TaxTMI 
TaxTMI 
2025 (9) TMI 1324
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....l Duty (SAD) at the rate of 4% at the time of import. On 01.07.2017, GST came in into force, w.e.f aforesaid date; CVD and SAD were replaced by IGST. The integrated Goods and Services Tax were imposed at the rate 18% on Dental equipment & accessories with the benefit of availing ITC. 3. On 28.11.2017, in pursuance of the Section 171 of CGST Act, 2017, the National Anti-Profiteering Authority was formed. The complaint was received from M/s Crown Express Dental Lab, Ranchi regarding profiteering by the Respondent for two products i.e. "Lava CNC 240 Milling Machine along with accessories" and "Sintering Furnace D664" to the tune of Rs. 4,78,085/-. The complaint was examined by Standing Committee on 25.05.2018. It was referred to the Directorate General of Anti-Profiteering, hereinafter referred as DGAP. On 08.06.2018, the DGAP submitted its report, which was received by the NAA on 31.08.2018. The first Report was received on 31.08.2018. Notices were issued by the National Anti-Profiteering Authority, hereinafter referred as Erstwhile NAA on 12.09.2018 and final order was passed on 28.11.2018 under Rule 133(1) of the CGST Rules. 4. In the final order, the erstwhile NAA directed t....
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....e alleged against the Respondent or any profiteering amount can be determined. Otherwise, the provisions of Section 171 of the CGST Act, 2017 cannot apply to the Respondent who is not an importer himself, but buys such goods from the importer. However, such facts are subject to ascertainment and verification by the DGAP". "12. For the reasons mentioned and discussed herein above and in the given circumstances, the Authority without going into the merits of the other submissions filed by the Applicant and the Respondent at this stage, find that this is a fit case for further investigation as per the provisions of Rule 133(4) of the CGST Rules, 2017 as per the findings and directions contained herein above. Accordingly, this Authority directs the DGAP to reinvestigate the matter on all the above issues and furnish his report under Rule 129(6) of the CGST Rules, 2017. The DGAP may also collect relevant documents/evidences from the supplier/importer and investigate them also under Rule 133(5). On his part, the Respondent is directed to fully co-operate with the DGAP in the process of reinvestigation which includes submission of the requisite documents / details / information p....
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.... which were sold in both pre and post GST period and it was concluded that the Respondent indicated that he had not passed on the benefit of input tax credit by way of commensurate reduction in prices of the goods/products after implementation of GST w.e.f 01.07.2017. DGAP worked out a profiteered amount of Rs. 1,29,39,594/- (including GST). The said profiteered amount was arrived at by comparing the actual base sale price of the products sold during the period 01.07.2017 to 30.08.2019 i.e. in the post-GST period with the commensurate base sale price which was arrived by deducting the benefit of input tax credit availed on the average price of post GST purchased from the average base sale price in pre GST i.e. during the period 01.04.2016 to 30.06.2017. The excess GST so collected from the recipients, was also included in the aforesaid profiteered amount as the excess price collected from the recipients also included the GST charged on the increased sale price. The Respondent vide letter dated 13.05.2022 submitted before the erstwhile NAA, the pre-GST tax structure as well as the post-GST tax structure. He further submitted that as per Rule 3 of CENVAT Credit Rules, 2004, only the ....
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....on under the Central Excise Act and so not eligible to take CENVAT credit; that he was not eligible to take credit of CST; that they could avail ITC credit of Rs. 9,77,343/- under Rule 117(4) by filing Tran-I and Tran-II, but no such credit was availed by him. This implied that during the pre-GST period, the Respondent did not avail any kind of credit on input goods or services. The erstwhile NAA had further directed that only in such case where any additional ITC had actually been made available to the Respondent in the GST regime as compared to pre-GST regime, could any profiteering be alleged against the Respondent, otherwise the provisions of Section 171 could not apply to the Respondent. Here, it was important to mention that during pre-GST period, the Respondent did not avail any credit on input goods or services but during the GST regime the Respondent had availed the following ITC credit as per their GSTR-2A mentioned in his reply dated 07.06.2022. The said profiteering amount is depicted in tabular form as follows:- TABLE Year GSTR-2A (ITC on inward supplies of goods) 2017-18 (01.07.2017 to 31.03.2018) 59,99,776/- 2018-19 (01.04.2018 to 31.03.2019) ....
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....DGAP submitted that there has been a non-compliance of Section 171 of the CGST Act and as the entire ITC availed by him would be treated as benefit of ITC to the Respondent which had not been passed on to the ultimate consumer. This Report is revising the total profiteering made by the Respondent in violation of the Section 171 of the CGST Act was Rs. 01,49,81,077 instead of 01,29,39,594/- as per the Report dated 01.07.2020. 12. This Report was placed before the Competition Commission of India which was then entrusted to examine the cases of Profiteering made by different stakeholders. The Respondent submitted its written submissions raising various factual and legal issues. We have enumerated the relevant submissions as follows:- i. Since no credit of tax of any kind was availed by the Respondent in the pre-GST period regime, the DGAP surmised that full quantum of ITC in post- GST period became benefit that needed to be passed on to the customers/recipients of goods. ii. The allegation of non-passing of ITC benefits and non-reduction of prices was not sustainable. This is the foundation, on which the other allegations like the quantification of profiteering we....
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....roduced documents to correlate whether the non- inclusion of ITC in cost had resulted in commensurate reduction of prices. This was indeed convoluted reasoning. x. The Respondent also submitted that when any one of primary assumptions breaks down, the ultimate conclusion had to be rejected as incorrect. Respondent relied upon the judgment of Hon'ble Supreme Court in the case of Oudh Sugar Mills Ltd. Vs. UOI - 1978 (2) ELT (J172) SC. 13. The clarifications were sought by the CCI from DGAP on the above submissions under Rule 133 (2A) of the CGST Rules, which are as follows:- i. The claim of the Respondent that they had excluded the ITC component for the cost of goods was not supported with any evidence. Further from comparing the pre and post GST prices of the 475 SKUs of the Respondent sold in the post GST period were scrutinized and it was observed that price of 158 SKUs were increased in post GST and price of 316 SKUs were reduced. Therefore, it could not be established whether the Respondent had actually reduced the price commensurately. Neither the Respondent's business pattern nor any supporting evidence could prove that the price reduction was due to I....
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....e DGAP worked out profiteering for all SKUs by adopting method approved by the Authority. The methodology and formula upheld by the erstwhile NAA in all the similar cases. The contention of the Respondent that in a single SKU there had been various prices based on warranty, marketing support etc. which were trade practices was irrelevant. The mandate of Section 171 of the CGST Act, 2017 is limited to additional benefit of ITC only in this case. The above Section mentioned "any supply" i.e. each taxable supply made to each recipient thereby clearly indicating that netting off of the benefit of ITC benefit by the Respondent was not allowed. The Respondent could not claim that he had passed on more benefit to one customer therefore he could pass less benefit to another customer. Each customer was entitled to receive the benefit of ITC benefit on each product purchased. The word "commensurate" mentioned in the above Section gives the extent of benefit to be passed on by way of reduction in the prices, which had to be calculated in respect of each product based on the tax reduction as well as the existing base price of the product. It was further reiterated that Section 171 of ....
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....that the officer who has submitted the report has been transferred in the meantime. Therefore, she has requested to grant her some more time to go through the records to effectively place the matter before this Tribunal. 15. Then, the matter was again taken up for hearing on 15.07.2025, Ms. Geetanjali Ahuja, Inspector appeared on behalf of the DGAP. Respondents were physically present through their Director Shri George Abraham. Mr P. S. Pruthi, Consultant for M/s Theco India Pvt. Ltd., also appeared. A written submission was placed before the Tribunal which was taken on record. A copy of written submissions was also served to the Departmental Representatives of the DGAP. The Learned Representative of the Respondent is also directed to submit the soft copy of the written submission to the Tribunal as well as to the Departmental Representative of the DGAP. In view of the order passed earlier by the NAA on 05.08.2022 the Tribunal directed that the respondent should furnish the details of the companies / firms who have purchased goods from them along with the Email IDs and Mobile Numbers within a period of one week. It was also brought to the notice of the Tribunal that the relevant....
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....om the Respondent. 17. The Tribunal further observed that on 30.07.2025 that 21 such buyers of the Respondent were yet to respond to the email sent by the DGAP. It was brought to our notice by Shri George Abraham, Director of the M/s Theco India Pvt. Ltd. that in the meantime he verified from the different sources and confirmed that in 08 such cases either the company has been liquidated or the sole proprietor / managing director have died. Further, Shri George Abraham was ready to provide the information to the DGAP of such 08 no. of purchasers. Out of total 58 buyers, 21 are to be verified including the 08 buyers that are liquidated / dead. The Tribunal considered it appropriate to give one last opportunity to the DGAP and the Respondent to put forth its written submissions to the DGAP and Respondent. In order to facilitate the enquiry in an effective manner, this tribunal directed the DGAP that the detailed information may be provided to the Respondent of the 21 buyers/ companies/ firms who have not responded to DGAP's notices within 03 working days, so that Respondent can also assist the DGAP in providing their whereabouts/ addresses/ emails/ phone numbers for proper investi....
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....e posting cost of goods in their profit and loss account, the amount of ITC was not embedded in the cost and hence it is established that the entire benefit of ITC was passed on to their recipient. This argument of the Notice is not acceptable because the Notice have not produced documents to correlate whether non- inclusion of ITC in cost has resulted in commensurate reduction of prices. Section 171 of the CGST Act, 2017 envisages that the benefit of ITC must be passed on to the recipient by the commensurate reduction in price. The invoices of all 475 SKUs of the Noticee sold in post- GST period were scrutinised. On critical examination of pre and post GST prices of all these invoices of the Noticee, it has been observed that in respect of 158 SKUs the prices were increased in post GST period as compared to pre- GST period and in respect of 316 SKUs the prices were reduced and in respect of 01 SKU the price remained the same (Annex-3). Therefore, it cannot be established whether the Noticee have actually reduced the prices of the SKUs commensurate with the benefit of ITC. Furthermore, the benefit of ITC claimed to have been passed on by the Noticee should have been specifically me....