2018 (5) TMI 760 – NATIONAL ANTI-PROFITEERING AUTHORITY – 2018 (13) G. S. T. L. 412 (N. A. P. A.) – Benefit of reduction in the rate of tax – India Gate Basmati Rice – ITC benefit – Anti-Profiteering proceedings – Held that: – it is revealed that the “India Gate Basmati Rice” sold by the Respondent was not liable for tax before the implementation of the GST and after coming into force of the CGST Act, 2017 it was levied GST @ 5% w.e.f. 22.09.2017.
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The ITC claimed by the Respondent was not sufficient to meet his output tax liability and he had to pay the balance amount of tax in cash as is evident from the perusal of the table prepared by the DGSG. It is also apparent from the returns filed by the respondent for the months of September, 2017, October, 2017 and November, 2017 that the ITC available to him as a percentage of the total value of taxable supplies was between 2.69% to 3% whereas the GST on the outward supply of his product was 5% which was not sufficient to discharge h
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s Maximum Retail Price (MRP) had been increased, and hence margin of profit had also been increased by the above Respondent. He had also attached images of the details printed on the 10 Kg. package of India Gate Basmati Rice (Mini Mogra) packed in the months of August, 2017 and October, 2017 showing the printed price of ₹ 540/- & ₹ 585/-respectively. 2. The above application was examined by the Standing Committee on Anti-Profiteering on 13.12.2017 and forwarded to the Director General Safeguards (DGSG) for detailed investigation on 18.12.2017. 3. The DGSG had issued notice to the above Respondent and after examining the record had reported that in this case the tax rate on the packed Basmati Rice carrying registered brand name of India Gate Basmati Rice had been increased from Nil to 5% after the implementation of the GST w.e.f. 01.07.2017, due to which input tax credit (ITC) had become available to the above Respondent. He had also reported that whether the benefit of
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varied between 2.69% to 3% however, as the GST rate on taxable outward supply was 5%, the ITC available was insufficient to discharge the GST liability and thus, the balance amount of GST had been paid in cash during the above period and since the ITC available was less than the GST liability on the outward supplies, there was no net benefit of ITC which could had been passed on to the consumers and therefore there was no violation of the provisions of section 171 of above Act. He had also given details of the calculation of the ITC which was available to the above Respondent as has been shown in the table given below: Month Total Taxable Value (Rs.) Total output tax liability (Rs.) ITC available (Rs.) ITC ratio to Taxable Value (%) GST Paid (Rs.) ITC Cash Sept., 2017 141581342 7142238 4246216 3 4795786 2346452 Oct., 2017 515995458 25828553 13869583 2.69 13869584 11958969 Nov., 2017 770088225 39052815 22514290 2.92 22514290 16538525 Total 1427665025 72023606 40630089 2.85 41179660 308
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contended that the price of paddy had increased by more than 30% in the year 2017 as compared to the year 2016 which constituted 75% of total cost of production, however, because of stiff competition in the market they had not passed on the total cost burden to the consumers and had increased the price of their product by 8% only from ₹ 540/- to ₹ 584/- in spite of increase in the raw material costs by more than 30%. They had further contended that the average price of paddy was ₹ 260/- per 10 Kg. in the year 2016 while it was ₹ 330/- per Kg. in the year 2017 due to which there was increase in the MRP and no other factor had influenced the price of their product. They had also produced the copies of the invoices of paddy purchases in their support. They had also submitted the following table to support their case:- Particulars per 10 Kg. 01.06.17 01.07.17 17.07.17 01.09.17 26.09.17 04.10.17 02.04.18 Pre GST MRP Post GST MRP Before Tax Incidence on Branded Rice A
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oduct was 5% which was not sufficient to discharge his tax liability. Moreover in this case the rate of tax has been increased from 0% to 5% instead of reduction in the same. Therefore, there appears to be no reason for treating the price fixed by the Respondent as violation of the provisions of the Anti-Profiteering clause. 7. It is also revealed from the perusal of the tax invoices submitted by the Respondent that there was an increase in the purchase price of paddy in the year 2017 as compared to its price during the year 2016 which constitutes major part of the cost of the above product. It is further revealed from the record that the Respondent had increased the MRP of his product from ₹ 540/- to ₹ 585/- which constituted increase of 8.33% keeping in view the increase in the purchase price. Therefore, due to the imposition of the GST on the above product as well as the increase in the purchase price of the paddy there does not appear to be denial of benefit of ITC as h
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