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TMI Blog2020 (5) TMI 442X X X X Extracts X X X X X X X X Extracts X X X X ..... ailed investigation as per Rule 129 (1) of the above Rules on the allegation that M/s Raymond Ltd. had not passed on the benefit of tax reduction from 28% to 18% w.e.f. 15.11.2017 on "After-Shave Lotion Park Avenue Good Morning 50 ml which was supplied to M/s Big Bazaar, Inderlok run by M/s Future Retail Ltd., on 08.11.2017 under Purchase Order (PO) No. 8114997697 with MRP of Rs. 115/- per unit, on 19.12.2017 under PO No. 8115407972 with the same MRP of Rs. 115/- per unit and on 12.06.2018 vide PO No. 4518098598 again with the same MRP of Rs. 115/- per unit. 2. The DGAP had issued Notice under Rule 129 (3) of the CGST Rules, 2017 on 09.04.2019 to M/s Raymond Ltd., to submit his reply as to whether he admitted that the benefit of reduction in the GST rate w.e.f. 15.11.2017, had not been passed on by him to his recipients by way of commensurate reduction in prices and if so, to suo moto determine the quantum thereof and indicate the same in his reply to the Notice as well as furnish all the documents in support of his reply. He was also afforded an opportunity to inspect the non-confidential evidence/information which formed the basis of the said Notice, during the period from 15.04 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir replies as to whether they admitted that the benefit of GST rate reduction had not been passed on by them to the recipients by way of commensurate reduction in the prices of the goods supplied by them and if so, to suo moto determine and indicate the same in their replies to the Notices. They were also given an opportunity to inspect the non-confidential evidence/ information furnished by the Applicant No. 1 on 10.06.2019 or 12.06.2019 and the same was not availed by both the Respondents. In response to the above Notice and subsequent reminders/summons, the Respondent No. 1 had submitted his replies in a piecemeal manner vide his e-mails/letters dated 18.06.2019, 24.06.2019, 05.07.2019, 05.08.2019. 16.08.2019, 24.08.2019, 28.08.2019, 05.09.2019. 09.09.2019, 10.09.2019. 11.09.2019 and 16.09.2019 which have been summed up by the DGAP as follows.- (a) That the aforesaid three POs were issued by M/s Big Bazaar to the Respondent No. 2 and the said transactions referred by the Applicant No. 1 were between the Respondent No. 2 and M/s Big Bazaar and he was not a party to the said transactions. Thus, the proceedings initiated against him were non-est and were liable to be dropped. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vident from the fact that the rate of discount under Column No. 26 of the sales sheet was named as "discount on account of GST rate change. ii. His Company Sale Price (CSP) per unit post 15.11.2017 was either less than or equal to the sale price per unit pre 15.11.2017. While arriving at these sale prices per unit, he had not considered seasonal discounts because they were temporary in nature and depended on a particular season or peculiar market requirements. The seasonal discounts were given only in respect of the period during which they were effective and for the remaining period, the base prices were charged without any seasonal discount. This seasonal discount was not available to the customers as a matter of right and entirely depended on the marketing campaign run by him during a particular season. The seasonal discount being exceptional in nature need not be adjusted in his sale price in both the periods mentioned above. iii. In the absence of sales in the period prior to 15.11.2017 for a given customer for a given product, there could not arise any situation of profiteering in those cases. iv. In respect of certain goods which were exempt from Excise Duty and VAT al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n over a period of 21 months from 01.07.2017 to 31.03.2019 without any adjustment of inflation and other factors that might govern a price increase would be unreasonable and hence such comparison must be restricted to shorter period of three months. Whenever the revenue authorities sought to compare the prices of identical products, regard must be had to the various factors including quantity, time gap. additional costs on logistics, market factors and transactional peculiarities etc. 6. The DGAP has also stated that the Respondent No 1 has also submitted the following documents/information requesting not to disclose them to any other party:- a. List of all GSTINs. b. Copies of GSTR-1 & GSTR-3B Returns for the period from July, 2017 to March, 2019 for all the registrations held all over India. c. Invoice-wise and Stock Keeping Unit (SKU) wise details of the outward taxable supplies (other than zero rated. nil rated and exempted) for the period from July 2017 to March 2019 for all the GST registrations. d. Price Lists (pre and post 15th November, 2017) for all the products. e. List containing customer codes and names of the customers of Canteen Stores Department (CSD), Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onship and market aging etc. The Respondent No. 1 has further mentioned that the goods were sold or distributed through channels of General Trade, Modern Trade, Institutional buyers, E-commerce platforms and CSD etc. Each channel had different pricing pattern and margins. He has also contended that the DGAP has wrongly determined profiteering by comparing the customer type or channel wise average of the base prices of the impugned products sold during the period from 01.11.2017 to 14.11.2017 or the latest month, wherever goods were not sold during the period from 01.11.2017 to 14.11.2017, with the actual invoice-wise base prices of such products sold during the period from 15.11.2017 to 31.03.2019. 11. The DGAP has also submitted that in regard to the Respondent No. 1's contention of giving discount of 7.81% on account of GST rate change and for not considering the discount based on the season or on the peculiar market requirements for the purpose of comparison, the copies of the sample invoices submitted by the Respondent No. 1 showed that there was no mention of the nature of the discount given on the Invoices i.e. whether it was on account of GST rate change or due to other rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the quantity or grammage of the products, while maintaining the earlier pre-rate reduction MRPs of such products, was also not acceptable. 13. The DGAP has also mentioned that the Respondent No. 1 has also sought to exclude the outward sale of the following goods from the scope of the present investigation:- (a) New Stock Keeping Units (SKUs) introduced after 14.11.2017. (b) Life Style Stores (LFS) channel introduced in July 2018 i.e. post 15.11.2017, where pre-rate change comparison of prices was not available. (c) Sales made through the CSD/CPC/BSF and INCS. (d) No sales made from July 2017 to 14.11.2017 so no comparison was available. 14. On examination of the nature of the above sales and the copies of the Circulars issued by the CSD, CPC and INCS to 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 at points No. (a) to (c) above. However, for the items sold during 15.11.2017 to 31.03.2019 but not sold during the period from July 2017 to 14.11.2017, base prices of corresponding items were provided by the Respondent No. 1 which were used for determination of profiteering, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.04/- 14. Total Profiteering N=J*M 72.48/- 15. From the above Table, the DGAP has concluded that it was clear that the Respondent No. 1 did not reduce the selling price commensurately of the PA Asl Good Morning Splash 50ml (MRP 115/-) (NPAASG050008)" product, when the GST rate was reduced from 28% to 18% w.e.f. 15.11.2017, vide Notification No. 41/2017 Central Tax (Rate) dated 14.11.2017 and hence he had profiteered an amount of Rs. 72.48/- on a particular invoice and thus the benefit of reduction in the GST rate was not passed on to the recipients by way of commensurate reduction in the price, in terms of Section 171 of the Central Goods and Services Tax Act, 2017. On the basis of above calculation as illustrated in the Table given above, profiteering in case of all the impacted goods of the Respondent No. 1 has been computed by the DGAP in the similar manner. However, he has claimed that the average base prices for other channels would be different from the channel which has been shown in Table above and accordingly, profiteering has been calculated channel-wise. 16. The DGAP has also stated that from the invoices made available by the Respondent No. 1, it appeared that he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 38,376 38,376 10. Delhi 7 68,66,663 43,21,976 1,11,88,639 11. Goa 30 2,85,628 52,144 3,37,772 12. Gujarat 24 26,96,883 41,05,036 68,01,918 13. Haryana 6 14,01,212 50,76,462 64,77,674 14. Himachal Pradesh 2 2,52,766 24,617 2,77,384 15. Jammu and Kashmir 1 2,19,967 65,582 2,85,549 16. Jharkhand 20 13,68,148 4,66,696 18,34,843 17. Karnataka 29 56,54,964 94,82,431 1,51,37,395 18. Kerala 32 57,65,995 9,28,745 66,94,740 19. Madhya Pradesh 23 24,39,065 40,82,573 65,21,637 20. Maharashtra 27 1,59,36,419 2,91,66,764 4,51,03,183 21. Manipur 14 1,27,663 - 1,27,663 22. Meghlaya 17 2,16,513 - 2,16,513 23. Mizoram 15 5,059 - 5,059 24. Nagaland 13 57,540 - 57,540 25. Odisha 21 30,59,079 8,01,378 38,60,457 26. Puducherry 34 2,89,577 4,49,656 7,39,233 27. Punjab 3 13,83,199 10,95,085 24,78,285 28. Rajasthan 8 33,14,776 16,04,101 49,18,877 29. Sikkim 11 17,711 - 17,711 30. Tamil Nadu 33 98,42,417 78,17,703 1,76,60,119 31. Telangana 36 34,05,733 68,94,992 1,03,00,726 32. Tripura 16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port dated 24.09.2019 furnished by the DGAP should not be accepted and their liability for profiteering under Section 171 of the CGST Act, 2017 should not be fixed. On behalf of the Applicants none appeared whereas the Respondent No. 1 was represented by Sh. Alpesh Dalai, Director (Finance), Sh. Nirav Parek (Employee), Sh. V. Lakshmikumaran, Sh. K. Srikanth, Sh. Gokul Kishore and Sh. Darshan Machchhar Advocates and the Respondent No. 2 was represented by Sh. Tushar Mittal, Consultant, Sh. Vineet Bhathi, Advocate and Smt. Shradha Agarwal, CA. 20. The Respondent No. 1 through his written submissions dated 10.01.2020 has stated that he was a company incorporated in 1964 and was a part of Raymond Group, dealing in personal grooming and toiletries such as deodorants, shampoos. fragrant soaps, shaving creams, perfumes and room fresheners etc. and was engaged, inter alia, in the manufacture and sale of various products which were broadly grouped under the product categories of After Shave Lotion, Body Deo, Deodorant Women, Dye Stick, Eau-De-Cologne, Eau-De-Perfume, Perfume, Perfumed Deodorant. Shampoo. Styling Gel, Grooming Kit, Soap and Talc etc. He has also stated that he was selling h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he complaint had been filed by the Applicant No. 1 by stating that M/s Raymond Ltd. had supplied 'Park Avenue After Shave Lotion Good Morning 50 ml', the price/value per unit pre and post GST rate reduction of which was INR 115/-. Accordingly, M/s. Raymond Ltd. had filed his reply inter alia stating that the said product was not supplied him but was sold by his associate company viz. the Respondent No. 1. M/s Raymond Ltd. had also mentioned the various steps which had been taken by the Respondent No. 1 to pass on the benefit of reduction in the rate of tax from 28% to 18%. However, instead of dosing the investigation at that stage, the DGAP had suo moto issued an addendum to the notice withdrawing the notice issued to M/s Raymond Ltd. and making the Respondent No. 1 an interested party. The Respondent No. 1 has claimed that the entire procedure right from the examination of the complaint till carrying out the investigation and passing of the order determining the amount profiteered was enshrined in Chapter XV of the CGST Rules which did not grant powers to the DGAP to suo moto make Respondent No. 1 a party as the investigation was required to be limited to the reference made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled investigation. It has been further submitted that there should have been some material to prima facie establish the allegation of profiteering before a reference was made by the Standing Committee. Thus; both the reference made by the Standing Committee and the consequent investigation by the DGAP were bad in law and liable to be set aside for want of prima facie evidence and also for being in violation of the process laid down in Rules 128 and 129. In this regard, reliance was placed on the judgements passed in the cases of Ved Prakash Prabhudayal Agarwa! v. ITO (1982) 135 ITR 756 (Bom.) = 1981 (8) TMI 55 - BOMBAY HIGH COURT and ITO v. Lakhmani Mewal Das (1976) 103 ITR 437 (SC) = 1976 (3) TMI 1 - SUPREME COURT. The Respondent No 1 has further referred to the Order dated 29.10.2018 passed by this Authority in the matter of M/s. Amway India Enterprises Private Limited (Case No. 12/2018) = 2018 (10) TMI 1614 - NATIONAL ANTI-PROFITEERING AUTHORITY, wherein, in the absence of description of products, name of the supplier and any specific evidence of profiteering by the Respondent it was held that the DGAP could not conduct investigation and this Authority had dismissed the complai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2019 (7) TMI 36 - NATIONAL ANTI-PROFITEERING AUTHORITY d. Excel Rasayan Pvt. Ltd. (3 Months) = 2019 (1) TMI 807 - NATIONAL ANTI-PROFITEERING AUTHORITY e. Harish Bakers & Confectionaries (3 Months) = 2018 (12) TMI 473 - NATIONAL ANTI-PROFITEERING AUTHORITY The Respondent has further placed reliance on the judgements of the Hon'ble Supreme Court passed in the cases of S.G. Jaisinghani v. Union of India & Ors. (1967) 2 SCR 703 = 1967 (2) TMI 30 - SUPREME COURT and Maneka Gandhi v. Union of India 1978 AIR 597 = 1978 (1) TMI 161 - SUPREME COURT in his support. 27. The Respondent No. 1 has also claimed that the formula used by the DGAP for computation of profiteering was incorrect as the DGAP in para 31 of his Report had stated that the profiteered amount had been arrived at by comparing the customer type or channel-wise average of the base prices of the goods sold during the period from 01.11.2017 to 14.11.2017 (or the latest month i.e. October 2017 and so on, in case these goods were not sold during the period from 01.11.2017 to 14.11.2017) with the actual invoice-wise base prices of such goods sold during the period from 15.11.2017 to 31.03,2019. In this regard, it was submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely pass on the benefit through additional primary discount of 7.81% in the cum-tax price (equivalent to the reduction in the rate of GST from 28% to 18%) on all the SKUs held in stock as on 14.11.2017 (excluding SKUs which were manufactured in excise-free units in the pre-GST regime). This additional primary discount was given on the invoices right from 15.11.2017. It was further contended that the benefit passed on by way of additional primary discount on the invoices should be reduced from the total profiteered amount. The Respondent has also placed reliance on the case of M/s Lipton India Ltd. v. State of Tamilnadu 1973 (32) STC 194 (Mad.) = 1973 (1) TMI 85 - MADRAS HIGH COURT in his support. 29. The Respondent No. 1 has also averred that the profiteering should not be computed in respect of the line items in respect of which credit notes were issued. He has further averred that during the normal course of business he was issuing credit notes on account of return of goods from his recipients or on account of incorrect invoicing. In respect of supplies made after 14.11.2017, there have been cases of credit notes being issued by him. The Respondent No. 1 has also stated that whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computed an amount of Rs. 5.47 Crore (Annexure-15) on this ground and argued that it should be excluded from the profited amount. 31. The Respondent No. 1 has also submitted that there was no effective reduction in the rate of tax on the SKUs which were manufactured in the excise free units including those situated in Baddi, Himachal Pradesh. The SKUs which were produced by the contract manufacturers in these locations were exempt from the Excise Duty in the pre-GST regime (area based exemption) and were chargeable only to Value Added Tax (VAT) I Central Sales Tax (CST) in the range of 14% -15% all over India. Since no Excise Duty was payable, the effective rate of tax embedded in the sale prices of these goods was only VAT / CST @ 14% - 15%. Accordingly, the effective rate of tax was much lower than 18%. The Respondent No. 1 has further submitted that he had identified the SKUs which were manufactured in these area based exempt locations and floated a proposal internally to revise the prices of these SKUs. While the said internal proposal was under consideration, several representations were made before the GST Council by the various associations for reduction in the rate of tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers or distributors through which sales were made only to the corporate customers. Bulk orders were placed by the corporate customers generally for corporate gifts, where the quantity and prices were negotiated on each and every order. The prices were highly discounted as compared to the supplies made by the Respondent No. 1 to the normal trade partners. These prices were inclusive of transport charges and other costs like customization of the packages depending on the requirement of the corporate customer. In the case of sales through the distributors, the quantity and prices were negotiated with the corporate customers by these distributors and sale prices of Respondent No. 1 were determined after deducting distributor's margins from the negotiated prices. Although the prices were negotiated at the time of placing of the purchase orders. the applicable rate of GST as on the date of supply was charged. He has further submitted that the prices were negotiated for each and every transaction and the rate of GST applicable on the date of supply was charged. Accordingly. there was no comparable price available for any transaction as each and every transaction was different and independ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he WTO regarding Anti-Dumping Duties on imports of Cotton-Type Bed Linen from India vide which it was held that the methodology of 'Zeroing could not be applied and both the negative and positive margins were to be considered while applying the anti-dumping provisions. The Respondent No. 1 has therefore, contended that the net profiteering should be computed after taking in to account the positive and negative benefits passed on at the entity level and accordingly, the amount of excess benefit passed on by this measure at the entity level aggregating to Rs. 18.60 Crore which was even higher than the profiteered amount should be excluded from the computation. 36. The Respondent No. 1 has also cited the recent order dated 18.02.2020 of the Hon'ble High Court of Delhi passed in W.P. (C) 1780/2020 in the case of M/s Johnson & Johnson Pvt. Ltd. v. Union of India & Ors. = 2020 (2) TMI 1184 - DELHI HIGH COURT, wherein the order passed by this Authority was challenged and has contended that the Hon'ble High Court had observed that the Petitioner had been able to make out a strong case for grant of interim relief and one of the points considered by the Hon'ble High Court was that cases whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01.11.2017 to 14.11.2017 with the actual invoice-wise base prices of such goods 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 prices. The Respondent No. 1 has also stated that while arriving at the total alleged profiteered amount, the DGAP had incorrectly inflated the pre-rate reduction prices by adding 18% GST to them and comparing them with the actual sale prices including 18% GST, without adducing grounds as to why this amount had been added. In this regard, the above Respondent has referred to the case of R.S. Joshi Sales Tax Officer Gujarat v. Ajit Mills Limited (1977) 4 SCC 98 = 1977 (8) TMI 140 - SUPREME COURT and the case of Dai Ichi Karkaria supra. Accordingly, the Respondent has submitted that an amount of Rs. 2.82 Crores (Rs. 18.48 Crores * 18/118) representing the GST collected should be reduced from the alleged profiteered amount. 38. The Respondent No. 1 has also argued that the interpretation of Section 171 of CGST Act made by the DGAP was not correct as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs (India) Ltd., New Delhi. b The Collins Cobuild English Dictionary for Advanced Learners - Harper Collins Publication. c. Oxford English Reference Dictionary - Oxford University Press. 39. The Respondent No. 1 has also submitted that the amount, if any, held as profiteered, should be refunded to the recipients and should not be deposited in the Consumer Welfare Funds (CWFs). The Respondent has further added that if this Authority was to hold that some amount has been profiteered by the Respondent No. 1, then the same would be refunded by the Respondent No. 1 to his recipients. Rule 133 of the CGST Rules provided that where this Authority determined that a registered person has not passed on the benefit of the reduction in the rate of tax, this Authority could, inter alia, order return to the recipient an amount equivalent to the amount not passed on. It further provides for deposit of such amount in the OWE constituted under Section 57 of CGST Act where the eligible person did not claim return of the amount or where such person was not identifiable. The Respondent No. 1 has further submitted that recipients of the Respondent No. 1 were identifiable as they were his distribut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that such stickers could be affixed also by the distributors, dealers or the retailers. It was further submitted that a commensurate reduction in the price on supply of goods was the only mandate under section 171 of the CGST Act and affixing of stickers with reduced MRPs was not a mandatory provision but a discretion provided in the Legal Metrology Act and the Rules framed thereunder. 41. The Respondent No. 1 has also averred that in the absence of any prescribed methodology and procedure for calculation of profiteering in the CGST Act and the CGST Rules or the procedure prescribed by this Authority under Rule 126. the present proceedings were arbitrary and liable to be dropped as they were violative of the principles of natural justice. It was further averred that the 'Procedure and Methodology' issued on 19.7.2018 by this Authority only provided the procedure pertaining to the investigation and hearing. He has also maintained that in the absence of any framework or guidelines laid down under Section 171 or the Rules made thereunder, different approaches could be followed by this Authority and the DGAP. Such unfettered discretion would lead to uncertainty, arbitrariness and whim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebasis Das and Others 2003 4 SCC 557 = 2003 (3) TMI 664 - SUPREME COURT. b. Uma Nath Pandey and Others v. State of UP (2009) 12 SCC 40 = 2009 (3) TMI 526 - SUPREME COURT. c. Collector of Central Excise v. ITC Ltd. 1994 (71) ELT 324 (SC) = 1994 (2) TMI 62 - SUPREME COURT. d. Vasta Bio-Tech Pvt. Ltd. v. Assistant Commr. 2018 (360) ELT 234 = 2018 (1) TMI 1437 - MADRAS HIGH COURT. e. Dharampal Satyapal Ltd. v. Dy. Commissioner of C. Ex 2015 (320) ELT 3 (SC) = 2015 (5) TMI 500 - SUPREME COURT. f. Union of India v. Hanil Era Textiles Ltd. 2017 (349) ELT 384 (SC) = 2013 (10) TMI 1467 - SUPREME COURT. 43. The Respondent No. 1 has also submitted that in absence of a judicial member, the constitution of NAA was improper as the Technical Members appointed in this Authority lacked judicial experience which was necessary for deciding the legal issues involved in the anti-profiteering proceedings. 44. The Respondent No. 1 has further submitted that Section 171 of the CGST Act and the Rules made thereunder pertaining to Anti-Profiteering were unconstitutional being violative of Article 14 and Article 19 (1) (g) of Constitution of India as the above provisions amounted to exercising re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... W DELHI 48. The Respondent No. 1 has also claimed that the POs mentioned in the complaint pertained to the Respondent No. 2 and had the invoices issued by him to the Respondent No. 2 in respect of the complained product had been examined by the Standing Committee on Anti-Profiteering it would have realized that he had passed on the benefit of tax reduction by giving discount of 7.81% and had maintained the pre rate reduction base price. He has also enclosed copies of invoices as Annexure-9 with Volume 3 of his written submissions dated 02.03.2020. 49. The Respondent No. 2 vide his submissions dated 08.01.2020 has stated that the constitution of the Standing Committee as well as of the Screening Committees on Anti-Profiteering as per Rule 123 of the CGST Rules, 2017 was illegal and without the authority of law as the CGST Act. 2017 nowhere envisaged constitution of these Committees. He has also stated that the constitution of the office of DGAP (earlier Director General of Safeguards) was purportedly done under Rule 129 of the CGST Rules, 2017, however, the said Rule was ultra vires of the CGST Act, 2017 as it nowhere envisaged constitution of any such body and therefore, the inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, in the present case no evidence was provided by the Applicant No. 1 in support of his application. In this connection it would be revenant to mention that all the above objections have been elaborately dealt by this Authority in its Interim Order No. 10/2020 dated 17.02.2020 and found to be untenable and hence, no findings are being recorded on them in this order. 52. The Respondent No. 2 has also pleaded that the calculations of profiteering made by the DGAP were erroneous and faulty and the profiteered amount worked out by the DGAP was excessive and illegal. He has further pleaded that the objective of this Authority was to ensure that any reduction in the rate of tax was passed on to the recipients by way of reduction in prices which meant that the supplies should not result in illegal profiteering, by the suppliers. He has also claimed that in this regard the Government of India in its flyer had stated as follows:- "This was obviously happening because the supplier was not passing on the benefit to the consumer and thereby indulging in illegal profiteering. National Anti-Profiteering Authority is a mechanism devised to ensure that prices remain under check and to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alculated the same from 15th November 2017 to 31 March, 2019. During such a long period the benefit of cost inflation index, increase in the labour cost and the delivery cost etc. had not been accounted for and out of the total alleged profiteered amount the major portion pertained to the F. Y. 2018-19. Month wise details of the alleged profiteered amount computed by the Respondent No. 2 are given hereunder:- Row Labels Sum of diff in totals inclusive of GST % age of total amount Sum of diff in totals exclusive of GST % age of total amount Nov-2017 74,297.76 1.92 62,964.21 1.92 Dec-2017 1,69,488.72 4.39 1,43,634.51 4.39 Jan-2018 2,99,706.40 7.75 2,53,988.48 775 Feb-2018 2,41,015.06 6.24 2,04,250.05 6.24 Mar-2018 3,14,725.03 8.14 2,66,716.13 8.14 For 17-18 10,99,232.99 28.44 9,31,553.38 28.44 Apr-2018 2,01,580.40 5.22 1,70,830.85 5.22 May-2018 2,74,551.45 7.10 2,32,670.72 7.10 Jun-2018 2,76,109.35 7.14 2,33,990.97 7.14 Jul-2018 2,57,106.32 6.65 2,17,866.71 6.65 Aug-2018 2,24,863.35 5.82 1,90,562.16 5.82 Sep-2018 2,75,316.69 7.12 2,33,319.23 7.12 Oct-2018 3,34,369.46 8.65 2,83,363.95 8.65 Nov-2018 2,05,413.74 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the buyers and had no discretion / power to alter or even reduce the prices as were mentioned in the POs. He has further added that his profit margin was almost static and there was no extra profit earned by him on account of reduction in the rate of tax. 59. The Respondent No. 2 has also stated that even otherwise no profiteering could be attributed to him, since it has been alleged in the notice itself that the Respondent No. 1 had committed profiteering by selling the products at a higher price, hence further selling of the said products at a higher price could not be recomputed in the hands of the Respondent No. 2. This would result in double computing of the profiteered amount. He has further stated that if the Respondent No. 1 was alleged to have profiteered, then his selling price to him would be Rs. 108.4 per unit in respect of the complained product. Thus, to avoid profiteering (as alleged by the DGAP) his base selling price should have been retained at Rs. 105 per unit. Thus, far from profiteering, this would in fact result in the Respondent No. 2 incurring a loss of Rs. 3.47 i.e. Rs. 108.47 - Rs. 105.00 per unit and hence, profiteering could not have been alleged t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be declared in the return filed by such supplier and his tax liability would stand adjusted to that extent in terms of section 34 of the CGST Act, 2017. The option was always open to the Respondent No. 2 to return the tax amount to the recipients by issuing credit notes and adjusting his tax liability for the subsequent period to that extent. (c) That the period of investigation has neither been prescribed in the CGST Act, 2017 nor in the corresponding Rules / Notifications. The period from 15.11.2017 upto the last month of receipt of reference i.e. 27.03.2019 was taken for investigation from 15.11.2017 to 31.03.2019. (d) That the calculation of profiteered amount has nothing to do with the costing of the product and it was independent of the costing of the product. (e) That even if the Respondent No. 2 had no control on the prices at which sales were to be made to his recipients and he was duty bound to comply with the prices mentioned in the POs issued by the recipients, the Respondent No. 2 had directly collected the amount of Rs. 38,64,891/- and retained the same which he was legally bound to pass on to his recipients but he had chosen to increase the base prices. (f) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 18% w.e.f. 15.11.2017 and had kept the MRP of the above product unchanged at Rs. 115/- per piece and thus, the benefit of reduction in the GST rate was not passed on to the recipients by way of commensurate reduction in the price. The Standing Committee on Anti-profiteering had examined the above application in its meeting held on 11.03.2019 and referred the same to the DGAP for detailed investigation in terms of Rule 129 (1) of the above Rules. During the course of the investigation carried out by the DGAP it was revealed that the above product was supplied by the Respondent No. 2 after he had purchased it from the Respondent No. 1. Hence, both the above Respondents were issued notices under Rule 129 (3) of the above Rules and investigation was conducted against them for not passing on the benefit of tax reduction. 65. It is further apparent from the record that the Respondent No. 1 has admitted that his products were being sold through various channels mentioned supra and the pricing pattern for each channel and each customer was different as it was based on the demand and supply, market outreach of the distributor, yearly volume of sales , length of relationship and market ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etc. (ii) the same customer may not have purchased the same product during the pre and the post rate reduction periods and (iii) a customer may have purchased a particular product during the pre rate reduction period and may not have purchased it in the post rate reduction period or vice versa and (iv) the average base prices computed for a period of 14 days w.e.f. 01.11.2017 to 14.11.2017 or for the month of October 2017 provide highly representative and justifiable comparable average base prices. However, the average pre rate reduction base prices were required to be compared with the actual post rate reduction base prices as the benefit is required to be passed on each SKU to each customer. In case average to average base prices are compared for both the periods the customers who have purchased a particular product on the base price which is less than the average base price but which is more than the commensurate base price, would not get the benefit of tax reduction. Such a comparison would be against the provisions of Section 171 as well as Article 14 of the Constitution which require that each customer has to be passed on the benefit of tax reduction on each purchase made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nefit of ITC shall be passed on to the recipient by way of commensurate reduction in prices. (2). The Central Government may, on recommendations of the Council, by notification, constitute an Authority, or empower an existing Authority constituted tinder any law for the time being in force, to examine whether Input Tax Credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him. (Emphasis supplied) 67. It is apparent from the perusal of Sub-Section 171 (1) that both the benefits of tax reduction and ITC are required to be passed on by the suppliers to the customers by commensurate reduction in the prices as they have been granted from the public exchequer to benefit the consumers. Sub-Section 171 (2) provides that the Central Government may on the recommendations of the GST Council constitute an Authority to examine whether the input tax credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the prices of the goods or services or both supplied by him. Therefore, this Authority has m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course of the investigation. Since, the DGAP is the investigating arm of this Authority any Report furnished by him to this Authority has to mention all the cases of denial of the above benefits once they have come to his notice keeping in view that this Authority has mandate to examine all such cases, determine the amount of benefit and provide relief to the affected consumers as per the provisions of Section 171 (2) and Rule 133 of the above Rules. The DGAP is legally required to investigate and bring before this Authority all those registered persons who have failed to pass on both the above benefits not withstanding whether any allegation has been received against them or not once he has become aware of such violation. It is further borne out from the record that M/s Raymond Ltd. had himself vide his letters dated 26.04.2019, 03.05.2019. 15_05.2019 and 17.05.2019 (Annexures-4 to 7 of the Report) informed the DGAP that the above product was manufactured by the Respondent No. 1 and was supplied by the Respondent No. 2 to M/s Big Bazar, therefore, it was incumbent upon the DGAP to investigate both the above Respondents in terms of Section 171 and Rule 129. During the course of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 1 has not produced any evidence to show that he has given the above discount on account of passing on the benefit of tax reduction. It is further clear from the above Table that the Respondent has himself admitted that he had increased the base price from Rs. 64.90 to Rs. 70.40 whereas he could not have increased it as he was required to maintain the pre rate reduction base price. Therefore, the Respondent has not kept the pre and post rate reduction base prices same and has thus profiteered to the extent of Rs. 6.49 per unit of the above product and has denied the benefit of tax reduction and therefore, the above contention of the Respondent is not correct. 72. The Respondent No. 1 has also submitted that there should have been some material to prima facie establish the allegation of profiteering before a reference was made by the Standing Committee to the DGAP. This Authority has already given its findings on this issue in its Interim Order dated 17.02.2020 and hence, the same is not being discussed in this order. In this regard, reliance has been placed by the above Respondent on the judgements/order passed in the cases of Ved Prakash Prabhudayal Agarwal v. ITO (1982) 135 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken a massive exercise to determine the revised prices and reflected the same on the packages. However, the Respondent has not produced even a single invoice or sticker or label of the product in respect of which he had reduced the price. On the contrary there is ample evidence that he had infact increased the prices w.e.f. 15.11.2017 of all the impacted products and hence the above claim of the Respondent is incorrect. 75. The Respondent No. 1 has also claimed that where ever it was feasible to increase the grammage instead of reducing the MRPs he had increased the same from January, 2018. However, the above Respondent has:- * Not supplied the names of the products in respect of which the benefit of tax reduction was passed on by him by way of increase in the quantity of the products. * What were the pre rate reduction prices of these products. * What was the quantity of each product during the pre rate reduction period. * What was the quantity in respect of each product which was commensurately required to be increased. * What was the quantity of such products during the post rate reduction period. * Copies of the production logs showing the date and quantity of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e above claim of the Respondent is not tenable. The Respondent has also placed reliance on the judgement of the Hon'ble Supreme Court passed in the cases of S.G. Jaisinghani v. Union of India & Ors. (1967) 2 SCR 703 = 1967 (2) TMI 30 - SUPREME COURT which pertains to the seniority of the Income Tax Officers and Maneka Gandhi v. Union of India 1978 AIR 597 = 1978 (1) TMI 161 - SUPREME COURT which was concerned with confiscation of her passport, in his support. However, the same are not being followed as the facts of the present case are entirely different from the facts of both the above cases as the Respondent No. 1 cannot claim violation of his fundamental rights on the ground that he would not pass on the benefit of tax reduction beyond a period of 3 months, which has been fixed by him illegally. arbitrarily and as per his own whims. 77. The Respondent No. 1 has also claimed that the method of adoption of average base prices pre-rate reduction at customer type/channel level and comparing them with the actual invoice-wise base prices post rate reduction was incorrect. It would be appropriate to mention here that the Respondent No. 1 has himself claimed in his submissions that he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, there is no provision of passing on the benefit of tax reduction by way of offering discounts and it should be invariably passed on by commensurate reduction in the prices only. As has been discussed above the Respondent was required to pass on benefit of 10% rate reduction whereas he has passed on benefit of 7.81% only and thus he has not passed on the full benefit of tax reduction. This benefit was to be calculated on each product and hence it would be different for different products based on their prices whereas the Respondent has passed benefit at the uniform rate, which is wrong and illegal. The Respondent has not produced any evidence to establish how he had arrived at the 7.81% discount. It is also evident from the perusal of the tax invoice dated 17.02.2018 attached by him at page 40 with Volume One of his submissions dated 02.03.2020 that an amount of Rs. 7,140.60 has been shown as discount. However, there is no mention of the % of the discount and that this discount has been given on account of benefit of tax reduction. Perusal of tax invoice dated 14.02.2018 (page 45 of Volume One) shows that discount of 7.81% has been given on 4 different products however, there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imed to have made similar reduction of 7.81% on rest of the products in respect of which the selling price was to be reduced therefore, it is clear that in respect of these products the prices have not been reduced to the extent of 10%. Therefore, the claim of the Respondent that the profiteering could only be to the extent of 7.81% is completely wrong as the above percentage is unreasonable, arbitrary and ultravires of the provisions of Section 171 (1) and hence the same is not tenable. The Respondent No. 1 has also computed an amount of Rs. 5.47 Crore on this ground and argued that it should be excluded from the profiteered amount. However, as has been discussed above the claim made by the Respondent on this ground is not correct and hence the above amount cannot be reduced from the profiteered amount. 81. The Respondent No. 1 has also submitted that there was no effective reduction in the rate of tax on the SKUs which were produced in the excise free units as only the VAT and CST in the range of 14% - 15% were applicable on them during the pre GST period whereas after coming in to force of the GST the rate of tax was increased to 28% which was further reduced to 18% w.e.f. 15.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent No. 1 has himself supplied the details of the prices of the products supplied to the Institutional Customers during the pre and the post rate reduction periods and hence, comparable prices were available to the DGAP for computation of the profiteered amount. Accordingly, the above claim of the Respondent in not correct and hence, profiteered amount of Rs. 2.64 Crore computed against the sales made to the institutional Customers. cannot be excluded from the profiteering. 84. The Respondent No. 1 has also pleaded that the rate of GST was reduced from 28% to 18% w.e.f. 15.11.2017 and accordingly. he had reduced the rate of GST from 28% to 18% in the invoices issued by him to his customers and hence he had passed on the benefit of tax reduction. The above plea of the Respondent is wrong and misleading as mere charging of GST @ 18% after the tax reduction does not amount to passing on the benefit of tax reduction in view of the fact that the Respondent had increased the base prices of his products w.e.f. 15.11.2017 and then charged GST @ 18% on them whereas he was legally bound not to increase them. The Respondent had continued to charge the same cum tax prices which he was chargin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he profiteered amount on the above ground. 86. The Respondent No. 1 has also cited the order dated 18.02.2020 of the Hon'ble High Court of Delhi passed in W. P. (C) 1780/2020 in the case of M/s Johnson & Johnson Pvt. Ltd. v. Union of India & Ors. = 2020 (2) TMI 1184 - DELHI HIGH COURT, wherein the order passed by this Authority was challenged and has contended that the Hon'ble High Court had observed that the Petitioner had been able to make out a strong case for grant of interim relief and one of the points considered by the Hon'ble High Court was that cases where the prices actually fell after reduction in the rate of tax were excluded from consideration by the this Authority in its impugned order. In this connection it would be appropriate to mention that the above case is still pending before the Hon'ble Court and therefore, no final judgement has been passed in the above case. The above Respondent has also placed reliance on the judgement of the Hon'ble Supreme Court passed in the case of Dai Ichi Karkaria Ltd. 1999 (112) ELT 0353 SC = 1999 (8) TMI 920 - SUPREME COURT to support his claim. In this regard it would be pertinent to mention that no man of commerce is entitled to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ases cannot be relied upon. 88. The Respondent No. 1 has also argued that the interpretation of Section 171 of CGST Act done by the DGAP was not correct as passing of the benefit of GST rate reduction through discounts etc. was in full compliance with the provisions of Section 171 of CGST Act. However, it is clear from plain reading of the provisions of Section 171 (1) that the benefit of tax reduction can be passed only by commensurate reduction in the price and not be any other means including the discounts. Moreover, the discount of 7.81% claimed to have been passed on account of tax reduction has been arbitrarily and wrongly computed by the Respondent and was also not commensurate with tax reduction of 10%. Not even a single tax invoice produced by the Respondent shows that the above discount was given on account of tax reduction. Moreover, the discounts so offered by the Respondent do not satisfy the conditions imposed under Section 15 (3) of the CGST Act, 2017 quoted supra. The strategy adopted by the Respondent to first increase the base prices from 15.11.2017 and then offer discount shows that he had no bonafide intention of passing on the benefit of tax reduction. Hence, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him. (3). The Authority referred to in sub-section (2) shall exercise such powers and discharge such functions as may be prescribed. (3A) Where the Authority referred to in sub-section (2) after holding examination as required under the said sub-section comes to the conclusion that any registered person has profiteered under sub-section (1), such person shall be liable to pay penalty equivalent to ten per cent. of the amount so profiteered.. PROVIDED that 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. Explanation:- For the purpose of this section, the expression "profiteered" shall mean the amount determined on account of not passing the benefit of reduction in rate of tax on supply of goods or services or both or the benefit of input tax credit to the recipient by way of commensurate reduction in the price of the goods or services of both." (Emphasis supplied) 91. Therefore, it is evident from the above Section and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State of Jharkhand v. Ambay Cements 2004 (178) E.L.T. 55 (SC) = 2004 (11) TMI 319 - SUPREME COURT and Tata Chemicals Ltd. v. Commissioner of Customs 2015 (320) E.L.T. 45 (SC) = 2015 (5) TMI 557 - SUPREME COURT any act prescribed to be performed in a particular manner has to be done in the prescribed manner and not to be performed at all. However. the above cases are of no help to the above Respondent as the procedure for depositing the profiteered amount in the CWFs has been duly prescribed in Rule 133 which is meticulously being followed by this Authority. 93. The Respondent No. 1 has also stated that as a manufacturer he was not under legal obligation to fix MRPs and affix stickers notifying change in the MRPs on his products. The above contention of the Respondent No. 1 is frivolous as the Respondent being a manufacturer as per the provisions of Rule 2 (d) is legally responsible for fixing the MRPs of his products as per the provisions of Rule 2 (m) of the Legal Metrology (Packaged Commodities) Rules, 2011. However, he has not re-fixed the MRPs after the rate reduction w.e.f. 15.11.2017. He was also required to stamp or re-sticker or reprint the MRPs on all the impacted SKUs a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profiteering in the CGST Act and the CGST Rules or the procedure prescribed by this Authority under Rule 126, the present proceedings were arbitrary and liable to be dropped as they were violative of the principles of natural justice. In this regard it is mentioned that the 'Procedure and Methodology' for passing on the benefits of reduction in the rate of tax and ITC has been explained in Section 171 (1) of the CGST Act, 2017 itself which provides 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 in prices." It is clear from the plain reading of the above provision that it mentions "reduction in the rate of tax or benefit of ITC" which means that the benefit of tax reduction and ITC has to be passed on by a registered person to his recipients since both the above benefits are being given by the Central and the State Governments out of their tax revenue, which cannot be misappropriated by a registered dealer. It also mandates that the above benefits are to be passed on each SKU or unit of construction or service to every buyer and in case they are not passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e its Notification dated 28.03.2018 under Rule 126 of the CGST Rules, 2017 and not on 19.07.2018 as has been claimed by the above Respondent. However, no fixed formula, in respect of all the sectors or the SKUs or the services, can be set for passing on the above benefits or for computation of the profiteered amount, as the facts of each case are different. in the case of one real estate project, date of start and completion of the project, price of the flat/shop, mode of payment of price or instalments, stage of completion of the project, rates of taxes pre and post GST implementation, amount of CENVAT and ITC availed/available, total saleable area, area sold and the taxable turnover received before and after the GST implementation would always be different from 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 the other project. Therefore, no set procedure/ methodology/ guidelines/ principles can be framed for determining the benefit of additional ITC which has to be passed on to the buyers of the units. Moreover, this Authority under Rule 126 has been empowered to 'determine' Methodology & Proced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Respondent is frivolous and hence the same cannot be accepted. 95. The Respondent No 1 has also submitted that the present proceedings have been initiated in violation of the principles of natural justice as Show Cause Notice has not been issued to the Respondent No. 1 proposing the action to be taken against him by this Authority. In this regard it is mentioned that a notice dated 03.10.2018 was duly issued to the Respondent listing the allegations and the action proposed to be taken against him. A copy of the Report dated 24.09.2018 furnished by the DGAP and all the Annexures attached with the above Report which detailed the mathematical methodology employed by the DGAP to compute the profiteered amount was also supplied to the Respondent. The above notice had also clearly mentioned that it was proposed to fix liability of the Respondent under Section 171 of the above Act. He was also asked to put in appearance and file his submissions. The Respondent has addressed elaborate oral and written submissions on 10.01.2020 and 02.03.2020 and has also made Power Point presentations. He has been given sufficient opportunity to present his case and therefore, the allegations of viol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent cannot be allowed to misappropriate and enrich himself at the expense of common consumers who are unorganised, voiceless and vulnerable. The Respondent is free to exercise his right to trade and fix his prices keeping in view his cost of goods. market conditions, competition and his business strategy but he cannot deny the above benefit under the pretext that it infringes his right to trade. Neither the DGAP nor this Authority has mandate to direct the Respondent to fix his prices as per their directions nor they have directed so and hence all such claims made by the Respondent are farfetched and are not tenable. 99. The Respondent No. 1 has further submitted that Rules 126, 127 and 133 of the CGST Rules suffer from the vice of excessive delegation. In this connection it would be pertinent to mention that Rule 126 empowers this Authority to frame "Methodology & Procedure" to regulate its proceedings. This power is available to all the judicial, quasi-judicial and statutory bodies e.g. the GST Tribunal has such power under Section 111 (1) of the CGST Act, 2017 and the Competition Commission has this provision under the Competition Act, 2002. Therefore, no special privilege h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2016 (331) ELT 239 (Guj.) = 2015 (12) TMI 931 - GUJARAT HIGH COURT. (ii) Vidyawati Gupta & others v. Bhakti Hari Nayak & others (2006) 2 SCC 777 = 2006 (2) TMI 670 - SUPREME COURT. (iii) All India Reporter Ltd. v. Ramchandra Dhondo Data AIR 1961 Bom 292 = 1959 (9) TMI 60 - BOMBAY HIGH COURT The Respondent No. 1 has also contended that this Authority had ample powers to modify its Interim Order dated 17.02.2020 as per the law settled in the following cases.- (a) Union of India v. Auto & General Engg. Co. 1995 (80) ELT 246 (Del.) = 1995 (7) TMI 182 - DELHI HIGH COURT. (b) Baron International Ltd. v. Union of India 2004 (163) ELT 150 (Bom) = 2003 (9) TMI 97 - HIGH COURT OF JUDICATURE AT BOMBAY. (c) Garg Ispat Udyog Ltd. v. Commissioner of Central Excise Jaipur 2013 (288) ELT 392 (Tri.-Del.) = 2013 (9) TMI 169 - CESTAT NEW DELHI In this connection it is mentioned that this Authority has no power to modify its orders which have been passed on substantive issues pertaining to the facts and the law. As per para 30 of the "Methodology & Procedure" determined by this Authority under Rule 126 of the CGST Rules, 2017 and notified by it on 28.03.2018 only arithmetical, clerical an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is incomprehensible and amounts to unethical and illegal business practice. Moreover, the benefit of tax reduction can be passed only through commensurate reduction in the prices as per the provisions of Section 171 (1) and it cannot be passed through arbitrary discounts. The discount offered by him also does not fulfill the conditions prescribed under Section 15 (3) of the above Act and hence, the same cannot be construed as passing on the benefit of tax reduction. The Respondent has himself admitted vide his above tax invoice that he has increased the base price of the above product from Rs. 64.90 to Rs. 70.40 whereas he could not have increased it. Therefore, the Respondent has profiteered to the extent of Rs. 6.49 per unit of the above product and he has not retained the pre rate reduction base price. Same is the position in respect of the other products supplied by him to the Respondent No. 2 through the above and the other tax invoices issued by him. It is also revealed that in respect of some of the products no discount has been shown in the tax invoices. Therefore, the above contentions of the above Respondent are not correct. 102. The Respondent No. 2 vide his submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of the same within a period of 2 months. He has also contended that in the present case the application/ complaint was made on 30.07.2018 and it was examined by the Standing Committee on Anti-Profiteering in its meeting held on 11.03.2019 i.e. after 7 months of the receipt of the application and hence the recommendation made by the above Committee for conducting investigation against him was illegal and was barred by limitation. The Respondent No. 2 has also submitted that that as per rule 128 (1) of the CGST Rules, to determine whether there was prima-facie evidence to support the claim of the applicant, the Standing Committee on Anti-Profiteering was required to examine the accuracy and adequacy of the evidence provided in the application. However, in the present case no evidence was provided by the Applicant No. 1 in support of his application. All the above objections have been elaborately dealt by this Authority in its Interim Order No. 10/2020 dated 17.02.2020 and hence, no findings are being recorded on them in this order. 105. The Respondent No. 2 has also pleaded that the DGAP had calculated the alleged profiteered amount by comparing the pre rate reduction base prices ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces as per the provisions of Section 171 (1) of the above Act and since, he had increased them he has been rightly held liable for profiteering during the F.Y. 2018-19. 108. The Respondent No. 2 has also claimed that the profiteered amount calculated by the DGAP was erroneous and incorrect in as much as the same has not taken into account the debit notes raised by the buyers. In this connection it would be pertinent to mention that the debit/credit notes issued by the Respondent No. 2 and 1 did not pertain to passing on the benefit of tax reduction and hence, they cannot be considered while computing the profiteered amount. Accordingly, out of the total profiteered amount of Rs. 38,64.891/- established against the Respondent No. 2, an amount of Rs. 27,65,658/- which related to the F. Y. 2018-19 cannot be excluded. 109. The Respondent No. 2 has also mentioned that the present Report was bad in law on account of mis-joinder of parties as he was only a middle man in the supply chain and had no control over the price fixation. The above claim of the Respondent runs contrary to the provisions of Section 171 (1) as he is responsible for passing on the benefit of tax reduction and hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were made by him. Therefore, the above contentions of the Respondent cannot be accepted. 113. Based on the above facts, it is established that both the above Respondents have acted in contravention of the provisions of Section 171 of the CGST Act, 2017 and have not passed on the benefit of reduction in the rate of tax to their recipients by commensurate reduction in the prices. Accordingly, the amount of profiteering in respect of the Respondent No. 1 is determined as Rs. 18,48,34,084/- including the GST under the provisions of Rule 133 (1) of the CGST Rules, 2017 as per Annexure-32 of the Report dated 24.09.2019 furnished by the DGAP. The place of supply wise break up of the profiteered amount is given as under:- S.No. Name of State Sate Code General Trade Other than General Trade Total Profiteering (Rs.) 1. Andaman & Nicobar Islands 35 2,89,408 - 2,89,408 2. Andhra Pradesh (New) 37 28,81,350 22,75,744 51,57,094 3. Arunachal Pradesh 12 34,078 - 34,078 4. Assam 18 24,31,584 5,41,810 29,73,394 5. Bihar 10 30,19,659 6,47,652 36,67,311 6. Chandigarh 4 3,05,386 19,166 3,24,552 7. Chhattisgarh 22 19,11,865 3,50,075 22, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, 2017 along with the interest and shall not be passed on to the Respondent No. 2 as he is not eligible to get the benefit of tax reduction at the expense of the common recipient. 116. Accordingly. both the Respondent are directed to reduce the prices of the impacted products as per the provisions of Rule 133 (3) (a) of the CGST Rules. 2017. keeping in view the reduction in the rate of tax so that the benefit of tax reduction is passed on to the recipients. The Respondents are also directed to deposit the profiteered amounts mentioned above along with the interest to be calculated @ 18% from the date when the above amounts were collected by them from the recipients till the above amounts are deposited, in terms of the Rule 133 (3) (b) of the CGST Rules, 2017. Since, the recipients in this case are not identifiable, the above Respondents are directed to deposit the above amounts of profiteering along with interest in the CWFs 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 along with interest @ 18% till the same are deposited as per the details mentioned in Annexures-32 and 34. 117. The ab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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