2018 (11) TMI 1011 – NATIONAL ANTI-PROFITEERING AUTHORITY – 2018 (19) G. S. T. L. 533 (N. A. P. A.) – Profiteering – benefit of reduction of tax – it was alleged that Respondent had not passed on the benefit of reduction in the rate of tax, when she had bought 'Bathing Bar' and 'Instant Drink Powder 50 Gms. – contravention of the provisions of Section 171 of CGST Act, 2017 or not.
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Held that:- The actual pre-GST tax rate on the above products was not 27% (12.5%Excise Duty + 14.5% VAT), as had been mentioned by the Applicant No.1 in her applications, but it was 14.5% (Nil Central Excise Duty+ 14.5% VAT) in the case of “Bathing Bar” and 16.5 % (2% Central Excise Duty + 14.5% VAT) in the case of “Instant Drink Powder 50 Gms.” It is also revealed that the Respondent was procuring both the above products on interstate basis from their sole vendors and this tax liability had increased by 3.5% post GST from 14.5% to 18% w.eJ 01.07.2017 and therefore, he had suffered loss on the supply o
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08.2018 has been received from the Directorate General of Anti-Profiteering (DGAP) after detailed investigation under Rule 129 (6) of the Central Goods & Services Tax (CGST) Rules, 2017. The brief facts of the case are that two applications, both dated 21.02.2018, were filed by the Applicant No.1 before the Standing Committee constituted under Rule 123 (1) of the above Rules alleging that the Respondent had not passed on the benefit of reduction in the rate of tax, when she had bought 'Bathing Bar' and 'Instant Drink Powder 50 Gms.' (here-in-after referred to as the products) from the Respondent. It was also alleged by the Applicant No. 1 that these products were being sold at the MRP of ₹ 95/- and ₹ 50/- respectively, which had 12.5% Excise Duty & 14.5% Value Added Tax (VAT), total 27% incidence of tax, built in the MRP till 30.06.2017 and after the implementation of the GST w.e.f. 01.07.2017, when the rate of tax was fixed as 18% on the above produ
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.2018, 13.07.2018 and 20.07.2018 informing that there was increase in the rate of tax and hence no benefit could be passed on by him. The Respondent had further contended that he was procuring both the products on inter-state basis from their sole vendors and his tax liability had increased by 3.5% post implementation of GST from 14.5% VAT to 18% GST w.eJ 01.07.2017 and therefore, he had suffered loss in his margin on sale of both the products. 4. The DGAP has stated in his report that the Respondent had purchased the Bathing Bar from Mis Forever Body care Industries, Uttarakhand which was entitled to avail area based exemption from Central Excise Duty under Notification No. 50/2003-C.E. dated 10.06.2003 till 30.06.2017. The Respondent was also procuring the said Instant Drink Powder 50 Gms. from Mis NCL Agro Foods, Rajkot which was eligible to avail the benefit of concessional Central Excise Duty @ 2% without Cenvat Credit under Notification NO.16/2012-C. E. dated 17.03.2012 before GS
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the above product was supplied by the Respondent in the GST regime at the same MRP of ₹ 95/- by reducing his margin of profit from his base price from ₹ 82.97 to ₹ 80.51 by suffering loss of ₹ 2.46 per Bathing Bar in gross margin during the GST regime. It is also been observed by the DGAP that as the base price had been reduced so as to maintain the same MRP inspite of increase in the tax rate, the antiprofiteering provisions contained in Section 171 (1) of the Central Goods and Services Tax Act, 2017 are not attracted in respect of the Bathing Bar. 6. The DGAP has also intimated that when the sale of Bathing Bar in the pre-GST era was compared with the sale of it's new stock in GST regime, the Respondent's supplier MIs Forever Bodycare Industries had increased the transaction value of the Bathing Bar from ₹ 28.36 to ₹ 29.94. Therefore, an additionallTC of ₹ 0.28 had become available post GST to him. The DGAP has further intimated that
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5% to 18% after the implementation of the GST the Respondent had still sold the above product at the same MRP of Rs. 501-, by reducing his base price from ₹ 43.67 to ₹ 42.37 and had thus suffered a loss of ₹ 1.30 in his gross margin in the GST regime. The DGAP has therefore found that since the base price had been reduced to maintain the same MRP inspite of increase in the tax rate, the anti-profiteering provisions contained in Section 171 (1) of the CGST Act, 2017 were not attracted. 8. The DGAP has also informed that when the sale of the Instant Drink Powder 50 Gms. in the pre-GST era was compared with the sale of it's new stock in the GST regime, the Respondent's vendor MIs NCL Agro Foods had reduced the cost price from ₹ 18.86 to ₹ 18.50 because of additionallTC of ₹ 0.36. He has further informed that the Respondent had reduced his base price by ₹ 1.30, from ₹ 43.67 to ₹ 42.37, so that inspite of the increase in the tax
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and there was nothing more to supplement her complaints except that the Authority might ascertain whether the Bathing Bars were actually manufactured in the unit located in Uttarakhand and hence were eligible for availing the benefit of area based exemption, as had been mentioned in Para 9 of the Report or from any other unit. 11. An opportunity of hearing was also accorded to the Respondents on 28.09.2018. During the course of hearing Mr. Shashank Goel, Advocate appearing on behalf of the Respondent had submitted that the Respondent mainly dealt in garments. He also submitted that MRP of the products sold by the Respondents was constant for the last 3 years and there was no rate reduction or increase, after implementation of the GST athough the rate of tax had increased. 12. We have carefully examined the DGAP's Report and the written submission made by both the Applicants and the Respondent placed on record and find that the following issues were required to be settled in the pr
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0 Gms. It is also revealed that the Respondent was procuring both the above products on interstate basis from their sole vendors and this tax liability had increased by 3.5% post GST from 14.5% to 18% w.eJ 01.07.2017 and therefore, he had suffered loss on the supply of both the products in question. It is further revealed that the base price of these products had been reduced by the Respondent to maintain the same MRP (Pre GST MRP) inspite of the increase in the tax rate of both the above products. The anti-profiteering provisions contained in Section 171 (1) of the CGST Tax Act, 2017 are not attracted in the present case. We thus find that since the reduction in the base prices of these products is more than the additional ITC eligible thereon, the allegation of profiteering is not established. 15. Based on the above facts it is clear that the Respondent has not contravened the provisions of Section 171 (1) of the CGST Act, 2017 and hence there is no merit in the applications filed by
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