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By: Dr. Sanjiv Agarwal
November 5, 2018
  All Articals by: Dr. Sanjiv Agarwal       View Profile
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If noodles can be cooked and consumed instantly, why not profit on sale of noodles! In yet another case where anti-profiteering charges have been established, the National Anti-profiteering Authority (NAA) has confirmed that sale of Maggie Noodle pack (Noodles) at same price even after rate of GST on it was reduced from 18% to 12% w.e.f. 15 November, 2017 was a case of anti-profiteering u/s 171 of the CGST Act 2017 read with Rule 128 CGST Rules, 2017 and that the dealer ought to be booked and penalized for indulging in such anti-profiteering act.

In a recent order dated 8th October, 2018, the NAA has in the matter of Ankur Jain and DGAP, CBIC, New Delhi v. Kunj Lub Marketing Pvt. Ltd., Hardoi (UP) (2018) 10 TMI 510 confirmed the allegation of anti-profiteering and penalized the dealer.

The complainant (retailer) lodged an e-mail complaint stating that he had purchased Maggie Noodle pack of 35 gms having maximum retail price (MRP) of ₹ 5 per pack on 6th November, 2017 with base price of ₹ 3.96 per pack and GST@18%. However, when GST rate was reduced from 18% to 12% w.e.f. 15 November, 2018, it increased the base price of noodle pack from ₹ 3.96 to ₹ 4.17 per pack with reduced GST @ 12%. It was also alleged that by increasing the base price, noodle’s cum-tax price remain unchanged implying that benefit of reduction of GST rate had not been passed on to the retailer.

Standing Committee referred the matter to Director General of Anti-profiteering (DGAP) for investigation to collect evidence and determine whether the benefit of tax rate reduction has been passed on to the retailer or not.

The distributor submitted that it had passed on the benefit of GST rate reduction in respect of the product bearing MRP of ₹ 5/- through other packs of Maggi Noodles having different grammage and that in the case of the product, the price reduction would have been around 21 paise to the retailer and around 25 paise to the ultimate consumer which would have been inconvenient to both the retailer and the consumer. However, on Maggi Noodles pack of 70 gms. bearing MRP of ₹ 12/- per pack, the benefit on account of GST rate reduction for the retailer would have been approximately 56 paise against which the distributor had reduced the price by 92 paise with reduced MRP of ₹ 11/- and thus, the benefit in respect of ₹ 5/- MRP pack had been passed on by reducing the price of other packs of Maggi Noodles by more than what was required. It claimed that the benefit of GST rate reduction had been passed on in respect of Maggie Noodles as a whole.

The dealer has contended that it had passed on the benefit of GST rate reduction in respect of 70 gm. pack of Maggi Noodles bearing MRP of ₹ 12/- by reducing the price for the complainant and the ultimate consumer by 92 paise and Re. 1/- respectively, which was much more than the required reduction of approximately 56 paise for the complainant.

It may be noted that the Central Government, on the recommendation of the GST Council, had reduced the GST rate on the product from 18% to 12%, vide Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017, w.e.f. 15.11.2017 which had not been disputed.

The DGAP had concluded that the distributor had not passed on the benefit of GST rate reduction to the recipients of the product including the complainant. Accordingly, the DGAP has calculated the profiteered amount of ₹ 90,778/- including the profiteered amount of ₹ 2,253/- charged by the distributor from the complainant as per following table:

(Amount in Rs.)




1st Nov. to 14th Nov. 2017

15th Nov. 2017 to 28th Feb. 2018

Commensurate Price per unit

Profiteering Per unit

Total Profiteering

Amount Charged

Base Price


Qty. Sold

Amount Charged

Base Price

GST Rate

Qty. Sold












L=112% of E




MAGGI 2-MIN Mas Ndls 35Gms















Total Profiteering on sale of the Product



The NAA considered the report of DGAP and carved out the following issues to be decided by the Authority:

  1. Whether the benefit accrued due to reduction in the rate of tax of one product can be passed on via another product or not?
  2. Whether there was any violation of the provisions of Section 171 of the CGST Act, 2017 in this case?
  3. If yes then what was the quantum of profiteering?

It noted that there is no doubt that the benefit of reduction in the GST rate was not passed on to the recipients by way of commensurate reduction in the price charged by the dealer which amounts to violation of the provisions of Section 171 of the Act.

Further, the distributor had no legal sanction to increase the base price of the product on his own and what was required of him was that he should have only reduced the MRP of the product by taking in to account the effect of the reduction in the rate of tax. It was further required to fix the MRP keeping in view the provisions of the Legal Metrology (Packaged Commodities) Rules, 2011 which prescribe the methodology of fixing the MRP keeping in view the rounding off the price. It had no mandate to deny the benefit of reduction of the tax rate due to the problem of legal tenders as he had no legal authority to fix MRP arbitrarily. It was for the customers to furnish the required legal tenders and therefore, the distributor can not be allowed to resort to profiteering. The Ministry of Consumer Affairs had already issued detailed instructions vide it’s Notification dated 16.11.2017 for notifying the reduced MRP which have not been followed by the above distributor.

On the distributor’s passing of the benefit by way of reducing the MRP of 70 grams pack, the NAA observed that the distributor had no such liberty to arbitrarily decide in respect of which products he would pass on the benefit and in respect of which products he would not pass such benefit. As per the provisions of Section 171 of the Act the benefit has to be passed on to each recipient and the same can not be selectively granted or denied. It is also clear that the Maggi Noodle pack of 35 Gms. is distinct from a 70 Gms. pack and both the packs may be bought by the different recipients/customers and hence the benefit accruing to one customer can not be given or denied to another nor can the benefit given to one set of customers arbitrarily enhanced and set off against the another. No such adjustments are permissible under the law.

The NAA held that the distributor had denied benefit of the reduction in GST rate to the consumers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and had thus realized more price from them than he was entitled to collect and had also compelled them to pay more GST than that they were required to pay by issuing incorrect tax invoices and hence he has committed offence under section 122 (1) (i) of the CGST Act, 2017 and therefore, it was liable for imposition of penalty.

The NAA determined that a total of ₹ 90778 was made by way profiteering including ₹ 2253 from the complainant. The order inter alia, provided for the following :

  1. directed to reduce the price of product commensurate to the reduction in the rate of tax
  2. directed to refund ₹ 2253 to complainant alongwith interest @ 18% p.a. from the date of collection of amount
  3. since the other customers from whom profiteering was made were not identifiable, directed to deposit the balance amount of ₹ 88,525 alongwith interest @18% p.a. till the date of deposit to Central and respective State Consumer Welfare Fund within a period of 3 months from the date of receipt of order.
  4. directed that a Show Cause Notice be issued to it to explain why the penalty prescribed under Section 122 of the Act read with rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed.

The NAA directed the Commissioner of State Tax, UP to monitor the order’s  implementation under the supervision of DGAP by ensuring that the amount profiteered by the distributor as ordered by the Authority is refunded or deposited within the above period failing which the same shall be recovered as per the provisions of the CGST Act, 2017.


By: Dr. Sanjiv Agarwal - November 5, 2018



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