TMI Blog2020 (4) TMI 571X X X X Extracts X X X X X X X X Extracts X X X X ..... nd ₹ 2,33,456/- in respect of the Respondent No. 2. - The said profiteered amount has been arrived at by the DGAP by comparing the actual invoice-wise base price of the complained product sold during the period from 15.11.2017 to 31.03.2019 with the commensurate price based on the average of the base prices of the product sold during the period from 01.11.2017 to 14.11.2017. The profiteered amount is determined as ₹ 63,14,901/- in respect of the Respondent No. 1 and ₹ 2,33,456/- in respect of the Respondent No. 2 in terms of Rule 133 (1) of the CGST Rules, 2017, during the period from 15.11.2017 to 31.03.2019. This Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent No. 1 2 shall reduce their prices commensurately as has been detailed above. The Respondent No. 1 2 are also directed to deposit an amount of ₹ 63,14,901/- and ₹ 2,33,456/- respectively in the CWF of the Central and the concerned State Governments, as the recipients are not identifiable, as per the provisions of Rule 133 (3) (c) of the above Rules alongwith 18% interest payable from the dates from which the above amount was realised by them from their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent No. 1 had supplied Dettol HW Liquid Original 900 ml to M/s Big Bazar, Inderlok on 07.11.2017 under Purchase Order (PO) No. 8115009618 with the MRP of ₹ 189/- per unit, on 21.12.2017 under PO No. 4514107805 with the MRP of ₹ 209/- and on 20.06.2018 under PO No. 4518283635 with the MRP of ₹ 192/- and thus he had not reduced the price of the above product commensurately. 2. The DGAP has stated in his above Report that the said application was examined by the Standing Committee on Anti-profiteering in its meeting held on 11.03.2019 and upon being prima facie satisfied that the Respondent had contravened the provision of Section 171 (1) of the CGST Act, 2017, it had referred the application to the DGAP for investigation under Rule 129 (1) of the CGST Rules, 2017 to determine whether the benefits of reduction in the rate of tax or ITC had been passed on by the Respondent to his recipients. The minutes of the meeting had been received by the DGAP on 27.03.2019 (Annexure-2) 3. Thereafter, the DGAP on receipt of the reference from the Standing Committee on Anti Profiteering, had issued notice to the Respondent on 08.04.2019 (Annexure-3 of the Report) under Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appear before the Assistant Commissioner, Directorate General of Anti profiteering on 27.06.2019 and to produce the relevant documents. In response to the Summons, Sh. Aditya Gupta, authorised representative on behalf of Sh. Gaurav Jain, vide letter dated 27.06.2019 submitted the required documents in respect of the complained product only. 6. The DGAP has also submitted that a letter dated 27.06.2019 was issued to the Respondent No. 1 to submit the details in respect of all the products which were being supplied by him and which had been affected by the GST rate reduction w.e.f. 15.11.2017. The Respondent No. 1 filed a Writ Petition No. 7743/2019, before the Hon ble High Court of Delhi and the Hon ble Court vide its orders dated 19.07.2018 (Annexure-10) and 22.08.2019 (Annexure-11) had granted stay on the submission of the information in respect of the products other than the complained product, during the pendency of the Writ Petition. The Respondent No. 2 had also filed a Writ Petition No. 816212019, before the Hon ble High Court of Delhi and the Hon ble court vide its orders dated 29.07.2018 (Annexure-12) and 22.08.2019 (Annexure-13) had granted stay on submission of inform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... customers back to him, for which he had issued credit notes with GST. He requested that the supplies against which credit notes had been issued, should be excluded from the investigation. e. That in respect of the CSD supplies, the prices were negotiated without tax and thereafter taxes prevailing were charged at the time of supply. f. That he had increased the price of the product from ₹ 192/- per unit to ₹ 209/- per unit w.e.f. 01.06.2018 due to commercial reasons such as increase in the rate of Customs Duty, forex rate fluctuations and market forces etc. g. That he had submitted the price trend of the product from September, 2014 and the price of the product was ₹ 170/- per unit in September, 2014, the price was further increased to ₹ 189/- per unit in September, 2016. Thereafter, in September, 2017, the price of the product was increased to ₹ 209/- per unit. h. That the benefit of ITC claimed in TRAN-1 statement had not been accepted by the GST authorities due to some technical glitch for which he had been running from pillar to post and had filed a Writ Petition before the Hon ble Punjab Haryana High Court. 10. The DGAP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be in terms of money, so that the final price payable by a recipient got reduced commensurate with the reduction in the tax rate or benefit of ITC. This was the only legally prescribed mechanism to pass on the benefit of ITC or reduction in the rate of tax to the recipients under the GST regime and there was no other method which a supplier could adopt to pass on such benefits. 16. The DGAP has further submitted that the Respondent No. 1 had sought to exclude the outward sale of the Goods sold to the CSD from the scope of the present investigation. On examination of the nature of the above sales and the copy of the agreement entered into by the Respondent No. 1, the DGAP has observed that the reduction in the rate of GST w.e.f. 15.11.2017 did not have any impact on the sales mentioned in respect of goods sold to the CSD. 17. The DGAP in his report has also claimed that the Respondent No. 1 had contended that he had increased the MRP of the product from ₹ 192/- per unit to ₹ 209/- per unit w.e.f. 01.06.2018 due to commercial reasons such as increase in the rate of Customs Duty, forex rate fluctuations and the market forces etc. and the price of the product was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofiteering per unit (H=G-F) 17.57 Total quantity sold to distributor as per invoice no. S170322005 dated 17.11.2017 (I) 240 Total profiteering (J=H*I) 4216.17 19. The DGAP in his report has further mentioned that as per the aforesaid pre and post-reduction GST rates and the details of the outward taxable supplies (other than zero rated, CSD, nil rated and exempted supplies) of the product Dettol HW Liquid Original 900 ml during the period from 15.11.2017 to 31.03.2019, as furnished by the Respondent No. 1, the amount of net higher sales realization due to increase in the base price of the product, despite the reduction in the GST rate from 28% to 18% or in other words, the profiteered amount came to ₹ 63,14,901/-. The details of the computation have been furnished by the DGAP in Annexure-24. The said profiteered amount has been arrived at by comparing the average of the base prices of the product Dettol HW Liquid Original 900 ml sold during the period from 01.11.2017 to 14.11.2017 differently for different types of customers i.e. CSD, Distributors, Direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gujarat 5,26,390 15 27 Maharashtra 18,94,548 16 29 Karnataka 4,46,416 17 32 Kerala 20,531 18 33 Tamil Nadu 1,31,663 19 36 Telangana 2,80,759 20 37 Andra Pradesh (New) 45,701 Grand Total 63,14,901 21. The DGAP has further mentioned that as per the data made available by the Respondent No. 2 it was observed that he had increased the base price of the product Dettol HW Liquid Original 900 ml when the rate of GST was reduced from 28% to 18% w.e.f. 15.11.2017. On the basis of the aforesaid pre and post-reduction GST rate and the details of the outward taxable supplies (other than zero rated, nil rated and exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outside the scope of Section 171 of the CGST Act. The Hon ble High Court by vide its order dated 19.07.2019 had directed that:- It is directed that, till the next date, it (the Noticee) will not be required to furnish information to the DGAP pursuant to the impugned notice other than information pertaining to the Complained Product. It is, however, clarified that the NAPA s inquiry as far as the Complained Product is concerned will proceed in accordance with law. b. That he had passed on the benefit of reduction in the tax rate of GST to his recipients. However, the DGAP vide his Report dated 19.09.2019 has erroneously held that the Respondent No. 1 2 had profiteered an amount of ₹ 63,14,901/- and ₹ 2,33,456/- respectively on the complained product. c. The proceedings were without jurisdiction as they are barred by limitation prescribed under Rule 128 (1) of the CGST Rules, 2017:- i. That in the present case, an online complaint was filed with the Standing Committee by the Applicant No. 1 on 30.07.2018. Hence, for the purpose of Rule 128 (1) of the CGST Rules, the date of receipt of the written complaint by the Standing Committee was 30.07.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had passed on commensurate reduction in the price of the goods... to the recipient. ii. That the provisions of Section 171 of the Act did not prescribe that the Respondent ought not to increase the price of the product, forever. The base sate price of the complained product was not controlled under any legislation or the Essential Commodities Act and the CGST Act and Rules also did not prescribe that the base sale price ought to be frozen forever or for a specified period, to ensure that the Respondent had not clawed back on the reduction in the GST rate. Therefore, it was clear that a supplier was expected to hold on to the base sale price only for a reasonable period. In this view, the DGAP ought to have taken only a reasonable period say upto 31.03.2018 (which would have been 4.5 months from the date of reduction in the GST rate i.e. 15.11.2017) for investigation and could not have taken a period of 16 months and 16 days. The decision of the DGAP of taking such a long period was arbitrary, without the authority of law and constituted colourable exercise of power. Assuming if the period of investigation was restricted to the end of the financial year i.e. 31.03.2018 (4.5 m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 209/- w.e.f. 01.09.2017 (i.e. 75 days before the date of rate reduction notification dated 15.11.2017). After the GST rate was reduced, the MRP of the complained product was reduced from ₹ 209/- to ₹ 192/-. Thereafter, in the routine course and for commercial/business reasons, the MRP of the complained product was increased to ₹ 209/- w.e.f. 01.06.2018 (i.e. nine months after the previous price increase). Since the DGAP has taken the period of consideration for investigation as 15.11.2017 to 31.03.2019, the DGAP didn t give benefit for the increase in MRP from ₹ 192/- to 209/- and consequently arrived at an amount of ₹ 63,14,901/-. v. That there was a 10.42% increase in the cost of production (as per BOM) of the product from the second half of 2017 till the end of first half of 2018 (June 2018). Cost Accountant s certificate to this effect was also enclosed as Exhibit-8. Accordingly, keeping in mind the increase in the cost of production and market expectations, he purely for commercial reasons had increased the MRP (with a corresponding increase in channel partner prices) which had been ignored in the DGAP s Report. vi. That the costs o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 171 of the CGST Act or Chapter XV of the CGST Rules did not prescribe the methodology or guidelines for passing on the commensurate reduction in prices. That the anti-profiteering provisions of the CGST Act and Rules did not stipulate that the commensurate reduction in prices ought to be passed on in cash or monetary terms only. Therefore, in the absence of computational methodology or mechanism prescribed under the CGST Act and the CGST Rules to pass on the commensurate reduction in prices, the Respondent No. 1, based on legal advice and bonafide belief, decided to pass on the commensurate reduction in price of the complained product through extension of promotional schemes etc. ii. That for the period upto the date on which the GST rate was reduced, the DGAP had taken an average of all the invoices and arrived at the average price. However, post 15.11.2017, the DGAP didn t take an average of all the invoices and selectively picked up, certain invoices where there was a difference and arrived at a conclusion that the Respondent No. 1 had profiteered. Assuming, the scope of the investigation was limited to 15.11.2017 to 31.03.2018 the alleged profiteering amount would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said supplies was contractual and the same was negotiated excluding taxes and thereafter taxes (as applicable at the time of sale) were applied thereon. Therefore, in such cases, the change in GST had no bearing on the price of the product supplied as the prevailing tax was added to the price negotiated between the parties. In this regard, a copy of the contract entered into by the Respondent No. 1 with a Channel Partner was enclosed as Exhibit-12. ii. That it was not the case of the DGAP that the Respondent No. 1 had applied incorrect tax rate on the supplies made to these customers. As taxes did not form part of the negotiated price and the price for supplies made in this channel was pre-agreed with the customer, there could be no instance of profiteering on such supplies. Once the Respondent No. 1 has charged reduced rate of tax from his customers, the DGAP or this Authority has no jurisdiction to examine the price at which goods were sold to the customer in this category. Provisions of Section 171 of the CGST Act were applicable only in situations where the tax was reduced, or additional benefit of ITC was given to the supplier. The case of the Respondent No. 1 fell unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CGST Rules for calculation of profiteering, the procedure adopted by the DGAP in his Report was arbitrary and subjective:- i. That in the absence of machinery provisions vesting powers and prescribing the mechanism and methodology to be adopted by the DGAP, to conduct anti-profiteering investigations, the DGAP has conducted the investigation, outside the scope of Chapter XV of the CGST Rules and based on the subjective methodology has subjectively decided the period of investigation from 15.11.2017 to 31.03.2019 without any rationale or justification. Hence, on this sole ground the DGAP s Report was liable to be rejected. This submission was being made without prejudice to the challenge made by the Respondent No. 1, before the Hon ble High Court in his writ petition. ii. That as per Rule 126 of the CGST Rules, this Authority has the power to determine the methodology and procedure for determination as to whether the reduction in the rate of tax on the supply of goods or services or the benefit of ITC has been passed on by the registered person (the Respondent No. 1 in the present case) to the recipients by way of commensurate reduction in prices. It was pertinent to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority had not prescribed any such mechanism in the exercise of its powers under Rule 126 of the CGST Rules. Absence of the same violated the principle of natural justice and thus, the investigation was liable to be set aside. vi. That in the case of Commissioner of Income Tax Bangalore v. B. C. Srinivasa Setty (1981) 2 SCC 460, the Hon ble Supreme Court has held that the charging section was not attracted where corresponding computation provision was inapplicable. Further, in the case of Samsung (India) Electronics Pvt. Ltd. v. Commissioner of Commercial Taxes U. P. Lucknow 2018 [11] G.S.T.L. 367 The Hon ble Allahabad High Court has observed that in the absence of any procedure or provision in the UP VAT Act, 2008 conferring such authority, in the case of a sale of composite packages bearing a singular MRP, the authorities under the Act could not possibly assess the components of such a composite package separately. Such an exercise, if undertaken, would also fall foul of the principles enunciated by the Supreme Court. Further, in the case of Eternit Everest Ltd. v. Union of India 1997 (89) E.L.T. 28 (Mad.), the Hon ble Madras High Court had held that in the absence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, there was no basis for the DGAP to assume that commensurate reduction used in Section 171 of the CGST Act would only mean, only in cash. The finding of the DGAP in this regard was erroneous. Methods like increase in quantity or grammage of goods supplied, introduction of promotional offer of giving an item free along with the main product etc. were also methods to extend the commensurate reduction . iv. That the DGAP had not considered that the increase in the price of the complained product was in routine for commercial and compelling reasons which were beyond the control of the Respondent No. 1. n. Passing of commensurate reduction benefit could be in monetary or non-monetary terms:- i. That the interpretation assigned by the DGAP that in terms of Section 171 of CGST Act, the legal requirement was that in the event of benefit of ITC or reduction in rate of tax, there must be a commensurate reduction in the prices of the goods or services and such reduction could only be in the form of cash, was incorrect. ii. That Section 171 of the CGST Act, 2017 did not use the words pass on the benefit by reduction in price only . The effect of commensurate redu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the complained product with the same MRP. The Respondent No. 1 was informed that if he passed the commensurate reduction in applicable taxes, the requirement of Section 171 of the CGST Act would be met. v. That the benefit of rate reduction was passed on to the consumers by way of an additional 200 ml free quantity with 900 ml unit thus reducing the price/m1 of the complained product. This already running promo had been further intensified after the rate change on 15.11.2017 in order to ensure that the benefit of the rate reduction on the old stock (stock lying prior to change in MRP on 24.11.2017) was passed on to the customers and to the end customers in the subsequent sales. Thus, the customers had received 1100 ml of Dettol hand liquid along with Dettol pump at the price of 900 ml. If the MRP of the Dettol 200 ml. was taken into consideration, there would be no profiteering at all. vi. That the passing of benefit through grammage/ml increase has been consistently accepted as one of the effective ways for passing on the benefit of GST rate reduction, for the reason that grammage/ml. increase was nothing but a reduction in the price per gram/ml in the hands of the rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the trader. If the dealer merely gathered the sum by way of tax and kept it in suspense account because of dispute about taxability or was ready to return if eventually it was not taxable, it is not collected. Collected., in an Australian Customs Tariff Act, was held by Griffth C.J., not .to include money deposited under an agreement that if it was not legally payable it will be returned (Words Phrases p. 274). We therefore, semanticise. Collected not to cover amounts gathered tentatively to be given back if found non-exigible from the dealer. iv. That in view of above judgement, re-computation of the alleged profiteering amount by extending the benefit of cum-tax to Respondent No. 1, the alleged profiteering amount would be further reduced by ₹ 9,67,699/-. The excel sheet containing the calculations has been furnished by the Respondent No. 1 vide Exhibit-14. v. That if the above mentioned benefits were factored in and thereafter the benefit of cum-tax was given, the alleged profiteering amount would further stand reduced by ₹ 80,685/- to ₹ 449,848/-. The Excel sheet mentioning the calculation in this respect has been submitted by the Respondent N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of GST rate reduction on certain products by increasing the quantity of grammage of the products while maintaining the earlier pre-rate reduction MRP of such products was not acceptable. v. That the DGAP has computed the profiteered amount by comparing the average of the base price of the product sold during the period from 01.11.2017 to 14.11.2017 with the actual invoice-wise base prices of such product sold during the period from 15.11.2017 to 31.03.2019. The excess GST so collected from the recipients was also included in the aforesaid profiteered amount as the excess price collected from the recipients also included the GST charged on the increased base price. 28. Further, the Respondent No. 1 vide his submissions dated 24.12.2019 in response to the above Report of the DGAP has stated:- i. That he had raised objection that the Standing Committee on Anti-Profiteering had not considered the written complaint within the period of limitation as prescribed under Rule 128 of the CGST Rules. The DGAP in response to the above objection had merely given the date of recommendation and had not given any response at all and had not denied the fact that the complaint was not co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount charged as GST from the customers had been deposited with the Government and hence, the same was needed to be reduced from the profiteered amount. 29. The Respondent No. 1 vide his submissions dated 15.01.2020 has further stated:- i. That he had undertaken various measures to pass on the benefit to his recipients including MRP reduction, addition of higher grammage on free of cost basis and higher post supply price reduction (discounts) etc. and he had also communicated the same to his customers i.e. distribution channels. ii. That every month, he was raising thousands of invoices for sale of the complained product and other products. He had not raised separate invoices for the complained product and the invoices had been raised on the Purchase Order(s) received from the distributors. His Chartered Accountant had inspected the books of accounts/sale maintained by the Respondent No. 1. iii. That a copy of the certificate issued by his Chartered Accountant was enclosed stating that the Respondent No. 1 had passed on the benefit of GST rate reduction by way of increase in the grammage of the complained product. The Respondent No. 1 had increased the volume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice of the goods or services or both. 32. It is apparent from the DGAP s Report that there has been reduction in the rate of tax from 28% to 18% w.e.f. 15.11.2017, vide Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017 and the above product was impacted by the rate reduction and hence, the benefit of the rate reduction was required to be passed on to the customers by the Respondents. It is also revealed that the DGAP vide his report dated 19.09.2019 has calculated the amount of net higher sales realization due to increase in the base price of the impacted goods, despite the reduction in the GST rate from 28% to 18% as ₹ 63,14,901/- in respect of the Respondent No. 1 and ₹ 2,33,456/- in respect of the Respondent No. 2. The said profiteered amount has been arrived at by the DGAP by comparing the actual invoice-wise base price of the complained product sold during the period from 15.11.2017 to 31.03.2019 with the commensurate price based on the average of the base prices of the product sold during the period from 01.11.2017 to 14.11.2017. The excess GST so collected from the recipients has also been included by the DGAP in the aforesaid profiteered amount a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 92. So net net after 10% GST rate cut the manufacturer instead of reducing the MRP of product actually increased it and engaged in profiteering according to me. (Emphasis supplied) 34.This Authority in the proceedings being held by it in the case of M/s J. K. Helen Curtis Ltd . and another, on the complaint dated 30.07.2018 filed by the Applicant No. 1, had opportunity to examine the record of the meetings of the Standing Committee held on 07.08.2018 and 08.08.2018 when the present complaint made against the Respondent No 1 was also discussed in detail by the members of the Standing Committee comprising of Sh. 0. P. Dadhich, Principal Commissioner, Customs (Preventive) Delhi, Sh. Himanshu Gupta Principal Commissioner SGST Delhi North and Sh. H. Rajesh Prasad Commissioner, SGST Delhi. The following observations were made in respect of the above complaint at Sr. No. 20 of Annexure-3 attached with the minutes of the above meetings: Return to the complainant for re-submitting with Pre Post 15.11.2017 invoices showing the price. 35. It is also revealed from the record that the Applicant No. 1 vide his e-mail dated 22.02.2019 addressed to the Standing Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove complaint was not recommended by the Standing Committee within the prescribed period of limitation is not correct and hence the same cannot be accepted. 37. The Respondent No. 1 has also placed reliance on the judgment passed by the Hon ble Supreme Court in the case of Chhatisgarh State Electricity Board v. Central Electricity Regulatory Commission and others (2010) 5 SCC 23) which has been followed in the case of Suryachakra Power Corporation Limited v. Electricity Department (2016) 16 SCC 152), in his support. But since the complaint filed by the Applicant No. 1 has been considered by the Standing Committee and recommended for detailed investigation well within the prescribed period of 2 months as per Rule 128 (1) of the above Rules, the law settled in the above cases cannot be relied upon. 38.The Respondent No. 1 has also contended that the period of investigation taken by the DGAP was arbitrary. In this regard it would be pertinent to refer to Section 171 (1) which provides that the benefit of tax reduction is required to be passed on by a registered person which implies that the Respondent is liable to be investigated till the date he does not pass on the be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Respondent No. 1 has also argued that he had immediately worked out the benefit to be passed on to the recipients and accordingly reduced the MRP of the product by 8.1% from ₹ 209/- to ₹ 192/- w.e.f. 24.11.2017. However, perusal of Table-A of the DGAP s Report shows that the above Respondent was selling the above product at the total price of ₹ 161.85 per unit including the GST between the period from 01.11.2017 to 14.11.2017, during the pre-rate reduction period and he was selling it ₹ 179.41 per unit after the rate reduction on 17.11.2017 and hence he had increased the price by ₹ 17.57 per unit which completely belies his claim that he had reduced his price by 8.1%. It is also revealed from the record that the Respondent had further increased his price w.e.f. 01.06.2018 without reducing it even once after the rate reduction. At no stage he has come with clean hands hence, the above contention of the Respondent is not tenable. His repeated claim of increase in his costs is also not correct as he had no ground to increase his price from the same date from which the rate of tax was reduced. Therefore, he cannot be given the benefit of increase in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction actual price for every customer as the same customer may not have bought the product either during the pre or the post reduction period. The DGAP has further calculated the average base price of the product by considering a short period of 14 days which gives more accurate and representative pre rate reduction average price. The DGAP was also required to compare the pre rate reduction average base price with the actual post rate reduction price as the benefit was required to be passed on to each buyer and it could not have been calculated by computing the average base price post rate reduction. In case the average base price is computed for the post rate reduction period then all the units of the product which have been sold below such average base price will get excluded from the computation of benefit of tax reduction although they might have been sold by the Respondent at a higher base price than the commensurate base price. As a consequence of which all those buyers who might have purchased such units of the product would not get the benefit of tax reduction which they are legally entitled to receive as per the provisions of Section 171 (1). Further, the DGAP has computed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or Channel Partners cannot override the provisions of Section 171 (1) and hence, the Respondent is legally bound to pass on the benefit of tax reduction. Therefore, the DGAP has rightly included the supplies made to the Institutional Distributor Channel Partners while computing the profiteered amount, hence the contention of the Respondent made in this regard is not correct and accordingly, an amount of ₹ 2,30,335/- as per Exhibit-13 cannot be excluded from the profiteered amount. 45.The Respondent has further contended that Section 171 of the CGST Act or Chapter XV of the CGST Rules or Methodology and Procedure dated 19.07.2018 issued by this Authority did not prescribe the methodology or guidelines for passing on the benefit of tax reduction or computation of profiteered amount. In this regard, it is submitted that the Procedure and Methodology for passing on the benefits of reduction in the rate of tax and ITC has been clearly provided in Section 171 (1) of the CGST Act, 2017 itself which states that Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormula which can be applied in all the cases of profiteering can be fixed while determining such a Methodology and Procedure as the facts of each case vary. In the case of one real estate project, date of start and completion of the project, price of the house/commercial unit, mode of payment of price, stage of completion of the project, rates of taxes, amount of ITC availed, total saleable area, area sold and the taxable turnover realised before and after the GST implementation would always be different than the other project and hence the amount of benefit of additional ITC to be passed on in respect of one project would not be similar to another project. Therefore, no set guidelines can be framed for determining methodology to compute the benefit of additional ITC which would be required to be passed on to the buyers of such units. Moreover this Authority under Rule 126 has power to determine Methodology Procedure and not to prescribe it. However, fixation of commensurate price is purely a mathematical exercise which can be easily done by a supplier keeping in view the reduction in the rate of tax and his price before such reduction or the availability of additional I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly approved by this Authority in all such cases and hence, the Respondent cannot claim that the DGAP has devised his own methodology and procedure. 47.The Respondent has also contested that the Methodology and Procedure issued by this Authority on 19.07.2018 only provided the procedure pertaining to investigation and hearings. However, as has been mentioned supra the Methodology Procedure to determine profiteered amount has already been provided in Section 171 (1) itself and hence, no Methodology Procedure is required to be determined by this Authority separately. This Authority has already notified the Procedure and Methodology vide its Notification dated 28.03.2018 under Rule 126 and not on 19.07.2018 as has been claimed by the Respondent which is available on its website. As discussed above computation of profiteered amount has to be done product wise or in technical terms each Stock Keeping Unit (SKU) wise and not invoice-wise, business vertical-wise or state-wise etc. as every buyer has fundamental right to get the benefit which is due to him on each SKU/unit/service which he has bought. It is also clear from the Explanation attached to Section 171 what is to be con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been imposed under Section 171 and hence no machinery or methodology and procedure is required to be framed separately under Section 171 as it itself prescribes such methodology and procedure. Moreover Rule 122 of the CGST Rules, 2017 provides for constitution of this Authority for determination whether the benefits of tax reduction or ITC have been passed, Rule 123 provides for the constitution of the Screening and Standing Committee on Anti-Profiteering to prima facie look in the complaints made under Section 171 (1) and Rule 129 stipulates creation of the office of DGAP to carry out detailed investigation in respect of the cases where the above benefits are required to be passed on. Under Rule 136 this Authority has been empowered to get its orders monitored through the vast network of field Tax Officers of the Central and the State Governments. Hence, there is more than enough machinery to implement the provisions of Section 171. Therefore, the above judgements are not being relied upon. 50.The Respondent No. 1 has further pointed out that the benefit of tax reduction was not required to be passed on by commensurate reduction in the price only. However, the above contentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein this Authority has accepted the argument of additional grammage being a correct way of passing on the benefit of tax reduction in terms of Section 171 of the CGST Act, 2017. Perusal of the above cited order shows that onetime benefit of grammage was allowed to M/s Hindustan Unilever Limited as it had provided the complete details regarding the passing on of the benefit by way of increase in grammage. However, in the present case the Respondent No. 1 has not submitted any information regarding the benefit passed on by way of increase in additional quantity as has been mentioned in para supra. He has also not supplied any evidence to prove that the additional quantity supplied by him was proportionate to the reduction in the rate of tax, it was supplied on account of the rate reduction and it was not part of any existing scheme of sale promotion, as was provided by M/s Hindustan Unilever Limited. Therefore, the above cited case is of no help to the Respondent No. 1. 53. The Respondent has further contended that there was no stipulation in Section 171 which required that the benefit of rate reduction should be passed on to the customers by commensurate reduction only i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it in the Government Treasury and it can be refunded only to the Respondent if he is found eligible to claim it. The above amount has to be deposited in the CWFs as the buyers are not identifiable as per the provisions of Rule 133 (3) (c). Therefore, the above contention of the Respondent No. 1 is untenable and hence the same cannot be accepted. 55. The Respondent No. 1 has relied upon the case of R. S. Joshi Sales Tax Officer Gujarat v. Ajit Mills Limited (1977) 4 SCC 98 in this regard, wherein the Hon ble Supreme Court had analysed what the term collected meant in the context of the sales tax legislation of Gujarat. However, in view of the reasons given in para supra the law settled in the above case is not applicable in the facts of the present case. 56. The Respondent No. 2 has also contended that the investigation was beyond the period of limitation and was without jurisdiction. He has further contended that the methodology and period of investigation had not been provided in the CGST Act or the Rules. In this context it is mentioned that the issues raised by the Respondent No. 2 have already been discussed and findings recorded on them in the paras supra. Accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09 Uttar Pradesh 95,896 7 10 Bihar 1,92,585 8 18 Assam 50,010 9 19 West Bengal 2,78,139 10 20 Jharkhand 22,852 11 21 Orissa 27,690 12 22 Chhattisgarh 73,363 13 23 Madhya Pradesh 1,49,627 14 24 Gujarat 5,26,390 15 27 Maharashtra 18,94,548 16 29 Karnataka 4,46,416 17 32 Kerala 20,531 18 33 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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