Prasanna Kumar Bisoi Vs UoI

GST - The petitioner filed returns for the financial year 2017-18, 20018-19 and 2019-20 at belated stage and availed Input Tax Credit at the time of filing GSTR-3B returns, as Works Contractor - The Superintendent demanded interest of Rs.2,24,487/- on 04.03.2020  under Section 50 (1) of the C.G.S.T Act, 2017 in respect of the above three financial years on the  ground that interest is payable on ITC set off - Hence the present Writ Petition - P etitioner submitted that in the 39 th meeting of GST Council held on 14.03.2020 it was decided that interest for delay in payment of GST is to be charged on the Net Cash Tax Liability w.e.f. 01.07.2017 retrospectively but not on the Input Tax Credit; that the petitioner has filed a representation before the Superintendent, Central GST and Central Excise, Berhampur with a prayer not to charge the interest on the availed Input Tax Credit and to drop the proceeding in view of the decision taken in the 39 th meeting of GST Council, h owever, no action has been taken as yet.

Held: Court disposes of this Writ Petition with a direction to the Superintendent, Central GST and Central Excise, Berhampur - opposite party No.3 to dispose of the representation filed by the petitioner on 06.05.2020 under Annexure:3 keeping in view the decision taken in the 39 th meeting of GST Council, as expeditiously as possible, preferably within a period of eight weeks and the decision taken, if any, is to be communicated to the petitioner: High Court [para 4]

- Petition disposed of : ORISSA HIGH COURT

2020-TIOL-53-NAA-GST

Director General Of Anti-Profiteering Vs PVR Ltd

GST - Anti-Profiteering - s.171 of the CGST Act, 2017 - Applicant alleges that the respondent had sold tickets of value of Rs.250/-, Rs.200/-, Rs. 150/- at the same prices prior to and after the GST rate reduction vide notification 27/2018-CTR dated 31.12.2018; that the respondent had not passed on the benefit of reduction in the GST rate from 28% to 18% w.e.f 01.01.2019 and instead, had increased the base prices; therefore, had profiteered - DGAP in its report has stated that the respondent had profiteered by an amount of Rs.13,51,519/- w.e.f 01.01.2019 to 06.01.2019 thus the benefit of rate reduction in GST rates was not passed on to the recipients by way of commensurate reduction in the prices of the tickets; however, it is confirmed by the DGAP that the respondent has reduced the prices commensurately w.e.f 07.01.2019 and has also deposited an amount of Rs.13,72,181/- as profiteered amount along with interest of Rs.35,865/- in the Consumer Welfare Funds - respondent has also claimed that one of his sites in the State of Telangana, Hyderabad has started its operation from 30.11.2019 and in terms of Telangana State Regulations, the prices of the tickets were to be fixed after completion of one month; that the prices of the tickets were fixed in terms of the order dated 02.01.2019 passed by the High Court of Telangana in WP no. 48127 of 2018 filed on 31.12.2018; therefore, the rate reduction was not applicable in the above cinema hall.

Held: Telangana State Regulations cannot supersede the provisions of the CGST/Telangana SGST Act, 2017 which governs the fixation of the GST rates as well as the anti-profiteering measures - since the Central government and the Telangana Government have given the benefit of tax reductions out of their precious tax revenue to benefit the common cinema goers the respondent cannot deny the same since it is not to be paid by him from his own pocket - respondent cannot illegally enrich himself at the expense of the general public which is vulnerable, unorganised and voiceless and misappropriate the above benefit - it is also revealed from the perusal of the order dated 02.01.2019 of the High Court that the Court has not exempted the respondent from passing on the benefit of tax reductions, therefore, the respondent has to pass on the rate reduction benefit to the eligible customers as per the provisions of s.171 of the Act - respondent has also averred that he was not allowed to change the ticket prices even on account of increase in his cost without permission of the licensing authorities concerned as per the provisions of the Andhra Pradesh Cinemas (Regulation) Act, 1955 - it is pertinent to note that passing on the benefit of tax reductions has no connection with the costs of the respondents as the CGST/SGST Act, 2017 only require passing on the benefit of tax reductions which does not fall under the provisions of the Andhra Pradesh Cinemas (Regulation) Act, 1955 - moreover, State Authorities always fix the upper price limits of the cinema tickets by taking into consideration the various factors including cost in the interest of cinema goers and the respondent is always at liberty to reduce the prices in accordance with the provisions of s.171 of the Act at the time of rate reductions - no prior approval of the State Government under this Act is required to pass on the benefit of tax reductions as the rates of tax are not fixed under it - it is also apparent from the record that the respondent has not reduced his prices suo motu as the same was done by him due to the intervention of the Central GST Anti-Evasion authorities; therefore, the claim of the respondent that he had passed on the benefit of rate reduction to his customers and no further reduction of ticket prices is required is unacceptable moreso since no evidence is there on record to substantiate this claim - the profiteered amount is determined as Rs.13,51,519/- for the period 01.01.2019 to 06.01.2019 as mentioned in DGAP report dated 31.01.2020 - as the respondent has voluntarily deposited this amount in the Consumer Welfare Funds (as recipients are not identifiable) along with interest and has also reduced the ticket prices commensurately w.e.f 07.01.2019, no further direction is required in the matter - Although the respondent has contravened the provisions of s.171 of the Act and resorted to profiteering, penalty u/s 171(3A) for violation of the above provisions cannot be imposed since the said sub-section has come into force w.e.f 01.01.2020 only - As the infringement pertains to the period 01.01.2019 to 06.01.2019 and the respondent has already deposited the profiteered amount along with interest no penalty is proposed to be imposed - Order is passed taking into account the prevalent pandemic and the notification 55/2020-CT: NAA

- Application disposed of: NAA

2020-TIOL-48-NAA-GST

Director General Of Anti-Profiteering Vs Vtwo Ventures

GST - 'Luggage trolley bag/suitcases' viz. Weekender & Neolite - Period involved is 15.11.2017 to 31.08.2018 - Anti-Profiteering - S.171 of the CGST Act, 2017 - DGAP in its report concluded that the respondent had increased the base prices despite the reduction in the rate of GST from 28% to 18% - Authority held that the Respondent had acted in contravention of the provisions of section 171 of the CGST Act, 2017 inasmuch as he did not pass on the benefit of reduction in the rate of tax to his recipients by way of commensurate reduction in the prices - respondent was, therefore, directed to deposit the profiteered amount of Rs.18,887/ as computed by the DGAP along with interest calculated @18% from the date when the above amount was collected from the recipients till the date the amount is deposited - since recipients are not identifiable, the amount was required to be deposited in the Central Consumer Welfare Fund and the Kerala State CWF in the ratio of 50:50 along with 18% interest within three months - since the respondent had deliberately and consciously acted, in contravention of the provisions of the CGST Act, 2017, by issuing incorrect tax invoices which is an offence u/s 122(1)(i) of the Act, they were liable for imposition of penalty and in which regard SCN was required to be issued - respondent were issued SCN dated 13.06.2019 asking them as to why penalty mentioned in s.122 r/w rule 133(3)(d) of the Rules should not be imposed - reply was filed on 25.09.2019.

Held: Period involved is 15.11.2017 to 31.08.2018 - Perusal of Section 122(1)(i) makes it clear that the violation of the provisions of Section 171(1) is not covered under it as it does not provide penalty for not passing on the benefits of tax reduction and ITC and hence the above penalty cannot be imposed for violation of the anti-profiteering provisions made under Section 171 of the above Act - Furthermore, vide Section 112 of the Finance Act, 2019 specific penalty provisions have been added for violation of the provisions of Section 171(1) which have come in to force w.e.f. 01.01.2020, by inserting Section 171(3A) - However, since no penalty provisions were in existence between the period w.e.f. 15.11.2017 to 31.08.2018 when the Respondent had violated the provisions of Section 171(1), the penalty prescribed under Section 171(3A) cannot be imposed on the Respondent retrospectively - Accordingly, the notice dated 13.06.2019 issued to the Respondent for imposition of penalty under Section 122(1)(i) is hereby withdrawn and the present penalty proceedings launched against him are accordingly dropped: NAA

- Penalty dropped: NAA

2020-TIOL-47-NAA-GST

Director General Of Anti-Profiteering Vs Horizon Projects Pvt Ltd

GST - Runway My City Project - Anti-Profiteering - S.171 of the CGST Act, 2017 - DGAP in its report stated that during the period July 2017 to June 2018 the respondent had benefited from additional ITC to the tune of 3.35% of the turnover; that the profiteered amount computed based on the aforesaid ratio comes to Rs.3,20,49,507/- - Authority held that Passing on the benefit of ITC which is not being paid by the respondent from this own pocket does not amount to violation of his fundamental right to carry out his business; that the computation of benefit of ITC as per the revised report indicated that the applicant is entitled to an amount of Rs.15,336/- as benefit of ITC apart from what has been already passed on to him and which has been duly verified by DGAP - in respect of the other flat buyers, the balance amount of Rs.3,19,49,275/- is directed to be passed without taking into account the benefit of ITC which has been claimed to have have been passed on; that interest is payable @18% on the said amount and the amounts are to be paid within a period of 3 months; that penalty is required to be imposed for the offence committed u/s 171(3A) of the Act for which reason SCN is to be issued; that the SCN dated 12.12.2018 issued to respondent proposing penalty u/s 29 and 122-127 was withdrawn - respondent was later issued notice on 18.12.2019 asking him to explain as to why the penalty mentioned in s.171(3A) r/w rule 133(3)(d) should not be imposed on him - respondent made their submissions on 03.01.2020.

Held: Period involved is 01.07.2017 to 30.06.2018 - Perusal of Section 122(1)(i) makes it clear that the violation of the provisions of Section 171(1) is not covered under it as it does not provide penalty for not passing on the benefits of tax reduction and ITC and hence the above penalty cannot be imposed for violation of the anti-profiteering provisions made under Section 171 of the above Act - Furthermore, vide Section 112 of the Finance Act, 2019 specific penalty provisions have been added for violation of the provisions of Section 171(1) which have come in to force w.e.f. 01.01.2020, by inserting Section 171(3A) - However, since no penalty provisions were in existence between the period w.e.f. 01.07.2017 to 30.06.2018 when the Respondent had violated the provisions of Section 171(1), the penalty prescribed under Section 171(3A) cannot be imposed on the Respondent retrospectively - Accordingly, the notice dated 18.12.2019 issued to the Respondent for imposition of penalty under Section 171(3A) is hereby withdrawn and the present penalty proceedings launched against him are accordingly dropped: NAA

- Penalty dropped: NAA

2020-TIOL-46-NAA-GST

Director General Of Anti-Profiteering Vs Puri Constructions Pvt Ltd

GST - Anti-Profiteering - Section 171 of the CGST Act, 2017 -  DGAP had submitted a revised investigation report and in which it is concluded that post-GST the respondent had benefited from the additional ITC to the tune of 1.79%  - Since the said conclusion was not challenged by the respondent, the Authority treated the same as correct and concluded that the amount of ITC benefit which had not been passed on by the respondent to the customers/the profiteered amount comes to Rs.1,01,06,773/- which includes GST (@12% or 18%) on the base profiteered amount of Rs.89,68,979/- and which also included an amount of Rs.49,169/- (including GST on base amount of Rs.43,655/-) which was profiteered by the respondent from the present applicant; that  the ITC benefit is required to be passed by the respondent to the 155 buyers from whom he has received consideration post GST; that the respondent had also realized an additional amount of Rs.15,90,239/- which includes both the profiteered amount @1.79% of the taxable amount and GST on the said profiteered amount from 92 other flat buyers and since these buyers are identifiable as per the documents, the profiteered amount is required to be passed to them along with interest @18% p.a - Authority concluded that in view of the above profiteering the respondent had committed an offence u/s 122 of the Act and is, therefore, liable for imposition of penalty and a SCN was issued in this regard on 15.05.2019 asking as to why penalty mentioned in s.122(1) read with rule 133(3)(d) of the Rules should not be imposed - respondent made submissions on 28.05.2019 and the same has been considered. 

Held:  Period involved is 01.07.2017 to 30.06.2018 - Perusal of Section 122(1)(i) makes it clear that the violation of the provisions of Section 171(1) is not covered under it as it does not provide penalty for not passing on the benefits of tax reduction and ITC and hence the above penalty cannot be imposed for violation of the anti-profiteering provisions made under Section 171 of the above Act - Furthermore, vide Section 112 of the Finance Act, 2019 specific penalty provisions have been added for violation of the provisions of Section 171(1) which have come in to force w.e.f. 01.01.2020, by inserting Section 171(3A) - However, since no penalty provisions were in existence between the period w.e.f. 01.07.2017 to 30.06.2018 when the Respondent had violated the provisions of Section 171(1), the penalty prescribed under Section 171(3A) cannot be imposed on the Respondent retrospectively - Accordingly, the notice dated 15.05.2019 issued to the Respondent for imposition of penalty under Section 122 (1) (i) is hereby withdrawn and the present penalty proceedings launched against him are accordingly dropped: NAA

- Penalty dropped: NAA

Devi Marine Food Export Pvt Ltd Vs ACCT

Whether where sale & delivery of DEPB pass book is completed in Maharashtra as per the MVAT Act & is taxed there, then such sale cannot be taxed again in Tamil Nadu - YES: HC

- Assessee's writ petition allowed: MADRAS HIGH COURT

SERVICE TAX

2020-TIOL-1420-HC-KERALA-ST

Homestead Projects And Developers Pvt Ltd Vs CCT & CE

ST - Petitioner was registered with the Service Tax Department under the category 'Construction of Residential Complex Service' - They were served with SCN dated 16.03.2020 [Ext.P8] invoking Section 73(1) of the Finance Act, 1994 read with Section 174(2) of the CGST Act, 2017 - while the petitioner was preparing to respond to the SCN, they received a recovery notice to pay Rs. 8,62,397/- along with interest - It is the contention of the petitioner that recovery proceedings under Section 87 of the Finance Act, 1994 cannot be initiated without adjudication - however, respondents 1 to 4 served notices dated 01.07.2020 on the Bankers of the petitioner invoking Section 87(b) of the Finance Act, 1994 directing the Bankers of the petitioner to debit/freeze the current accounts held by the petitioner in their banks and the bankers were instructed to close all other accounts related to the petitioner and to remit the amount available in the accounts, to the government, within 15 days - Petitioner, inter alia, seeks to set aside Exts.P11, P12 and P13 notices issued by the 3rd respondent.

Held: Court has passed an interim order staying the operation of Exts.P11, P12 and P13 notices addressed to the Banks - Before adjudicating the issues raised in Ext.P8 show-cause notice, if the respondents proceed under Section 87(b) of the Finance Act and Section 79(1)(c)(i) of the Act read with Section 142(8)(a) of the CGST Act, 2017 , the petitioner will indeed be put to hardship - Such proceedings are ordinarily to be initiated only after adjudication process is over - Writ petition is disposed of directing the 4th respondent to give opportunity to the petitioner to adduce such evidence before the 4th respondent in order to explain the deficiencies pointed out in Ext.P8 - After considering the reply given by the petitioner to Ext.P8 show-cause notice and after considering the materials adduced by the petitioner, the 4th respondent shall pass appropriate orders on Ext.P8 in accordance with law, within a period of one month - The interim order passed by this Court on 08.07.2020 will ensure to the benefit of the petitioner for the period of one month: High Court [para 4, 9]

- Petition disposed of: KERALA HIGH COURT

2020-TIOL-1278-CESTAT-BANG

KMMI Steel Pvt Ltd Vs CC, CE & ST

ST - SCN was issued to assessee alleging failure to discharge service tax on "Mining of Mineral services" - The SCN proposed to demand service tax along with interest and also proposed to impose penalties under Sections 76, 77(1)(a) and Section 78 of FA, 1994 and penalty/fine under Section 70 r/w Rule 7 of STR, 1994 - The assessee, immediately on being pointed out regarding their statutory liability for payment of service tax on mining of minerals, they paid the entire amount of service tax along with interest of well before the issuance of SCN - The case of assessee is squarely covered by Section 73(3) of FA, 1994 since the assessee after making payment of service tax and applicable interest before issuance of SCN, intimated the authorities for not issuing the SCN - Once the payment of service tax and interest is made by assessee and the intimation is furnished to the authorities, then the authorities should not serve any notice under sub-section (3) of Section 73 in respect of amounts already paid - There was no case to initiate proceedings for imposition of penalties under various sections of the Act - This view is fortified by decision of High Court in case of Adecco Flexione Workforce Solution Ltd. 2011-TIOL-635-HC-KAR-ST - This is not the case of wilful non-payment with intent to evade tax - The assessee is not liable to pay penalty - Extending the benefit of Section of 80 of FA, 1994, the penalties and late fines are set aside in entirety - The assessee's liability to pay service tax and interest amount is upheld which already stands paid, as also recorded in the impugned order, there is no warrant to impose penalty and late fees in view of the findings made above - Hence, the impugned order is modified: CESTAT

- Appeal partly allowed: BANGALORE CESTAT

2020-TIOL-1277-CESTAT-BANG

Honeywell Technology Solutions Lab Pvt Ltd Vs CST

ST - The issue involved is whether salary paid to employees deputed to the assessee by their parent company 'Honeywell International Inc.' for assisting them in their business operations of software development and information technology and other related support service, whether the same is liable to service tax under category of 'Manpower Recruitment or Supply Agency Service' under reverse charge mechanism - Based on the audit, assessee was issued SCN proposing to demand Service Tax under category of 'Manpower Recruitment or Supply Agency Service' in terms of Section 66A r/w Rule 2(i)(d)(iv) of STR, 1994 for the period from 2005-06 to 2008-09 - Similar issue arose before Tribunal in case of M/s. Volkswagen India (Pvt.) Ltd. 2013-TIOL-1640-CESTAT-MUM - Ruling of Tribunal in M/s. Volkswagen India (Pvt.) Ltd. was followed by Delhi Bench in Nissin Brake India Pvt. Ltd. 2018-TIOL-1976-CESTAT-DEL upheld in 2019-TIOL-151-SC-ST wherein under similar facts and circumstances, the issue was decided in favour of assessee - Revenue preferred an appeal before the Supreme Court against the order of Tribunal in Nissin Brake India Pvt. Ltd. and by order dated 22/02/2019, Supreme court held that it finds no merit in the appeal and was accordingly pleased to dismiss the appeal - Thus, the principle of law laid down in case of M/s. Volkswagen India (Pvt.) Ltd. and followed in Nissin Brake India Pvt. Ltd. have cristalized and attained finality - The impugned order is set aside: CESTAT

- Appeal allowed: BANGALORE CESTAT

CENTRAL EXCISE

CUSTOMS

2020-TIOL-141-SC-CUS-LB

UoI Vs Agricas LLP

Cus - FTP - Import of Beans/Peas/Pigeon peas – Quantitative restrictions - Challenge is to the validity of the notifications dated 29 th March 2019 bearing S.O. Numbers. 1478-E, 1479-E, 1480-E and 1481-E - connected challenge is to the Trade Notice dated 16 th April 2019 issued by the Directorate General of Foreign Trade on the ground of excessive delegation as not being in accord with sub-section (2) to Section 3 read with the bar under sub-section (3) to Section 6 of the Foreign Trade (Development and Regulation) Act, 1992 - Primary grounds raised in the writ petitions were that the impugned notifications issued by the DGFT had the effect of modifying or amending the EXIM policy as the specified items were withdrawn from the free category and moved to restricted category; that the DGFT, a statutory authority under the provisions of FTDR Act, was not authorised to authenticate/issue an order amending or modifying the EXIM policy as this power vests with the Central Government in terms of sub-section (2) to Section 3, read-with sub-section (3) to Section 6 of the FTDR Act, which states that powers exercisable under Section 3, 5, 15, 16 and 19 of the FTDR Act cannot be delegated to the DGFT or any other officer subordinate to the Director General.

Held:

+ Section 3 of the FTDR Act, as enacted, had undergone amendments by addition of proviso to sub-section (2) and by insertion of sub-section (4) vide Act 25 of 2010 with effect from 25 th August 2010.

+ Sub-section (2) states that the Central Government can, by an order in the Official Gazette, make a provision for prohibiting or restricting or otherwise regulating, in all or specified cases and subject to such exceptions, if any, the import or export of goods and after the amendment vide Act 25 of 2010, services or technology.

+ Imposition of quantitative restrictions on imports or exports would clearly fall within sub-section (2) to Section 3 of the FTDR Act.

+ Sub-section (3) to Section 3 states that where an order is passed under sub-section (2) whereby the import or export of goods is prohibited, restricted or otherwise regulated, the goods in question would be deemed to be prohibited goods under Section 11 of the Customs Act, 1962 and accordingly the provisions of the latter Act would apply.

+ Sub-section (4) to Section 9A of the FTDR Act [Power of Central government to impose quantitative restrictions] introduced by Act 25 of 2010 with effect from 27 th August 2010, on one hand states that no permit or licence shall be necessary for imports or exports of goods, nor any goods shall be prohibited from import or export, except as may be required under the FTDR Act, or the rules or orders made thereunder.

+ At the same time, by using the phrase ‘without prejudice to anything contained in any other law, rule, regulation, notification or order', it protects the operation of the other law, rule, regulation, notification or order to the extent that they do not directly or indirectly deal with the permit or licence necessary for import or export of goods or prohibit import or export of goods. This is also clear from Section 18A of the FTDR Act which was also enacted and inserted by Act 25 of 2010 with effect from 27 th August 2010.

+ The provisions of FTDR Act, therefore, are in addition to, and not in derogation of, the provisions of any other law for the time being in force. This would be the correct way to harmoniously read and interpret sub-section (4) to Section 3 and Section 18A [Application of other laws not barred] of the FTDR Act. The expression ‘order', as per clause (h) to Section (2) of the FTA means any Order made by the Central Government under Section 3.

+ It is, therefore, clear that there is no violation of Section 3 of the FTDR Act in the issuance of the impugned notifications or orders, which are intra vires and not ultra vires . Section 3 of the FTDR Act empowers and authorises the Central Government, i.e. the Union of India to frame policy, rules or regulations for import or export of goods.

+ The policy is framed under Section 5 of the Act. Thus, the Central Government i.e. the Union of India has been given the necessary discretion and election with regard to framing of policies for import and export of goods, services and technology.

+ Section 9A for the FTDR Act, is to be understood as an enabling provision empowering imposition of ‘quantitative restrictions' after following the procedure in the situations referred to therein.

+ As a sequitur , it has to be held that notwithstanding Section 9A, the Central Government continues and has authority to impose quantitative restrictions by an order under Section 3(2) of the FTDR Act.

+ The need to enact Section 9A arose from the obligations flowing from Article XIX, as restriction in form of ‘quantitative restriction', require a procedure to be followed. Section 9A has to be interpreted as an escape provision when the Central Government i.e. the Union of India may escape the rigours of paragraph (1) of Article XIX of GATT-1994.

+ Section 9A is not a provision which incorporates or transposes paragraph (1) of Article XI into the domestic law either expressly or by necessary implication. To hold to the contrary, we would be holding that the Central Government has no right and power to impose ‘quantitative restrictions' except under Section 9A of the FTDR Act.

+ Section 9A of the FTDR Act does not elide or negate the power of the Central Government to impose restrictions on imports under sub-section (2) to Section 3 of the FTDR Act. In other words, the impugned notifications would be valid as they have been issued in accordance with the power conferred in the Central Government in terms of sub-section (2) to Section 3 of the FTDR Act. The powers of the Central Government by an order imposing restriction on imports under sub-section (2) to Section 3 is, therefore, not entirely curtailed by Section 9A of the FTDR Act.

Conclusion: Larger Bench upholds the impugned notifications and the trade notices and rejects the challenge made by the importers. The imports, if any, made relying on interim order(s) would be held to be contrary to the notifications and the trade notices issued under the FTDR Act and would be so dealt with under the provisions of the Customs Act, 1962.

- Petitions dismissed: SUPREME COURT OF INDIA

2020-TIOL-1281-CESTAT-ALL

CC Vs Jai Mata Di Trading

Cus - The miscellaneous applications filed by Revenue are for staying the operations of the order passed by Commissioner (A) vide which he has set aside the enhancement of value of the imported fabrics done by the lower authorities - Tribunal make a reference to the latest decision of the Supreme Court in case of Sanjivani Non Ferrous Trading Pvt. Ltd. vide which the Tribunal decision in case of Sanjiivani Non Ferrous Trading Pvt. Ltd. was upheld rejecting the Revenue's appeal - It was held in the said decision that enhancement of the value on the basis of NIDB data is not permissible without first rejecting the transaction value - Inasmuch as, the issue stands decided, no merits found in the Revnue's appeals: CESTAT

- Appeals rejected: ALLAHABAD CESTAT