Case Law Details
Shri Shylesh Damodaran Vs Landmark Automobiles Pvt. Ltd. (National Anti-Profiteering Authority)
It is clear from the plain reading of Section 171 (1) that it deals with two situations one relating to the passing on the benefit of reduction in the rate of tax and the second pertaining to the passing on the benefit of the ITC. On the issue of reduction in the tax rates, it is clear from the DGAP’s investigation report that there was no reduction in the tax rate in this case hence, the allegation of profiteering by the Respondent on account of change in tax rate is not sustainable. It is also revealed from the perusal of the record that the profit margin of the Respondent had got reduced from Rs. 28,589/- which he was receiving in the pre-GST period to Rs. 16,621/- in the post-GST period and after taking in to account the discounts of Rs. 4,500/- and Rs. 9,000/-, which the Respondent had received for achieving pre-defined purchase and sale targets for the above two periods the total post-GST profit margin of the Respondent was Rs. 25,621/- (Rs. 16,621/- + Rs. 9,000/-), which was less than the pre-GST profit margin of Rs. 33,089/- (Rs. 28,589/- + Rs. 4,500/-). It is also apparent that the reduced profit margin was due to the fact that the post-GST purchase price of the Respondent was Rs. 6,906.05 less than the pre-GST purchase price. It is also clear from the record that the post-GST sale price charged by the Respondent was Rs. 15,683.50/- less than the pre-GST sale price. The record also reveals that the base price charged by the Respondent in the post-GST sale invoice dated 14.10.2017 was Rs. 1,73,346/- less than the base price in the pre-GST sale invoice dated 28.04.2017 due to the reason that in the pre-GST period, the credit of Excise Duty, NCCD and Cesses etc. was not available to the Respondent as only credit of VAT was admissible while in the post-GST period, the Respondent was entitled to claim the ITC on the entire GST paid @ 45% and when the post-GST purchase invoice dated 29.09.2017 and sale invoice dated 14.10.2017 issued by the Respondent were compared, it was evident that the Respondent had not passed on the burden of the input GST paid @ 45% amounting to Rs. 2,88,661.95/- to the Applicant due to the reason that he was eligible to claim ITC on this amount. It is also clear that there was increase in the ITC which the Respondent could avail in the post-GST era as compared to the pre-GST era and the pre-GST and post-GST sale invoices issued by the Respondent revealed that the base price charged from the above Applicant had been reduced as the benefit of ITC was passed on by the Respondent to the Applicant No. 1. Therefore, the allegation that the above Applicant had not been given the benefit of ITC by the Respondent was not proved.
FULL TEXT OF THE ORDER OF NATIONAL ANTI-PROFITEERING AUTHORITY
1. An application dated 12.08.2017 was filed before the Standing Committee on Anti-profiteering under Rule 128 of the Central Goods and Service Tax (CGST) Rules, 2017, by the Applicant No. 1 alleging that he had purchased one Honda City Car from the above Respondent vide Tax Invoice No. A-Tax/998/17-18 dated 14.10.2017 by paying an amount of Rs. 9,54,234/- on which GST @ 28% and Cess @ 17% was charged, however the benefit of Input Tax Credit (ITC) was not passed on to him by the above Respondent and therefore action should be taken against the Respondent for contravention of the provisions of Section 171 of the CGST Act, 2017.
2. The application was examined by the Standing Committee on Anti-profiteering and on 04.01.2018 it was forwarded to the Director General of Anti-Profiteering (here-in-after referred to as the DGAP) (erstwhile Director General of Safeguards) to initiate an investigation and collect evidence necessary to determine whether the benefit of ITC on the said Car had been passed on by the Respondent to the above Applicant or not. The DGAP after scrutiny of the application had returned the same to the Standing Committee for reconsideration on the ground that no meaningful investigation could be conducted as no evidence had been furnished by the above Applicant. The Standing Committee had returned the above application on 28.02.2018 to the DGAP stating that once the application had been recommended for investigation, it couldn’t reconsider it’s decision as it had become `functus officio’.
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