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 also find that the respondent has given details of all the basic components of the price of the car purchased by the applicant as has been mentioned in Table ‘B’ above and benefit of Rs. 10,550/- on account of reduction of tax by about 2% viz. from 31.254% (pre GST) to 29% (post GST), as discussed above, has already been passed on to the applicant and the amount of Rs. 10,550/- is inclusive of the ITC as has been calculated in Table ‘B’. Therefore, no additional benefit on account of ITC is required to be paid by the respondent. Thus, the contention of the applicant made in his letter dated 15.03.2018 is not valid and deserves to be rejected.
Based on the above facts we find that the respondent has not contravened the provisions of Section 171 of the CGST Act, 2017 and accordingly we do not find any merit in the application of Sh. Dinesh Mohan Bharadwaj filed under Rule 128 of the CGST Tax Rules, 2017 and we accordingly dismiss the same. A copy of this order be sent to the applicant, the respondent and the DSSG free of cost. File of the case be consigned after completion.
Full Text of the Order of National Anti-Profiteering Authority
1. 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 MT (i-VTEC) through the above respondent, who was an authorised dealer of M/s Honda Car India Ltd. at Bareilly, for an amount of Rs. 9,13,300/- which included Excise Duty @ 35%, Central Sales Tax (CST) @ 02% and UP Value Added Tax (VAT) @ 14% (Total 51%). He had also stated that he had taken delivery of the Car on 11-07-2017 after coming into force of the GST w.e.f. 01-07-2017, by paying an amount of Rs. 8,98,750/-. He had further stated that after 01-07-2017 the respondent was required to reduce the Excise Duty, CST and VAT amounting to 51% from the price of the Vehicle of Rs. 9,13,300/- and then charge SGST @ 14%, CGST @ 14% and Cess @ 1% (Total 29%) on the reduced price. He has therefore alleged that he was not given benefit of reduced rate of Tax which amounted to profiteering by the above respondent and hence action should be taken against him.
2. The applicant had filed the above application with the Standing Committee vide his letter dated 01-11-2017 (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 DGSG 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 28-012018 (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 registered under the GST and was engaged in trading and servicing of the cars and he was bound to sell cars at the ex-showroom price fixed by M/s Honda Cars Ltd. The respondent had justified the price charged by him from the applicant and maintained that the contention of the applicant that the pre-GST duties and taxes on such cars amounted to 51% was wrong and in fact, the total pre-GST tax incidence was 29.175% only and hence, there was a very negligible difference in the incidence of tax. The respondent had also submitted that he had reduced the dealer’s margin from Rs. 33,736/- to Rs. 25,826/- and the price of the car by Rs. 4,000/- on account of the change in the colour of the car from Orchid White (premium colour) to Alabaster Silver (base colour), as per the applicant’s request.
4. The respondent had also intimated that the car of Orchid White colour was booked by the applicant vide Sale Contract dated 28.04.2017 when the ex-showroom price of this colour and 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 there was substantial reduction in the rate of tax as had been contended by the applicant and whether the benefit of reduction in rate of tax had been passed on to the applicant.
7. The DGSG had found that the applicant had booked a car of premium colour (Orchid White) vide Sale Contract dated 28.04.2017 at ex-showroom price of Rs. 9,13,300/- (pre-GST), but he took delivery of the Car of base colour (Alabaster Silver) of the same model which had a lower ex-showroom price of Rs. 9,09,300/- (pre-GST). He had also found that since the applicant had taken delivery of the car of base colour, he was to be charged Rs. 4,000/- less than the contractual price. The DGSG had further found that the contention of the respondent that he had reduced the dealer’s margin was not correct, as was evident from his reply dated 28.01.2018 enclosing therein the price list. It had also been revealed that the respondent, in his first reply dated 26.12.2017, had stated that he had reduced 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 “1”. 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’
