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Supreme Court issues notices on challenge to anti-profiteering rules

editor — Sat, 20 Apr 2024 10:25:32 +0000

The Supreme Court has issued notices to the central government, the Central Board of Indirect Taxes and Customs (CBIC), the Goods and Services (GST) Council, and the National Anti-Profiteering Authority (NAA), which is now under the purview of the Competition Commission of India. These notices come in response to a petition filed by Swati Realty, challenging a Delhi High Court decision that upheld the constitutional validity of anti-profiteering provisions related to the GST system. Swati Realty argues that the High Court failed to recognize that these provisions are unconstitutional.

Earlier in February, the Supreme Court had also issued a notice to the Union government on a similar matter. The advocate representing the real estate player in the Supreme Court highlighted that the Delhi High Court agreed with the real estate companies’ assertion that the methodology employed by the NAA is flawed, especially in the real estate sector where there is no direct link between turnover and input tax credit (ITC) for a specific period.

The NAA was established in November 2017 to ensure that companies pass on the benefits of ITC and GST reductions to consumers by reducing prices. Since December 2022, the Competition Commission of India has been addressing complaints of profiteering by companies.

In January, the Delhi High Court upheld the constitutional validity of anti-profiteering provisions, stating that they aim to ensure a proportional reduction in prices when GST rates are lowered or due to ITC. The court ruled that these provisions are in the public interest and are consistent with the legislative authority granted under the Constitution.

Over 100 companies, including Hindustan Unilever, Patanjali, Jubilant Foodworks, and Phillips, had filed petitions against the anti-profiteering provisions in the High Court.

Source: https://www.business-standard.com/india-news/sc-issues-notice-to-centre-others-on-anti-profiteering-provisions-124041900719_1.html

Merely uploading SCN under the category “Additional Notices” instead of “Notices” on the GST portal does not constitute sufficient intimation to the taxpayer

editor — Tue, 09 Apr 2024 05:43:22 +0000

Introduction:

The Hon’ble Delhi High Court, in the case of Anhad Impex v. Assistant Commissioner, addressed the issue of whether the misplacement of a Show Cause Notice (SCN) in the “Additional Notices” category instead of “Notices” on the GST portal constitutes sufficient intimation to the taxpayer. This analysis examines the court’s findings and the implications for similar cases.

Facts of the Case:

Introduction:

Facts of the Case:

M/s. Anhad Impex ("the Petitioner") received an Impugned Order dated November 29, 2023, from the Assistant Commissioner ("the Respondent"), creating a demand under Section 73 of the CGST Act.
The Petitioner asserted that they never received the SCN, which formed the basis of the Impugned Order, thus depriving them of the opportunity to respond or participate in adjudication proceedings.
SCNs are typically uploaded under the "Notices" section on the GST portal, but in this instance, it was placed in the less accessible "Additional Notices" category, leading the Petitioner to miss it.
The Respondent contended that uploading the notice on the GST portal suffices as per Section 169 of the CGST Act.

Issue:

Whether the misplacement of the SCN in “Additional Notices” rather than “Notices” warrants the invalidation of the demand order?

Held:

The court noted that the Petitioner's lack of response to the SCN indicated a lack of proper and timely intimation.
Placing the SCN under "Additional Notices" instead of "Notices" made it less accessible, infringing upon principles of natural justice and provisions of the CGST Act.
Referring to precedents such as East Coast Constructions & Industries Ltd. v. Asstt. Commissioner and Murugesan Jayalakshmi v. State Tax Officer, the court emphasized the importance of proper categorization on the portal.
Consequently, the Impugned Order was set aside, with directions for the Petitioner to respond to the SCN, and the Respondent to re-adjudicate the matter with a personal hearing within four weeks.

Investigation of Large Corporations and Multinational Companies under GST Requires ‘Formal Authorization’

editor — Tue, 02 Apr 2024 07:46:09 +0000

The Department of Revenue has issued directives to CGST officials regarding the initiation of investigations into cases involving prominent industrial entities and multinational corporations (MNCs). These guidelines aim to streamline procedures and ensure uniformity in enforcement activities while maintaining the ease of doing business.

These guidelines outline specific scenarios where written approval from the zonal Chief Commissioner is necessary before initiating an investigation or taking action. These include cases involving large corporates, major MNCs, matters already under consideration by the GST Council, or matters seeking to impose taxes or duties on a sector, commodity, or service for the first time under Central excise or GST.

The precise definition of ‘big industrial house’ and major MNCs under these guidelines remains unclear to tax experts. Additionally, the guidelines require CGST field formations to gather details on prevailing trade practices and transaction nature from stakeholders in such cases, ensuring sufficient justification for initiating investigations and actions.

This uniform procedure was introduced following discussions by the Central Board of Indirect Taxes and Customs (CBIC) on the necessity for standardized enforcement procedures by CGST field formations, particularly concerning regular taxpayers and their impact on the ease of doing business.

Furthermore, tax officials are instructed to confirm whether any ongoing inquiries relate to the same subject matter or taxpayer by another investigating office or tax administration. This information must be presented to the authority responsible for approving the investigation’s initiation.

Experts believe that the directive addresses industry concerns, emphasizing the importance of effective implementation to promote tax certainty and stability in the business environment.

Source: https://www.thehindu.com/business/Economy/now-gst-probe-into-big-corporates-major-mncs-needs-a-written-approval/article68013343.ece