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2022 (7) TMI 25 - NAPA - GSTProfiteering - supply of the products manufactured and sold by the Respondent - allegation is that the Respondent had not passed on the benefit of reduction of rate of tax to the consumers by way of commensurate reduction in base price of the products manufactured and sold by him - contravention of Section 171 of the CGST Act, 2017 - penalty - HELD THAT:- The rate of tax had increased from 21.16% to 28% post-GST in respect of some goods. There were such 491 other products where the rate of tax applicable in pre-GST era ranged from 18% to 25% that increased to 28% with introduction of GST. In respect of 27 products manufactured or traded by the Respondent, the effective GST rate was 18% - the Authority finds that ass per the DGAP’s Report, in pre-GST era, there were 490 such manufactured products on which the rate of consolidated tax (i.e. CENVAT/Central Excise + VAT) applicable was 18% to 25% Ad-valorem i.e. less than 28% and the applicable rate of tax increased to 28% Ad-valorem with introduction of GST. Thus, the provisions of Section 171 of the CGST Act, 2017 are not applicable on supply of such goods. Further, there was reduction in the rate of tax applicable on only 13 manufactured goods and 14 traded goods in the GST-regime as per the DGAP’s Report and its Annexures (i.e. in comparison to the consolidated tax rate of tax i.e. CENVAT/Central Excise + VAT applicable in pre-GST regime). It is also noted that the Respondent had not dealt in 13 of such 14 traded goods on which the rate of tax was decreased in post-GST regime. Hence, the DGAP’s has calculated profiteering in respect of 13 manufactured goods and 01 traded goods (on which rate of tax was decreased with the introduction of GST) in which the Respondent has dealt post-GST. The Authority finds that, the Respondent’s contention to consider rate price rather than transaction value for computation of profiteering is not sustainable as the transaction value is the base value (taxable value) upon which all the taxes are levied and paid to the Government. Therefore, to pass on the benefit of any rate reduction in terms of Section 171 of the CGST Act, 2017, the Supplier has to reduce the base value commensurately. Thus, it is evident from the narration of facts that 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 he has thus committed an offence under Section 171(3A) of the above Act and therefore, he is liable for imposition of penalty under the provisions of the above Section with effect from 01.01.2020 onwards for the amount profiteered. These provisions came into effect from 01.01 2020 i.e. penalty equivalent to ten per cent of the profiteered amount will be imposed upon him for the amount profiteered after 01.01.2020. However, no penalty shall be leviable if the profiteered amount is deposited within thirty days of the date of passing of the order by the Authority. Thus, the profiteered amount is determined as Rs. 1,18,33,987/-. Accordingly, the Respondent is directed to reduce his prices commensurately in terms of Rule 133(3)(a) of the CGST Rules, 2017. As per the outward sales data submitted by the Respondent, it is gathered that all the transactions of the Respondent are B2B customers. Therefore, each of the customer is identifiable. Hence, we order that the profiteered amount of Rs. 1,18,33,987/- shall be passed on/refunded along with interest @ 18% (from the date of receipt of the profiteered amount by the Respondent up till the date of passing on/refund of such profiteered amount to the recipients) by the Respondent as per Annexure-A and B to this Order within a period 3 months from the date of this order. Application disposed off.
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