TMI Blog2022 (5) TMI 737X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of Section 171 (1) of the above Act. It is also apparent that the DGAP has carried out the present investigation w.e.f. 15.11.2017 to 30.09.2019 - it is evident that, the Respondent did not reduce the selling price of the products mentioned above when the GST rate was reduced from 28% to 18% w.e.f. 15.11.2017 and hence, the benefit of reduction in GST rate was not passed on to the recipients by way of commensurate reduction in the prices, in terms of Section 171 of the CGST Act, 2017 and therefore, he has contravened the provisions of Section 171 of the CGST Act, 2017. It is established that the Respondent has acted in contravention of the provisions of Section 171 of the CGST Act, 2017, and has not passed on the benefit of reduction in the rate of tax to his recipients by commensurate reduction in the prices. Accordingly, the profiteered amount is determined as Rs. 1,54,138/- as per the provisions of Rule 133 (1) of the CGST Rules 2017. The Respondent is therefore directed to reduce the prices of his 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 is passed on to the recipient ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 129 of the CGST Rules, 2017. 2. The DGAP, on receipt of the aforesaid reference from the Standing Committee on Anti-profiteering, issued a Notice under Rule 129 of the Rules on 23.10.2019, calling upon the Respondent to reply as to whether he admitted that the benefit of ITC has not been passed on to his recipients by way of commensurate reduction in price and if so, to suo moto determine the quantum thereof and indicate the same in his reply to the Notice as well as to furnish all documents in support of his reply. Further. the DGAP allowed the Respondent to inspect the non-confidential evidence/information which formed the basis of the above Notice, during the period from 31.10.2019 to 01.11.2019. However, the Respondent did not avail of the opportunity. 3. The DGAP has stated that the Respondent did not furnish the complete records/ information and relevant documents which were required for investigation. Hence. three Summons dated 02.01.2020. 15.01.2020 and 03.02.2020 under Section 70 of the Central Goods and Services Tax Act. 2017 read with Rule 132 of the Rules, were issued to Sh. Suresh Mali, Proprietor of the Respondent, asking him to appear before the DGAP. In respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods or services. Such reduction could only be in monetary terms, so that the final price payable by a recipient got reduced commensurate with the reduction in the tax rate or benefit of input tax credit which was the legally prescribed mechanism to pass on the benefit of input tax credit or reduction in rate of tax to the recipients under the GST regime. Moreover, the DGAP has observed that Section 171 simply did not provide a supplier of any goods or services, any other means of passing on the benefit of input tax credit or reduction in rate of tax to the consumers. 7. The DGAP has noticed from the invoices made available by the Respondent that the Respondent had increased the base prices of the subject goods when the rate of GST was reduced from 28% to 18% w.e.f. 151 1.2017. so that the commensurate benefit of GST rate reduction was not passed on to the recipients. The DGAP has thus observed that the base prices of the subject goods were increased by the Respondent when there was a reduction in the GST rate from 28% to 18% w.e.f. 15.11.2017, so that the benefit of such reduction in GST rate was not passed on to the recipients by way of commensurate reduction in price. The D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1260 12. Excess amount charged or profiteering M=L-G 200 13. Total Profiteering N= M*J 1000 8. The DGAP has claimed from the above Table that the Respondent has not reduced the selling price of the Eclat Serum 30GM , 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 profiteered an amount of Rs. 1000/- on a particular Invoice No. 000907 dated 29.09.2018 and thus the benefit of reduction in 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. The DGAP, on the basis of aforesaid calculation as illustrated in Table A above, has found that profiteering in case of al1 goods impacted by the GST rate reduction vide Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017, supplied by the Respondent during the period 15.11.2017 to 30.09.2019 has also been arrived in similar way. 9. The DGAP has further reported that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... increased base price. The DGAP has observed that the Respondent had made the supply of the impacted goods in the State of Maharashtra only:- Table- B' S.No. Description Total 1. Total no. of impacted products sold between 01.07.2017 to 14.11.2017 4 2. Total no. of Invoices issued during the period 15.11.2017 to 30.09.2019 516 3. Total Value of Invoices issued during the period 15.11.2017 to 30.09.2019 Rs. 68,16,544/- 4. Total no. of Product against which profiteering has been found 3 5. Total no. of Invoice on which profiteering was found 81 6. Total value of Invoices of the products on which Rs. profiteering was observed Rs. 15,96,007/- 7. Total Profiteering against the impacted products Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the personal hearing in the matter was accorded to the Respondent on 31.03.2022 via video-conferencing. During the hearing, the Respondent has stated that the rate reduction benefit was not passed on to him by his supplier while supplying the product Eclat Serum to him. 12. Meanwhile, the parties were directed to file their submissions via email. Therafter, the Respondent vide his email dated 14.09.2020 has agreed to pay the profiteered amount as computed by the DGAP in his Report dated 23.03.2020. Hence, the DGAP was directed to provide necessary guidance to the Respondent so that he could pay the above amount. The DGAP vide letter dated 15.12.2020 has asserted that the Respondent had issued the Demand Drafts (DDs) on 01.12.2020 for payment of Rs. 1000/- to the Applicant No. 1 and Rs. 76,569/- to Central Consumer Welfare Fund (CWF) and Maharashtra State CWF each. However, no documentary evidence was furnished by the Respondent. Therefore, the DGAP vide email dated 02.12.2020 asked the Respondent to remit the interest amount also and furnish all the documentary evidence to the DGAP. In compliance, the Respondent vide email dated 09.12.2020 has furnished the copies of 6 Cheque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t had submitted copies of the Demand Drafts of Rs. 76,569/- and Rs. 32,250/- for payment of basic profiteered amount and interest amount respectively and has informed that he had sent these drafts to the Pay and Accounts Officer, Consumer Welfare Fund, Department of Consumer Affairs, New Delhi through courier. In this regard, an email was sent on 12.12.2020 to the Pay and Accounts Officer, CWF, Department of Consumer Affairs, New Delhi for confirmation of the receipt of said 2 Demand Drafts from the Respondent. The Sr. Accounts Officer, Pay and Accounts Office, Department of Consumer Affairs, New Delhi, vide email dated 14.12.2020 informed that DD/Cheque No. 002223 for Rs. 76,569/- has been deposited in the bank and other DD/Cheque No. 002226 for Rs.32,250 has been returned to the Respondent as cheque favouring was not correct. The DGAP has also intimated that the Respondent has further informed that the Demand Draft No. 002226 dated 08.12.2020 for Rs.32,250/- favouring Central Consumer Welfare Fund has again been submitted by him to the PAO, Consumer Welfare Fund, New Delhi. In this regard, an email was sent on 21.01.2021 to the Pay and Accounts Officer, CWF, Department of Consu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1). 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. (2). The Central Government may, on recommendations of the Council, by notification, constitute 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the products. despite the reduction in the GST rate from 28% to 18% or the profiteered amount has come to Rs. 1,54,138/- (inclusive of Rs. 1000/- of the Applicant No. 1) including the GST on the base profiteered amount. The details of the computation have been given by the DGAP in Annexure-12 of his Report dated 23.03.2020. 20. From the above facts and discussion. it is evident that, the Respondent did not reduce the selling price of the products mentioned above when the GST rate was reduced from 28% to 18% w.e.f. 15.11.2017 and hence, the benefit of reduction in GST rate was not passed on to the recipients by way of commensurate reduction in the prices, in terms of Section 171 of the CGST Act, 2017 and therefore, he has contravened the provisions of Section 171 of the CGST Act, 2017. 21. Based on the above facts, it is established that the Respondent has acted in contravention of the provisions of Section 171 of the CGST Act, 2017, and has not passed on the benefit of reduction in the rate of tax to his recipients by commensurate reduction in the prices. Accordingly, the profiteered amount is determined as Rs. 1,54,138/- as per the provisions of Rule 133 (1) of the CGST Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has paid the entire profiteered amount of Rs. 1,54,138/- along with interest @ 18% of Rs. 64,850/- for the investigation period from 15.11.2017 to 30.09.2019. 24. Based on the above facts it is clear that the Respondent has contravened the provisions of Section 171 (1) of the CGST Act, 2017. However, since, the penalty prescribed under Section 171 (3A) of the CGST Act, 2017 for violation of the above provisions has come in to force w.e.f. 01.01.2020 and the infringement pertains to the period from 01.01.2019 to 30.09.2019 and the Respondent has also deposited the profiteered amount alongwith the interest, therefore, no penalty is proposed to be imposed on the Respondent. 25. Further, during the hearing held on 31.03.2022, the Respondent has stated that the rate reduction benefit was not passed on to him by his supplier/s while supplying the product Eclat Serum to him. Therefore, there arises a need to check whether his supplier has passed on the above benefit to him or not so that the investigation can be taken to its logical end in terms of Section 171 of the CGST Act, 2017 and the Rules framed thereunder. Accordingly, this Authority directs the DGAP to gather the inform ..... X X X X Extracts X X X X X X X X Extracts X X X X
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