TMI Blog2022 (10) TMI 312X X X X Extracts X X X X X X X X Extracts X X X X ..... ITC on every supply and not on some supplies. Consequently, prima facie, a supplier cannot claim that he has passed on more benefit to one customer therefore he could pass less or no benefit to another customer than the benefit which is actually due to that customer - This Court is also of the prima facie view that the post-sale discount has not been granted on account of GST rate reduction and therefore, does not qualify as commensurate reduction in prices as required under Section 171 of the Act. Keeping in view the aforesaid as well as the orders passed by this Court in M/S. SAMSONITE SOUTH ASIA PVT. LTD. VERSUS UNION OF INDIA ORS. [ 2020 (10) TMI 1031 - DELHI HIGH COURT] , this Court directs the petitioner to deposit the principal profiteered amount after deducting the GST imposed on the net profiteered amount (which has already been deposited by the petitioner with the Department) in six equated instalments commencing 10th October, 2022. The interest amount directed to be paid by the respondents as well as the penalty proceedings and further investigation by NAA in respect of other products sold by the petitioner are stayed till further orders. Application disposed of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oducts should be excluded. In support of this argument, he gave certain illustrations from which it could be seen that when compared the invoices issued during the period 15th November, 2017 to 30th November, 2017 with the invoice raised in the month of March 2018, the actual sale price per unit including GST had remained same during both periods. He also prayed that the profiteering on account of GST collected by him, should be excluded. 7. Per contra, learned counsel for NAA contended that Section 171 of GST confers powers of wide amplitude upon the NAA to examine any supply of goods or services by any registered person and to examine whether the reduction in the tax rate or benefit of input tax credits have been passed on to the recipient by way of commensurate reduction in prices or not. He stated that even assuming that the rules provide for a mechanism by which a recipient or any other interested party or a Commissioner, can make a written application in a prescribed form which is required to be examined by the Standing Committee and the Screening Committee, however, this procedure in no way fetters the original power conferred upon the NAA by Section 171, to examine whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of every consumer who receives the supply of goods or services and not from the prospective of registered person or entity for the reason that the object of the Act is to ensure that the sacrifices made by Governments by forgoing their share of taxes from the public exchequer, must reach every consumer on every supply, and not selectively, as per the whims and fancies of the suppliers. Therefore, according to him, the benefit of tax reduction has to be passed on at the level of each supply of Stock Keeping Unit (SKU) to each buyer of such SKU and in case it is passed on the profiteered amount has to be calculated on each SKU. Further, according to him, the above Section mentions any supply i.e. each taxable supply made to each recipient thereby clearly indicating that netting off of the benefit of tax reduction by a supplier is not allowed. 10. He submitted that a taxing statute has several goals and collection of taxes may not be the only goal. A taxing statute has many regulatory aspects to it as well, and it would be apparent from Section 171 of the CGST Act that the Governments intend to forego their share of taxes in favour of the public, so that the common public, who be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has not undergone any change during the period November 2017 to March 2018, (ii) increase in the base price could not have happened overnight to exactly coincide with the GST rate reduction w.e.f. 15th November, 2017 and (iii) increase in the cost of raw material/input services, if any, has no relevance in the context of GST rate reduction w.e.f. 15th November, 2017 and Section 171 of the CGST Act, 2017 does not provide for any scope for adjustment of increase in cost against the benefit of reduced tax rate. He further stated that it could be seen from the illustrations that selling rates of the products have remained the same during the month of November, 2017 and March, 2018. Consequently, according to him, the Authority found that the petitioner had been economical with the truth and had been submitting information and data which is inadequate, unreliable and unsubstantiated. COURT S REASONING 13. This Court is of the prima facie view that Section 171 is not a charging or a taxing provision. On the contrary, it is an incidental provision in the CGST/SGST Acts, for the purpose of ensuring that the object of these Acts, namely, eliminating the cascading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hey must be going into the process of manufacture with other raw material and/or ingredients. To work out the impact of the increase in Customs Duty, one would need to examine whether any other raw material/ingredient or other factor has shown increase in rate or decrease in rate and their consumption/utilisation has to be supported by proper manufacturing composition. Consequently, prima facie, any purported increase in Customs Duty on certain raw material with effect from 01st December, 2018 cannot be examined at this stage. 18. Prima facie, this Court is also of the view that the under Section 171 any benefit of reduction in rate of taxes or benefit of input tax credit on any supply of goods or services can only be by way of commensurate reduction in prices. When a statute clearly provides for a manner in which something is to be done, and a duty is cast upon the supplier to extend the benefit of rate reduction by way of commensurate reduction in prices, the supplier cannot insist that instead of reducing prices, he will give extra grammage of the product. 19. Keeping in view the aforesaid as well as the orders passed by this Court in Phillips India Limited Vs. Union of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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