DLF Ltd

GST - Anti-Profiteering - s.171 of the CGST Act, 2017 - Applicant has alleged profiteering by the respondent in respect of purchase of flat in the respondent's project 'The Sky Court' in the DLF Garden City, Gurugram - Applicant alleged that he had purchased the flat when the completion certificate had already been received by the respondent and possession was already given to many residents; that since the sale of flats after issuance of completion certificate did not attract GST, the applicant no. 1 has alleged that the respondent had charged GST @18% on the Preferential location charges (PLC) - DGAP has in its report contended that the submission of the respondent that the applicant no.1 had booked a flat after receipt of Occupancy Certificate and that he had not charged GST on Basic Sale Price (BSP) of the flat appeared to be correct; that since GST was not charged by the respondent on the BSP, therefore, the Anti-profiteering proceedings did not arise in the case of the applicant no.2; that ITC pertaining to the unsold units (remaining at the time of issue of CC) would not fall within the ambit of this investigation and the respondent was required to recalibrate the selling prices of such units to be sold to the prospective buyers by considering the proportionate benefit of additional ITC available to him post-GST; that ITC as a percentage of the turnover that was available to the respondent during the pre-GST period was 26.85% and during the post-GST period it was 26.14% and thus the respondent had not benefited from any additional ITC; that the provisions of s.171 were not applicable to the present case of the project “The Sky Court”.

Held: Authority notes that DGAP while computing the ratio of the ITC to turnover for the post-GST regime has considered the ITC availed by the respondent for the period 01.07.2017 to 31.07.2019, however, since the completion certificate was received by the respondent on 17.07.2017, the amount of ITC availed/available to the respondent in the post-GST regime should have been considered up to 16.07.2017 and not up to 31.07.2019 and accordingly the ratio of ITC to turnover w.e.f 01.07.2017 is required to be recomputed by the DGAP - Applicant has in his written submission vide his emails has stated that it has not been established in the investigation report that the respondent was within his right and also compliant with the GST rules while charging 18% GST on the PLC on the sale of the apartment post receipt of Occupancy Certificate which should also have been Nil as per the premise of the respondent; that there was a big loophole in the investigation that had been carried out by the DGAP and the matter has remained unsolved - Authority has only been mandated to ensure that both the benefits of tax rate reduction and ITC are passed on to the customers, therefore, Authority has no mandate to look into the matter whether the respondent has wrongly charged GST from applicant on the PLC and the applicant may take up the matter with jurisdictional authorities - Respondent also executing another project viz. The Ultima in the same DLF Garden City in respect of which DGAP has not conducted any investigation to ascertain whether the respondent is liable to pass on the benefit of ITC to the recipients of this project or not - Further, respondent is having a single GST registration and is maintaining a joint ITC register and is availing ITC on all the projects which he is executing from a common pool of ITC to discharge his GST output liability on these projects through the combined GSTR-3B returns, therefore, all the projects on which the respondent is availing ITC from the common pool are required to be investigated to determine whether he has passed on the benefit of ITC to the buyers of each project which are being executed by him - Authority, as per the provisions of s.171(2) of the Act, after taking  suo moto  cognisance directs the DGAP to conduct investigation in respect of the above project also and submit its report to the Authority for determination whether the respondent is liable to pass on the benefit of ITC in respect of the above project to the buyers or not as per the provisions of s.171(1) of the Act - Report dt. 31.08.2020 furnished by the DGAP cannot be accepted, therefore, in terms of rule 133(4) and s.171(2) of the Act, the DGAP is directed to further investigate the present case on the above issues and submit his report u/r 129(6) of the Rules - Respondent is directed to extend all assistance to the DGAP and furnish the necessary documents or information as required during the course of investigation: NAA

- Interim order passed: NAA

IO No. 37/2020

MRF Corp Ltd

GST - Anti-Profiteering - s.171 of the CGST Act, 2017 - Applicant alleges profiteering by respondent in respect of two products SP EP Primer Grey and Thinner for Finish - Applicant in his complaint has stated that the prices of the subject goods supplied  by the respondent remained unchanged or were increased after reduction in the rate of GST from 28% to 18% w.e.f 27.07.2018 vide notification 18/2018-CR and the benefit of tax rate reduction was not passed on by the respondent to the recipients by way of commensurate reduction in the prices - DGAP carried out investigation for the period 27.07.2018 to 31.05.2019 and the time limit to complete the investigation was extended up to 09.03.2020 by the Authority vide its order dated 02.12.2019 in terms of rule 129(6) of the Rules - DGAP in its investigation concluded that the profiteered amount came to Rs.10,52,07,669.50 - From a perusal of the report dated 27.02.2020 of the DGAP, Authority notes that there is contradiction in the DGAP's report dated 27.02.2020 and 27.07.2020 vis-a-vis the submission of the respondent; DGAP has not examined the claim of the respondent carefully and the clarification given by DGAP is wrong; that it has not been mentioned whether any effort was made to examine the details of the outward taxable supplies of the respondent made during the previous months of May 2018, April 2018, March 2018 and so on to confirm that the above 90 product have not been sold by the respondent in the pre-rate reduction period - Since these details were not summoned by the DGAP vide NOI dated 25.06.2019, therefore, the DGAP is required to conduct fresh investigation to ascertain that the above 90 products have been launched post 27.07.2018 and they have not been sold during the above period - Based on the said findings and without going into the merits of case, the report dated 27.02.2020 furnished by the DGAP cannot be accepted and accordingly, the DGAP is directed to conduct further investigation on the issues mentioned as per the provisions of rule 133(4) r/w s.171(2) of the Act and submit fresh report u/r 129(6) of the Rules, 2017: NAA

- Interim order passed: NAA

2020-TIOL-87-NAA-GST

Director General Of Anti-Profiteering Vs Aster Infrahome Pvt Ltd

GST - Anti-Profiteering - s.171 of the CGST Act, 2017 - Period 01.07.2017 to 31.08.2018 -  Applicants had submitted that the respondent had not passed on the benefit of ITC to them by way of commensurate reduction in the price of the flats - DGAP, in its report, submitted that post-GST the respondent had benefited from an additional ITC to the tune of 7.24% and which ought to have been passed on to the home buyers; that the total amount profiteered is Rs.5,30,34,074/- which includes  GST @12% or 8% on the base profiteered amount of Rs.4,82,18,816/- Authority had vide its Order no. 57/2019 dated 19.11.2019 - 2019-TIOL-57-NAA-GST held that the total amount profiteered is to be paid to applicants no. 1 to 12 and the other eligible house buyers by the respondents along with interest @18%; that the  CGST/SGST Commissioner concerned were directed to take necessary action to ensure that the benefit of additional ITC is passed on to the eligible house buyers;  that penalty is also imposable for contravention of s.171 of the Act for which reason, SCN is required to be issued u/r 133(3)(d) of the Rules - Accordingly, respondent was issued notice dated 27.12.2019 asking him to explain why the penalty mentioned in s.171(3A) of the Act, 2017 r/w rule 133(3)(d) of the Rules should not be imposed - Respondent has not made any written submissions or availed any opportunity of hearing in the matter. 

Held: It is revealed from the perusal of the CGST Act and the Rules framed under it that the Central government vide notification no. 01/2020-CT dated 01.01.2020 has implemented the provisions of the Finance (No.2) Act, 2019 from 01.01.2020 vide which sub-section 171(3A) was added in Section 171 of the Act, 2017 and penalty was proposed to be imposed in the case of violation of Section 171(1) of the Act, 2017 -  Since no penalty provisions were in existence between the period 01.07.2017 to 31.12.2018 when the respondent had violated the provisions of s.171(1) of the Act, the penalty prescribed under sec.171(3A) cannot be imposed on the respondent retrospectively - Accordingly, the notice dated 04.02.2020 issued to the respondent for imposition of penalty u/s 171(3A) is hereby withdrawn and the present penalty proceedings are dropped: NAA

- Proceedings dropped: NAA

2020-TIOL-88-NAA-GST

Director General Of Anti-Profiteering Vs Sharma Trading Company

GST - Anti-Profiteering - s.171 of the CGST Act, 2017 -  Vaseline VTM 400 ml - Period 15.11.2017 to 31.01.2018 -  Authority vide order no. 06/2018 - 2018-TIOL-5-NAA-GST had determined the profiteered amount as Rs.5,50,370/- inasmuch as it was held that the respondent had not passed on the benefit of reduction in the rate of tax to the applicant by way of commensurate reduction in the price of the product ‘Vaseline VTM 400 ml' - It was also held that the respondent had contravened the provisions of s.171(1) of the Act and had committed an offence u/s 122(1)(i) of the Act, 2017 and hence was liable for imposition of penalty under the provisions of the above section -  Accordingly, the Authority had issued notice dated 13.09.2018 to the Respondent to Show cause as to why they were not liable for imposition of penalty under the provisions of s.122 of the Act, 2017 read with Rule 133(3)(d) of the Rules, 2017 - Respondent vide his submissions dt. 28.09.2018 stated that the penalty provisions u/s 122 r/w rule 133(3)(d) should not be invoked and penalty should not be imposed as these provisions do not apply on the issue of profiteering and, therefore, s.122(1)(i) or any other sub-clause of s.122 of the Act, 2017 was inapplicable to the issue at hand .

Held: It is revealed that no penalty had been prescribed for violation of the provisions of s.171(1) of the Act and, therefore, the respondent was issued a SCN to state why penalty should not be imposed on him for violation of the above provisions as per s.122(1)(i) of the Act as he had apparently issued incorrect or false invoices while charging excess consideration and GST from the buyers - However, from the perusal of s.122(1)(i) of the Act it is clear that the violation of provisions of s.171(1) was not covered under it as it does not provide penalty for not passing on the benefit of rate reduction and hence the above penalty cannot be imposed for violation of the anti-profiteering provisions made under s.171 of the Act - It is further revealed that vide s.112 of the Finance Act, 2019, specific penalty provisions have been added for violation of the provisions of s.171(1) which have come into force w.e.f 01.01.2020 by inserting s.171(3A) of the Act - Since no penalty provisions were in existence between the period 15.11.2017 to 31.01.2018 when the respondent had violated the provisions of s.171(1) of the Act, the penalty prescribed under sec.171(3A) cannot be imposed on the respondent retrospectively - Accordingly, the notice dated 13.09.2018 issued to the respondent for imposition of penalty u/s 122(1)(i) is hereby withdrawn and present penalty proceedings are dropped: NAA

- Proceedings dropped: NAA

CTO Vs RSWM Ltd

Whether Revenue can exercise powers u/s 26 r.w.s 55 of the RVAT Act if this power is not available under RIPS 2003 - NO : HC

- Revenue's appeal dismissed : RAJASTHAN HIGH COURT

Nektar Therapeutics India Pvt Ltd Vs CC, CE & ST

ST - The assessee, a 100% EOU is engaged in research and development services of advanced pharmaceutical ingredients and other biopharma products and is a wholly owned subsidiary of Nektar USA - During the year 2006, an employee of parent company, Nektar USA, was sent to India on a secondment to work as a full time Managing Director of Indian company, i.e., the assessee - Since the 'secondee' was a citizen of America, the parent company and the assessee entered into a 'salary reimbursement agreement' for sake of administrative convenience so that the salary of the 'secondee' would be paid in foreign currency outside India by parent company which would be reimbursed by assessee to its parent entity - Whether the reimbursement of salary paid to the 'secondee', to the parent company amounted consideration for provision of manpower recruitment and supply agency services within the meaning of section 65(68) of FA, 1994 - The issue is no longer res integra as the Supreme Court has in the case of M/s Nissin Brake India Pvt Ltd 2018-TIOL-1976-CESTAT-DEL dealt with similar issue - This view has been reiterated by the Chennai Bench of Tribunal in case of M/s Komatsu India Pvt. Ltd. and Bangalore Bench of Tribunal in M/s Goldman Sachs Services Pvt. Ltd. - Going by the ratio decidendi of Apex Court, no merit found in the demand raised by revenue - The revenue is not disputing that the 'secondee' is always under the control and supervision of assessee and that the assessee's parent company had absolutely no obligation to pay the salary and other charges to the 'secondee' but for remitting secondee's salary in foreign exchange based on the salary reimbursement agreement - The impugned order cannot sustain and the same is set aside: CESTAT

- Appeal allowed: HYDERABAD CESTAT

2020-TIOL-1721-CESTAT-DEL

Hindustan Zinc Ltd Vs CCGST

CX - The assessee is in appeal against impugned order, wherein Commissioner (A) has dismissed the appeal as time barrred as the same is filed beyond the prescribed time limit in terms of Section 85(3A) of FA, 1994 - The adjudication order was passed on 27.04.2018 and the same has been despatched on 27.04.2018 through speed post dated 02.05.2018 and the same did not return undelivered - Therefore, it was presumed by Commissioner (A) that the said order has been delivered to assessee and as per the assessee they have received the impugned order only on 15.01.2019 and thereafter they have filed the appeal within time - As per provisions of Section 37C of CEA, 1994 the service is complete by speed post by proof of delivery - Admittedly, there is a presumption that if order has not been returned back, it has been delivered/ served but there is no clear cut proof of delivery of adjudication order on assessee - Therefore, benefit of doubt goes in favour of assessee and by non filing of appeal within time, the assessee has not gained anything - As Revenue has failed to produce the proof of delivery of adjudication order on assessee, it is held that assessee have received the impugned order only on 15.01.2019 and filed the appeal on 21.02.2019 before Commissioner (A) is within time - The matter is remanded back to Commissioner (A) to decide the issue on merits: CESTAT

- Matter remanded: DELHI CESTAT

2020-TIOL-1720-CESTAT-BANG

Shri Amman Dhall Mill Vs CC

Cus - The appellant has imported Canadian Green Peas - DGFT vide Notfn 37/2015-2020 notified that the impugned goods can be imported only at a Minimum Price of Rs.200/ CIF per kilogram; of an annual quota of 1.5 lakh MT and only at Kolkata Sea Port - The Commissioner confiscated the imported goods absolutely and imposed penalty on appellants - The appellant is an actual user and had been importing green peas regularly - In respect of impugned import also they have applied to DGFT for permission - Their application was not rejected and no order was passed on said application - It is quite possible to accept the contentions of appellants that they had a genuine expectation that their application would be considered in course of time and the permission would come forth about the time of import - At about the same time, different importers have imported green peas in violation of restrictions imposed by DGFT vide said Notfn - In case of imports by M/s. Harihar Collections, Commissioner has allowed the imported green peas to be redeemed on payment of fine in lieu of confiscation - The appeal filed by department in this regard was dismissed by Bombay High Court 2020-TIOL-1763-HC-MUM-CUS - It would be travesty of justice to treat imports/importers with similar violations in a dissimilar manner - Importers at Mumbai and importers at Cochin cannot be treated differently - Therefore, the impugned goods can be allowed to be redeemed on payment of fine in lieu of confiscation under Section 125 of Customs Act, 1962 and penalty under Section 112(a) of Customs Act, 1962 - However, considering that the appellant is a regular importer; is aware of the law and procedures regarding imports; has violated more than one condition of import, interest of justice will be met if a deterrent redemption fine is imposed, in addition to the penalty already imposed by Commissioner: CESTAT

- Appeal allowed: BANGALORE CESTAT