Sh. Dinesh Mohan Bhardwaj Proprietor, M/s U.P. Sales & Services Versus M/s Vrandavaneshwree Automotive Private Limited
GST
2018 (4) TMI 1377 – THE NATIONAL ANTI-PROFITEERING AUTHORITY – 2018 (13) G. S. T. L. 415 (N. A. P. A.)
THE NATIONAL ANTI-PROFITEERING AUTHORITY – NAPA
Dated:- 27-3-2018
1/2018
GST
Sh. B. N. Sharma, Chairman, Sh. J. C, Chauhan, Technical Member, Sh, Bijay Kumar, Technical Member and Ms R Bhagyadevi, Technical Member
ORDER
The present report has been received from the Director General of Safeguards (DGSG) after detailed investigation under Rule 129 (6) of the Central Goods & Services Tax (CGST) Rules, 2017. The brief facts of this case are that an application dated 01-11-2017 (Annexure-1) was filed by the above applicant before the Standing Committee, constituted under Rule 123 (1) of the above Rules in which he had stated that he had entered in to a contract vide Annexure-3, on 28-04-2017 for supply of a Honda Car having Model No. WR-V 1.2 VX
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2017 (Annexure-1) which was considered by the Committee in its meeting held on 07-11-2017 (Annexure-2) and referred to the DGSG for detailed investigation under rule 129 (1) of the CGST Rules, 2017, which was received by the DGSG on 29-11-2017, The DCSG had issued notice to the above respondent on 15-12-2017 (Annexure-5) to furnish reply and also supply copies of the documents mentioned in the notice. The respondent had submitted his reply and required documents vide his letters dated 26-12-2017 (Annexure-7) and 28-01-2018 (Annexure – 8). The DGSG had also given opportunity to the applicant to inspect the reply and documents submitted by the respondent vide his letter dated 30-01-2018 and after inspecting the same the applicant vide his letter dated 16-02-2018 (Annexure-6) had intimated that he was satisfied with the reply given by the respondent and therefore the case may be closed.
3. The respondent, in his replies dated 26.12.2017 and 28 01.2018 had stated that he was r
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model was Rs. 9.13,300/- and the ex-showroom price of the Alabaster Silver colour Car was Rs. 9,09,300/- at that time. Her had also intimated that after GST had been imposed w.e.f. 01.07.2017, the price list was revised and the ex-showroom price of the Alabaster Silver colour car was fixed as Rs. 8,98,749/- which was charged from the applicant.
5. The respondent had also submitted copies of the following documents with his replies:-
(a) Audited Balance Sheet & Profit & Loss account for the FY 2016-17
(b) Copies of purchase invoices from April to September, 2017.
(c) Copies of retail invoices from April to September, 2017.
(d) Copies of returns filed with the Commercial Taxes Department from April to June, 2017.
(e) Price Lists (pre-GST & post-GST).
(f) Copies of Service Tax returns from April to September, 2017
6. The DGSG had investigated whether the rate of tax on the car had been reduced post-GST and if so, whether
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his margin from Rs. 33,736/- to Rs. 25,826/- but in his subsequent reply dated 28 01.2018, he had furnished a post-GST price list wherein two types of dealer's margins were shown, the first was of an amount of Rs. 26,619/- and the second was of an amount of Rs. 7,000/- shown as dealer's margin The DGSG had concluded that the total dealer's margin appeared to be Rs. 33,619/- and not Rs. 25,826/-, as claimed by the respondent.
8. The DGSG had further found that the contention of the applicant that the total incidence of tax on the car was reduced from 51% to 29% post-GST, was also not correct as there was a minor reduction in the tax rate in the post-GST period and the tax rate had remained more or less the same. He had also calculated the comparative rates of pre-GST and post-GST tax on the model of car purchased by the applicant which are given in Table 'A' below:-
Table 'A'
Duty/Tax/Cess
Pre-GST Rate (%)
Post-GST Rate (%)
Excise Duty
(S. No. 285
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9
Dealer Price
L=J+K
7,94,149
6,96,705
VAT @ 14.5%
M=L*14.5%
1,15,152
GST+Cess @ 29%
N=L*29%
2,02,044
Ex-showroom price of Alabaster Silver colour car
O=L+M/N
9,09,300
8,98,750
Additional cost of Orchid White colour car
P
4,000
Ex-showroom price of Orchid white colour car
Q=O+P
9,13,300
Price charged from the applicant
8,98,750
Benefit passed on to the applicant (excluding Rs. 4,000/- reduced for change in colour)
10,550
10. The DGSG had also found that the allegation of the applicant that the total tax prior to the implementation of GST was 51% which was reduced to 29% w.e.f. 01.07.2017, was not correct. He had further found that claim of the applicant that though the price charged from him of Rs. 8,98,750/- was less than the contractual price of Rs. 9,13,300/- still the said reduction was not commensurate with the reduction in the rate of tax was also not correct. It was also re
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ring that “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 recipient by way of commensurate reduction in prices” had not been contravened in the present case.
13. The investigation report submitted by the DGSG was considered by the Authority in its meeting held on 01.03.2018 and it was decided to accord personal hearing to the applicant on 16.03.2018 at 11 AM Accordingly vide notice dated 01.03.2018, the applicant was informed but he did not appear but submitted his replies vide emails dated 15.03.2018 and dated 16.03.2018. The applicant vide his letter dated 16.03.2018, received through email around 4 PM had informed that he could not attend the proceedings before the Authority due to health problems, He vide his letter dated 15.03.2018 has also submitted as under:-
“At page no.:05 of subject order sheet under clause no.: 16 it is mentioned as per hereunder:-
In view of the abovementioned findi
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GST was implemented w.e.f. 1st July 2017 as claimed by the applicant and whether the benefit as emanating from such reduced tax rate has not been passed on to the applicant in the form of commensurate reduction in the price of the car purchased by him.
ii. Whether any input tax credit benefit was to be passed on to the applicant by the respondent.
15. With regard to point no. (i) above It has been found from the record that the rate of tax both during pre-GST era as well as the post GST era was a matter of fact which has been clearly delineated in detail by the DGSG in his report dated 23.02 2018 as has been mentioned above. It has also been found that the applicant's contention that the pre-GST rate of tax which was 51% was reduced to 29% in post GST era, was factually incorrect as the pre-GST rate of tax, on the car contracted to be purchased by the applicant, was leviable at 31.254% which was rationalized to 29% (CGST-14%+SGST-14%+Cess-1%)thus there was a re
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t no. (ii), we find that though the applicant in his initial application dated 1.11.2017 had not mentioned anything with regard to not passing of the Input Tax Credit (ITC) benefit and it was only after the Investigation Report of the DGSG dated 24.02.2018 was sent to him, when he had mentioned in his letter dated 15.03.2018 that ITC has not been contravened to the recipient in his case and he had requested to highlight the exact amount of ITC to be contravened to him,
17. We have carefully considered the submissions made by the applicant in his letter dated 15.3.2018 and we are of the view that the applicant has not understood the provisions of Section 171 of the CGST Act, 2017 and the DGSG's report in its true spirit and context. The entire scheme of GST is ITC based i.e. the recipient of the goods and services takes credit of GST paid by him on purchase of goods and services and uses such ITC while discharging GST output tax liability on supply of goods and services. We a
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