Shri Surya Prakash Loonker, And Director General Anti-Profiteering, Central Board of Indirect Taxes & Customs, Versus M/s. Excel Rasayan Pvt. Ltd.,
GST
2019 (1) TMI 807 – NATIONAL ANTI-PROFITEERING AUTHORITY – TMI
NATIONAL ANTI-PROFITEERING AUTHORITY – NAPA
Dated:- 16-1-2019
Case No. 02/2019
GST
SH. B. N. SHARMA, CHAIRMAN, SH. J. C. CHAUHAN, TECHNICAL MEMBER, SH. AMAND SHAH, TECHNICAL MEMBER
None for the Applicant No. 1.
Ms. Gayatri, Deputy Commissioner, for the Applicant No. 2.
Sh. Rakesh Upadhyaya, Director and Dr. Prabhat Kumar, Advocate for the Respondent.
ORDER
1. The present Report, dated 04.09.2018, has been received on 07.09.2018 from the Director 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 an application dated 22.02.2018 was filed by the Applicant No. 1 before the Standing Committee, constituted under Rule 123 (1) of th
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letters dated 1 1.04.2018 and 19.05.2018 that prior to coming into force of the GST, he was a SSI unit, manufacturing synthetic detergents falling under Chapter 34 of the erstwhile Central Excise Tariff Act, 1944 and that he had been availing SSI exemption and charging VAT @ 12.5 % on the base prices. He had further submitted that on introduction of the GST, 28% tax was levied and since this disturbed his pricing pattern he had reduced the base prices. He had also stated that w.e.f. 15.11 .2017, when the CST rate on his products in question was reduced from 28% to 18%, though the base prices were increased, they were much less than the base prices in the Pre-GST era.
3. The DGAP's report submitted that the Respondent had also filed details of invoice-wise outward taxable supplies (other than zero rated) and State-wise details for all the products from 01.11.2017 to 31.03.2018 along with copies of GSTR-1, GSTR-3B, Audited Balance Sheet and the Sample invoices. The DGAP after exami
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the total amount of profiteering covering the period between 15.11.2017 to 31.03.2018, came out to be Rs. 4,64,849.74, but the Applicant No. 1 was supplied Fortune ADW Detergent 1 kg. at the price of Rs. 186.99 and Fortune Rinse Aid 500 ml. at the price of Rs. 127.49 which were lower than the commensurate cum-tax prices of these products and therefore, the Applicant was not eligible for any refund.
4. The above Report was considered by the Authority in it's meeting held on 11.09.2018 and it was decided to hear the interested parties on 26.09.2018, however no one appeared on behalf of the Respondent & Applicant No. 1. Another Notice dated 03.10.2018 was issued and accordingly hearing was held on 12.10.2018. Sh. Rakesh Upadhyaya, Director and Sh. Prabhat Kumar, Advocate, appeared on behalf of the Respondent, no one appeared on behalf of the Applicant No. 1, and Ms. Gayatri, Deputy Commissioner appeared on behalf of the DGAP.
5. The Respondent in his written submissions dated 10.10.
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tax was enhanced. He has also quoted the Hon'ble Finance Minister stating that the GST rate of 28% was tax neutral and only pertained to those units which were paying 12% Central Excise Duty and VAT @ 12.5%. However, this rate did not apply to him as he was availing exemption under the SSI notification. The above submissions of the Respondent were forwarded to the DGAP for reply who vide his submission dated 22.10.2018 stated that the Respondent has reiterated the earlier submissions and nothing more was to be added by the DGAP. Final price to the consumers, as per the submissions made by the Respondent, is as per the table given below:-
Final rice to the Consumers
Year
Month/Qtr.
ADW
Rinse Aid
ADW
Rinse Aid
VAT 12.5%
GST @ 28%
GST @ 18%
2016
Prior to GST
April
220
150
195.50
133.40
24.44
16.68
0
0
0
0
October
220
150
195.50
133.40
24.44
16.68
0
0
0
0
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f the Authority to determine whether any reduction in the rate of tax on any supply of goods or services or the benefit of Input Tax Credit (ITC) has been passed on to the recipient by way of commensurate reduction in the prices or not? In the instant case the Respondent has not disputed the fact that there has been reduction in the rate of tax from 28% to 18% with effect from 15th November 2017 vide Notification No. 41/2017- Central Tax (Rate) dated 14.1 1 .2017 and has also not disputed the calculation made by the DGAP based on his outward sales data. The DGAP vide Annexure-II of his report has quantified profiteered amount as Rs. 4,64,849/- in which he has taken the actual selling price of Fortune ADW Detergent 1 Kg. i.e. Rs. 220/- and worked out the base price and the commensurate cum-tax price. The base price of the above product before rate reduction on 14.11.2017 was Rs. 171.80 and the Post-GST rate reduction it was Rs. 186.44 which has not been disputed as can be seen from the
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(April to December 2016) to Rs. 117.19 (July to November 2017) and Rs. 127.12 (15.1 1.2017 to March 2018). For this product also he has claimed that though the base price has increased from Rs. 117.19 to Rs. 127.12 after rate reduction in November 2017, the base price had remained less than Rs. 133.40 which was prevalent prior to the introduction of GST. Thus the Respondent has claimed that the consumer had effectively paid the same price or less price which was prevalent in pre GST era. However, this argument of the Respondent does not hold good as not to increase the MRPs when tax rates were increased on account of implementation of the GST, was the business call taken by him and therefore he cannot claim any concession on this ground. The benefits arising due to the GST rate reduction cannot be denied to the consumers just because in the earlier scenario MRPs were not changed to extend some extra benefit to the consumers. It has also been found that the base price of both the above
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rofiteered an amount of Rs. 4,64,849.74 for the period w.e.f. 15.11.2017 to 31.03.2018. However as far as the Applicant No. 1 is concerned he has bought both the above products @ Rs. 186.99 (Fortune ADW Detergent 1 Kg.) and at Rs. 127.49 (Fortune Rinse AID 500 ml.) which are lower than the commensurate cum tax prices. Therefore there is no profiteering in respect of the products purchased by him.
8. From the above discussions, it is clear that the Respondent has admittedly not passed on the benefit of tax reduction since the base prices of the above two products were increased to maintain the same selling prices which were existing before the reduction in the rate of tax. The Respondent, who is a registered manufacturer, is liable to pass on the benefit to the recipients irrespective of the fact whether the base prices are still lower as compared to the pre-GST price or not. Moreover, from the documents submitted to the DGAP by the Respondent it is also established that the base price
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ected to deposit the profiteered amount of Rs. 4,64,849.74 into the Consumer Welfare Fund as per the provisions of Rule 133 (3) (c) in the ratio of 50:50 in the Central and the State Consumer Welfare Funds, along with interest at the rate of 18% to be calculated from the date of collection of the higher amount till the date of deposit into the Consumer Welfare Fund. Out of the entire profiteered amount of Rs. 4,64,849.74, an amount of Rs. 2,32,424.87 will be deposited into the Central Consumer Welfare Fund and the balance amount shall be deposited into the State Consumer Welfare Fund as per the Table-I given below. The Authority, as per Rule 136 of the CGST Rules, 2017, directs the DGAP and the respective Commissioners of both CGST and SGST to monitor this order by ensuring that the amount profiteered by the Respondent as ordered by the Authority, is deposited in the Consumer Welfare Funds within a period of 3 months from the date of receipt of this order, along with interest failing w
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Haveli
28.37
Grand Total
232424.87
10. It is clear from the narration of the facts stated above that the Respondent has indulged in profiteering in violation of the provisions of Section 171 of the CGST Act, 2017 and has not passed on the benefit of reduction of tax as per the Notification 41/2017-Central Tax(Rate) dated 14.11.2017 in respect of the above products to his customers and therefore, he is liable for penalty under Rule 133(3)(d) of the CGST Rules, 2017, the relevant provisions of which state as under:-
“133. x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-xx-x-x-x-x-x-x-x-x-x-x-x-x-x-x-xx-x
(3) Where the Authority determines that a registered person has not passed on the benefit of the reduction in the rate of tax on the supply of goods or services or the benefit of input tax credit to the recipient by way of commensurate reduction in prices, the
Authority may order –
(a) reduction in prices:
(b) return to the recipient, an amount equivalent to the amount not passed on by the
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ovisions, the Respondent had not put forth any submissions on them except stating that he had not profiteered as has been discussed in para 5 above. As it is clear from the facts of the present case that the Respondent was fully aware of the Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017 whereby the rate of GST was reduced from 28% to 18% and he was also fully aware of Section 171 of the CGST Act 2017, whereby he was bound to pass on the benefit of reduction in the rate of tax by commensurate reduction in the prices of the products in question, therefore he is liable for penalty. The Respondent has deliberately defied the law on the pretext that he had not increased the prices of his products when the rate of tax was increased to 28% and increased the base prices to maintain the same old selling price prior to reduction of rate of tax from 28% to 18%, by issuing wrong invoices to his recipients. Accordingly, he has committed an offence under section 122 (1) (i) of the abo
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