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2019 (12) TMI 588 - NAPA - GSTProfiteering - packaged foods - urisdiction of NATIONAL ANTI-PROFITEERING AUTHORITY (NAPA) - benefit of reduction in the GST rates that had not been passed on by him to the recipients - contravention of Section 171 of CGST Act, 2017 - penalty - HELD THAT:- The benefit of rate reduction has to be passed on by a registered person to the recipient on every supply of goods and services by commensurate reduction in the prices and in case it is not passed on the supplier shall be acting in contravention of the above provision. This Authority has been duly constituted under Section 171 (2) of the above Act and in exercise of the powers conferred on it under Rule 126 of the CGST Rules, 2017 it has notified the ‘Procedure & Methodology’ for determination of the profiteered amount vide its Notification dated 28.03.2018 and not on 19.07.2018 as has been claimed by the Respondent. However, the mathematical methodology for determination of the profiteered amount has to be applied on case to case basis depending on the facts of each case and no fixed formula can be set for calculating the same as the facts of each case are different. The mathematical methodology applied in the case where the rate of tax has been reduced and ITC disallowed cannot be applied in the case where the rate of tax has been reduced and ITC allowed. The power under Rule 126 has been granted to this Authority by the Central Government as per the provisions of Section 164 of the above Act which has approval of the Parliament. Rule 126 has further been framed on the recommendation of the GST Council which is a constitutional body created under the Constitution (One Hundred and First Amendment) Act, 2016. Therefore, the above power has both legislative sanction as well as incorporation in the CGST Act, 2017 and the CGST Rules, 2017. The delegation provided to this Authority under the above Section and Rule is clear, precise, unambiguous and necessary and is well within the provisions of the Constitution and therefore, it has been rightly conferred on this Authority. Hence, the objections raised by the Respondent in this regard are frivolous and without legal force. It will also be appropriate here to mention that as per the provisions of Section 171 (2) of the above Act and the Rules framed under it, the Central Government has been empowered to constitute an Authority “to examine whether ITCs availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of goods or services or both supplied by him.” In exercise of the above power the Central Govt. has constitute this Authority vide Office Order No. 343/2017 dated 28th November, 2017 to ensure that both the above benefits are passed on to the customers. The profiteered amount is determined as ₹ 89,73,16,384/- as per the provisions of Rule 133 (1) of the above Rules as has been computed vide revised Annexure-16 of the supplementary Report dated 15.03.2019. Accordingly, the Respondent is directed to reduce his prices commensurately in terms of Rule 133 (3) (a) of the above Rules. The Respondent is also directed to deposit an amount of ₹ 73,14,83,660/- (₹ 89,73,16,383/- ₹ 16,58,32,723/- as he has already deposited an amount of ₹ 16,58,32,723/- in the CWF of the Central and the concerned State Government, as the recipients are not identifiable, as per the provisions of Rule 133 (3) (c ) of the above Rules alongwith 18% interest payable from the dates from which both the above amounts were realised by the Respondent from his recipients till the date of their deposit as per the revised Annexure-16 attached with the Report dated 15.03.2019. Penalty - HELD THAT:- The Respondent has denied the benefit of tax reduction to the customers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has thus profiteered as per the explanation attached to Section 171 of the above Act. Therefore, he is liable for imposition of penalty under Section 171 (3A) of the CGST Act, 2017 - Therefore, a SCN be issued to him directing him to explain why the penalty prescribed under the above sub-Section should not imposed on him. Application disposed off.
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