2020 (7) TMI 608 - HC - GST

Vires of Section 171 of the Central Goods and Services Tax Act, 2017 and Chapter XV of Central Goods and Services Tax Rules, 2017 - refund of profiteered amount - stay on recovery of balance amount - HELD THAT - Granting an absolute stay with respect to the balance amount of ₹ 1.92 crores approx. may result in the flat buyers of the petitioner being left without a flat as well as without the benefit of the amounts which have already been ordered to be refunded to them. We are therefore not inclined to grant stay of recovery of the balance amount - eight weeks time granted to the petitioner to deposit the balance amount in this Court, if the proof of having already given benefit of an amount of ₹ 1.53 crores is furnished to the authority concerned. However, there shall be a stay of proceedings for recovery of penalty. List on on 24th August, 2020.

Summary

Issues:
Challenge to vires of Section 171 of CGST Act and Chapter XV of CGST Rules, order by National Anti-Profiteering Authority, notice for penalty imposition, stay sought on recovery of assessed amount, stay sought on penalty proceedings.

Analysis:
The petition challenges the validity of Section 171 of the Central Goods and Services Tax Act, 2017, and specific rules under it. It also contests an order by the National Anti-Profiteering Authority holding the petitioner, a builder, to have profiteered a significant amount during an investigation period. The order directed the petitioner to refund this amount to flat buyers. Additionally, a notice was issued for potential penalty imposition. The court noted that similar legal matters have been clubbed for a joint hearing.

The petitioner requested a stay on the recovery of the remaining assessed amount, arguing that a substantial portion had already been refunded to flat buyers. They cited precedents where a 10% deposit allowed for a stay. The petitioner also challenged the penalty proceedings, citing that the penalty provision was introduced after the assessment period. Respondents acknowledged stays on penalty proceedings in other cases.

The court raised concerns about flat buyers potentially being deprived of both flats and refunded amounts if the balance amount was not recovered. Thus, the court declined an absolute stay on recovery but granted eight weeks for the petitioner to deposit the balance amount if proof of prior refunds was provided. In such a scenario, recovery of the assessed amount would be stayed, but penalty proceedings would be halted. The court allowed the Director General Anti-Profiteering to verify the refunds made by the petitioner.

The application for interim relief was disposed of, and the case was scheduled for a joint hearing with related matters in August 2020.