TMI Blog2019 (5) TMI 359X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 535/- which is the profiteered amount in respect of the Applicant. Respondent is directed to reduce the price of the product as per the provisions of Rule 133 (3) (a) of the CGST Rules, 2017, by making commensurate reduction in the prices, keeping in view the reduction in the rate of tax so that the benefit is passed on to the recipients. Penalty - HELD THAT:- It is established from the facts that the Respondent had issued incorrect invoices while selling the above product to his customers as he had not correctly shown the basic price which he should have legally charged from them. The Respondent had also compelled them to pay additional GST on the increased price through the incorrect tax invoices which would have otherwise resulted in further benefit to the customers which he had failed to pass on - 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 Act. Hence, he is liable for imposition of penalty under the above Section read with Rule 133 (3) (d) of the CGST Rules, 2017. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. A notice under Rule 129 of the CGST Rules, 2017, was issued on 13.11.2018, by the DGAP, calling upon the Respondent to reply as to whether he admitted that he had contravened the provisions of Section 171 of the CGST Act, 2017, and that the benefit of reduction in GST rate had not been passed on to the recipients by way of commensurate reduction in price. The Respondent was also asked to suo-moto determine the quantum of profiteering, if any, and indicate the same in his reply to the notice issued by the DGAP. The DGAP had also called upon the Respondent to submit certain documents like GST Returns (1 3B), details of outward taxable supplies, etc. The DGAP had also called upon the Applicant vide e-mail dated 07.01.2019, to inspect the non-confidential evidences/reply furnished by the Respondent between 08.01.2019 to 09.01.2019 which was not availed by the Applicant. 4. The Respondent had submitted replies vide his letters dated 22.11.2018 and 07.12.2018, and stated that he had refunded the differential amount arising on account of reduction in the rate of GST from 28% to 18% to the Applicant. The Respondent also stated that total 44 numbers of the product were s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, the legal requirement was abundantly clear that in the event of a benefit of input tax credit or reduction in rate of tax, there must be a commensurate reduction in the prices of the goods or services. Such reduction could only be in absolute terms, such that the final price payable by a consumer must get reduced commensurate with the reduction in the tax rate and this was the legally prescribed mechanism for passing on the benefit of input tax credit or reduction in rate of tax to the recipients under the GST regime. 7. The DGAP has also submitted that the issue was to determine the amount of profiteering by the Respondent for failing to pass on the benefit of the reduction in the rate of tax on the product to the recipients in terms of Section 171 of the CGST Act, 2017. The DGAP further submitted that from the invoices made available, it was clear that the Respondent had increased the base price of the product from ₹ 1640.62 to ₹ 1779.66, when the rate of tax was reduced from 28% to 18% and on the basis of aforesaid pre and post-reduction GST rates and the details of outward taxable supplies (other than zero rated, nil rated and exempted supplies) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e product was reduced from 28% to 18% vide Notification 41/2017 dated 14.11.2017 and the Applicant was a walk in customer who was wrongly billed @ 28% due to a software rate updation error and the excess amount charged amounting to ₹ 164/- as computed bel had been already refunded to the Applicant vide Cheque No. 047999 drawn on HDFC Bank, which the Applicant had also acknowledged. The Respondent also calculated the amount to be refunded to the Applicant by him as under:- Particulars INR Selling Price (A) 2,100 Tax @ 28% 459 Base Price before change 1,641 Base Price (same) 1,641 Tax @ 18% 295 Selling price after rate change (B) 1,936 Amount to be refunded to the customer (A-B) 164 11. The Respondent further stated that the total sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce the MRP and hence he had complained to the DGAP for profiteering. He has further stated that on receipt of the notice from the DGAP, he had agreed that an error had been committed and informed that he had refunded an amount of ₹ 164/- to the Applicant. He also submitted that he had given all the data to the DGAP i.e. 44 products sold in Gujarat (Nov 17 to Oct 2018) and 241 products sold during the period to all his walk-in customers. He further stated that he had dispatched letters to 15 customers for an amount of ₹ 2460/- and 14 cheques of ₹ 2296/- were pending to be dispatched. The Respondent further stated that while the DGAP working is based on average rate of sales for the period 01.11.2017 to 14.11.2017 and the difference in realization was ₹ 13,973/- and since he had refunded the amount, the proceedings may be dropped. 14. The Respondent vide his submissions dated 14.02.2019 stated that while considering the Authority's concern that whether the credit note would benefit the ultimate recipient, the Respondent had no reservation in depositing the amount of ₹ 13,973/- into the Consumer Welfare fund. 15. The Applicant vide h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is inclusive of ₹ 535/- which is the profiteered amount in respect of the Applicant. The Respondent has also agreed to deposit this alleged amount along with interest, in his submission dated 05.02.2019 filed before this Authority. 18. Based on the above discussions the Respondent is directed to reduce the price of the product as per the provisions of Rule 133 (3) (a) of the CGST Rules, 2017, by making commensurate reduction in the prices, keeping in view the reduction in the rate of tax so that the benefit is passed on to the recipients. The above Respondent is also directed to refund the amount of ₹ 535/- to the Applicant along with interest @18% from the date when this amount was received by him from the Applicant No. 1 and deposit the remaining amount of profiteering of (₹ 13,973/- (-) ₹ 535/- = ₹ 13,438/- (Rupees Thirteen Thousand Four Hundred Thirty Eight Only) along with interest @18% in the Consumer Welfare Fund of the Central and the concerned State Governments as per the provisions of Rule 133 (3) (c) of the CGST Rules, 2017 in the ratio of 50:50, till the same is deposited within a period of 3 months. 19. The concerned Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within a period of 3 months by the Respondent, from the date of receipt of this order, failing which the same shall be recovered by the corresponding field formations of Central and State GST Authorities, as per the provisions of the CGST/SGST Act, 2017. The Authority as per the provisions of Rule 136 of the CGST Rules, 2017 also directs the respective Commissioners of CGST/SGST to monitor the implementation of this order. One of the allegations of the Applicant is that the Respondent has collected GST @ 28% even when it was reduced to 18%. This Authority though has no jurisdiction over the above allegation directs the respective Commissioners of CGST/SGST to examine the same and necessary action may be taken if it is found to be true. 20. It is also established from the above facts that the Respondent had issued incorrect invoices while selling the above product to his customers as he had not correctly shown the basic price which he should have legally charged from them. The Respondent had also compelled them to pay additional GST on the increased price through the incorrect tax invoices which would have otherwise resulted in further benefit to the customers which he had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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