the essay of 25 November 2020 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">NOVEMBER 25, 2020</font></strong></p> <p align="center"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>The Priced Pizza </strong></font></p> <p align="center"><u><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>By Vijay Kumar</strong></font></u></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">'<STRONG>HARDCASTLE </STRONG>Restaurants Pvt Ltd' was operating quick service restaurants under the brand name <em>"McDonald's"</em> in the Western and Southern regions of India and was registered as a supplier under the GST in 10 States. Director General of Anti-Profiteering (DGAP) found that <em>Hardcastle Restaurants </em>was selling 1,844 products and after comparing the price lists published before and after 15.11.2017 when the rate of tax was reduced, they had increased the base price in respect of 1,774 (96.20%) products and that although they had charged GST @ 5% on and after 15.11.2017 but due to increase in the base price, the customers were forced to pay the same price which was being charged from them before 15.11.2017 whereas they should have been charged the lower price after commensurate reduction due to reduction in the rate of tax and hence they were denied the benefit which had become due to them. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The National Anti-Profiteering Authority in its order dated November 16, 2018 - <strong><a href="https://taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTQzMDM4" target="_blank">2018-TIOL-13-NAA-GST</a></strong> held that </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> </strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>it is clear that the Respondent has resorted to profiteering by charging more price than that he could have charged by issuing incorrect tax invoices. He has further acted in conscious disregard of the obligation which was cast upon him by the law by issuing incorrect invoices in which the base prices were deliberately enhanced exactly equal to the amount of reduced tax and benefit of ITC and thus he had denied the benefit of ITC and reduction in the rate of tax granted vide Notification dated 14.11.2017 to his customers. Accordingly he has committed an offence under Section 122 (1) (i) of the <a href="https://taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=29&filename=notification/gst/cgst_act/2017/cgst_act_index.htm" target="_blank"><strong>CGST Act, 2017</strong></a>. Therefore, a show cause notice may be issued to the Respondent to explain why penalty under the provisions of the above Section should not be imposed on him. </em></font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em> </em></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This was an order passed by a four-member bench but was actually heard by a three-member bench. These are small niceties which an august body like the National Anti-Profiteering Authority cannot be bothered with, but the High Court was not impressed. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bombay High Court in its order - <strong><a href="https://taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTUzNDUx" target="_blank">2019-TIOL-2419-HC-MUM-GST</a> </strong> dated 01 10 2019 observed, </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>We conclude that when the three members of the Authority had heard the Petitioner and participated in the entire hearing, the collectively signed decision, when the fourth member joined only for signing the order has resulted in violation of the principles of natural justice and fairness, and is liable to be set aside. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em> </em></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>As a result, the impugned order dated 16 November 2018 passed by the National Anti-Profiteering Authority is set aside. The proceedings bearing Case No. 14 of 2018 = <a href="https://taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTQzMDM4" target="_blank"><strong>2018-TIOL-13-NAA-GST</strong> </a> before the National Anti- Profiteering Authority - Respondent No.2. stand restored. Fresh notice to the Petitioner is not necessary as the Petitioner will appear before the Authority on 25 November 2019. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em> </em></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>We keep all the contentions of the parties on merits, jurisdiction and validity of the Authority, open. </em></font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em> </em></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, the case is back with the Anti-Profiteering Authority. But before that, the Government took the matter in Special Leave Petition to the Supreme Court. Strangely, the petitioners in the SLP are the 'National Anti-Profiteering Authority' and the 'Director General of Anti Profiteering' and one of the respondents is UNION OF INDIA through Secretary, Ministry of Finance, Department of Revenue. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Shouldn't the Union of India be the first petitioner and does an adjudicating authority like the Anti-Profiteering Authority go about filing SLPs when its decisions are set aside? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Anyway, the Supreme Court in its order dated 18.11.2020 observed, - <em><strong><a href="https://taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTYyMzEx" target="_blank">2020-TIOL-172-SC-GST-LB</a></strong></em></font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Considering the fact that after the impugned order, the matter has already proceeded before the authority. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>At this distance of time, we do not wish to interfere in this Special Leave Petition. Hence, Special Leave Petition is disposed of, leaving all question of law open. </em></font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Yes, now the Anti-Profiteering Authority has to decide the issue afresh remembering to have the same bench to hear the case and pass the order - not three members hearing and four members passing the order. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is a side story. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In an order dated February 19, 2020 - <strong><a href="http://tiolcorplaws.com/caselaw/details/MzE0OA==" target="_blank">2020-TIOL-59-SC-GST</a></strong>, the Supreme Court observed, </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>A batch of writ petitions is pending before the High Courts of Delhi, Bombay and Punjab and Haryana in which the constitutional validity of Section 171 of the Central Goods and Services Tax Act 2017 read with Rule 126 of the Central Goods and Services Tax <a href="https://taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=29&filename=notification/gst/gst_forms/rule/cgst_rules_index.htm" target="_blank"><strong>Rules 2017</strong></a> and other cognate provisions, is under challenge. Twenty writ petitions are pending before the High Court of Delhi. Two writ petitions, which are the subject matter of the present Transfer Petitions, are pending before the High Court of Judicature at Bombay. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em> </em></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Having heard learned counsel, we consider it appropriate and proper that, in the interests of a uniform and consistent view on the law, all the writ petitions should be transferred to the High Court of Delhi, where earlier writ petitions are already pending. </em></font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And many stories …… </font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"> <strong>Principles of Natural Justice </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The order of the Anti-Profiteering Authority has been set aside by the Bombay High Court on the ground that <em>when the fourth member joined only for signing the order has resulted in violation of the principles of natural justice and fairness, and is liable to be set aside. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court in a recent decision in STATE OF U.P. vs SUDHIR KUMAR SINGH recently (16th October 2020) - <strong><a href="http://tiolcorplaws.com/caselaw/details/MzE0OA==" target="_blank">2020-TIOLCORP-36-SC-MISC-LB</a></strong> after analysing several judgements observed, </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(1) Natural justice is a flexible tool in the hands of the judiciary to reach out in fit cases to remedy injustice. The breach of the <em>audi alteram partem </em> rule cannot by itself, without more, lead to the conclusion that prejudice is thereby caused. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) Where procedural and/or substantive provisions of law embody the principles of natural justice, their infraction <em>per se </em> does not lead to invalidity of the orders passed. Here again, prejudice must be caused to the litigant, except in the case of a mandatory provision of law which is conceived not only in individual interest, but also in public interest. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(3) No prejudice is caused to the person complaining of the breach of natural justice where such person does not dispute the case against him or it. This can happen by reason of estoppel, acquiescence, waiver and by way of non-challenge or non-denial or admission of facts, in cases in which the Court finds on facts that no real prejudice can therefore be said to have been caused to the person complaining of the breach of natural justice. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(4) In cases where facts can be stated to be admitted or indisputable, and only one conclusion is possible, the Court does not pass futile orders of setting aside or remand when there is, in fact, no prejudice caused. This conclusion must be drawn by the Court on an appraisal of the facts of a case, and not by the authority who denies natural justice to a person. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(5) The <em>"prejudice"</em> exception must be more than a mere apprehension or even a reasonable suspicion of a litigant. It should exist as a matter of fact, or be based upon a definite inference of likelihood of prejudice flowing from the non-observance of natural justice. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Does it amount to denying principles of natural justice if three members hear a case and four members sign the order, especially when it was a unanimous order? Even if the fourth Member had not signed, or if he was in the Bench and gave a conflicting order, nothing would have changed. </font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Until next week</strong></font></p> </body> </html>