Crown Express Dental Lab, Director General Anti-Profiteering, Central Board of Indirect Taxes and Customs Versus M/s Theco India Private Limited
GST
2018 (12) TMI 135 – NATIONAL ANTI-PROFITEERING AUTHORITY – TMI
NATIONAL ANTI-PROFITEERING AUTHORITY – NAPA
Dated:- 28-11-2018
Case No. 15/2018
GST
Sh. B. N. Sharma, Chairman, Sh. J. C. Chauhan, Technical Member And Ms. R. Bhagyadevi, Technical Member
Dr. Archana Singh and Sh. Vijay Pandey, Associate for the Applicant No. 1, Sh. Anwar Ali T. P., Additional Commissioner for the Applicant No. 2.
Sh. George Abraham and Sh. Amish Jain, Directors for the Respondent.
ORDER
1. This investigation Report dated 30.08.2018 has been received from the Applicant No. 2 i.e. Director General of Anti-Profiteering (here-in- after referred to as the DGAP) on 31.08.2018 under Rule 129 (6) of the Central Goods & Services Tax (CGST) Rules, 2017. The facts of the present case, in brief, are that the Standing Committee on Anti- profite
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D) and Special Additional Duty (SAD) had been subsumed in the IGST but the Respondent had charged 18% IGST on Rs. 59,06,000/- which was the selling price as per the quotation dated 28.11.2016 and which included CVD and SAD etc. which had been merged in the IGST and hence he had been denied the benefit of Input Tax Credit (ITC) by the Respondent and therefore, action should be taken against him.
2. The said Application was examined by the Standing Committee on Anti-profiteering and was referred to the DGAP vide it's minutes of the meeting dated 25.05.2018 for detailed investigation under Rule 129 (1) of the CGST Rules, 2017.
3. The DGAP had called upon the Respondent vide his notice dated 18.06.2018 to submit his reply on the allegations leveled by the Applicant No. 1 and also to suo-moto determine the quantum of benefit which had not been passed by the Respondent on account of the ITC. The Respondent was also asked to furnish documents and evidence in support of his reply. The DG
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additional discount combo offer of approx. Rs. 13 lakhs in the Lava Frames supplied by him if there was any adverse effect due to GST and the Applicant had agreed to these terms. The DGAP has also stated that the Respondent had further claimed that the invoices were issued after the implementation of the GST and he proposed to cover the extra cost to be paid by the above Applicant due to IGST through the additional supply of Lava Frames to him. The DGAP has further stated that the Respondent has intimated that he had imported and sold both the items after the GST was implemented and he had not claimed any transitional benefit on them.
4. The DGAP has also submitted that the Respondent had informed there had been an increase in the taxable value of 240CNC Milling Machine w.e.f. January, 2017, as was apparent from the invoice (Annex- 14) of Poona Dental Lab who had bought the same on 27.01.2017, however, no invoice was available for the Sintering Furnace D664 as it was supplied for the
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above Applicant to pay the GST amount of Rs. 10.84 lakhs, although he had paid the same to the Government.
5. The DGAP after having investigated the submissions made by the Respondent had found that the Respondent had given a quotation on 28.11.2016 for a total amount of Rs. 59,06,000/- plus 2% Freight and 2% CST against C-Form, for both the items to the above Applicant which showed that the total amount which was to be paid by the above Applicant, was as under:-
Description
Price (in Rs.)
Lava Mill CNC 240 and accessories (A)
44,66,000/-
Lava Materials approved Sintering Furnace D664 (B)
14,40,000/-
Total price (C=A+B)
59,06,000/-
Freight (D= 2% of 'C' above)
1,18,120/-
Price (including Freight = C+D)
60,24,120
Plus CST (2%)
6. The DGAP has also intimated that as against the above quoted price the invoice for the above items was issued on 06.09.2017, as under:-
Description
Price (in Rs.)
Lava Mill CNC 240 and accessories (A)
45,55,320/-
Lava Materi
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price to the extent of the CVD that was no longer to be paid as well as to the extent of the IGST the credit of which was available to him. The DGAP has concluded that the invoice dated 06.09.2017 on which IGST@18% was charged proved that the base price of the above items had remained the same, i.e., Rs. 60,24,120/- as per the quotation dated 28.11.2016 and the base price was not reduced to the extent of CVD that was not to be paid after the implementation of the GST.
8. The DGAP has also provided a detailed comparison of the taxes and duties which were payable before and after the implementation of GST and stated after the perusal of the Bill of Entry No. 3050858 dated 31.08.2018, it was apparent that the taxable value of the product “Lava CNC 240 Milling Machine” on which CVD @ 12.5% would have been required to be paid was Rs. 22,15,844/- and for the Bill of Entry No. 2990028 dated 25.08.2018, the taxable value of the product “Sintering Furnace D664” on which CVD @ 12.5% was require
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y. Therefore, The DGAP has concluded that the total price to be charged from the Applicant No. 1 should have been Rs. 66,30,377/- instead of Rs. 71,08,462/- and hence the total amount of profiteering done by the Respondent in the case of supplies made to the Applicant No. 1 was Rs. 4,78,085/-.
9. The above report was considered by the Authority in its meeting held on 12.09.2018 and it was decided to hear the Applicant No. 1 and the Respondent on 26.09.2018.
10. The hearing was held on 26.09.2018, wherein the Applicant No. I was represented by Dr. Archana Singh and Sh. Vijay Pandey; Applicant No. 2 was represented by Sh. Anwar Ali T.P., Additional Commissioner and on behalf of the Respondent Sh. George Abraham and Sh. Amish Jain, Directors appeared. The Applicant No. 1 stated that he had purchased the above two items from the Respondent based on the quotation dated 28.11.2016 having taxable value of Rs. 60,24,120/-, however, after much delay the products were received with the tax inv
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eration of the CST paid by the Respondent on the above items as the Applicant No. 1 was based in Ranchi and any sale prior to the GST attracted CST @ 2 %, which amounted to an additional Cost, for which no credit was available as per the provisions of the CST Act, 1956. The Respondent has also contended that the DGAP had failed to consider the 2 % CST component of Rs. 1,20,482/- while working out the amount of profiteering The Respondent has also contended that he had not indulged in Profiteering and the amount of Rs. 4,78,085/- inclusive of GST @ 18% amounting to Rs. 79,928/- calculated by the DGAP was incorrect.
13. We have carefully considered the material placed before us as well as the submissions made by the Respondent and find that the Respondent has vehemently argued that he had supplied additional material to the above Applicant costing about Rs. 13 Lakhs and borne an amount of Rs. 6 Lakhs out of the above amount which had not been taken in to consideration by the DGAP. In th
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nt has also claimed that the price of 240CNC Milling Machine had increased in the month of January, 2017 which was communicated to the above Applicant and he had agreed that the Machine may be supplied to him on the increased price. However, there is no evidence on record to prove the above claim of the Respondent. Neither he had submitted fresh quotation to the above Applicant nor he had sent any communication to him in this regard and hence the above claim is not tenable.
14. We have also found that the Respondent has wrongly charged higher price from the Applicant No. 1 as he should have reduced the base price to the extent of CVD (at 12.5%) which was chargeable on the amount mentioned in the quotation dated 28.11.2016 since in the period prior to GST no CENVAT credit was available for the CVD paid on the import of the goods whereas in the post GST period no CVD was charged instead IGST was charged on the import of goods which was available as ITC to the Respondent while supplying
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ind it prudent to refer to the tables below for ascertaining the quantum of profiteering in the subject supplies:-
Table-A
Pre-GST import scenario
Post-GST (As charged)
CNC 240 Milling Machine (in Rs.)
D664 Sintering Furnace (in Rs.)
Total
CNC 240 Milling Machine (in Rs.)
D664 Sintering Furnace (in Rs.)
Total
Taxable value at the time of import (A)
22,15844
10,25,411
32,41,255
CVD @ 12.5% of taxable value at the time of import (B)
2,76,980
1,28,176
4,05,156
Base Price Charged By The Respondent (C)
45,55,320
14,68,800
60,34,120
Base Price
45,55,320
14,68,800
60,24,120
CST Charged (2% of C)
91,106
29,376
1,20,482
IGST Charged (18%)
8,19,958
2,64,384
1084342
Total price to be charged
46,46,426
14,98,176
61,44,602
Total price actually charged
53,75,278
17,33,184
71,08,462
Table-B
Pre-GST (What should have been)
Post-GST (What should have been)
CNC 240 Milling Machine (in Rs.)
D664
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he total Profiteered amount to be Rs. 4,78,085/- (Rs.3,26,837 + Rs. 1,51,248 = Rs. 4,78,085).
16. As is evident from the narration of the facts mentioned above, the Respondent has charged more than the actual base price and hence there is no doubt in our minds that the Respondent has profiteered at the expense of the Applicant No. 1 in respect of the subject supplies made by him and has thus violated the provisions of Section 171 of the Act ibid and has therefore rendered himself liable to penal action in line with the provisions of Section 122 of the CGST Act, 2017 apart from his liability to refund the above profiteered amount along with the applicable interest in terms of the provisions of the CGST Rules. 2017.
17. Accordingly, the Respondent is directed to reduce the sale price of the above items immediately commensurate to the reduction in the price due to ITC of erstwhile chargeable CVD which is now available in the form of IGST and pass on this benefit to his customers. He is
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t has deliberately acted in defiance of the above law and hence he is guilty of the conduct which is contumacious and dishonest. He has further acted in conscious disregard of the obligation which was cast upon him by the law, by issuing incorrect invoice in which the base price was deliberately not reduced by the amount of CVD, SAD and CST chargeable under erstwhile scenario which is now chargeable as IGST in the GST regime and is available as ITC benefit and thus he had denied the benefit of reduction in the price granted vide IGST provisions to his customers. Accordingly he has committed an offence under Section 122 (1) (i) of the CGST Act, 2017.
19. It is also revealed from the record that the notice regarding imposition of penalty has already been issued to the Respondent on 11.09.2018. However, the Respondent has not furnished any reply or advanced any arguments on the quantum of penalty to be imposed on him. Keeping in view the principles of natural justice, opportunity of bein
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