Director General of Anti-profiteering, Central Board of Indirect Taxes & Customs, Versus M/s. J.P. and Sons,
GST
2018 (12) TMI 472 – NATIONAL ANTI-PROFITEERING AUTHORITY – 2019 (22) G. S. T. L. 473 (N. A. P. A.)
NATIONAL ANTI-PROFITEERING AUTHORITY – NAPA
Dated:- 6-12-2018
Case No. 16/2018
GST
SH. B.N. SHARMA, CHAIRMAN SH. JC CHAUHAN, TECHNICAL MEMBER, MS. R BHAGYADEVI, TECHNICAL MEMBER
Present:-
Sh. Akshat Aggarwal, Assistant Commissioner and Sh. Bhupender Goyal, Assistant Director (Costs) for the Applicant,
Sh. Ankit Khandelwal, Proprietor and Sh. Anand Kumar Garg for the Respondent.
ORDER
1. This report dated 31.072018, has been received from the Director General of Anti-Profiteering (DGAP) under Rule 129 (6) of the Central Goods and Service Tax (CGST) Rules, 2017. The brief facts of the present case are that the Standing Committee vide the minutes of it's meeting dated 13.042018 had requested the DGAP to initiate investigation under Rule 129 (1) of the CG
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rice Charged of Inclusive of GST (Rs.)
1.
JJGST1707093 12.10.2017
Baby Shampoo 100 ml.
57.24
28%
73.27
Baby Powder 200 Gms.
80.82
28%
103.45
2.
JJGST1709322 16.11.2017
Baby Shampoo 100 ml.
62.10
18%
73.28
Baby Powder 200 Gms.
87.67
18%
103.45
2. The DGAP had called upon the Respondent to submit his reply on the allegations levelled above and also to suo moto determine the quantum of benefit which he had not passed on during the period between 15-11,2017 to 31.032018 on the above products. The Respondent was also requested to provide a copy of the audited Balance Sheet, GST Returns, Tran-1 Returns and the details of the outward taxable supplies etc.
3. The Respondent had submitted replies to the notice issued by the DGAP on 24.05-201B vide his letters dated 08.06.2018 and 22.06.2018, The DGAP has informed that the Central Government on the recommendations of the GST Council had reduced the GST rate on the above products from 28% to 18% w.e.f. 15,11.
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had also stated that the invoices dated 1210.2017 and 16.11.2017 were issued prior to the updation of software by J & J and hence he could not charge the reduced prices.
4. The DGAP has also intimated that during the investigation it had been observed that the Respondent was required to sell the above products at the base prices which were prevalent before 15.11.2017 and he should have charged GST @ 18% on such base prices to pass on the benefit of reduction in the rate of tax from 28% to 18% w.e.f. 15.11.2017. He has further intimated that since the Respondent was a supplier registered under the CGST/SGST Act, 2017 vide GSTI No. 07AWPPK4876R1ZC, he was legally bound to pass on the benefit of reduction in the rate of GST to his customers immediately w.e.f. 15.11.2017.
5. The DGAP has also submitted that by increasing the base prices of the above products and having maintained the pre-GST rate reduction MRPs, the benefit of GST rate reduction was not passed on to the customers by the
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ve been.
8. The DGAP has further stated that after analysing the entire outward supplies made by the Respondent, it had been observed that during the period w.e.f. 15.11.2017 to 31 03.2018, the Respondent had sold 223 products comprising of 32 HSN codes out of which 134 products comprising of 14 HSN codes were affected by the reduction in the rate of GST from 28% to w.e.f. 15.11.2017, the details of which have been mentioned in Annexure-8 by the DGAP. The DGAP has further observed that out of the above 134 products impacted by reduction in the rate of GST, Il products were not supplied during the period between 01.11.2017 to 14, 11.2017. He has also informed that out of the above 11 products, the prices for calculating the profiteered amount in the case of 9 products had been taken from the price list submitted by the Respondent whereas 2 products had been launched in December, 2017. The DGAP has further informed that in the case of rest 123 products, it was observed that the base pri
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submitted that as per the above agreement, he was appointed as Retail Distribution Stockist (RDS) by J & J and he was bound by the terms of this agreement to use the software 'Wave' which included the Manual, any associated software components, any media, any printed materials other than the Manual, and any online or electronic documentation. He has also claimed that the contract also required him not to use the above software in case he did not agree to the terms of the above agreement. The Respondent has also maintained that the contract stated that the ownership of the licensed software at all times would be with J & J. He has further alleged that through this agreement, he had been given a very limited right of using the software solely for the business of the above company and take prior consent of the concerned officer in case he wanted to use this software for any other business. He has also claimed that the title and full ownership rights of the above software were with J & J a
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he had produced the list of MRPs and the Tax Invoices Which he had issued to his customers after 15.11.2017 to prove that he had charged the same base prices which were fixed by the above company and had also charged tax at the rate of 18%,
12. The Respondent has also filed further submissions on 06.09.2018 in which he has stated that he had deposited the due tax which he had charged from the customers at the rate of 18% and had not misused the Input Tax Credit (ITC) availed off as had been calculated by the DGAP. He has further added that he was only an intermediatory between the Company and the customers and was ready to pay the difference of tax if any but no penalty should be imposed since the circumstances were beyond his control and he had no intention to retain the profit on revised rates, He has further submitted that the calculation of the profiteered amount should be done on the stock which was lying on 14.11.2017 only. instead of the total sales made from 15.11.2017 to 31.
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butor, from the Distributor to the Retailer and from the Retailer to the consumer upto 14.11.2017, and from 17.11.2017 onwards as per the table given below:-
JB Powder 200 Gms, Monsoon
Particular
J&J to Distributor
Distributor to Retailer
Retailer to consumers
Upto 14 November 2017
17th November onwards
Upto 14 November 2017
17th November onwards
Upto 14 November 2017
17th November onwards
Base Price
74.76
79.74
80.82
86.21
93.75
100.00
Tax
20.93
14.35
22.63
15.52
26.25
18.00
Invoice Price
95.69
94.09
103.45
101.72
120.00
118.00
JB NMT Shampoo (TBP) 100 ml.
Particular
J&J to Distributor
Distributor to Retailer
Retailer to consumers
Upto 14 November 2017
17th November onwards
Upto 14 November 2017
17th November onwards
Upto 14 November 2017
17th November onwards
Base Price
52.95
54.06
57.25
58.45
66.41
67.80
Tax
14.83
9.73
16.03
10.52
18.59
12.20
Invoice Price
67.78
63.79
73.28
68.97
85.00
80.00
16. We have careful
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t before 15, 11.2017, Therefore, there is no doubt that the Respondent had increased the base prices of the above products w.e.f. 15.11.2017 by the amount shown above, whereas he was required not to increase them and after charging GST @ 18%, he was legally bound to charge the reduced prices so as to pass on the benefit of reduced tax rate to his customers and hence he has indulged in profiteering.
17. It is also revealed from the perusal of Annexure-8 submitted by the DGAP that between the period w.e.f. 15.11.2017 to 31.03.2018, the Respondent had sold 223 products manufactured by J & J out of which rate of tax was reduced in respect of 134 products from 28% to 18% w.e.f 15.11.2017. It is further revealed that out of the above 134 products, 11 products were not supplied during the period between 01.11.2017 to 14.11.2017 and hence for calculating the profiteered amount in respect of 9 products, the prices had been taken from the price list submitted by the Respondent whereas 2 product
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s vehemently argued that he had no control on the fixing of the base prices as well as the MRPs as both of them were fixed by J & J through the software which he was bound to follow as per the terms of the agreement executed by him with the above Company, However, it is apparent from the record that the Respondent is duly registered under the CGST/SGST Act, 2017 and he was hence bound to follow the Notification dated 14.11.2017 mentioned above vide which the rate of GST was reduced from 28% to 18% on 130 products which he was selling, He cannot escape the legal obligation which was imposed upon him by the above Notification by shifting his accountability on this ground, The Respondent has himself admitted during the course of the hearing that he was aware that he was required to pass on the benefit of the reduced rate of tax to his customers and therefore also he cannot deny his legal liability. The Respondent has also not produced any evidence to show that he had made any corresponden
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cannot be construed to have resulted in passing on of the benefit when the base prices had been deliberately increased. Hence, this contention of the Respondent is not tenable and cannot be accepted.
20. The Respondent has also submitted that the amount of profiteering should be calculated on the basis of the stock which was lying with him as on 14.11.2017 instead of the sales made between 15.11.2017 to 31.03.2018 and therefore, the total amount of profiteering would be Rs. 47,333.03/-, However, this argument of the Respondent is fallacious as he had made illegal profit on all the supplies which he had made w.e.f. 15.11.2017 to 31.03,2018 as he had charged increased prices on all the 130 products although he was bound not to do so as per the Notification dated 14.11.2017. Hence the amount of profiteering calculated by the DGAP is correct.
21. The Respondent has also claimed that he had deposited the due tax and had not misused the ITC and he was willing to pay the balance tax if any
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the CGST Rules, 2017 by making commensurate reduction in their prices keeping in view the reduction in the rate of tax so that the benefit is passed on to the recipients, The Respondent is also directed to deposit the profiteered amount of Rs. 5,01,646/- along with the interest to be calculated @ 18% from the date when the above amount was collected by him from his customers till the above amount is deposited. Since the recipients in this case are not identifiable the DGAP is directed to get the amount of profiteering of Rs. 5,01,646/- along with interest deposited from the Respondent in the Consumer Welfare Fund of the Central and the concerned State Govt. as per the provisions of Rule 133 (3) (c) of the CGST Rules, 2017. The above amount shall be deposited within a period of 3 months by the Respondent from the date of receipt of this order failing which the same shall be recovered by the DGAP as per the provisions of the CGST Act, 2017 and shall be deposited as has been directed vide
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