M/s JSL) which is engaged in manufacturing & supplying steel - The appellant supplies power to M/s JSL - The two entered into an agreement for supply of coal & other inputs to the appellant for generating power - The appellant had approached the Authority for Advance Ruling seeking to know the application of GST on coal & other inputs supplied on 'job work' basis by M/s JSL to the appellant, supply of power by the appellant to M/s JSL & on the job work charges payable by M/s JSL - The Authority held that the process undertaken by the appellant amounted to  "manufacture" & did not fall within the scope of 'treatment or process' as seen in the definition of job work - It further held that since the appellant and M/s JSL were related parties, any supplies made between them, even if without consideration, would attract GST - Aggrieved, M/s JEL went in appeal before the Appellate authority and also submitted  that the question of applicability of GST on coal & other inputs supplied by M/s JSL had not been answered and this the appellant claimed was perhaps on the reasoning that the transaction pertained to GST liability of M/s JSL & not the appellant - AAAR held that the processing activity undertaken on goods belonging to another registered person qualifies as job work even if it amounts to manufacture, provided all the requirements under the CGST/MGST Act in this behalf are met with; that the transaction between the appellant & M/s JSL does not amount to job work u/s 2(68) & Section 143(3) of the two Acts - appellant M/s JEL challenged both the orders before the Bombay High Court - High Court noted that  the moot question which arose in the matter was whether the Appellate Authority, in relying upon the 'new grounds', has violated the principles of natural justice, by not putting the petitioner to any notice that such 'new grounds' were proposed to be considered or by not affording the petitioner opportunity to place on record the documentary evidences or clarifications in order to meet such 'new grounds'; that, therefore, in  absence of any indication by the Appellate Authority that it proposed to take into consideration the 'new grounds' or the failure on the part of the Appellate Authority to afford the petitioner an opportunity to produce documents or documentary evidences having direct bearing on the 'new grounds', in the opinion of the Bench, amounts to failure on the part of the Appellate Authority to adhere to the principles of natural justice and such failure vitiates the decision making process and affords a good ground for interference in the exercise of powers of judicial review - accordingly, the High Court held that it  is satisfied that the ground of failure of natural justice and the consequent vitiation of the decision making process, has been made out, therefore, the  impugned order dated 2nd  July 2018 made by the Appellate Authority was set aside and the petitioner's appeal was remanded to the Appellate Authority for reconsideration on its own merits and in accordance with law.

Held: All the observations made in the AAAR order dated 02.07.2018 are repealed - AAAR holds that the proposed arrangement under consideration of supply of coal or any other inputs by the principal M/s JSL to the appellant M/s JEL for generation of electricity is satisfying the condition laid down u/s 143(1)(a) of the CGST Act in respect of bringing back of the inputs by the principal M/s JSL from the job worker ' s (M/s JEL's) premises after the completion of job work and, therefore, no GST would be leviable on such supply - furthermore, the job work charges payable to M/s JEL by M/s JSL will be subjected to GST in terms of the provisions laid down in 11/2017-CTR as amended: AAAR

- Appeal allowed: AAAR

2020-TIOL-393-CESTAT-ALL

Durgesh Enterprises Vs CCE & ST

ST - Appellants were registered with the Department for providing Construction Services in respect of Commercial or Industrial buildings and civil structures - Appellants were issued with show cause notice dated 24.10.2014 wherein it was stated that appellants were providing Commercial or Industrial Construction Service for the period from 01.04.2009 to 30.06.2012 and other than negative list service for the period from 01.07.2012 to 31.03.2013 and that appellant short paid service tax to the tune of around Rs.1.11 crores - Original Adjudicating Authority confirmed the demand holding that provided services were 'Erection, Commissioning and Installation Service', 'Maintenance and Repair Service' and 'Manpower Supply Agency Service' - appeal to CESTAT.

Held: If the confirmation of service tax is under a different category than the one which was proposed in the show cause notice then such confirmation of demand is not sustainable - impugned order is set aside on the said ground itself and the appeal is allowed: CESTAT [para 4 to 6]

- Appeal allowed: ALLAHABAD CESTAT

CENTRAL EXCISE

2020-TIOL-392-CESTAT-AHM

Kaira Can Company Ltd Vs CCE & ST

CX - Valuation Section 4 of the CEA, 1944 - Appellant is engaged in manufacture of Biscuit Cone which is cleared on payment of Excise Duty on their sale price to their customer - Customer is supplying Free of Cost Paper, Aluminium Sleeve printed with buyers production details to the appellant and the appellant supplies Biscuit Cone duly packed in the said sleeve - Case of the department is that the sleeve which is packing material supplied by the customer to the appellant, the cost thereof, needs to be included in the Transaction Value and duty should be charged on the said value demand confirmed, therefore, appellant is before the CESTAT.

Held: Appellant had filed declaration under Rule 173B & 173C of erstwhile CER, 1944 wherein they had disclosed that the laminated paper sleeves are supplied free of cost by the customer and the same has no impact on the assessable value; with this information given by the appellant to the revenue, if at all revenue had any objection about the valuation, on this basis the Show Cause Notice could have been issued well within the time - Once a fact was revealed by the appellant to the revenue, thereafter, it cannot be said that there is suppression of fact on the part of the appellant - entire demand which is beyond one year from the date of Show Cause Notice is time barred - impugned order is set aside and appeal is allowed only on time bar without going into the merit of the case: CESTAT [para 5.1, 6, 7]

- Appeal allowed: AHMEDABAD CESTAT

TP - Assessment order merits being quashed if it omits to judiciously examine specific issues of selection of comparables, as was directed by Tribunal on remand: HC

I-T - Demurrage charges of preceding AY were not debited to P&L account nor claimed as deduction from total income for current AY, no disallowance u/s 40(a)(i) is warranted for faliure to deduct TDS: ITAT

TP - TP adjustment on account of interest on receivables is sustainable, where assessee company is debt-free, owing to which no question of such interest arises: ITAT

TIOL CORPLAWS

Companies Act - Valuer of equity shares not to apply control premium to reach fair valuation where purchaser already holds controlling stake in Company: NCLAT

Patent Act - If rights of patent holder do not crystallize on mere grant of patent but still suit filed on strength of grant of patent is maintainable: HC