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2019 (12) TMI 1082 - NAPA - GSTProfiteering - purchase of various consumer goods - baby care products - allegation that benefit of reduction in the rate of GST not passed on - contravention of section 171 of CGST Act - penalty - HELD THAT:- The Respondent has taken in to account the price of a particular product description sold to a particular customer in the last invoice prior to 15.11.2017 as the base price prior to 15.11.2017 and where such a price was not available till 01.07.2017 he has taken the price available in the price list as on 14.11.2017. However. the Respondent has considered one invoice having the maximum base price for computing the base price whereas he should have taken average of the base prices which he had charged to his different customers making purchase from him through different channels. Taking the maximum base price from an invoice or from the price list has resulted in reducing the amount of benefit when compared with the post GST base price. the DGAP has computed the average pre rate reduction base prices after taking in to account all the invoices issued to different customers which gives more representative measure of the base prices than the prices computed by the Respondent. The Respondent has not commensurately reduced his prices but he has infact increased them by adding the tax costs and the losses w.e.f. 15.11.2017 on the base prices which he was already charging on 14.11.2017 as is apparent from the perusal of column L and M of Annexure-13 submitted by him. It is also clear that the Respondent has arbitrarily computed the pre rate reduction base prices of his products by taking in to consideration the highest selling base prices instead of the average base selling prices although he was admittedly selling his products to different customers at different prices. It is absolutely clear that the Respondent had no intention of passing on of the above benefit and he has thus denied the benefit of tax reduction to his customers. Therefore, it is established that he has committed violation of the provisions of Section 171 (1) of the above Act - It is also established that the methodology adopted by the Respondent while computing the benefit of tax reduction was illogical, unreasonable, arbitrary, illegal and incorrect and hence the same cannot be accepted. The profiteered amount is determined as ₹ 2,30,40,74,132/-as per the provisions of Rule 133 (1) of the above Rules as has been computed vide Annexure-13 of the Report dated 24,06.2019. 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 ₹ 2,30,40,74,132/-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 the above amount was realised by the Respondent from his recipients till the date of its deposit. The above amount shall be deposited within a period of 3 months from the date of passing of this order failing which it shall be recovered by the concerned Commissioners CGST/SGST. 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 apparently liable for imposition of penalty under Section 171 (3A) of the CGST Act, 2017 - Therefore, a SCN be issued directing him to explain why the penalty prescribed under the above sub-Section should not be imposed on him.
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