TMI Blog2020 (5) TMI 265X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Goods Services Tax (CGST) Rules, 2017. The brief facts of the present case are that an application dated 29.09.2017 was filed before the Standing Committee on Anti-profiteering, by the Applicant No. 1, alleging profiteering in respect of the supply of a Used Heidelberg Speed Master Offset Press with complete tools and accessories (Model SM 74-5+LX, Year of manufacture 1997) by the Respondent. 2. The DGAP also submitted that the Applicant had purchased an imported Used Heidelberg Offset Press SM 74-5 +LX, Mfg. Year 1997 with complete tools and accessories from the Respondent for which the Respondent had quoted price of ₹ 1,40,00,000/-(plus local Sales Tax, if applicable) as per the proforma Invoice No. Press/DA/PMS/060517 dated 06.05.2017. He was, however, billed for an amount of ₹ 1,65,20,000/- as per tax invoice No. 01 dated 29.07.2017, which included GST @ 18% on ₹ 1,40,00,000/-. The above Applicant also alleged that after the implementation of the GST, various existing taxes like VAT, CST, CVD, SAD etc. had been subsumed in the GST but the Respondent charged 18% GST on ₹ 1,40,00,000/- which was the quoted price inclusive of erstwhile taxes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Rule 130 of the Rules. 8. The DGAP further claimed that the Central Government had implemented GST w.e.f 01.07.2017 which subsumed various taxes levied by the Central Government and State Governments, which are as follows: - Taxes which were subsumed in the Goods and Services Tax (GST) Central Taxes State Taxes Central Excise Duty State VAT/ Sales Tax Additional Duties of Excise (Goods of special importance) Central Sales Tax Additional Duties of Excise (Textiles and Textile products) Entertainment Tax (other than by local bodies) Excise Duty levied under Medicinal Toilet Preparations Act Entry Tax/ Octroi (all forms) Additional Duties of Customs (commonly known as CVD) Purchase Tax Special Additional Duties of Customs (SAD) Taxes on lottery, betting gambling Service Tax Luxury Tax Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... follows:- Description Price (in Rs.) Used Heidelberg Speed Master Offset Press with complete tools and accessories (A) 1,40,00,000/- CGST @ 9% (B) 12,60,000/- SGST @ 9% (C) 12,60,000/- Total Price, including Tax (D=A+B+C) 1,65,20,000/- 11. The DGAP also contended that had the import of the Used Heidelberg Speed Master Offset Press with complete tools and accessories (Model SM 74-5+LX, Year of manufacture 1997) taken place before implementation of GST when the quotation dated 06.05.2017 was provided to the above Applicant, the Respondent would have suffered Countervailing Duty (CVD) @ 12.5% and Special Additional Duty (SAD) @ 4% at the time of import. Though the refund of the amount paid by the Respondent as SAD would have been available to him upon the sale of the products, the credit of CVD paid by the Respondent would not have been available, and would have formed an embedded part of the cost of the product in the said quotation. However, the actual im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 1,65,00,000(-) ₹ 1,58,28,879]. This calculation of the amount of profiteering has been summarized in the table below:- Description Amount (in Rs.) Taxable value at the time of import (A) 46,85,564 CVD 12.5% of the taxable value at the time of import (B) 5,85,696 Base price charged by the Respondent (C) 1,40,00,000 Commensurate base price (D=C-B) 1,34,14,304 IGST(18%) (E=D x 0.18) 24,14,575 Commensurate cum-tax price (F= D+E) 1,58,28,879 Price actually charged by the Respondent (G) 1,65,00,000 Profiteering amount (H=G-F) 6,71,121 14. The DGAP also reported that the benefit of the ITC would be available to the Respondent in those situations where the Respondent had quoted the prices of his supplies in the pre-GST regime and supplies of the same were made in the post-GST regime. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) CVD 12.5% =₹ 5 85 69600 (d) Central Excise education cess (b+c ) x 2 = ₹ 18,252.00 (e) Higher education cess (b+c ) x1 =₹ 9 ,126.00 (f) Sum of CVD Cess =₹ 6,13,074.00 Calculations of the amount of the profiteering Taxable value at the time of Import (A) = ₹ 46,85,564.00 CVD + Cesses (B) = ₹ 6,13,074.00 Base Price charged by notice(C) =₹ 1,40,00,000.00 Commensurate base price (D=C-B) =₹ 1,33,86,926.00 IGST 18% (E=D x 0.18%) =₹ 24,09,647.00 Commensurate cum-tax price (F=D+E) = ₹ 1579657300 Price actually charged by the notice (G) =₹ 1,65,20,000.00 Profiteering amount (H=G-F) = ₹ 7,23,427.00 000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not leviable, hence, the said Cesses have not been considered while calculating profiteering. 21. The DGAP has further reported that the contention of Applicant No. 1 that due to a typing error, the amount of ₹ 1,65,20,000/- had been mistyped as ₹ 1,65,00,000/- in Para 18 of the DGAP report dated 25.10.2019, was correct and thus liable to be accepted and accordingly, the amount of profiteering will increase by ₹ 20,000/-; the actual amount of profiteering ought to be read as ₹ 6,91,121/- (inclusive of GST 18% or ₹ 1,15,187/- charged on the excess base price) and not as ₹ 6,71,121/-; also that the price actually charged by the Respondent in respect of the said supply to Applicant No.1 has to be read as ₹ 1,65,20,000/- (instead of ₹ 1.65,00,000/4 and Para 18, 19 and 20 of the DGAP report stood revised accordingly. 22. DGAP has further submitted that the claim of Applicant No. 1, regarding the additional component of tax paid by him in the GST period was not acceptable, since Respondent's quotation for the supply of the impugned product, which had been issued before the implementation of GST, was for an amount of ₹ 1,40, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt has not submitted any documentary evidence in support of his above claim, hence, the said contention of the Respondent fell flat. 26. We have carefully heard both the parties and have also gone through the record of the case placed before us and it is observed 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n submitted by Applicant No.1 as per his own understanding. In this context, the DGAP has submitted that since the product, i.e the Printing Machine, had been imported by the Respondent, it was not a case of levy of Central Excise Duty and hence also not a case where Central Excise Education Cess and Secondary Higher Education Cess were leviable; that in the case of importation, Countervailing Duty (CVD) was leviable (instead of Central Excise Duty) along with Education Cess (@1% of CVD) and Secondary Higher Education Cess(@ 2% of CVD till February 2015, before the Government of India issued Notification No. 14/2015-Central Excise dated 01.03.2015 and 15/2015-Central Excise dated 01.03.2015, exempting the imports of the impugned product from the levy of Education Cess and the Secondary Higher Education Cess, respectively. Therefore at the time of the import of the impugned product and at the time of the raising of the subject quotation by the Respondent to the Applicant No. 1 in the year 2017, the cesses, namely the Education cess and the Secondary Higher Education Cess, were not leviable, hence, the said Cesses have not been considered while calculating profiteering. We do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record to demonstrate that the above provisions have been complied with. 33. Further, during the course of hearings before this Authority, the Respondent has conveyed his agreement with the report of the DGAP and has also submitted that he has passed on the profiteered amount of ₹ 6,91,121/- to the Applicant No. 1, albeit without interest, vide RTGS dated 12.12.2019. Applicant No. 1 has also acknowledged the same during the course of the hearings. 34. The Respondent has also requested waiver of the interest on the profiteered amount. However, in the absence of any provision of law, this request of the Respondent is untenable and cannot accepted. 35. It is clear from the above narration of the facts that 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, the relevant provisions of which, interalia, state as under:- 133. x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-xx-x-x-x-x-x-x-x-x-x-x-x-x-x-x (3) Where the Authority determin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f this order failing which the same shall be recovered by the Commissioner CGST/SGST as per the provisions of the CGST/SGST Act, 2017. 38. 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. 39. Further this Authority as per Rule 136 of the CGST Rules, 2017 directs the Commissioners of CGST/SGST Delhi to monitor this order under the supervision of the DGAP by ensuring that the interest amount as ordered by the Authority is passed on to the Applicant No. 1. A report in compliance of this order shall be submitted to this Authority by the concerned Commissioners within a period of 4 months from the date of receipt of this order. 40. As per the provisions of Rule 133 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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