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2019 (6) TMI 1337 - NATIONAL ANTI-PROFITEERING AUTHORITYProfiteering - Vitrified Tiles - benefit of reduction in the rate of tax not passed on - increase in the MRP of the product after the rate of tax was reduced - contravention of the provisions of Section 171 of the CGST Act, 2017 - penalty - HELD THAT:- It is revealed that the Central Govt. vide Notification No.41/2017-Central Tax (Rate) dated 14.11 2017 had reduced the rate of GST from 28% to 18% in respect of the tiles with effect from 15.11.2017, the benefit of which was required to be passed on to the recipients by the Respondent as per the provisions of Section 171 of the CGST Act, 2017. It is revealed that the Respondent had increased the base price of the product from ₹ 750/- to ₹ 814/when the rate of tax was reduced from 28% to 18% with effect from 15.11.2017. Thus, by increasing the base price of the product, post-GST rate reduction, the benefit of reduction in tax rate was not passed on to the Applicant No. 1 by the Respondent. It is established that the Respondent has acted in contravention of the provisions of Section 171 of the CGST Act, 2017 and has not passed on the benefit of reduction in the rate of tax to his recipients by commensurate reduction in the prices. Accordingly, the amount of profiteering is determined as ₹ 54,67,149/- as per the provisions of Rule 133 (1) of the CGST Rules, 2017 - The Respondent is therefore directed to reduce the prices of his products as per the provisions of Rule 133 (3) (a) of the CGST Rules, 2017, keeping in view the reduction in the rate of tax so that the benefit is passed on to the recipients - The Respondent is also directed to deposit the profiteered amount of ₹ 54,67,149/- along with the interest to be calculated @ 18% from the date when the above amount was collected by him from the recipients till the above amount is deposited. The Respondent is further directed to refund an amount of ₹ 75/- (750* 1.28 = 960 -750*1.1.8 = 885) to Applicant No. 1. along with the interest @ 18% - Since rest of the recipients in this case are not identifiable, the Respondent is directed to deposit the amount of profiteering of ₹ 27,33,537/- in the Central Consumer Welfare Fund (CWF) and ₹ 27,33,537/- in the Uttar Pradesh State CWF as per the provisions of Rule 133 (3) (c) of the CGST Rules, 2017, along with 18% interest. Penalty - HELD THAT:- The Respondent had issued incorrect invoices while selling the above product to his recipients as he had incorrectly shown the base prices and had also compelled them to pay additional GST on the increased prices through the incorrect tax invoices which would have otherwise resulted in further benefit to the recipients. It is also established from the record that the Respondent has deliberately and consciously acted in contravention of the provisions of the CGST Act, 2017 by issuing incorrect invoices which is an offence under Section 122 (1) (i) of CGST Act - penalty under Section 122 (1) (i) of CGST Act read with Rule 133 (3) (d) of the CGST Rules, 2017 upheld - Since he has not submitted his reply on the issue of penalty, therefore, in the interest of natural justice before imposition of penalty a notice is issued to him asking him to explain why penalty should not be imposed on him. Application disposed off.
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