TMI Blog2019 (12) TMI 993X X X X Extracts X X X X X X X X Extracts X X X X ..... mount of ₹ 1,69,379/- on 32 products on which the GST was reduced from 18% to 12% w.e.f. 15.1112017 and 3 products on which the tax rate was reduced from 18% to 12% w.e.f. 25.01.2018, as per the provisions of Rule 133 (1) of the CGST Rules, 2017 - The Respondent is directed to reduce the sale prices of the above products immediately commensurate with the reductions in the rates of tax as were notified on 14.11.2017 and 25.01.2018 respectively and pass on the benefit of reductions in the rates of tax to his customers. Penalty - HELD THAT:- The Respondent has profiteered an amount of ₹ 16,45,559/- as he has not passed on the benefit of tax reductions to his customers. It is also apparent that the Respondent has deliberately and consciously acted in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and hence he is liable for imposition of penalty under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 - Keeping in view the principles of natural justice, before imposition of penalty, a notice be issued to him asking him to explain why penalty should not be imposed on him under the above provision. - Case No. 74/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of ₹ 300/- leading to ₹ 22.27 being charged to the customer for the above product against the regular price without trade promotion of ₹ 22.73/-; and that though a benefit of 2.6% had been passed on the above product as against the effective benefit of 7.8% accruing at HSN level, higher benefit compared to the benefit accruing had been passed on to the customers on other product packs under the same HSN code and GST benefit commensurate with the reduction in tax rate had been passed on at an aggregate product HSN category level. The Respondent had submitted the following documents along with the reply:- a) Details of invoice-wise outward taxable supplies (other than zero rated) made to M/s. Raj Super Store only for the product Kit Kat 4 Finger 18 from 01.07.2017 to 31.03.2018. b) Copies of GSTR-1 and GSTR- 3B Returns from July, 2017 to May, 2018. c) The details of outward taxable supplies for the months of December, 2017 to May, 2018. d) The list of MRPs of the products effective pre and post 15.11.2017. 3. The DGAP vide his Report dated 29.10.2018 had submitted that from the invoices made available as detailed above, it was clear that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18% w.e.f. 15.11.2017. Out of these 209 items, 21 were newly introduced products post GST rate reduction w.e.f. 15.11.2017 and out of the remaining 188 items (20921), 17 items were not sold during the period from 01.11.2017 to 14.11.2017. He had also contended that the pre 15.11.2017 reference prices for these 17 items, had been taken from the price list for the period pre 15.11.2017, submitted by the Respondent vide email dated 22.10.2018. He had further contended that out of the 188 items, it was found that the base prices of 116 products were increased and the base prices of 72 products were reduced post 15.11.2017, thus, out of total 209 items impacted by the GST rate reduction w.e.f. 15.11.2017, the base prices of 116 products were increased post 15.11.2017; the base prices of 72 products were reduced post 15.11.2017 and 21 products were newly introduced post 15.11.2017. The DGAP had also intimated that the amount of profiteering in respect of these 116 products supplied by the Respondent during the period from 15.11.2017 to 31.05.2018, came to ₹ 16,45,564.62/-, as per the details furnished in Annexure-16 of the his above Report. It was further intimated by the DGAP tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll-known brand names like NESCAFE, MAGGI, KITKAT, etc., after purchasing the same from M/S Nestle India Ltd. He had also claimed that the GST rate on the products supplied by the Respondent was reduced from 28% to 18% or from 18% to 12% from 15.11.2017 vide Notification No. 41/2017-Central Tax (Rate) and in respect of certain other products, the rate of GST was reduced from 18% to 12% w.e.f. from 25.01.2018 vide Notification No. 06/2018-Central Tax (Rate). The Respondent had also stated that based on the same set of findings in respect of same set of products a Report had been submitted by the DGAP relating to M/s. Nestle India Ltd., which was being contested by the above Company on diverse grounds. He had further stated that proceedings were pending before this Authority pursuant to the Report of the DGAP and hence, it would be in the fitness of things if the present proceedings initiated against the Respondent, who was a distributor of M/s. Nestle India Ltd., were taken up for adjudication after the proceedings initiated against M/s. Nestle India Ltd, were concluded. The Respondent also requested that the proceedings based on the impugned Report of the DGAP may be adjourned to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7-Central Tax (Rate) dated 14.11.2017 and from 18% to 12% vide Notification No. 06/2018- Central Tax (Rate) dated 25.01.2018 in respect of the products being sold by the Respondent, the benefit of which was required to be passed on to the recipients by the Respondent as per the provisions of Section 171 (1) of the above Act. 10. It is also revealed from the perusal of the tax invoices issued by the Respondent that he had sold the above product having MRP of ₹ 25/- at the discounted base price of ₹ 17.40/- vide invoice No. KTCG30375 dated 14.11.2017 when the rate of GST was 28% and at the price ₹ 18.76/- vide invoice No. KTCG633331 dated 05.12.2017 when the GST was reduced to 13% which showed that instead of reducing the base price due to reduction in the rate of tax he had increased it by ₹ 1.36 and hence, he had not passed on the benefit of tax reduction to his customers as is clear from the Table given below:- Sr. No. Invoice No. and date Description of product MRP (in Rs.) Discounted Base Price (in Rs.) Rate of GST Pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot shift his responsibility to comply with the provisions of Section 171 (1) of the above Act on M/s. Nestle India Ltd. Pendency of profiteering proceedings against M/s. India Ltd. also has no connection while determining accountability of the Respondent for profiteering under Section 171 (1) of the above Act as he is responsible for passing on the benefit on his own account. Granting of discounts also does not amount to passing on of the benefit of tax reductions as they have been given as a normal trade practice by the Respondent. The Respondent could also not have passed the benefit of tax reduction which was available on the purchase of one product on the other product as this benefit was required to be passed on every product to each customer who had purchased that product as per the provisions of Section 171 (1) of the above Act. Accordingly, the above contentions of the Respondent cannot be accepted. 13. It is clear from the narration of the facts stated above that the Respondent has indulged in profiteering in violation of the provisions of Section 171 (1) of the CGST Act, 2017 and has not passed on the benefit of reductions of tax given vide Notification No. 41/2017-Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax to his customers. Since the recipients in this case are not identifiable, the Respondent is directed to deposit the amount of profiteering of ₹ 8,22,779.50 in the Central Consumer Welfare Fund (CWF) and ₹ 8,22,779.50 in the Delhi State CWF as per the provisions of Rule 133 (3) (c) of the CGST Rules, 2017, along with 18% interest PA from the date from which the above amount was realised by the Respondent from his customers, as all the supplies were made in the State of Delhi. The above amount shall be deposited within a period of 3 months from the date of this order failing which the same shall be recovered by the Commissioner CGST/SGST as per the provisions of the CGST/SGST Act, 2017. 15. It is also established from the above facts that the Respondent has profiteered an amount of ₹ 16,45,559/- as he has not passed on the benefit of tax reductions to his customers. It is also apparent that the Respondent has deliberately and consciously acted in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and hence he is liable for imposition of penalty under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017. Ke ..... X X X X Extracts X X X X X X X X Extracts X X X X
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