Crown Express Dental Lab Vs Theco India Private Limited (National Anti-Profiteering Authority)
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.
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 Rs. 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 by the Respondent from the date of receipt of this order failing which the same shall be recovered by the DGAP as per the provisions of the CGST Act, 2017 and shall be refunded as has been directed vide this order.
We have also carefully considered the issue of imposition of penalty on the Respondent as the allegation of profiteering has been duly established against him. It is clear from the facts of the present case that the Respondent was fully aware of the GST provisions and availability of ITC on account of IGST charged on import of goods. He was also fully aware of the provisions of Section 171 of the above Act whereby he was bound to pass on the benefit arising due to ITC availability on import of the above product. However, 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.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING AUTHORITY
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-after referred to as the items), under Rule 128 of the CGST Rules, 2017, against the above Respondent. The Applicant No. 1 had stated in his application that he had purchased the above two items from the Respondent which were imported from Germany. The above Applicant had also stated that though the Respondent had quoted price of Rs. 59,06,000/- with additional 2% Central Sales Tax (CST) and 2% freight as per his quotation dated 28.11.2016 (Annexure-3), he was asked to pay an amount of Rs. 71,08,462/- vide Tax Invoice dated 06.09.2017 (Annexure-4), which included IGST @18%, amounting to Rs. 10,84,341.60/-. The Applicant No. 1 has alleged that after the implementation of the GST, a number of taxes viz. CST, Counter Veiling Duty (CVD) 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 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 of the base price and the duties, taxes and CVD of both the items vide Annexures-12 & 13 to prove that after the coming into force of the GST, the Customs Duty was reduced to 7.5% the benefit of which had been given to the Applicant by him. The Respondent had further submitted that the above Applicant had wrongly claimed that the net price paid for the above items had increased due to levy of IGST as it could be availed as ITC by him Y and a CNC240 Milling Machine priced at Rs. 48.5 lakh, would effectively cost the Applicant No. 1 Rs. 45.5 lakh, amounting to benefit of Rs. 3 lakh on account of ITC. The DGAP has further informed that the Respondent has also claimed that he had sold the Sintering Furnace D664 for the first time and had extended an 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 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 quotation clearly mentioned that he required an advance of Rs. 30 Lakhs against which he would consider the order as confirmed and this amount was paid by the above Applicant in several installments (Annex-15) and the complete amount was received only on 22.06.2017 when he had intimated the above Applicant that the GST was about to be implemented and he would convey the final price only after the GST had been implemented. The DGAP has further intimated that the Respondent had pleaded that he told the Applicant that he could claim full refund of the advance if he so desired and he had supplied the goods only after an agreement with the above Applicant (Annex-16). The DGAP has also intimated that the Respondent had stated that he had given more than 5 months to the 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:-
