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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 ..... (ii) Lava Materials Approved Sintering Furnace D664 (here-in- after referred to as the items), under Rule 128 of the CGST Rules, 2017, against the above Respondent. The Applicant No. 1 had stated in his application that he had purchased the above two items from the Respondent which were imported from Germany. The above Applicant had also stated that though the Respondent had quoted price of Rs. 59,06,000/- with additional 2% Central Sales Tax (CST) and 2% freight as per his quotation dated 28.11.2016 (Annexure-3), he was asked to pay an amount of Rs. 71,08,462/- vide Tax Invoice dated 06.09.2017 (Annexure-4), which included IGST @18%, amounting to Rs. 10,84,341.60/-. The Applicant No. 1 has alleged that after the implementation of the GST, a number of taxes viz. CST, Counter Veiling Duty (CVD) and Special Additional Duty (SAD) had been subsumed in the IGST but the Respondent had charged 18% IGST on Rs. 59,06,000/- which was the selling price as per the quotation dated 28.11.2016 and which included CVD and SAD etc. which had been merged in the IGST and hence he had been denied the benefit of Input Tax Credit (ITC) by the Respondent and therefore, action should be taken against him. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017, as was apparent from the invoice (Annex- 14) of Poona Dental Lab who had bought the same on 27.01.2017, however, no invoice was available for the Sintering Furnace D664 as it was supplied for the first time by the Respondent. The DGAP has further submitted that the Respondent had maintained that the above Applicant had agreed to the terms of the sale. The DGAP has also intimated that the Respondent had claimed that his quotation clearly mentioned that he required an advance of Rs. 30 Lakhs against which he would consider the order as confirmed and this amount was paid by the above Applicant in several installments (Annex-15) and the complete amount was received only on 22.06.2017 when he had intimated the above Applicant that the GST was about to be implemented and he would convey the final price only after the GST had been implemented. The DGAP has further intimated that the Respondent had pleaded that he told the Applicant that he could claim full refund of the advance if he so desired and he had supplied the goods only after an agreement with the above Applicant (Annex-16). The DGAP has also intimated that the Respondent had stated that he had given more than 5 months to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extent of CVD that was not to be paid after the implementation of the GST. 8. The DGAP has also provided a detailed comparison of the taxes and duties which were payable before and after the implementation of GST and stated after the perusal of the Bill of Entry No. 3050858 dated 31.08.2018, it was apparent that the taxable value of the product "Lava CNC 240 Milling Machine" on which CVD @ 12.5% would have been required to be paid was Rs. 22,15,844/- and for the Bill of Entry No. 2990028 dated 25.08.2018, the taxable value of the product "Sintering Furnace D664" on which CVD @ 12.5% was required to be paid would have been Rs. 10,25,411/- and hence, the Respondent would have been liable to pay CVD at 12.5% amounting to Rs. 2,76,980/- for the item "Lava CNC 240 Milling Machine" and Rs. for the item "Sintering Furnace D664" without getting benefit of ITC. The DGAP has also stated that since the import had taken place after coming in to force of the GST, the Respondent was not required to pay CVD. Thus, the taxable value should have been reduced by Rs. 2,76,980/- from the amount of Rs. 45,55,320/- for the "Lava CNC 240 Milling Machine" and it should have been reduced by Rs. 1,28,176/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration of the CST paid by the Respondent on the above items as the Applicant No. 1 was based in Ranchi and any sale prior to the GST attracted CST @ 2 %, which amounted to an additional Cost, for which no credit was available as per the provisions of the CST Act, 1956. The Respondent has also contended that the DGAP had failed to consider the 2 % CST component of Rs. 1,20,482/- while working out the amount of profiteering The Respondent has also contended that he had not indulged in Profiteering and the amount of Rs. 4,78,085/- inclusive of GST @ 18% amounting to Rs. 79,928/- calculated by the DGAP was incorrect. 13. We have carefully considered the material placed before us as well as the submissions made by the Respondent and find that the Respondent has vehemently argued that he had supplied additional material to the above Applicant costing about Rs. 13 Lakhs and borne an amount of Rs. 6 Lakhs out of the above amount which had not been taken in to consideration by the DGAP. In this connection it is revealed that there 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the extent of the CVD that was no longer to be paid as well as to the extent of the IGST whose credit was now available to him. The Respondent has himself admitted during the course of the hearing that he had not deposited the amount of the CVD collected by him from the above Applicant on both the items in the Govt. accounts and therefore, he was bound to reduce the price by the amount of CVD. We find it prudent to refer to the tables below for ascertaining the quantum of profiteering in the subject supplies:- Table-A Pre-GST import scenario Post-GST (As charged) CNC 240 Milling Machine (in Rs.) D664 Sintering Furnace (in Rs.) Total CNC 240 Milling Machine (in Rs.) D664 Sintering Furnace (in Rs.) Total Taxable value at the time of import (A) 22,15844 10,25,411 32,41,255 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 46,46,42 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll 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 import of the above product. However, the Respondent has deliberately acted in defiance of the above law and hence he is guilty of the conduct which is contumacious and dishonest. He has further acted in conscious disregard of the obligation which was cast upon him by the law, by issuing incorrect invoice in which the base price was deliberately not reduced by the amount of CVD, SAD and CST chargeable under erstwhile scenario which is now charg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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