Smt. Mandalika Sakunthala And Director General Anti-Profiteering, Central Board of Indirect Taxes And Customs, New Delhi Versus MIs Fabindia Overseas Pvt. Ltd.
GST
2018 (11) TMI 1011 – NATIONAL ANTI-PROFITEERING AUTHORITY – 2018 (19) G. S. T. L. 533 (N. A. P. A.)
NATIONAL ANTI-PROFITEERING AUTHORITY – NAPA
Dated:- 16-11-2018
Case No. 13/2018
GST
Sh. B. N. Sharma, Chairman, Sh. J. C. Chauhan, Technical Member, Ms. R. Bhagyadevi, Technical Member And Sh. Amand Shah, Technical Member
For The Applicant : Sh. Anwar Ali, Additional Commissioner
For The Respondent : Sh. Shashank Goel, Advocate and Sh. Siddhant Mehra, Corporate Head-Finance & Taxation
ORDER
1. The present report dated 16.08.2018 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 A
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o submitted copies of the tax invoices dated 09.01.2018 for both the products and the labels of the products showing their MRP, Batch No. and manufacturing dates in support of her claims.
2. The above applications were examined by the Standing Committee on Anti-Profiteering and were referred to the DGAP vide minutes of its meeting dated 02.05.2018 for detailed investigations under Rule 129 (1) of the CGST Rules, 2017.
3. The DGAP had called upon the Respondent to submit reply on the above allegations and also to suo-moto determine the quantum of benefit which was not passed on by him after reduction in the rate of tax. The Respondent had submitted replies vide letters dated 25.06.2018, 06.07.2018, 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
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.5% with Nil Central Excise duty + 14.5% VAT in the case of “Bathing Bar” and 16.5% with 2% Central Excise duty + 14.5% VAT in the case of “Instant Drink Powder 50 Gms.” which had been incresed to 18% after the implementation of the GST w.e.f. 01.07.2017 and hence there was no reduction in the rate of tax ..
5. It has also been stated by the DGAP in his Report that when the pre-GST stock of Bathing Bar in the GST regime was compared with it's stock in the pre GST regime, no change was found the in the Input Tax Credit (ITC) and the Respondent's cost price had also remained the same at Rs. 28.64 per piece. After the rate of tax had increased from 14.5% to 18% after implementation of the GST, the above product was supplied by the Respondent in the GST regime at the same MRP of Rs. 95/- by reducing his margin of profit from his base price from Rs. 82.97 to Rs. 80.51 by suffering loss of Rs. 2.46 per Bathing Bar in gross margin during the GST regime. It is also been observed by th
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remained unchanged at Rs. 95/- which had resulted in the loss of Rs. 3.76 out of gross margin to the Respondent. The DGAP has therefore, contended that as the reduction in the base Price was more than the lTC, the allegation of profiteering was not established.
7. In respect of the Instant Drink Powder 50 Gms. the DGAP has observed that there was no change in ithe ITC and the Respondent's cost price had remained the same at Rs. 18.86. The DGAP has further observed that when the sale of old pre GST stock of the above product in the GST era was compared with the sale in the pre-GST regime, although the rate of tax had increased from 14.5% 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 Rs. 43.67 to Rs. 42.37 and had thus suffered a loss of Rs. 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 MR
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tax had increased in respect of both the above products but the Respondent had reduced his base prices and the profit margins to maintain the same MRP inspite of the increase in the tax rate, therefore, The anti-profiteering provisions contained in Section 171 (1) of the CGST Act, 2017 had not been contravened by the Respondent.
10. The above report was considered by the Authority in its meeting held on 21.08.2018 and it was decided to hear the Applicant No. 1 on 05.09.2018. However, she did not appear during the hearing and informed via e-mail dated 04.09.2018 that she would not be able to attend 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 Responde
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Act 2017 read as under:-
(1). “Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices.”
14. It is apparent from the perusal of the facts of the case narrated above 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 of both the products in question. It is further revealed that the base price of these products had been redu
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