Out of 56 Buyers, 50 Received GST ITC Benefits: GSTAT Rules Supplier of Dental Equipment Did Not Profiteer ₹1.49 Crore [Read Order]

In a recent ruling, the Principal Bench of the Goods and Services Tax Appellate Tribunal (GSTAT) at New Delhi held that the supplier of dental equipment and accessories did not profiteer Rs. 1,49,81,077 as alleged by the Directorate General of Anti-Profiteering (DGAP).

The case arose under Section 171 of the Central Goods and Services Tax Act, 2017, which deals with anti-profiteering. The allegation was that after the introduction of GST on 1 July 2017, Theco India Pvt. Ltd. failed to pass on the benefit of input tax credit (ITC) to its customers through a commensurate reduction in prices.

The DGAP had investigated and claimed that the company profiteered Rs. 1,49,81,077 by not transferring the ITC benefit on 85 dental products sold during the period from 1 July 2017 to 30 August 2019.

The respondent’s counsel argued that before the implementation of GST, the company was not registered under the Central Excise Act and was not eligible to avail any CENVAT or CST credit. They added that the company did not receive any additional ITC benefit under GST and had already excluded ITC components while fixing prices, meaning the benefit had been effectively passed on to customers.

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The respondent also pointed out that many buyers had confirmed receiving ITC benefits, and there was no evidence of any undue profit.

Justice (Retd.) Dr. Sanjaya Kumar Mishra (President of GSTAT) observed that anti-profiteering proceedings are inquisitorial in nature, and the burden lies on the DGAP to prove profiteering through clear evidence.

The tribunal observed that the DGAP’s report itself admitted inconsistencies, as prices had increased for 158 stock-keeping units (SKUs), decreased for 316 SKUs, and remained unchanged for one. It explained that this variation did not prove that the company had profiteered.

The tribunal pointed out that the DGAP had failed to show any material evidence demonstrating that the respondent had retained undue profits. Verification revealed that out of 56 buyers, 50 confirmed receiving the ITC benefit, one buyer was unregistered under GST, and five businesses had closed due to liquidation or death of the proprietor.

The tribunal ruled that there was no evidence of profiteering under Section 171 of the CGST Act. It rejected the DGAP’s report and closed the proceedings, ruling that Theco India Pvt. Ltd. had duly passed on the ITC benefits to its buyers.

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