Anti-Profiteering — In the instant case, applicant stated that he had purchased the two items (i) Lava CNC 240 Milling Machine with accessories and (ii) Lava Materials Approved Sintering Furnace D664 from the Respondent which were imported from Germany.
He 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 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.
Held that—We found that the Respondent has wrongly charged higher price from the Applicant No. 1 as he should have reduced the base price to the extent of CVD (at 12.5%) which was chargeable on the amount mentioned in the quotation dated 28.11.2016 since in the period prior to GST no CENVAT credit was available for the CVD paid on the import of the goods whereas in the post GST period no CVD was charged instead IGST was charged on the import of goods which was available as ITC to the Respondent while supplying goods to the above Applicant. Hence the price offered prior to implementation of GST has to be reduced by the amount of CVD paid in order to neutralise the impact of ITC now available to the Respondent.
Accordingly, the Respondent 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.
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 chargeable as IGST in the GST regime and is available as ITC benefit and thus he had denied the benefit of reduction in the price granted vide IGST provisions to his customers. Accordingly he has committed an offence under Section 122 (1) (i) of the CGST Act, 2017.
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. — Crown Express Dental Lab Vs. Theco India Private Limited  6 TAXLOK.COM 50 (NAPA)