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TMI Blog2018 (12) TMI 135X X X X Extracts X X X X X X X X Extracts X X X X ..... ntum of penalty to be imposed on him. Keeping in view the principles of natural justice, opportunity of being heard has to be given to the Respondent before the penalty is imposed. Hence fresh notice be given to him to explain why penalty should not be imposed on him. It is clear that the Respondent did not pass on the benefit arising out of the increased ITC in the case of the subject transaction - the possibility of the Respondent having profiteered and thus unfairly benefited in the similar manner, in case of the other supplies affected by him to other customers, cannot be ruled out. We unequivocally opine that a fresh investigation by the DGAP covering all products supplied by the Respondent, within the confines of Section 171 of the CGST Act, is merited to unearth and quantify the benefit that the Respondent has failed to pass on to his customers - The DGAP is directed to initiate investigation against the Respondent in this regard. - Case No. 15/2018 - - - Dated:- 28-11-2018 - Sh. B. N. Sharma, Chairman, Sh. J. C. Chauhan, Technical Member And Ms. R. Bhagyadevi, Technical Member Dr. Archana Singh and Sh. Vijay Pandey, Associate for the Applicant No. 1, Sh. Anwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent 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 and a CNC240 Milling Machine priced at ₹ 48.5 lakh, would effectively cost the Applicant No. 1 ₹ 45.5 lakh, amounting to benefit of ₹ 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. ₹ 13 lakhs in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Applicant, was as under:- Description Price (in Rs.) Lava Mill CNC 240 and accessories (A) 44,66,000/- Lava Materials approved Sintering Furnace D664 (B) 14,40,000/- Total price (C=A+B) 59,06,000/- Freight (D= 2% of 'C' above) 1,18,120/- Price (including Freight = C+D) 60,24,120 Plus CST (2%) 6. The DGAP has also intimated that as against the above quoted price the invoice for the above items was issued on 06.09.2017, as under:- Description Price (in Rs.) Lava Mill CNC 240 and accessories (A) 45,55,320/- Lava Materials approved Sintering Furnace D664 (B) 14,68,800/- Total price (C=A+B) 60,24,120/- IGST (18%) 10,84,342/- Price (including Tax) 71,08,462/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ava CNC 240 Milling Machine and it should have been reduced by ₹ 1,28,176/- from the amount of ₹ 14,68,800/- for the Sintering Furnace D664 and the base price should have been ₹ 42,78,340/- for the Lava CNC 240 Milling Machine and ₹ 13,40,624/- for the Sintering Furnance D664 . The commensurate prices of the products Lava CNC 240 Milling Machine and Sintering Furnace D664 inclusive of GST at 18% should have been ₹ 50,48,441/- and ₹ 15,81,936/- respectively. Therefore, The DGAP has concluded that the total price to be charged from the Applicant No. 1 should have been ₹ 66,30,377/- instead of ₹ 71,08,462/- and hence the total amount of profiteering done by the Respondent in the case of supplies made to the Applicant No. 1 was ₹ 4,78,085/-. 9. The above report was considered by the Authority in its meeting held on 12.09.2018 and it was decided to hear the Applicant No. 1 and the Respondent on 26.09.2018. 10. The hearing was held on 26.09.2018, wherein the Applicant No. I was represented by Dr. Archana Singh and Sh. Vijay Pandey; Applicant No. 2 was represented by Sh. Anwar Ali T.P., Additional Commissioner and on beh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is no mention of the Combo Offer either in the quotations dated 28.11.2016 supplied by the Respondent to the above Applicant nor there is any mention of the same in the tax invoice. Moreover, any discount offered by the Respondent was from his own resources and therefore, the same cannot be considered as part of the taxable value and hence the contention of the Respondent made in this behalf cannot be accepted. The Respondent has also claimed that the amount of CST of ₹ 1,20,482/- paid by him for which no ITC was available had not been taken in to consideration while calculating the profiteered amount. In this connection it is quite clear that both the above items were supplied vide tax invoice dated 06.09.2017 when the GST had come in to force and the CST had been subsumed in it. Therefore, there is no question of payment of CST by the Respondent and hence the argument advanced by the Respondent in this behalf is not maintainable. The Respondent has also claimed that the price of 240CNC Milling Machine had increased in the month of January, 2017 which was communicated to the above Applicant and he had agreed that the Machine may be supplied to him on the increased price. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CVD @ 12.5% of taxable value at the time of import (B) 2,76,980 1,28,176 4,05,156 Base Price Charged By The Respondent (C) 45,55,320 14,68,800 60,34,120 Base Price 45,55,320 14,68,800 60,24,120 CST Charged (2% of C) 91,106 29,376 1,20,482 IGST Charged (18%) 8,19,958 2,64,384 1084342 Total price to be charged 46,46,426 14,98,176 61,44,602 Total price actually charged 53,75,278 17,33,184 71,08,462 Table-B Pre-GST (What should have been) Post-GST (What should have been) CNC 240 Milling Machine (in Rs.) D664 Sintering Furnace (in Rs.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent 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 ₹ 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. 18. 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 ..... 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