2018 (10) TMI 510 – NATIONAL ANTI-PROFITEERING AUTHORITY – 2018 (19) G. S. T. L. 84 (N. A. P. A.) – Profiteering – Benefit of reduction in the rate of tax – Maggi – reduction of rate of tax from 18% to 12% – increase in the base price of the product – benefit of the reduction of GST rate not passed, as base price increased – violation of the provisions of Section 171 of the CGST Act, 2017 – quantum of profiteering.
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Whether the benefit of reduction in the rate of tax on the above product had been passed on by the Respondent to the Applicant or not?
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Held that:- The base price of the product was ₹ 3.96/- per pack before 15.11.2017 which was increased to ₹ 4.17/- per pack by the Respondent after the rate of tax on the product was reduced from 18% to 12% vide Notification dated 14.11.2017 and the product was sold to the recipients @ ₹ 4.67/- per pack. The Respondent was required to sell the product @ ₹ 4.43/- per pack due to reduction in the tax rate and
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Gms. products – Held that:- The Respondent has no such liberty to arbitrarily decide in respect of which products he would pass on the benefit and in respect of which products he would not pass such benefit. As per the provisions of Section 171 of the Act the benefit has to be passed on to each recipient and the same can not be selectively granted or denied. It is also clear that the Maggi Noodle pack of 35 Gms. is distinct from a 70 Gms. pack and both the packs may be bought by the different recipients/customers and hence the benefit accruing to one customer can not be given or denied to another nor can the benefit given to one set of customers arbitrarily enhanced and set off against the another. No such adjustments are permissible under the Act.
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Quantum of profiteering – Held that:- The quantum of profiteering is determined as ₹ 90,778/- including the profiteering of ₹ 2,253/- made by the Respondent from the Applicant No. 1. Accordingly, the Respondent is directed
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, TECHNICAL MEMBER Present:- None for the Applicant No. 1. Sh. Bhupender Goyal, Assistant Director (Costs) for the Applicant No.2. None for the Respondent. ORDER 1. An application through email dated 29.11.2017 was filed before the Standing Committee on Anti-profiteering under Rule 128 of the Central Goods and Services Tax (CGST) Rules, 2017 by the Applicant No. 1 stating that he had purchased Maggi Noodle packs, each weighing 35 Gms., having Maximum Retail Price (MRP) of ₹ 5/- (here-in-after referred to as the product ) from the Respondent on 06.11.2017 vide invoice No. N1611 and on 28.11.2017 vide invoice No. N1867. The above Applicant had also alleged that prior to 15.11.2017, the Respondent was charging 18% GST on the product s base price of ₹ 3.96/- per pack, however, after the GST rate was reduced from 18% to 12% w.e.f. 15.11.2017, the Respondent had started charging 12% GST on the product s increased base price of ₹ 4.17/- per pack. Thus, the Applicant No. 1 ha
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Respondent was called upon by the DGAP to submit his reply as to whether he admitted that the benefit of reduction in the GST rate had not been passed on to the above Applicant by way of commensurate reduction in the price. The Respondent was also asked to suo-moto determine the quantum of benefit not passed on and indicate the same in his reply to the Notice. Certain documents viz. Balance Sheet, GST Returns (1 & 3B), details of outward taxable supplies etc. were also sought from the Respondent by the DGAP. Incidentally the date of invoice No. N1611 was found to be 05.11.2017 instead of 06.11.2017 on examination by the DGAP. The period covered by the current Investigation is from 15.11.2017 to 28.02.2018. The Applicant No. 1 was given an opportunity vide email dated 12.06.2018 by the DGAP to inspect the non-confidential reply furnished by the Respondent, however, he did not avail of the said opportunity, instead, he had sent a letter dated 15.06.2018, informing that he had got cla
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and around 25 paise to the ultimate consumer which would have been inconvenient to both the retailer and the consumer whereas on Maggi Noodles pack of 70 Gms. bearing MRP of ₹ 12/- per pack, the benefit on account of GST rate reduction for the retailer would have been approximately 56 paise against which the respondent had reduced the price by 92 paise with reduced MRP of ₹ 11/- and thus, the benefit in respect of ₹ 5/- MRP pack had been passed on by reducing the price of other packs of Maggi Noodles by more than what was required. Therefore, the Respondent had claimed that the benefit of GST rate reduction had been passed on in respect of Maggie Noodles as a whole. The Respondent had also submitted the following documents: – a) Balance Sheet, Profit and Loss Account for the year 2016-17. b) Copies of the GSTR- 3B returns for the period from October, 2017 to February, 2018. c) Copies of the GSTR-1 returns for the period from October, 2017 to February, 2018. d) GST TRA
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ion of not passing on the benefit of reduction in the rate of GST from 18% to 12% on the product w.e.f. 15.11.2017 but instead the Respondent has contended that in the case of the product the MRP of which was ₹ 5/-, the benefit of GST rate reduction to the Applicant No. 1 as retailer and to the ultimate consumer would have been 21 paise and 25 paise respectively, which would have been inconvenient to both due to legal tender issues. The DGAP has further stated that the Respondent has contended that he has passed on the benefit of GST rate reduction in respect of 70 Gm. pack of Maggi Noodles bearing MRP of ₹ 12/- by reducing the price for the Applicant No.1 and the ultimate consumer by 92 paise and Re. 1/- respectively, which was much more than the required reduction of approximately 56 paise for the above Applicant. The DGAP has also submitted that the provisions of Section 171 of the CGST Act, 2017 required that any reduction in the rate of tax on any supply of goods or se
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te reduction to the recipients of the product including the Applicant No. 1. Accordingly, the DGAP has calculated the profiteered amount of ₹ 90,778/- including the profiteered amount of ₹ 2,253/- charged by the Respondent from the Applicant No.1 as has been shown below:- (Amount in Rs.) Sr.No. Product MRP 1st Nov. to 14th Nov. 2017 15th Nov. 2017 to 28th Feb. 2018 Commensurate Price per unit Profiteering Per unit Total Profiteering Amount Charged Base Price GST Rate Qty. Sold Amount Charged Base Price GST Rate Qty. Sold A B C D E F G H I J K L=112% of E M=[H-L] N=[K*M] 1 MAGGI 2-MIN Mas Ndls 35Gms 5.00 4.67 3.96 18% 12468 4.67 4.17 12% 382048 4.43 0.24 90,778/- Total Profiteering on sale of the Product 90,778/- 5. The DGAP has also reported that the Applicant No.1 vide his letter dated 15.06.2018 has sought to withdraw his application and requested for closure of the case, however, he has contended that as the application filed by the above Applicant had been investigated
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31.08.2018 was received on 05th Sept, 2018 from the Respondent stating that he had submitted his final reply vide his email/letter dated 21st Aug, 2018 which should be taken in to account while passing order in the present proceedings. In the interest of justice, the Authority had accorded last opportunity of hearing to the Respodent on 10th Sep, 2018 but the Respondent did not attended therefore, there was no other alternative except to proceed against the Respondent exparte. 7. Perusal of the letter dated 21.08.2018 written by the Respondent shows that he has stated that he had already filed his submissions before the DGAP and had also submitted the necessary information/documents before him and there were no additional submissions that were intended to be submitted over and above the one submitted earlier before the DGAP and his case should be decided keeping in view his earlier submissions. The Respondent has re-iterated that he had not profiteered and duly passed on the benefits w
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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. 171. (1) 10. It is apparent from the perusal of the facts of the case as well as the invoices dated 05.11.2017 and 28.11.2017 that the base price of the product was ₹ 3.96/- per pack before 15.11.2017 which was increased to ₹ 4.17/- per pack by the Respondent after the rate of tax on the product was reduced from 18% to 12% vide Notification dated 14.11.2017 and the product was sold to the recipients @ ₹ 4.67/- per pack. The Respondent was required to sell the product @
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tax rate due to the problem of legal tenders as he had no legal authority to fix MRP arbitrarily. It was for the customers to furnish the required legal tenders and therefore, the Respondent can not be allowed to resort to profiteering. The Ministry of Consumer Affairs has alredy issued detailed instructions vide it s Notification dated 16.11.2017 for notifying the reduced MRP which have not been followed by the above Respondent. 12. It is further apparent from the record that the Respondent has contended that he had passed on the benefit in respect of the product by way of reducing the MRP of the 70 Gms. products. The Respondent has no such liberty to arbitrarily decide in respect of which products he would pass on the benefit and in respect of which products he would not pass such benefit. As per the provisions of Section 171 of the Act the benefit has to be passed on to each recipient and the same can not be selectively granted or denied. It is also clear that the Maggi Noodle pack
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377; 88,525/- along with the interest at 18% P.A. till the date of deposit in the respective Central or State Consumer Welfare Fund within a period of 3 months from the date of receipt of this order. 14. It is evident from the above that the Respondent had denied benefit of the reduction in GST rate to the consumers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has thus realized more price from them than he was entitled to collect and had also compelled them to pay more GST than that they were required to pay by issuing incorrect tax invoices and hence he has committed offence under section 122 (1) (i) of the CGST Act, 2017 and therefore, he is liable for imposition of penalty. Accordingly, a Show Cause Notice be issued to him directing him to explain why the penalty prescribed under Section 122 of the above Act read with rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him. 15. Further, the Authority, as per Rule 136 of the CGST Rules
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