2018 (12) TMI 135 – NATIONAL ANTI-PROFITEERING AUTHORITY – TMI – Penalty – Profiteering – benefit of reduction in the price granted – Section 122 (1) (i) of the CGST Act, 2017 – Held that:- The Respondent 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.
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The notice regarding imposition of penalty has already been issued to the Respondent on 11.09.2018. However, the Respondent has not
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dent in this regard. – Case No. 15/2018 Dated:- 28-11-2018 – 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- profiteering had recommended an investigation on an application dated 06.02.2018 (Annexure-2) filed by the Applicant No. 1 relating to the purchase of (i) Lava CNC 240 Milling Machine with accessories and (ii) Lava Materials Approved Sintering Furnace D664 (here-in-
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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 DGAP has informed that the Respondent in his replies dated 29.06.2018 (Anexure-10) and 17.07.2018 (Annexure-11) had denied the allegations leveled by the Applicant No. 1 The DGAP has also informed that the Respondent had also submitted the details
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ad 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 first time by the Respondent. The DGAP has further submitted that the Respondent had maintained that the above Applicant had agreed to the terms of the sale. The DGAP has also intimated that the Respondent had claimed that his
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given a quotation on 28.11.2016 for a total amount of ₹ 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 Materials approved Sintering Furnace D664 (B) 14,68,800/- Total price (C=A+B) 60,24,120/- IGST (18%) 10,84,342/- Price (including Tax) 71,08,462/- 7. The DGAP has also stated that had the import of the above items been made prior to the implementat
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ice of the above items had remained the same, i.e., ₹ 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 ₹ 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 required to be paid would have been ₹ 10,25,411/- and hence, the Respondent would have been liable to pay CVD at 12.5% amounting to ₹ 2,76,980/- for the item "Lava CNC 240 Milling Machine" and Rs. for the ite
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been ₹ 66,30,377/- instead of ₹ 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 ₹ 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 ₹ 60,24,120/-, however, after much delay the products were received with the tax invoice amounting to ₹ 71,08,462/- on 06.09.2017. The Applicant No. 1 contended that since
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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 ₹ 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 ₹ 4,78,085/- inclusive of GST @ 18% amounting to ₹ 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 ₹ 13 Lakhs and borne an amount of ₹ 6 Lakhs out of the above amount which had not been taken in to consideration by the DGAP. In this connection it is revealed that there is no mention of the Comb
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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 goods to the above Applicant. Hence the price offered prior to
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e 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 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
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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 also directed to refund an amount of ₹ 4,78,085/- along with interest @ 18% to the Applicant No. 1 from the date when this amount was realised by him till the date of refund. The above amount shall be refunded within a period of 3 months
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orrect 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 being heard has to be given to the Respondent before the penalty is imposed. Hence fresh notice be given to him to explain why penalty should not be imposed on him. 20. Further, as elaborated above, it is clear that the Respondent did not pass on
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