TaxTMI 
TaxTMI 
2022 (5) TMI 633
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....anoj, for the petitioner and Mr.Zoheb Hussain, representing Mr.M.Santhanaraman, for the respondents. (i) The petitioner trades in dental equipment and accessories both locally purchased as well as imported. (ii) A complaint was filed by a customer, one Crown Express Dental Labs, alleging that the petitioner had not passed on the benefit of Input Tax Credit (ITC) to it, in regard to purchases made by it from the petitioner. The complaint, dated 06.12.2018 was investigated by R2, who submitted a report on 30.08.2018 to R1/Authority. Based on the report, the Authority vide order dated 28.11.2018 directed the petitioner to remit an amount of Rs.4,78,085/- to the complainant, along with interest at 18%. This order has been complied with by the petitioner. (iii) In order dated 28.11.2018, the Authority also opined that the petitioner might well have profited from transactions of supplies effected by it to other customers, and a direction was thus issued to the DGAP to conduct investigation afresh to unearth further instances of unjust enrichment, if any, that the respondent had engaged in. (iv) The suo moto investigation ordered by the Authority result....
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....g to cause investigation or inquiry with regard to such other goods or services or both, in accordance with the provisions of the Act and these rules. (b) The investigation or enquiry under clause (a) shall be deemed to be a new investigation or enquiry and all the provisions of Rule 129 shall mutatis mutandis apply to such investigation or enquiry." 8. It is clear from the order dated 28.11.2018 passed by the Authority that it had reasons to believe that there had apparently been contravention of the provisions of Section 171(1) of the CGST Act, 2017, in respect of the goods or services or both supplied by the Respondent other than those covered in the report dated 30.08.2018, and hence the DGAP was directed to investigate the same notwithstanding the absence of any recommendation of the Screening /Standing Committee. 9.Accordingly, the Authority directs the DGAP to submit Report under rule 129(6) of the CGST Rules, 2017 covering all the goods and services supplied by the Respondent as a registered person as per the provisions of Section 171(1) of the CGST Act, 2017 and quantify the benefit that the Respondent has failed to pass on to his customers. ....
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....dents is bad in law and this amounts to a fundamental flaw in the order impugned. The cases are (i) Mahindra & Mahindra Vs. Joint Commissioner - CT (Appeals) (Order No.493 of 2021 dated 18.02.2021), (ii) Rane NSK Steering Systems (P) Ltd Vs. Asstt. (C.C.E (2019) 369 ELT 307), (iii) Huawei Telecommunications (India) Company (P) Ltd Vs. Principle Vs. Principal Commissioner of Customs, Chennai - VII (2017 (356) E.L.T. 506 (Mad) (iv) Kothari Petrochemicals Ltd Vs. Union of India (2015 (316) E.L.T. 17 (Mad) (v) State of Punjab Vs. Bhatinda District Co-Op Milk P.Union Ltd (2007) 217 ELT 325 (S.C.), (vi) Rajhans Impex Pvt. Ltd. Vs. Union of India ((2020) 372 ELT 346), (vii) N.V.K.Mohammed Sultan Rowther & Sons Vs. Additional C.C.E., Madurai ((2019) 365 ELT 516), (viii) Srei Equipment Finance Ltd Vs. Union of India ((2018) 17 GSTL 598), (ix) Webel Technology Ltd Vs. Commissioner of Service Tax, Kolkata ((2018) 19 GSTL 467), (x) Oryx fisheries private limited Vs. Union of India and others ((2010) 13 SCC 427), (xi)Siemens Ltd Vs. State of Maharastra and others ((2006) 12 SCC 33) and (xii) Whirlpool Corporation Vs. Registrar of Trade Marks, Mumbai ((1998) 8 SCC 1). 7. The following cases h....
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....tion is that the petitioner has an effective and efficacious remedy in terms of Rule 133 (2) to file an appeal as against the DGAP's report dated 01.07.2020, before the Authority. He relies, in this regard upon the judgements in Union of India & Anr. Vs. Kunisetty Satyanarayana, ((2006) 12 SCC 28) (ii) State Bank of Travancore Vs. Mathew K.C., ((2018) 3 SCC 85), (iii) CIT Vs. Chhabil Dass Agarwal, ((2014) 1 SCC 603) and Ujjam Bhai Vs. The State of UP (AIR 1962 SC 1621). 13. On merits, learned counsel would urge that the objective of the Antiprofiteering measure is to provide an institutional mechanism to ensure that full benefit of ITC and reduction in rates of GST are passed on to customers. The interpretation of the Rules in question and the determination of its effective date, must be seen in this context. 14. The main object behind the levy of GST is to streamline and rationalize tax levies, both procedurally and substantively, widen the tax base, mitigate cascading and double taxation and to enable better compliance by lowering the overall burden cast upon the customers as well as by ensuring ease of compliance. This was to be one of the steps to pave way for a common na....
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.... Having heard learned counsel in detail, my decisions is as follows. The petitioner has accepted the decision of the Authority dated 28.11.2018 to the effect that it has profiteered and has made good the unjust enrichment as determined by it. The challenge now, is to the widening of the scope of enquiry to include suo moto review from 01.07.2017 with the inception of GST, till date of the complaint. A bird's-eye view of the relevant provisions under the Act and Rules would be useful in this context. 19. Goods and Service Tax has been brought in with effect from 01.07.2017 to pave way for an integrated system of doing business pan India with common protocols and procedures in place for filing of returns and remittance of taxes. Since one of the objectives of the GST law is to aid transparency and the building of a robust economy, Section 171 of the CGST Act provides for a protection against measures for profiteering that may be designed by a supplier of goods and services. Section 171 reads as follows: "171. Anti-profiteering measure - (1) Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipien....
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....he reduction in the rate of tax on the supply of goods or services or the benefit of input tax credit to the recipient by way of commensurate reduction in prices. (2) An opportunity of hearing shall be granted to the interested parties by the Authority where any request is received in writing from such interested parties. [(2A) The Authority may seek the clarification, if any, from the Director General of Anti Profiteering on the report submitted under sub-rule (6) of rule 129 during the process of determination under sub-rule (1).] [(3) Where the Authority determines that a registered person has not passed on the benefit of the reduction in the rate of tax on the supply of goods or services or the benefit of input tax credit to the recipient by way of commensurate reduction in prices, the Authority may order- (a) reduction in prices; (b) return to the recipient, an amount equivalent to the amount not passed on by way of commensurate reduction in prices along with interest at the rate of eighteen per cent. from the date of collection of the higher amount till the date of the return of such amount or recovery of the amount including inter....
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....of receipt of the report of the DGAP, determine whether an assessee has profiteered, after hearing an assessee, if such hearing is sought. Sub-Rule 3 states that where the Authority determines that there has been profiteering, he may either order reduction in prices, a refund of the amount profiteered or the deposit of an amount equal to 50% of the amount profiteered in certain designated funds. He may also contemplate the imposition of the penalty or, as a drastic measure, the cancellation of registration under the CGST Act. 23. Sub-rule (4) says that, notwithstanding that the DGAP may either recommend action or dropping of the investigation, the Authority may, if it is of the opinion that further investigation is called for, refer the matter back to the DGAP to cause such further investigation. Rule 5 (a), further expands the powers of the Authority stating that notwithstanding anything contained in sub-rule (4), if, upon receipt of the report of the DGAP, the Authority has reasons to believe that the assessee has profiteered, it may direct the DGAP to cause investigation or enquiry in that regard. 24.Sub-rule 5 (b) states that the investigation or enquiry under Rule 5 (a) ....
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....in support of the position that the insertion of Rules 133 (4) & (5) (a) is only in aid of procedure and hence are applicable retrospectively. 30. The Constitution Bench in the case of Memon Abdul Karim (supra) considered whether Section 48 of the Administration of the Evacuee Property Act, 1950 would be applicable to the facts and circumstances of that case. The Bench noted that Section 48 prescribed procedure and thus, even amended, would apply retrospectively in the sense that a procedural provision would, normally apply to all actions after the date it had come into force even though the actions may have begun earlier or the claim upon which the action may be based may be of an anterior date. 31. The relevant paragraphs state thus: "4. The amended S ection.48 came into the Act by Act No. 91 of 1956 from October 22, 1956 and runs as follows: - "48. Recovery of certain sums as arrears of land revenue:-(1) Any sum payable to the Government or to the Custodian in respect of any evacuee property, under any agreement, express or implied, lease or other document or otherwise howsoever, may be recovered in the same manner as an arrear of land revenue. (2) If any....
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....bearing in mind the object of anti-profiteering measures, I am not inclined to accept the submission of the petitioner to the effect that the Rules are prospective in operation and will not be applicable in respect of complaints filed and enquiry commenced prior to the date of insertion of the rules. In my considered view, with the coming into force of GST on 01.07.2017 and with it Section 171, every conceivable effort to contain profiteering must be made be available to the Authorities and the Rules merely arm and equip the officers with the necessary ammunition to address the issue effectively. 33. In Excel Crop Care Limited (supra), the Hon'ble Supreme Court had occasion to interpret the provisions of the Competition Act, 2002. The challenge was to the applicability of the Section 3 of that Act to a notice inviting tenders. Section 3, coming under Chapter II, entitled 'Prohibition of certain agreements, abuse of dominant position and regulation of combinations' specifies the agreements that are prohibited under that chapter. 34. The Competition Act was passed on 13.01.2003, notifying only certain provisions of the Act and Section 3 was notified on 20.05.2009, subsequent to....
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.... having appreciable adverse effect on the competition. We, therefore, reject this argument of the appellants as well touching upon the jurisdiction of the DG." 37. The petitioner brushes away reference to this judgment stating that there is no provision comparable to Section 171 of the CGST Act in the Competition Act and thus the ratio of that judgment is not applicable to the present case. I disagree. What has weighed with the Hon'ble Bench are the provisions of Section 18, which crystallizes into itself the object of the Act. Section 18 reads as follows: '18. Subject to the provisions of this Act, it shall be the duty of the Commission to eliminate practices having adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade carried on by other participants, in markets in India: Provided that the Commission may, for the purpose of discharging its duties or performing its functions under this Act, enter into any memorandum or arrangement with the prior approval of the Central Government, with any agency of any foreign country. 38. The provisions of Section 171 of the CGST Act compare well with the spi....
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....ot have explained the DG's powers in broad terms: (-if other facts also get revealed and are brought to light, revealing that the 'persons' or 'enterprises' had entered into an agreement that is prohibited by Section 3 which had appreciable adverse effect on the competition, the DG would be well within his powers to include those as well in his report....If the investigation process is to be restricted in the manner projected by the Appellants, it would defeat the very purpose of the Act which is to prevent practices having appreciable adverse effect on the competition?). The trigger for assumption of jurisdiction of the CCI is receipt of complaint or information, when the -Commission is of the opinion that there exists a prima facie case? exists (per Section 26 (1)). The succeeding order is administrative (per SAIL); however that order should disclose application of mind and should be reasoned (per SAIL). Upto this stage, with that enunciation of law, no doubt arguably Cadila could have said that absent a specific order as regards its role, by CCI, the DG could not have inquired into its conduct. However, with Excel Crop Care specifically dealing with the quest....
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....hich no opportunity had been granted to the company. 42. In the case of Competition Commission of India (supra), the report of the CCI was to the effect that Grasim had abused its dominant position. The challenge before the Supreme Court was on the ground that the CCI was entitled to treat the report of the Director General as 'information' under Section 19 of that Act and proceed accordingly, if it were of the view that there existed a prima facie case of contravention by Grasim. After referring to the judgments in the case of Excel Crop Care and Cadila Health Care, the Court upheld the exercise of powers by the CCI. 43. I am thus of the considered view that the ratio of the judgements discussed in the proceeding paragraphs are applicable in the context of Section 171 of the GST Act as well. In light of the discussion as above, as well as for the reason that the issue to be decided is a legal issue untrammeled by any dispute on facts, the preliminary objection on maintainability is rejected. The assumption of jurisdiction by the respondents is upheld. 44. Coming to impugned notice dated 10.07.2020, the Authority has called upon the petitioner, based upon report of the DGA....