TMI Blog2022 (9) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... nd they cannot be compared with netted off. This Authority has also clarified in its various orders that the benefit cannot be computed at the product, service or the entity level as the benefit has to be passed on each supply of goods and services. This Authority determines that the amount profiteered by the Respondent No. 1 and No. 2 is Rs. 61,54,833/- and Rs. 28,50,72,358/- respectively. The amount profiteered by the Respondent No. 2 is inclusive of the amount profiteered by the Respondent No. 1. Hence, the Respondent No. 2 is liable to pass on the profiteered amount of Rs. 61,54,833/- to the Respondent No. 1 and thus, the Respondent No. 1 is liable to pass on this benefit of rate reduction due to the Applicant No. 1 and the remaining amount in the Central and concerned State Consumer Welfare Fund. Further, since the recipients (other than the Respondent No. 1) of the benefit of rate reduction are not identifiable, the Respondent No. 2 is directed to deposit the remaining profiteered amount of Rs. 27,89,17,525/- in two equal parts in the Central Consumer Welfare Fund and the concerned State Consumer Welfare Fund as per the provisions of Rule 133 (3) (c) of the CGST Rules 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of GST rate reduction from 28% to 18 % vide Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017 w.e.f. 15.11.2017, indicating that the benefit of reduction in the GST rate from 28% to 18% was not passed on to the recipients. 2. The above application was forwarded to the DGAP by the Standing Committee on 09.10.2019 along with the report of the preliminary enquiry conducted by the Screening Committee of Maharashtra. On scrutiny of the purchase invoices of the Respondent enclosed with the application, issued by the Respondent No. 2 it was observed by the Committee that the benefit of reduction in the GST rate was not passed on to the recipients by way of commensurate reduction in the price. 3. After receipt of the above reference from the Standing Committee, the DGAP initiated his investigation to collect evidence necessary to determine whether the benefit of GST rate reduction had been passed on by the Respondent No. 1 and No. 2 to the recipients in general and to the Applicant No.1 in respect of supply of subject goods in particular. The DGAP has carried out the investigation and submitted the report dated 28.01.2021 to the Authority, stating therein that:- a. on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her submitted that from Karnataka, only stock transfers and other supplies of the nature of scrap sales, sale of assets were effected to pay recoveries etc. Vide e-mail dated 15.10.2020, it has also been stated by the Respondent No. 2 that 02 goods namely Juvederm Volbella and Juverderm Volift , were not sold in pre-rate reduction period as they were launched in the market in January, 2018. Thus, the said two goods did not form part of profiteering calculation. Vide the above submissions, the Respondent No. 2 has submitted the following documents:- i. GST registration confirmation for Maharashtra and Karnataka. ii. GSTR-1 and GSTR-3B for the period November-17 to September-19 for both GST registrations. iii. Price list of the subject goods. iv. Sample Invoices. v. Invoice wise details of outward taxable supplies for the period July, 2017 to September, 2019. f. The DGAP has further stated that he has carefully examined the subject application and various replies of the Respondent No. 1 2 and the documents/evidence on record along with the preliminary report of the Maharashtra Screening Committee. The findings were as follows:- i. Initially, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turer (Respondent No. 2) and not the dealer (Respondent No. 1). The Standing Committee, however, maintained his stand and replied vide letter dated 23.11.2020 that as per the attached invoices and report of the State Screening Committee, it appeared to them that the manufacturer had indulged in the profiteering rather that the dealer, therefore, investigation needed to be conducted on part of the manufacturer i.e. M/s. Allergan Healthcare Pvt. Ltd. (Respondent No. 2). g. In terms of Rule129 (4) of the CGST Rules, 2017 the DGAP might also issue Notices to such other persons as deemed fit for a fair enquiry into the matter. Therefore, initially, the DGAP decided to proceed with the investigation against both the Respondent No. 1 2 and notice dated 21.10.2019 was issued to both. Thereafter, the contention of the DGAP was substantiated by the scrutiny of invoices issued by the Respondent No. 1 during the pre and post rate reduction periods, which indicated at profiteering by the Respondent No. 1. Accordingly, the documents/data furnished by the Respondent No. 1 was also investigated. h. The Central Government, on the recommendation of the GST Council, had reduced the GST ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce No. H R/2115/17-18 10. Invoice Date I 23.11.2017 11. Total Billed quantity (above invoice) J 15 12. Actual Base Price Charged in Invoice (per unit) K 29039 13. Actual Selling price per unit (post rate reduction-with GST) L=K*1.18 34266.02 12. Excess amount charged or profiteering M=L-G 2677.42 13. Total Profiteering N= M*J 40161.30 On the basis of the above Table, it was clear that the Respondent No. 1 did not reduce the selling price of the JUVEDERM VOLUMA WITH LIDOCAINE (2SYGX1ML) BOX , when the GST rate was reduced from 28% to 18% w.e.f. 15.11.2017, vide Notification No. 41/2017 Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of Rs. 61,54,833/- has been furnished by the DGAP Table-B below:- Table-B S. No. State Code State Profiteered Amount (Rs.) 1. 04 Chandigarh 5355 2. 08 Rajasthan 58903 3. 27 Maharashtra 6090575 Grand Total 61,54,833 I. Further, the subject application, the various replies of the Respondent No. 2 and the documents/evidence on record had been carefully examined by the DGAP and it appeared that the Respondent No. 2 increased the base prices of the subject goods when the rate of GST was reduced from 28% to 18% w.e.f. 15.11.2017. Thus, the benefit of GST rate reduction was not passed on to the recipients by way of commensurate reduction in price. The methodology adopted in respect of specific item i.e. JUVEDERM ULTRA PLUS XC 1 mL sold during the month of November, 2017 (pre-G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. Excess amount charged or profiteering M=L-G 10078.05 13. Total Profiteering N= M*J 100780.50 Upon perusal of the above Table-C, it is clear that the Respondent No. 2 did not reduce the selling price of the JUVEDERM ULTRA PLUS XC 1 mL , 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. 100780/- on a particular Invoice No. MH0011000506 dated 03.04.2018 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 CGST Act, 2017. On the basis of aforesaid calculation as illustrated in Table-C above, profiteering has been arrived at in case of all goods impacted by the GST rate reduction vide Notification No. 41/2017 Central Tax (Rate) dated 14.11.2017, supplied by the Respondent No. 2 during the period 15.11.2017 to 30.09.2019. m. On the basis of aforesaid pre and post-reduction GST rates and the deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19 West Bengal 9767889.93 12. 21 Orissa 749348.28 13. 22 Chhattisgarh 400467.13 14. 23 Madhya Pradesh 1447987.59 15. 24 Gujarat 11126725.94 16. 27 Maharashtra 96436736.66 17. 29 Karnataka 19117062.62 18. 30 Goa 1576768.84 19. 32 Kerala 3375798.78 20. 33 Tamil Nadu 8880247.20 21 36 Telangana 20199944.37 22. 37 Andhra P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent case, the Screening Committee and Standing Committee had recommended enquiry only against the Respondent No. 2 i.e. the manufacturer and did not recommend investigation against him. Despite clear reports and recommendations that no investigation needed to be taken up against him, the DGAP had proceeded to continue the investigation and issued his report recommending action against us which was in complete violation of the provisions of the CGST Act and the Rules. iii. The DGAP did not have suo-moto powers to initiate any investigation. Rule 128 conferred powers on the Standing committee to examine the evidence provided to determine whether there was a prima fade case to support the claim of the applicant. There was a two level examination by the Standing Committee and the State Level Screening Committee and only based on a prima facie finding that the supplier had not passed on the benefit of reduction in rate of tax, the matter was referred to the DGAP for detailed investigation. iv. The Respondent No. 1 has relied upon the decision of Hon'ble Supreme Court in the case of CIT VS Anjum, M.H Ghaswala (2002) I SCC 633, Competent Authority Vs Barangore Jute Factory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , smudge or alter the retail sale price indicated by the manufacturer or the packer or the importer as the case might be on the package or on the label affixed thereto. xii. In the instant case, it was impossible to alter the MRP that was affixed by the manufacturer on the product and there was no special relaxation from the Ministry of Consumer Affairs at every point of time when there was a change in the rate of tax. It was a well-established principle that one could not be compelled to violate another law and the doctrine of impossibility would equally apply to the facts of the case. xiii. When there was no procedure laid down for alteration of prices and no relaxation was given for alteration or modification of an MRP fixed by the manufacturer and when there were special orders passed permitting such modifications, insisting on reduction in price and alleging violation under Section 171 was legally not permissible. xiv. The DGAP provided an arbitrary methodology to fix the price for the period prior to 15.11.2017 and for the period post 15.11.2017. The working provided in the table was not prescribed under the procedures and methodology issued under Rule 126. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on by the Respondent No. 1, and that Notice for Initiation of investigation was already issued to the Respondent No. 1 on 21.10.2019, investigation was preceded against the Respondent No., 1. ii. The Standing Committee maintained his stand that as per the attached invoices and report of the State Screening Committee, it appeared to him that the manufacturer had indulged in profiteering rather than the dealer, and therefore investigation needed to be proceeded against the manufacturer. However, scrutiny of the impugned invoices of the Respondent during pre and post reduction period for the same product indicated that the Respondent No. 1had also indulged in profiteering. Therefore, investigation against the Respondent was carried out by the DGAP. Further the DGAP was empowered under Rule 129 (4) of the CGST Rules, 2017 to issue notices to such other persons as deemed fit for a fair inquiry into the matter. Therefore, initially it was decided to issue notice for Initiation of investigation to the Respondent No. 1 along-with the Respondent No. 2. Later, scrutiny of invoices issued by the Respondent No. 1 during pre and post rate reduction period indicated profiteering on pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rate of GST was reduced from 28% to 18% in the invoice no. R/2115/17-18 dated 23.11.2017. Hence, the question here was not of alteration of the price/MRP but of reducing the base price of the product when there was reduction in the rate of tax so the commensurate benefit was passed on to the recipients. viii. The Methodology and Procedure has been notified by this Authority vide its Notification dated 28.03.2018 under Rule 126 of the Rules and its main contours were enshrined in Section 171 (1) of the Act. The word commensurate mentioned in Section 171 gave the extent of benefit to be passed on by way of reduction in the prices which had to be computed in respect of each product based on the tax reduction as well as the existing base price of the product. The computation of commensurate reduction in the prices was purely a mathematical exercise based on certain parameters which would vary from product to product. Hence, no fix methodology can be prescribed to determine the amount of benefit required to be passed on to the recipients. Hence, a single formula, which fits all, could not be set. ix. Profiteering was not a tax but it was a benefit which had accrued to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profiteering could have been determined, especially when a person was sought to be subjected to civil and penal consequences on failure to comply with the provisions of the law. Further, if it was the case of the DGAP, as it appeared from the Report dated 28.01.2021, that no uniform methodology or procedure could be prescribed for determination of the quantum of benefit to be passed on, would in itself show that the provisions as provided for in the law could not be implemented and the present proceedings are manifestly arbitrary and unreasonable. f) The DGAP had arrived at the alleged profiteering amount by comparing the average Allergan Selling Price (ASP) for the period 01.11.2017 to 14.11.2017 with the actual selling price for the period under review. In his view, the same was arbitrary on account of the following:- i. For the period 01 November 2017 to 14 November 2017, he had effected sales to certain distributors at a reduced/special price in the normal course of trade and this had led to consideration of Average ASP that was significantly lower than the actual average; ii. Further the DGAP had failed to appreciate the nuances of his business to arrive at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons only contemplate a broad co- relation between reduction of taxes and prices of products. It was submitted that the use of the term, commensurate' made it clear that the intent was to take overall facts and circumstances into consideration. The provision was in nature of anti-abuse provision for a business. A mere change in the rate of tax could not be considered as profit much less profiteering so as to lead to a reduction in price (without consideration of commensurate increase in cost and expenses including the purchase price of the product being sold) and the business of a registered dealer seen as a whole. j) The sale price should vary depending upon the period considered as well as the composition of units sold during such period and accordingly there could not be a mean or average price derived for a 15 day period and applied as had been done in the present case. The correct approach might have been for the DGAP to consider the actual MRP and reduction required from a rate change perspective and towards this, adopt the last prevailing MRP (where several MRPs were available for the same product at a product level). In any view of the matter there was no rationale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red amount. The details of amount of credit notes issued by him for the period under review i.e. November 2017 to September 2019 has been furnished by him in the below mentioned table:- S. No. Particulars of goods Amount of credit notes 1. JUVEDERM ULTRA PLUS XC 5,76,42,251 2. JUVEDERM VOLUMA XC 11,89,45,845 3. JUVEDERM ULTRA XC 2,63,62,143 Total 20,29,50,239 n) On the basis of the above Table, the profiteered amount should have been reduced to the extent of such credit notes. Post giving effect to the same, the Respondent has tabulated the profiteering values in the Table mentioned below:- SI.No. Particulars of goods Alleged Profiteering amount Amount of credit notes Balance 1. JUVEDERM ULTRA PLUS XC 5,81,68,648 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DGAP proceedings. In respect of two products Le Juvederm Ultra Plus and Juvederm Ultra XC, the prices had been reduced w.e.f. 15 January 2019 and the said reduction was lower than the average selling price as calculated by the DGAP. Thus on the said grounds this allegation needed to be set aside. 9. Copy of the above submissions dated 08.04.2021 filed by the Respondent No. 2 were supplied to the DGAP for Supplementary Report under Rule 133 (2A) of the CGST Rules, 2017. The DGAP filed his clarifications on the Respondent's above submissions vide Supplementary Report dated 16.07.2021 and has clarified that:- i. The Anti-profiteering law as provided under Section 171 of the CGST Act. 2017 and the Rules under Chapter XV of the CGST Rules, 2017 did not envisage any personal hearing by the DGAP. The mandate of the DGAP was to carry out a fair inquiry and investigation of any complaint/application referred by the Standing committee. The DGAP was not an adjudicating authority. After carrying out investigation, the DGAP submits its Report to the NM who calls for further submissions from the Respondent and also gives personal hearing. Hence, there was no question of violation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39; might had been sold at a price of Rs.90/,92/95/98/- and 100/ in a day or during a month to different or same buyer falling under same category. The average price of all these sales would be Rs. 95/-. Now in post rate reduction era suppose the same product 'Z' was sold at Rs. 88/941,95/-97/and Rs. 101/- to different or same buyer then the following picture as shown in the below Table should emerge- S.No. Pre-Rate reduction Price of Product 'X' Post Rate Reduction Price of Product 'X' Profiteering in case of Average- to-Average comparison Profiteering in case of Average-to-Actual comparison Invoice No. Base declared on invoice price Average Base Price of product Invoice No. Base declared on invoice price Average Base Price of product 1 01 90 95 02 88 95 0 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent out of business was immaterial and could not absolve the Notices of passing on the due benefit to the recipient as no such exception had been provided under Section 171 of the CGST Act, 2017. viii. Under the provisions of Section 171 of the CGST Act, 2017, no tax was being levied or collected from the Respondent. However, Section 171 of the CGST Act, 2017, mandates that any benefit of reduction in the rate of tax or the benefit of ITC which accrues to a supplier must be passed on to the consumers as both were concessions given by the Government and the suppliers were not entitled to appropriate such benefits by increasing their profit margin at the cost of the consumers. Such benefits must go to the consumers. Hence, Section 171 only requires the supplier to pass on the benefit of reduction in rate of tax or the benefit of ITC to his recipients by reducing the price commensurately and did not require him to seek any approval to conduct trade or fix prices of the products supplied by him. Further, Section 171 of the CGST Act, 2017 requires the supplier of goods or services to pass on the benefit of reduction in tax rate or ITC to the recipients by way of commensurate r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he law provides for conducting investigation in respect of any supply of goods or services. Therefore, the Respondents contention that DGAP had exceeded its power by investigating products beyond contours of the complaint was incorrect and unacceptable. xiv. The reduced selling price had been considered while calculating profiteering. In Annexure 25 of the Report, it could be seen that during January, 2019 and afterwards, in a number of cases where the actual selling price was below the average selling price, the profiteered amount was indicated as zero. However, during this period wherever the actual selling price was more than the average selling price, there was profiteering and the same had been indicated in the said Annexure. 10. The Respondent No. 1 has also filed his rejoinder dated 19.04.2022 on the clarifications dated 08.04.2021 submitted by the DGAP, vide which he has reiterated his submissions made earlier before this Authority and has inter alia stated that:- a. The methodology notified by this Authority is totally silent about the computational aspect as to how the authority will determine that the benefit of reduction in the rate of tax has been passed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the Applicant No. 1 were also granted hearing through video conferencing on 02.05.2022 and 06.06.2022. Ms. Meenakshi Agrawal, Applicant No. 1 appeared in person, Sh. Karan Rajkotia Sh. Raghavendra CR (Advocate) appeared on behalf of the Respondent No. 1, Sh. Prashant Acharya, Sh. Anand Kamath, Sh. Ashish Maloo and Ms. Jayashree appeared on behalf of the Respondent No. 2 and Sh. Manoj Kumar, Assistant Commissioner appeared on behalf of the DGAP. 13. The Applicant No. 1 has filed her written submissions vide e-mail dated 26.03.2022 and has stated that she agreed with the Report of the DGAP and the Respondent No. 1 has not passed on the due benefit of reduction in the rate of tax to her till date. 14. The Respondent No. 1 has also filed his written submissions dated 15.06.2022 vide which he has reiterated his submissions made earlier before this Authority and has submitted the following details/documents:- a. Price list of the impugned products w.e.f. 14.11.2017. b. Price list of the impugned products w.e.f. 16.11.2017. c. Details of the discount provided by him to his customers. d. The alleged profiteered amount of Rs. 61,54,833/- in the hands of the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record. On examining this various submissions, the Authority also finds that the following issues need to be addressed:- a. Whether there was any violation of the provisions of Section 171 of the CGST Act, 2017 committed by Respondents? b. Whether Respondents have passed on the commensurate benefit of reduction in the rate of tax to their customers and whether various issued raised by the Respondents like breach of principle of natural justice, absence of methodology etc. are tenable in the proceedings? 17. It is revealed from the records that the Respondent No. 1 is a distributor of the products manufactured by the Respondent No. 2. A complaint was filed by the Applicant No. 1 alleging profiteering by the Respondent No. 1 in respect of supply of three products namely Juvederm Voluma with Licodaine, Juvederm Ultra Plus XC and Juvederm Ultra and has alleged that increased the base prices of the subject goods in spite of GST rate reduction from 28% to 18 % vide Notification No. 41/2017 - Central Tax (Rate) dated 14.11.2017 w.e.f. 15.11.2017, indicating that the benefit of reduction in the GST rate from 28% to 18% was not passed on to the recipients. On scrutiny of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so argued that in the present case, the DGAP has not completed the investigation as per the provisions of CGST Act and CGST Rules. In this regard, we find that due to prevalent pandemic of COVID-19 in the country, vide Notification 35/2020-Central Tax dated 03.04.2020 issued by the Central Board of Indirect Taxes and Customs under Section 168 (A) of the CGST Act, 2017, it was notified that where any time limit for completion/furnishing of any report, has been specified in, or prescribed or notified under the CGST Act, 2017 which falls during the period from the 20th day of March, 2020 to the 29th day of June, 2020, and where completion or compliance of such action has not been made within such time, then, the time limit for completion or compliance of such action, shall be extended up to 30,06.2020. Vide Notification 55/2020-Central Tax dated 27.06.2020 and Notification No. 65/2020 dated 01.09.2020 and Notification No. 91/2020 dated 14.12.2020, it was further extended up to 31.03.2021. Hence, the DGAP has submitted his report within the specified time limit and as per the provisions of CGST Act and CGST Rules. Therefore, the contention of the Respondent No. 1 is not maintainable an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock carrying higher MRP, while the manufacturer is under statutory obligation to reaffix the revised MRP, everybody in the supply chain is also legally required to pass on the benefit of tax rate reduction by maintaining the base price and charging GST at the reduced rate on such base price. Further, the question of alteration of MRP did not arise here. The Respondent No. 1 was only required to charge the reduced rate of GST on the base price which he was charging earlier in the pre-GST rate reduction regime. Instead, the Respondent No. 1 has charged the reduced rate of GST on the increased base price of the impugned products which in turn resulted in non-passing on of the benefit of reduction in the rate of tax to his customers. Hence, the above contention of the Respondent being incorrect cannot be accepted. 23. The Respondent No. 1 No. 2 have also contended this Authority was required to determine the 'methodology' and procedure' but the Respondent was unaware about framing of methodology nor he has been provided any computation methodology till date. Further, neither Section 171 of the CGST Act, 2017 nor did Rule 126 of the CGST Rules, 2017 provide specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent that a supplier cannot claim that he has passed on more benefit to one customer on a particular product therefore he would pass less benefit or no benefit to another customer than what is actually due to that customer, on another product. Each customer is entitled to receive the benefit of tax reduction or ITC on each product or unit or service purchased by him subject to his eligibility. 25. The term commensurate mentioned in the above Sub-Section provides the extent of benefit to be passed on by way of reduction in the price which has to be computed in respect of each product or unit or service based on the price and the rate of tax reduction or the additional ITC which has become available to a registered person. The legislature has deliberately not used the word 'equal' or 'equivalent' in this Section and used the word 'Commensurate'. The benefit of additional ITC would depend on the comparison of the ITC/CENVAT credit which was available to a supplier in the pre-GST period with the ITC available to him in the post GST period w.e.f. 01.07.2017. Similarly, the benefit of tax reduction would depend upon the pre rate reduction price of the product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame to the Respondents. The Respondents cannot deny the benefit of tax reduction to his customers on the above ground and enrich himself at the expense of his buyers as Section 171 provides clear cut methodology and procedure to compute the benefit of tax reduction and the profiteered amount. Therefore, the Authority finds that the above plea of the Respondent cannot be accepted. Further, with respect to the cases relied upon by the Respondents, it is mentioned that under Section 171 (1) no tax has been imposed and hence no computation provisions mentioned in the above case are required to be made. The Respondent cannot claim protection under Articles 14, 19(1)(g), 265 and 246A of the Constitution when he has violated the above Article himself by denying benefit of tax reduction to his various customers Hence, the law settled in the cases relied upon by the Respondents is not applicable in the present case. 28. The Respondent No. 2 has further contended that the DGAP has not provided any hearing to him during the course of investigation to defend his position against the allegation levelled on him and any adverse report impacts the reputation and business of the entity. He has a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may not have purchased the same product during the pre and the post rate reduction periods and (iii) the average base prices computed for a period of 14 days w.e.f. 01.11.2017 to 14.11.2017 or for the previous months provide highly representative and justifiable comparable average base prices. On the basis of the average pre rate reduction base prices the commensurate base prices have been computed and compared with the invoice wise actual base prices of the products as is evident from Table-A C supra. 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 product to each customer. In case average to average base prices are compared for both the periods, the customers who have purchased the products on the base prices which were more than the commensurate base prices 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 him. Further, the average base price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of India. In this connection it would be relevant to mention that the Respondent has full right to fix his prices under Article 19 (1) (g) of the Constitution but he has no right to appropriate the benefit of tax reduction under the garb of the above right. Neither this Authority not the DGAP has acted in any way as a price controlling authority as he does not have the mandate to do so. Under Section 171 read with Rule 129 of the above Rules the DGAP has only been mandated to investigate whether both the benefits of tax reduction and ITC which are the sacrifices of precious tax revenue made from the kitty of the Central and the State Governments have been passed on to the end consumers who bear the burden of the tax. The intent of this provision is the welfare of the consumers who are voiceless, unorganized and vulnerable. The DGAP has nowhere interfered with the pricing decisions of the Respondent and therefore, there is no violation of Article 19 (1) (g) of the Constitution. 31. It has also been contended by the Respondent No. 2 that he has passed on the benefit of reduction in the rate of tax to his distributors by issuing credit notes amounting to Rs. 20,29,50,239/- and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and they cannot be compared with netted off. This Authority has also clarified in its various orders that the benefit cannot be computed at the product, service or the entity level as the benefit has to be passed on each supply of goods and services. Hence, the above contentions of the Respondent are not correct as the Respondent cannot apply the above methodology of netting off as it would result in denial of benefit to the customers which would resulted in violation of the provisions of Section 171 of the above Act as well as Article 14 of the Constitution. Accordingly, the profiteered amount cannot be reduced by Rs. 12,80,368/-. 33. The Respondent has also argued that the complaint filed by the Applicant No. 1 was with respect to the products namely Juvederm Ultra Plus Xc and Juvederm Voluma . However, the DGAP had arrived at the profiteering amount by including an additional product i.e. Juvederm Ultra XC in addition to the aforementioned two products. As per Section 171 and Rule 128, there was no mention of any power which allows the DGAP to take suo-moto cognizance of any alleged contravention of Section 171 in the absence of a compliant and to this extent and therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Applicant No. 1 for the period from 15.11.2017 to 30.09.2019. The Applicant No. 1 is resident of State of Maharashtra, as such the said amount of Rs. 38,267/- would be subtracted from allocation of State of Maharashtra. The place (State or Union Territory) of supply-wise break-up of the total profiteered amount of Rs. 61,16,566/- is mentioned in the below Table:- S. No. State Code State Profiteered Amount (Rs.) 1. 04 Chandigarh 5355 2. 08 Rajasthan 58903 3. 27 Maharashtra 6090575 (-) 38267=6052308 Grand Total 61,16,566/- 37. Accordingly, the Respondent No. 1 is directed to pass on Rs. 38,267/- to the Applicant No. 1 as the benefit of rate reduction alongwith applicable interest to be calculated from the dates on which the above amount was realized by the Respondent from the Applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d amount of Rs. 27,89,17,525/- in two equal parts in the Central Consumer Welfare Fund and the concerned State Consumer Welfare Fund as per the provisions of Rule 133 (3) (c) of the CGST Rules 2017, along with interest payable @ 18% to be calculated from the dates on which the above amount was realized by the Respondent No. 2 from his recipients till the date of its deposit as prescribed and in accordance with the provisions of Rule 133 (3)(b) of the CGST Rules, 2017. The above amount of Rs. 27,89,17,525/- shall be deposited, as specified above, within a period of 3 months from the date of passing of this order failing which it shall be recovered by the concerned CGST/SGST Commissioners. 41. The place (State or Union Territory) of supply-wise break-up of the total profiteered amount of Rs. 27,89,17,525/- in respect of the Respondent No. 2 is mentioned in the below Table:- S. No. State Code State Profiteered Amount (Rs.) 1. 01 Jammu Kashmir 25809 2. 03 Punjab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iteered amount in the case of the Respondent No. 2. 42. It is evident from the above narration of facts that the Respondents have denied the benefit of tax reduction to the customers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he has thus resorted to profiteering. Hence, they have, committed an offence under section 171 (3A) of the CGST Act, 2017 and therefore, they are liable to penal action under the provisions of the above Section. However, since the provisions of Section 171 (3A) come have come into force w.e.f. 01.01.2020, whereas, the period during which violation has occurred is w.e.f 01.07.2017 to 30.09.2019, hence the penalty prescribed under the above Section cannot be imposed on the Respondents retrospectively. 43. Further, this Authority as per Rule 136 of the CGST Rules 2017 directs the concerned Commissioners of CGST/SGST to monitor this order by ensuring that the amount profiteered by the Respondent No. 1 2 as ordered by this Authority is deposited in the CWFs of the Central and the concerned State Government as per the details given above. A report in compliance of this order shall be submitted to this Authority by the con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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