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2020 (5) TMI 265 - NAPA - GSTProfiteering - supply of a “Used Heidelberg Speed Master Offset Press with complete tools and accessories (Model SM 74-5+LX, Year of manufacture 1997)” - allegation that the benefit of ITC was not passed by way of commensurate reduction in price in terms of Section 171 of the CGST Act, 2017 - contravention of section 171 of CGST Act - imposition of penalty - HELD THAT:- The Central Government implemented GST w.e.f 01.07.2017 and that GST subsumed several taxes hitherto levied by the Central Government and the State Governments. Out of these several taxes, input tax credit of some taxes was not being allowed in the erstwhile tax regime. Such subsumed taxes, the credit of which was not allowed in the erstwhile tax regime, used to get embedded in the cost of the goods or services supplied resulting in an increase in the prices of the goods or services supplied. With the introduction of GST with effect from 01.07.2017, the said taxes got subsumed in GST. Under the GST regime, ITC of the GST paid on inputs is available in respect of all inward supplies of goods and services, unless specifically denied - Thus, the additional benefit of ITC in the GST regime is limited to those input taxes, the credit of which was not allowed in the pre-GST regime, but is allowed in the GST regime. This additional benefit of ITC in the GST regime is required to be passed on by the suppliers to the recipients by way of commensurate reduction in price in terms of Section 171 of Goods and Services Tax Act, 2017. The Respondent has violated the provisions of Section 171 of the CGST Act 2017 in as much as he had not passed on the benefit of reduction of tax/ additional ITC in respect of the supply effected by him to Applicant No. 1, and therefore, he is liable for action under Rule 133 of the CGST Rules, 2017 - it is established that the Respondent has acted in contravention of the provisions of Section 171 of the CGST Act, 2017 and has not passed on the benefit of reduction in the rate of tax/ additional ITC to the Applicant No. 1 by commensurate reduction in the price. Accordingly, the amount of profiteering is determined as ₹ 6,91,121/- as per the provisions of Rule 133 (1) of the CGST Rules, 2017. The Respondent has acted in contravention of the provisions of Section 171 of the CGST Act, 2017 and has not passed on the benefit of reduction in the rate of tax/ additional ITC to the Applicant No. 1 by commensurate reduction in the price. Accordingly, the amount of profiteering is determined as ₹ 6,91,121/- as per the provisions of Rule 133 (1) of the CGST Rules, 2017 - the Respondent liability to refund the profiteered amount of ₹ 6,91,121/-, along with the interest to be calculated at 18% from the date when the above amount was collected by him from the recipients till the above amount is deposited/refunded, is established. Further, since the Respondent has already refunded the profiteered amount of ₹ 6,91,121/- to Applicant No. 1 through RTGS dated 12.12.2019 and since the receipt thereof has also been acknowledged by the Applicant No. 1, vide submissions of Applicant No. 1 dated 10.01.2020, we direct the Respondent to pay the interest to be calculated @ 18% from the date when the profiteered amount was collected by him from the Applicant No. 1 till the above amount is paid within a period of 3 months from the date of receipt of this order failing which the same shall be recovered by the Commissioner CGST/SGST as per the provisions of the CGST/SGST Act, 2017. Penalty - HELD THAT:- It is evident from the case records that the Respondent has denied the benefit of rate reductions/additional ITC in the GST to the Applicant No. 1 in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he has thus profiteered as per the explanation attached to Section 171 of the above Act. Therefore, he is liable for imposition of penalty under Section 171 (3A) of the CGST Act, 2017 - Therefore, a Show Cause Notice be issued to him directing him to explain why the penalty prescribed under the above sub-Section should not be imposed on him.
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