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2023 (12) TMI 145 - CCI - GSTProfiteering - Erection and Commissioning service supplied by M/s Eros Elevators Escalators Pvt. Ltd. - the benefit of reduction in tax rate in post-GST era not passed on - benefit of additional ITC on the materials purchased by the Respondent not passed on by way of commensurate reduction in price - contravention of section 171 of CGST Act - HELD THAT - The Applicant No. 1 has claimed that the Respondent's scope of activities was Design, Manufacturer, Supply Installation of Elevators Escalators as per his ISO 9001 2015 Certificate No. UQ-2019110909. Perusal of the above Certificate shows that the Respondent has been issued a Certificate of Registration by a United Kingdom based agency in which he has been shown as manufacture of the lifts. However, during the course of the investigation it has been found by the DGAP that the Respondent had not manufactured the lifts which he has supplied to the Applicant No. 1. He had procured the material from the other manufacturers locally and had supplied the same and installed the lifts. Hence the above claim of the Applicant is not correct. The above Applicant has also claimed that the Respondent had increased the base price in the post GST period and had profiteered an amount of Rs. 2,93,502/-. However, perusal of the initial agreement dated 04.07.2015 executed in the pre GST period and the Quotation Nos. QT41092 R4 dated 04.07.2015, QT52365 R1 dated 3.05.2015 and QT52268 R2 dated 30.05.2015, shows that the base price for the installation of both the lifts was Rs. 23,06,499/- and the total tax applicable was Rs. 2,93,502/- and hence the total price was Rs. 26,00,000/-. Therefore, the total pre-GST tax was 12.72% - there is no question of the Respondent having profiteered and hence both the above allegations of the Applicant No. 1 are incorrect and untenable. Perusal of Rule 128 (1) shows that the Standing Committee on Anti-profiteering is only required to examine the accuracy and adequacy of the evidence submitted by the Complainant and if it is prima facie satisfied that the benefit of ITC or tax reduction has not been passed then it has to forward the complaint to the DGAP for detailed investigation as per Rule 129 (1) of the above Rules. Since the evidence produced by the Applicant No. 1 was found to be adequate and accurate by the Standing Committee it had correctly recommended investigation in the complaint. The Respondent has been given due opportunity to present his case by the DGAP during the investigation and has also been allowed to defend himself as per the provisions of the principles of natural justice by the Authority, on the basis of which no allegation has been established against him. Therefore, he should have no grievance on this account. The Commission finds that the instant case does not fall under the ambit of Anti-Profiteering provisions of Section 171 of the CGST Act, 2017. Accordingly, the proceedings initiated against the Respondent under Rule 133 of the CGST Rules, 2017, are hereby dropped.
Issues Involved:
1. Violation of Section 171(1) of the CGST Act, 2017. 2. Determination of additional benefit to be passed on to the Applicant. Summary: Issue 1: Violation of Section 171(1) of the CGST Act, 2017 The Applicant alleged that the Respondent did not pass on the benefit of tax rate reduction and additional Input Tax Credit (ITC) post-GST implementation. The DGAP's investigation revealed that the Respondent had not manufactured the lifts but procured materials from other manufacturers, hence not liable for Central Excise Duty. The Respondent reduced the base price from Rs. 23,06,499/- in the pre-GST period to Rs. 22,03,390/- in the post-GST period. The Commission found no evidence of profiteering as the base price was reduced despite an increase in the tax rate from 12.72% to 18%. The Applicant's claims were deemed incorrect and untenable. Issue 2: Determination of Additional Benefit to be Passed on to the Applicant The Applicant contended that the Respondent should have passed on the benefit of ITC on Octroi and other taxes. The DGAP found that the Respondent did not benefit from Octroi as it was around 1.4% to 1.6% of the base price and was not levied on locally purchased materials. The Respondent also did not avail transitional credit for Excise Duty on stock as of 30.06.2017. The Commission concluded that the Respondent did not receive any additional ITC benefit post-GST implementation. Conclusion: The Commission concluded that Section 171(1) of the CGST Act, 2017, was not applicable in this case as there was no reduction in the tax rate or additional ITC benefit to be passed on. The proceedings against the Respondent were dropped, and the order was issued to all parties free of cost.
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