TMI Blog2020 (12) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... of the DGAP. The above methodology employed by the DGAP for computing the profiteered amount appears to be correct, reasonable, justifiable and in consonance with the provisions of Section 171 of the CGST Act, 2017. The above mathematical methodology has also been approved by this Authority in respect of all such cases of reduction in the rate of tax. Therefore, the above mathematical methodology can be safely relied upon. The price charged from different customer may vary but it cannot be below the price paid by him to the manufacturer plus his profit margin. Since, the Respondent has himself admitted that he was charging different prices from his customers there was no other alternative available to the DGAP except to compute the average base prices of the products being sold by him in the pre rate reduction period and then to compare them with the actual base prices so as to assess whether the Respondent has passed on the benefit of tax reduction or not. Therefore, the above claim of the Respondent is incorrect. The Respondent is directed to reduce his prices commensurately, as indicated in the above mentioned Annexure, in terms of Rule 133 (3) (a) of the above Rules. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 32 inches despite reduction in the rate of GST from 28% to 18% w.e.f. 01.01.2019. The Applicant No. 1 had also alleged that the product LG LED TV having value of ₹ 12,600/- was sold at a lower price after the reduction in the GST rate from 28% to 18% w.e.f. 01.01.2019 levied vide Notification No. 24/2018-Central Tax (Rate) dated 31.12.2018 but without commensurate reduction in the price. The Applicant No. 1 had further alleged that the Respondent had not passed on the benefit of reduction in the rate of tax in respect of the impugned product to the extent of 10% (28%-18%) by commensurate reduction in price as has been furnished in Table- A given below:- Table- A (Amount in Rs.) Product Description LG LED TV Before 01.01.2019 Base Price 9843.75 Tax Rate 28% Tax Amount 2756.52 Total 12,600 On or after 01.01.2019 Base Price 10169.49 Tax Rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t reminders dated 22.07.2019, 08.08.2019, 10.10.2019, 21.11.2019, 28.11.2019, 02.12.2019, 06.12.2019, 17.12.2019 and summons dated 23.10.2019, 31.10.2019, has submitted his replies vide e-mails/letters dated 22.07.2019, 25.07.2019, 06.08.2019, 19.08.2019, 22.08.2019, 22.10.2019, 29.10.2019, 13.11.2019, 15.11.2019, 19.11.2019, 27.11.2019, 03.12.2019, 09.12.2019, 12.12.2019 whereby he has submitted that:- a) The investigation had been initiated only for TVs upto 32 inches. Further, in terms of recent amendment to the CGST Rules, 2017 vide Notification No. 31/2019-Central Tax (Rate) dated 28.06.2019 it had been clearly stated that any action seeking to expand the scope of investigation had to follow the procedure prescribed under Rule 133 (5) and should be treated as a new investigation or enquiry following the procedure prescribed under the CGST Act and the Rules. Such investigation could be initiated only based on the written findings of this Authority on the submissions of the DGAP. The DGAP could not suo moto expand the scope of investigation without following the procedure laid down in the CGST Rules, 2017. b) The orders of the Hon ble High Court of Delhi in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the documents in a piecemeal manner and had not co-operated during the course of investigation and had also not submitted the pre-rate reduction base prices in respect of specific products and clarifications for claiming Power Banks and Play Stations as non-impacted products. The DGAP has also informed that the Respondent had not classified his information/documents as confidential in terms of Rule 130 of the above Rules. 6. The DGAP has further stated that the Central Government, on the recommendation of the GST Council, had reduced the GST rate on the goods supplied by the Respondent from 28% to 18% w.e.f. 01.01.2019, vide Notification No. 24/2018-Central Tax (Rate) dated 31.12.2018. 7. The DGAP has also claimed that the Respondent has relied on the orders of the Hon ble High Court of Delhi passed in the case of M/s. Reckitt Benckiser India (P) Ltd. v. Union of India others in WP(C) 7743/2019 dated 19.07.2019 = 2019 (7) TMI 1135 - DELHI HIGH COURT , wherein the Hon ble High Court has granted relief that only the enquiry as far as the complained product was concerned would continue till final disposal of the petition. The DGAP has intimated that there was no stay/dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. MRP B 30,990 3. Total quantity of item sold C 333 4. Total taxable value (after Discount) D 61,65,920/- 5. Average base price (without GST) E=(D/C) 18,516/- 6. GST Rate F 28% 18% 7. Commensurate Selling price (post Rate reduction) (including GST) G=118% of E 21,849/- 8. Invoice No. H 1238/18E/S-6490 9. Invoice Date I 20.01.2019 10. Total quantity (as per invoice indicated in H) J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of aforesaid pre and post-reduction GST rates and the details of outward taxable supplies (other than zero rated, nil rated and exempted supplies) of the impacted products during the period from 01.01.2019 to 30.06.2019 (excluding sales returned and inter unit branch transfers), as furnished by the Respondent, the amount of net higher sales realization due to increase in the base prices of the impacted goods, despite the reduction in the GST rate from 28% to 18% or in other words, the profiteered amount came to ₹ 37,89,550/-. The details of the computation have been given in Annexure-20 of the DGAP s Report. The above profiteered amount has been arrived at by comparing the average of the base prices of the goods sold during the period from 01.12.2018 to 31.12.2018 (or the latest month i.e. November, 2018 and so on, in case those goods were not sold during 01.12.2018 to 31.12.2018) with the actual invoice-wise base prices of such goods sold during the period from 01.01.2019 to 30.06.2019. The excess GST so collected from the recipients, has also been included in the aforesaid profiteered amount as the excess price collected from the recipients also included the GST c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 1 1,975 7 SONY POWERBANK 5000mah CP-E5VPX/WC 85076000 3 390 1 100 4 490 8 SONY POWERBANK 8700mah BLK CP-V9/B 85076000 1 450 - - 1 450 9 SONY POWERBANK 8700mah WHT CP-V9/W 85076000 1 100 - - 1 100 10 STUFFCOOL POWERBANK 10000mAH GREY 85076000 2 499 - - 2 499 Grand Total 1,309 157,015 75 6,832 1,384 163,847 The DGAP has also i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Applicants. Further, the Respondent has filed written submissions dated 18.02.2020 in which he has submitted that - I. The DGAP in his Report has failed to consider the unique pricing nature of the retail industry and the allegations of profiteering were baseless:- The Respondent has stated that the DGAP has considered the sale of the product LG LED TV before and after 01.01.2019 for the purpose of investigation and while computing the Prices without Profiteering ought to be the base price prevailing before 01.01.2019 was taken into consideration. In this regard, the Respondent has also stated that the base price varied from transaction to transaction as the final sale price completely depended on the customer s bargaining power i.e. the price at which the customer was willing to purchase the product. The Respondent has further stated that the DGAP has been comparing two base prices that would not be same at any given point of time. He has illustrated that the DGAP has considered the base price of LG LED TV as ₹ 9,843.75/-, which was sold before 01.01.2019 and ₹ 10,169.49/- for the TV which was sold on or after 01.01.2019. II. Multiple prices fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18% 18% 18% 18% Tax Amount 1,647 1,678 1,693 1,708 1,724 Total 10,799 11,000 11,100 11,200 11,300 Prices Without Profiteering ought to be (as per the Report) Base Price 9,531 9,766 9,844 9,922 10,000 Tax Rate 18% 18% 18% 18% 18% Tax Amount 1,716 1,758 1,772 1,786 1,800 Total 11,247 11,523 11,616 11,708 11,800 Alleged Profiteering Profiteered Amount per unit (447) (523) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at an average price was the correct representative of the price of a product and to extrapolate the price of a month was not acceptable as the pricing fluctuated for any given product at any given time for the aforesaid reasons. IV. The Respondent has also averred that apart from the unique pricing methodology, the DGAP had also failed to consider the fact that he had sold over 2000 different products and with the rate reduction, there had also been a reduced ITC on the purchase front and the Respondent had strived to sell the goods at only discounted rates and below MRPs. The study conducted by the DGAP was therefore one sided and ought to be set aside for lack of legal and factual basis. V. The Respondent has also furnished Sale Register of HSN Codes impacted by the GST rate Notification No. 24/2018 dated 31.12.2018. However, the Sales Register submitted by him involved both the products which were impacted and non-impacted by the notification falling under these HSN Codes. Considering the same, the Respondent has provided a column for detailed classification of products into Impacted and non-impacted products. He has also submitted reconciliation of the amount of sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Anti-profiteering to cause investigation or inquiry with regard to such other goods or services or both, in accordance with the provisions of the Act and these rules. VIII. The Respondent has also placed reliance on the case of M/s. Reckitt Benckiser India (P) Ltd. v. Union of India W.P. No. 7743/2019 in which the Hon ble High Court of Delhi vide its Order dated 22.08.2019 has granted relief by observing that the enquiry would be conducted in respect of the complained product only. The Respondent has also averred that the DGAP in his Report had concluded that it was an interim relief only in the above case and not a final judgement, so its ratio was not applicable in this case. In this regard, the Respondent has submitted that the expansion of the investigation to include products other than the product under investigation was prima facie without any legal basis and has been done without following the prescribed procedure under Rule 133 of the CGST Rules, 2017 and the proceedings were required to be set aside in respect of the products not covered under the notice for investigation. The Respondent has also submitted that the statutory provisions of anti-profiteering had als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re was high chance that the product was sold at a price higher than the price prevailing in December. He has also attached copies of newspaper clippings evidencing the discounts offered by him during the above period vide Annexure-2. The Respondent has also provided an illustration as per the Table given below using the Sale Register details of December, 2018: - Impacted Product DGAP Average base Price Sales prices in December SAMSUNG LED 32M5570 22,957 25,000 26,406 24,219 25,781 25,703 SONY LED 32W622F 23,366 25,000 23,984 23,828 23,906 24,141 SAMSUNG LED 32N4300 19,638 20,703 20,312 20,547 20,469 20,281 PANASONIC LED 32FS600D 17,861 17,961 17,969 18,75 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Pre-GST Maximum base price (after discount) SAMSUNG LED 32M5570 22,957 21,094 30,078 SONY LED 32W622F 23,366 17,969 25,781 SAMSUNG LED 32N4300 19,638 14,980 21,094 PANASONIC LED 32FS600D 17,861 15,625 21,874 LG LED 321AJ573D 18,516 15,313 21,641 PANASONIC LED 32FS490 15,249 13,281 17,969 PANASONIC LED 32F201DX 12,940 11,796 16,797 SAMSUNG LED 32N4000 14,107 10,937 16,406 AKAI LED AKLT32-DN132SV 11,263 10,539 14,063 SONY LED 32R20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n erroneously included in the computations and the same should be removed from the calculations for profiteering. XVII. Products falling under HSN 8507 6000 and HSN 9504 9090 were classified as not impacted:- The Respondent has also claimed that the following products listed in Table-C of the Report were not impacted by the rate reduction:- MI Power Banks; Sony Power Banks; Stuffcool Power Banks; and Sony Play station accessories. MI. Sony and Stuffcool Power Banks:- The Respondent has further claimed that there have been sales of two types of Power Banks falling under HSN Code 85076000 - Lithium Ion and Lithium Polymer. The GST rate Notification No. 24/2018 dated 31.12.2018 had reduced the rate on Lithium Ion Power Banks from 28% to 18% with effect from 01.01.2019. All MI, Sony and Stuffcool Power Banks were Lithium Polymer Power Banks which did not form part of GST rate reduction Notification No. 24/2018 dated 31.12.2018 due to which the Respondent had classified the same under the non impacted products and continued to charge same GST rate as earlier. The Respondent had submitted the same explanation before the DGAP vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition to revise his retail selling prices as he had taken input tax credit on the purchase of such products. Therefore, he should not sell the products at the MRPs and instead, reduce the retail selling prices to pass on the benefit of reduction in GST rate from 28% to 18% w.e.f. 01.01.2019 to the customers as the retail selling prices of the products were decided by the Respondent within the MRPs printed on the products. The DGAP has further claimed that the Respondent was a separate GSTN holder as an independent entity and therefore, he was duty bound to comply with all the provisions including provisions of Section 171 of the above Act and the rules made there under. c. The DGAP has also clarified that the discount offered by the Respondent has been duly considered and profiteering has been arrived at by comparing the average base prices (after discount) during the period from 01.12.2018 to 31.12.2018 (pre-GST rate reduction) with the actual selling price of the same items sold during the post-GST rate reduction period i.e. on or after 01.01.2019 which was mentioned in Para-18 of the DGAP s Report dated 23.12.2019. d. The DGAP has also stated that the Respondent s s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Para-18 and 20 of his Report dated 23.12.2019. Further, in many such cases where the pre-rate reduction price was not available from the Sale Register, the Respondent was asked to submit the pre-rate reduction base price charged prior to 31.12.2018. The base price so submitted by him was taken for the computation of profiteering by the DGAP. Further, the DGAP has considered average base price (after discount) during the period from 01.12.2018 to 31.12.2018 which was a normal period of business. h. The DGAP has also stated that he has excluded all the transactions for which credit notes were issued for sale returns by mapping the credit notes with original sale invoices. However, for a specific transaction highlighted by the Respondent, the DGAP had inadvertently computed profiteering amounting to ₹ 1,98,751/-, for which credit note was issued later on. On perusal of credit note No. 1210/19E/SR-164 dated 01.07.2019 submitted by the Respondent, the DGAP had found that invoice No. 1210/19E/S-8562 dated 30.06.2019 (Telangana State) was cancelled and therefore, he has recommended that profiteering amounting to ₹ 1,98,751/- should be reduced from the total profiteere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erated his earlier contentions and additionally submitted that: - I. The DGAP has accepted comparing of the random invoices issued in May, 2018 and January, 2019 for the sale of product LG LED TV before and after 01.01.2019 for the purpose of initiation of profiteering investigation. The LG LED TV brand and model in the impugned invoice pertained to less than 24 inches model which was not impacted by the rate change Notification dated 31.12.2018 and therefore, the basis of initiating the proceedings for profiteering against the Respondent on the basis of the above invoices was without any legal or factual basis. II. The Respondent has also submitted the newspaper cuttings through which the discount schemes during the FY 2017-18, FY 2018-19 and FY 2019-20 were launched to establish the business model followed by him and to support the fact that the schemes, discounts and offers were prevailing every year during the period from October to December. III. The Respondent has further submitted that he had launched various discount schemes during the various parts of the year for various festivals and many other events. However, quantum of discounts offered by him was huge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xure 1 05.01.2019 12.01.2019 Deccan Chronicle Happy New Year Annex-3 2 26.01.2019 Deccan Chronicle Biggest Republic Day Offer Annex-4 3 02.02.2019 09.02.2019 16.02.2019 02.03.2019 Deccan Chronicle Off Seasons Prices Annex-5 4 09.03.2019 10.03.2019 Deccan Chronicle 37 th Anniversary Annex-6 5 05.04.2019 06.04.2019 Deccan Chronicle Ugadi Offers Annex-7 6 05.05.2019 Deccan Chronicle Akshaya Tritiya Offers Annex-8 7 08.06.2019 Deccan Chronicle World Cup Fever Annex-9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titute an Authority, or empower an existing Authority constituted under 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. (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... realization due to increase in the base prices of the products, despite the reduction in the GST rate from 28% to 18% or the profiteered amount has come to ₹ 37,89,550/- including the GST on the base profiteered amount. The details of the computation have been given by the DGAP in Annexure-20 of his Report dated 23.12.2019. 24. The DGAP for computation of the profiteered amount has compared the average base prices of 101 products which were being supplied by the Respondent during the pre rate reduction period w.e.f. 01.12.2018 to 31.12.2018 with the actual post rate reduction base prices of these products which were sold by the Respondent w.e.f. 01.01.2019 to 30.06.2019. In respect of the products which were not sold during the period w.e.f. 01.12.2018 to 31.12.2018, the Respondent was asked to furnish the average base prices and the prices so given by him were compared with the actual post rate reduction base prices. It was not possible to compare the actual base prices prevalent during the pre and the post GST rate reduction periods due to the reasons that the Respondent was (i) selling his products at different prices to different customers based on the various factors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t each customer has to be passed on the benefit of tax reduction on each purchase made by him. On the basis of the aforesaid pre and post-reduction GST rates and the details of the outward taxable supplies (other than zero rated, nil rated and exempted supplies) of the above products sold during the period from 01.01.2019 to 30.06.2019, as have been supplied by the Respondent himself, the amount of net higher sales realization due to increase in the base prices of the impacted goods, despite the reduction in the GST rate from 28% to 18% or the profiteered amount has been calculated as ₹ 37,89,550/- as per Annexure-20 of the investigation Report. The excess GST charged from the recipients has also been included in the profiteered amount. The place of supply-wise break-up of the total profiteered amount of ₹ 37,89,550/- has been furnished vide Table-D supra in respect of 2 States. The above profiteered amount has been reduced to ₹ 34,34,008/- vide subsequent Report dated 01.06.2020 of the DGAP. The above methodology employed by the DGAP for computing the profiteered amount appears to be correct, reasonable, justifiable and in consonance with the provisions of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per the provisions of Section 171(1) as there was reduction of 10% in the rate of tax however, it is apparent from the perusal of Annexure-20 attached with the Report dated 23.12.2019 that the Respondent had not reduced his prices commensurately and has continued to charge the same prices which he was charging before the rate reduction by increasing the pre rate reduction prices. The bargaining power of the customers is not unlimited as the Respondent has to sell his products on profit and hence, he cannot sell them as per the wishes of his customers. Accordingly, the price charged from different customer may vary but it cannot be below the price paid by him to the manufacturer plus his profit margin. Since, the Respondent has himself admitted that he was charging different prices from his customers there was no other alternative available to the DGAP except to compute the average base prices of the products being sold by him in the pre rate reduction period and then to compare them with the actual base prices so as to assess whether the Respondent has passed on the benefit of tax reduction or not. Therefore, the above claim of the Respondent is incorrect. 27. The Respondent has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19, stating whether they admit that the benefit of reduction in the GST rate from 28% to 18% w.e.f. 01.01.2019, has not been passed on to their recipients by way of commensurate reduction in the prices of the goods impacted by such GST rate reduction w.e.f. 01.01.2019. The Noticee may also suo moto determine the quantum of benefit not passed on, if any and indicate the same in their reply to this Notice. Vide Para 4 of the above Notice the DGAP had also directed the Respondent to furnish details of GSTR-I 3B Returns and invoice wise details of the taxable supplies of all the goods impacted by the rate reduction w.e.f. December, 2018 to June, 2019. Therefore, it is quite apparent that the Respondent was duly informed that he would be investigated for all the products on which the rate of tax has been reduced and accordingly he was directed to supply the above information. Hence, the above claim of the Respondent is incorrect as the Respondent had prior notice for investigation of all the impacted products. 30. The Respondent has further averred that he could not have been investigated in respect of the other products except the product in respect of which the complaint was mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the National Anti-profiteering Authority, the Standing Committee and the State level Screening Committees. 32. Therefore, it is clear from the above provisions that the office of the DGAP has been charged with the responsibility of conducting detailed investigation to collect evidence necessary to determine whether both the above benefits have been passed on or not in terms of the provisions of Section 171 of the CGST Act, 2017 and Rule 129. The above Rule has been framed by the Central Government under Section 164 of the CGST Act, 2017 read with Section 171 (3) which has approval of the Parliament and all the State Legislatures and of the GST Council which is a constitutional body established under 101 st Amendment of the Constitution and the express approval of the Central Government and the State Governments. There is no provision in the above Act or the Rules which provides that the investigation shall be limited to the products against which complaint has been received. On the contrary every product on which the rate of tax has been reduced is required to be investigated by the DGAP and report submitted to this Authority to determine whether the above benefits have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abeyance. 35. The Respondent has also cited the judgement passed by the Hon ble Supreme Court in the case of M/s. Kusum Imgots Alloys Ltd. v. Union of India supra and contended that the interim orders passed by the Hon ble High Court of Delhi were required to be implemented. In the above case the issue involved was whether the jurisdiction of the Hon ble High Court was limited to the State of Delhi or was extendable to the entire Union and hence the law settled in the above case is not being followed. 36. The Respondent has also contended that during the month of December, the sale prices of the products were generally lowest as December was a festive season month. The DGAP has considered the average sale prices of the products during the month of December, 2018 for comparison with the actual sale prices during the period from 01.01.2019 to 30.06.2019 which has resulted in excess profit which has been wrongly considered as profiteering. In this context, it would be pertinent to mention that one or the other festive season or festival is always going on in the country throughout the year and the month of December has no specific relevance in this regard. Therefore, it ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es obtained on the basis of the sales made during the month of December, 2018, after a lapse of a period of 17 months. Accordingly, the comparison made by the Respondent is wrong, illogical arbitrary and unreliable. Hence, the computations made by the Respondent vide Annexure-3 also cannot be relied upon as there would be no profiteering in case the average base prices computed for the month of December, 2018 are compared with the minimum and maximum prices prevailing during the same month. It is also on record that the Respondent has not reduced his prices after the rate reduction has come in to force. Therefore, the above plea of the Respondent in not convincing. 38. The Respondent has further pleaded that the DGAP has wrongly claimed that the LG LED TV 24LJ470 was impacted by the GST rate reduction w.e.f. 01.01.2019 vide Notification No. 24/2018 Central Tax (Rate) dated 31.12.2018. In this regard, the Respondent has submitted that the above model was 24 inches (60.96 cm) television which was subject to GST @28% till 27.07.2018 and thereafter it was reduced to 18% vide Para C (xii) of Notification No. 18/2018 Central Tax (Rate) dated 26.07.2018. The Respondent has also contend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent is not tenable. 40. The Respondent has also argued that a sale transaction dated 30.06.2019 amounting to Rs. was erroneously posted in the books of account which was reversed on the succeeding day i.e. on 01.07.2019. In this regard, the Respondent has submitted a copy of entry posted in the books of account and credit note issued to reverse it as evidence vide Annexure-4 and requested that the transaction has been erroneously included in the computations and the same be deducted from the profiteered amount. The DGAP in his Supplementary Report dated 01.06.2020 has also verified that he has excluded all the transactions for which credit notes were issued for sales returned by mapping the credit notes with the original sale invoices. However, in respect of the above transaction he has inadvertently computed profiteering amounting to ₹ 1,98,751/- for which credit note was issued later on. On perusal of credit note No. 1210/19E/SR-164 dated 01.07.2019 submitted by the Respondent, the DGAP has observed that invoice No. 1210/19E/S-8562 dated 30.06.2019 (Telangana State) was cancelled and therefore, profiteering amounting to ₹ 1,98,751/- should be reduced from the tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9,550/- on the above Power Banks. On perusal of the record, we observe that after coming into force of Notification No. 24/2018-Central Tax (Rate) dated 31.12.2018 there had been no impact on the tax rate leviable on the above Power Banks having HSN Code 85076000, which were being supplied by the Respondent with the Lithium Polymer batteries. Hence, we agree with the DGAP s observation and allow reduction of profiteered amount by ₹ 1,56,791/- in respect of the above Power Banks from the total profiteering amount of ₹ 37,89,550/-. 43. On the basis of above clarifications, the profiteered amount reported in the Report dated 23.12.2019 is revised to ₹ 34,34,008/-, the place (State) of supply-wise break-up of which has been furnished below:- S.No. Name of State State Code Profiteering (Rs.) 1 Telangana 36 30,51,396 2 Andhra Pradesh 37 3,82,612 Grand Total 34,34 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erusal of the provisions of Section 171 (3A) under which penalty has been prescribed for the above violation shows that it has been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019 and it was not in operation during the period from 01.01.2019 to 30.06.2019 when the Respondent had committed the above violation and hence, the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively. Accordingly, notice for imposition of penalty is not required to be issued to the Respondent. 47.As per the provisions of Rule 133 (1) of the CGST Rules, 2017 this order was required to be passed within a period of 6 months from the date of receipt of the Report from the DGAP under Rule 129 (6) of the above Rules. Since, the present Report has been received by this Authority on 23.12.2019 the order was to be passed on or before 22.06.2020. However, due to prevalent pandemic of COVID-19 in the Country this order could not be passed on or before the above date due to force majeure. Accordingly, this order is being passed today in terms of the Notification No. 65/2020-Central Tax dated 01.09.2020 issued by the Government of Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X
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