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2020 (6) TMI 781 - NAPA - GSTProfiteering - Paints - Varnishes - Putty - Respondent had not passed on the benefit of reduction in the rate of GST - contravention of section 171 of CGST Act - Penalty - HELD THAT:- The record reveals that the Government had reduced the GST rate from 28% to 18% w.e.f. 27.07.2018 vide its Notification No. 18/2018-Central Tax dated 26.07.2018 on “Paints, Varnishes and Putty”. This fact has also not been contested by the Respondent. Therefore, there is no dispute that the Respondent is liable to pass on the benefit of tax reductions w.e.f. 27.07.2018. It is further observed that the Respondent who supplied the above products was impacted with the Notification in the case of 331 products. Out of these 331 products, base prices only in the case of 151 products were increased from 27.07.2018 (post GST rate reduction). Therefore, the Respondent is required to pass on an amount of ₹ 3,76,360/- in respect of these 151 products. It is also evident from the record that the Applicant No. 1 had filed an application under Rule 128 (1) of the CGST Rules, 2017 before the Standing Committee on Anti-profiteering alleging that the Respondent had not passed on the benefit of reductions in the GST rates to his customers but had instead increased the base prices of his products by keeping the Maximum Retail Prices (MRPs) unchanged. The above Applicant had also submitted invoices showing both the pre and post GST rate reduction prices claiming that the Respondent had not reduced the MRPs. It is clear from the narration of the facts that the profiteered amount has been computed by comparing the average pre rate reduction base prices of the impacted products with the monthly average post rate reduction base prices in respect of both the tax reductions. The mathematical methodology adopted by the DGAP to compute the profiteered amount is not in line with the methodology adopted by the DGAP himself in similar cases of profiteering wherein the average pre rate reduction base prices have been compared with the actual post rate reduction prices to compute the profiteered amount. Further, in case the mathematical methodology of comparing the average to average base prices employed by the DGAP is adopted it would not be possible to compute the benefit of tax reduction which is due to each customer on each supply. The profiteered amount computed by the DGAP would also not be correct. The DGAP is directed to compare the average pre rate reduction base prices of the products which were impacted by the tax rate reduction w.e.f. 27.07.2018 with the actual post rate reduction base prices of the impacted products - the DGAP shall reinvestigate the case and submit his Report under Rule 133 (4) of the Rules. The Respondent is directed to extend necessary assistance to the DGAP during the course of the investigation. Penalty - HELD THAT:- As per the provisions of Rule 133 (1) of the CGST Rules, 2017 this order was required to be passed within a period of 6 months from the date of receipt of the Report from the DGAP under Rule 129 (6) of the above Rules. Since the present Report has been received by this Authority on 10.10.2019 the order was to be passed on or before 09.04.2020. However, due to the prevalent pandemic of COVID-19 in the country, this order could not be passed on or before the above date due to force majeure - this order is being passed today in terms of the Notification No. 35/2020-Central Tax dated 03.04.2020 issued by the Government of India, Ministry of Finance (Department of Revenue), Central Board of Indirect Taxes & Customs under Section 168 A of the CGST Act, 2017.
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