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2019 (5) TMI 783

he rate of tax not passed on - contravention of provisions of Section 171 of the CGST Act, 2017 or not - penalty - HELD THAT:- The Respondent had increased the base prices of his products w.e.f. 15.11.2017 despite reduction in the rate of GST from 28% to 18%. The DGAP in his Report has also revealed that the amount profiteered by the Respondent in respect of supplies of the products during the period 15.11.2017 to 31.08.2018 is ₹ 18,887/-. Therefore the Respondent has acted in contravention of the provisions of Section 171 of the CGST Act, 2017 in as much as he did not pass on the benefit of reduction in the rate of tax to his recipients by way of commensurate reduction in the prices. Penalty - HELD THAT:- It is 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 above Act and hence he is liable for imposition of penalty under the above Section read with Rule 133 (3) (d) of the CGST Rules, 2017 - In the interest of natural justice before imposition of penalty a notice be issued to him asking him to expla .....

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e reduction in prices. The Respondent was also asked to suo-moto determine the quantum of benefit not passed on to his recipients, if any, and specify the same in his reply. The period of investigation covered by the DGAP under this Report is from 15.11.2017 to 31.08.2018. 4. In the aforementioned Report, the DGAP has reported that the Respondent had submitted replies to the DGAP vide his letters dated 28.09.2018 and 05.10.2018 and 22.10.2018 where he had stated that as distributor of the company's (VIP) products, he followed the company's pricing structure and that his distributor's margin had remained unchanged in the pre and post GST periods, even when the rate of GST was reduced from 28% to 18% ad-valorem and he never enjoyed any additional benefits in respect of his supplies. The Respondent also submitted that along with other suppliers of luggage items he had represented before the Government of India seeking reduction in the GST rate as the tax burden on the industry had increased in the post-GST era as compared to the pre GST era. The Respondent further stated that he had not increased the prices of his products post implementation of GST, since he was hopeful o .....

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.99 ₹ 286.92 ₹ 13772 Neolite Strolly 53360 VIP FIR 42021220 ₹ 1864.26 ₹ 2022.25 1 18% ₹ 2386.26 ₹ 2199.83 ₹ 186.43 ₹ 186 Neolite Strolly 53360 VIP FIR 42021220 ₹ 1864.26 ₹ 1939.31 2 18% ₹ 2288.39 ₹ 2199.83 ₹ 88.56 ₹ 177 Total ₹ 18887 8. The above Report of the DGAP received on 06.12.2018, was considered by the Authority in its sitting held on 11.12.2018 and it was decided to hear the Applicants and the Respondent on 03.01.2019. Sh. Mansur M.I., Deputy Commissioner, SGST, Kerala appeared on behalf of the Applicant No. 1. Applicant No. 2 was represented by Sh. Rana Ashok Rajneesh, Assistant Commissioner and no one appeared for the Respondent. 9. The Respondent filed his written submissions vide his letter dated 01.01.2019 via post wherein he averred that he was a distributor engaged in business of trading of luggage and travel goods , falling under Chapter 4202. The said goods were leviable to taxes @ 18% in the pre GST era, whereas the GST rate fixed thereon was 28% with effect from 1 July, 2017, which was later reduced to 18% on 15th November, 2017 on account of representations by the trade. T .....

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pondent as also the documents placed on record to consider whether there was any reduction in the rate of tax in the relevant period and whether the benefit of reduction in the rate of tax was passed on to the recipients as required under Section 171 of the CGST Act, 2017. 14. From the facts of the case and the records placed before us, we find it evident that the Respondent had increased the base prices of his products w.e.f. 15.11.2017 despite reduction in the rate of GST from 28% to 18%. The DGAP in his Report has also revealed that the amount profiteered by the Respondent in respect of supplies of the products during the period 15.11.2017 to 31.08.2018 is ₹ 18,887/-, the details of which have already been tabulated in para 7 above. Therefore we find that the Respondent has acted in contravention of the provisions of Section 171 of the CGST Act, 2017 in as much as he did not pass on the benefit of reduction in the rate of tax to his recipients by way of commensurate reduction in the prices. It is pertinent to note that the amount of profiteering determined by the Applicant No. 2 works out as ₹ 18,887/- as follows: Goods/Services Description HSN Base price per unit pr .....

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