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2018 (12) TMI 472 - NAPA - GSTProfiteering - benefit of tax reduction not passed on - Johnson & Johnson Baby Shampoo 100 ml. - Johnson & Johnson Baby Powder 200 Gms - It was also alleged that instead of reduction, the base prices of the above two products were increased on and thus the Respondent had indulged in profiteering in contravention of the provisions of Section 171 of the CGST Act, 2017. Held that:- There is no doubt that the Respondent had increased the base prices of the products w.e.f. 15.11.2017, whereas he was required not to increase them and after charging GST @ 18%, he was legally bound to charge the reduced prices so as to pass on the benefit of reduced tax rate to his customers and hence he has indulged in profiteering. The Respondent had increased the base prices of 130 products which were supplied by him during the period between 15.11.2017 to 31.032018 and by doing so he had resorted to profiteering on account of increase in their base prices, Thus, it is established that the Respondent had acted in contravention of the provisions of Section 171 of the CGST Act. 2017 and had not passed on the benefit to his customers by commensurate reduction in the prices of these products. Accordingly, the amount of profiteering made by the Respondent is determined as ₹ 501 ,646/- as per the provisions of Rule 133 (1) of the CGST Rules, 2017. The Respondent has vehemently argued that he had no control on the fixing of the base prices as well as the MRPs as both of them were fixed by J & J through the software which he was bound to follow as per the terms of the agreement executed by him with the above Company - However, it is apparent from the record that the Respondent is duly registered under the CGST/SGST Act, 2017 and he was hence bound to follow the Notification dated 14.11.2017 mentioned above vide which the rate of GST was reduced from 28% to 18% on 130 products which he was selling, He cannot escape the legal obligation which was imposed upon him by the above Notification by shifting his accountability on this ground. The Respondent has also not produced any evidence to show that he had made any correspondence with J & J to inform it that he was bound to reduce the prices due to reduction in the rate of tax and J & J should either not increase the base prices or compensate him for the benefit he was bound to pass on to his customers, therefore, it is quite apparent that he had deliberately charged the enhanced prices with an intention to pocket the amount which he was bound to pass on to the recipients. The Respondent is directed to reduce the prices of all the above products as per the provisions of Rule 133 (3) (a) of the CGST Rules, 2017 by making commensurate reduction in their prices 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 ₹ 5,01,646/- along with the interest to be calculated @ 18% from the date when the above amount was collected by him from his customers till the above amount is deposited. Penalty - Held that:- 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 the above Act and hence he is liable for imposition of penalty under the above Section read with Rule 133 (3) (d) of the CGST Rules, 2017 - Although notice for imposition of penalty has already been issued to the Respondent on however, no formal oral or written submissions have been filed by the Respondent on the quantum of penalty. Therefore, keeping in view the principles of natural justice it would be appropriate to issue fresh notice asking him to explain why penalty should not be imposed on him for the above offence. Decided against respondent-assessee.
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