Sh. Pushpak Chauhan and Director General Anti-Profiteering, Central Board of Indirect Taxes & Customs, Versus M\/s. Harish Bakers & Confectioners Pvt. Ltd.,
GST
2018 (12) TMI 473 – NATIONAL ANTI-PROFITEERING AUTHORITY – 2019 (22) G. S. T. L. 463 (N. A. P. A.)
NATIONAL ANTI-PROFITEERING AUTHORITY – NAPA
Dated:- 7-12-2018
Case No. 17\/2018
GST
SH. B. N. SHARMA, CHAIRMAN, SH. J.C. CHAUHAN, TECHNICAL MEMBER, MS. R. BHAGYADEVI, TECHNICAL MEMBER
\nPresent:-
\nNone for the Applicant No. 1.
\nSh. Bhupender Goyal Assistant Director (Costs) for the Applicant No.
\nMrs. Monika Goel and Sh. Rajesh Kumar Soota, Advocates for the Respondent.
\nORDER
\n1. The present Report dated 18.06.2018 has been received from the Director General of Safeguards, now Director General of Anti-Profiteering (here-in-after referred to as the 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 vide his applicatio<\/p>\n
= = = = = = = =<\/p>\n
Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n gainst him. The above application was examined by theStanding Committee on Anti-Profiteering and was referred to the DGAP, vide minutes of it's meeting dated 20.12.2017 for detailed investigations under Rule 129 (1) of the CGST Rules, 2017. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n percentage) = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n es “with GST benefits where applicable”. Accordingly the DGAP's Report has held that though the base prices were increased but since discounts were given by the Distributors to the Respondent, he was bound to pass on the benefit of reduction in the rate of tax w.e.f. 15.11.2017 to the customers. The Report also stated that the Respondent was responsible for passing on the benefit as he was a registered supplier under the CGST\/SGST Act, 2017. It is also submitted by the DGAP that it was established from the record that the Respondent had sold 114 units of Nestle Munch Nuts 32 Gm. Chocolate at the MRP of Rs. 20\/- including GST @ 28% during the period between 01.11.2017 to 14.11.2017 when the base price of the above product was Rs. 15.63 per unit. One unit of the above product was sold by the Respondent to the Applicant No. 1 on 16.11.2017 vide invoice No. 311392 dated 16.11.2017 by increasing it's base price from Rs. 15.63 to Rs. 16.95 due to which the MRP had remained Rs. 20\/- p<\/p>\n = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n assed on the benefit of rate reduction to the above Applicant. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ng as he had given details of all the basic components of the prices of the chocolates on the invoices and the benefit of tax rate reduction has been passed to the Applicant No. 1. He also submitted that he had not made any additional profit after the reduction in the rate of tax and that he had reduced the tax rate from 28% to 18% and he had sold the chocolates after charging the applicable rate of tax on base prices which were calculated on the basis of the cost of the purchases and mark- up and hence he had not resorted to profiteering. He had also submitted that. In fact the base prices of the above products had been increased by the Distributors as the cost of Nestle Munch Nuts 32 Gm. to him was Rs. 14.01 per unit before 15.11.2017 which was increased to Rs. 15.20 after 15.11.2017 and he had sold the same at the base price of Rs. 15.63 before 15th November 2017 and at the base price of Rs. 16.95 after 15th November, 2017, thus keeping this margin same at 11.5%. He had further stat<\/p>\n = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n sed i.e. the recipient of the goods and services took credit of the GST paid by him on the purchase of goods and services and used such ITC while discharging GST output tax liability on supply of goods and services and since no additional ITC was available to him he was bound to enhance the base prices of the above products. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n e months of November, 2017 to March, 2018 on the base price and therefore, the finding of the DGAP that “M\/S Navin Enterprise, in his various sale invoices issued to the noticee on different dates during the period from November, 2017 to March, 2018, had given discount on the base price” mentioned in para 1 1 of the Investigation Report was incorrect. He has also contended that the statement made in para 11 of the Report that M\/S NE had clearly mentioned in his invoices “With GST benefits wherever applicable” was not correct as such statement was not found in his invoices for the month of November, 2017 and was added in his invoices during the month of January, 2018, whereas M\/S NE had increased the base price from Rs. 14.01 per unit to Rs. 15.20 per unit after 14th November, 2017. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n port was wrong as he had purchased 944 units of Nestle Munch Nuts 32 Gm. and 4515 units of Cadbury Dairy Milk Chocolate during the period between 15.11.2017 to 31.03.2018. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n A) = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n iterated the points already submitted by M\/S CTC. They had also submitted the details of the purchase and sale invoices to support their contentions. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n fore us and it has been revealed that the Central Govt. vide Notification No. 41\/2017Central Tax (Rate) dated 14.11.2017 had reduced the rate of GST from 28% to 18% in respect of the above two products viz. the Nestle Munch Nuts 32 Gm. Chocolate and the Cadbury Dairy Milk Chocolate with effect from 15.11.2017, the benefit of which was required to be passed on to the recipients by the Respondent as per the provisions of Section 171 of the above Act. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n 6. The Respondent has vehemently argued that he had no control on the fixing of the base prices as well as the MRPs as he was charged increased base prices by his Distributors Viz. M\/S CTC and M\/S NE and hence the Respondent could not make any changes in the base prices and the MRPs. He has also claimed that he had charged 18% GST after the rate was reduced w.e.f. 15.11.2017 on all the sales made by him and had also maintained the same profit margins which he was charging before 15.11.2017 and hence he had not profiteered. However, it is apparent from the record that the Respondent is duly registered under the CGST\/SGST Act, 2017 and therefore, he was under legal obligation to follow the Notification dated 14.11.2017 mentioned above vide which the rate of GST was reduced from 28% to 18% on both the above products. He cannot deny his accountability as well as the duty cast upon him under the above Notification by contending that he had not increased the base prices whereas he had charge<\/p>\n = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n passing of the benefit unless the MRPs were reduced and the base prices were maintained. The claim of the Respondent that his profit margins had remained the same is also not tenable as he had not only increased the base prices but had also earned additional margin on the enhanced prices. He had further forced his customers to pay additional GST on the increased base prices otherwise the customers should have got further benefit of reduced base prices. The Respondent has also cited the case of Dinesh Mohan Bhardwaj supra in his support however the facts of the present case are different than that case as the complainant in the above case had been given the benefit of ITC whereas in the present case the Applicant No. 1 was to be given the benefit of tax reduction and hence the Respondent cannot claim any relief on account of the above case. Therefore, the above contentions of the appellant cannot be accepted. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n units of the Cadbury Dairy Milk Chocolate during the period between 15.11.2017 to 31.03.2018 and since he has not furnished the details of the outward supplies made during the above period the DGAP has rightly taken the above units to have been sold by the Respondent during the above period. It is also clear from the record that the Respondent had increased the base price by Rs. 1.56 per unit in the case of Nestle Munch Nuts 32 Gm. Chocolate and Rs. 3.13 per unit in respect of the Cadbury Dairy Milk Chocolate and hence the total amount of profiteering is determined as Rs. 15,958\/- (Rs. 1416 + Rs. 14,542) on all the above units of both the products. The Respondent has claimed that the amount of profiteering should be calculated on the basis of the difference between the base price at which he had purchased the above products and the base price on which he had sold them, however, this argument of the Respondent is fallacious as the amount of profiteering has to include the amount of add<\/p>\n = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ot passed on the benefit of tax reduction to his customers. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n to his customers. Since the Applicant No. 1 has paid a higher price of Rs. 4.69 (1.56 + 3.13) for 02 items Viz. Nestle Munch Nuts 32 Gms. and Cadbury Dairy Milk Chocolate, the Respondent is directed to refund the same to the Applicant No. 1 along with interest @ 18% w.e.f. 16.11.2017 till the same is paid to the Applicant No. 1. The Respondent has also voluntarily deposited an amount of Rs. 1295\/- in the CWF. Therefore, the balance profiteered amount of Rs. 14,658.31 (15,958 – {1295 + 4.69}) will be deposited into the CWF by the Respondent as per the provisions of Rule 133 (3) (c) of the CGST Rules, 2017 along with the interest at the rate of 18% to be calculated from the date of collection of the higher amount till the date of the deposit of such amount. The above amounts shall be refunded or deposited by the Respondent within a period of 3 months from the date of receipt of this order failing which the same shall be recovered by the DGAP and refunded or deposited as has been directe<\/p>\n = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" Sh. Pushpak Chauhan and Director General Anti-Profiteering, Central Board of Indirect Taxes & Customs, Versus M\/s. Harish Bakers & Confectioners Pvt. Ltd.,GST2018 (12) TMI 473 – NATIONAL ANTI-PROFITEERING AUTHORITY – 2019 (22) G. S. T. L. 463 (N. A. P. A.)NATIONAL ANTI-PROFITEERING AUTHORITY – NAPADated:- 7-12-2018Case No. 17\/2018 GSTSH. B. N. SHARMA, CHAIRMAN, SH. J.C. … Continue reading “Sh. Pushpak Chauhan and Director General Anti-Profiteering, Central Board of Indirect Taxes & Customs, Versus M\/s. Harish Bakers & Confectioners Pvt. Ltd.,”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-15431","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/15431","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=15431"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/15431\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=15431"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=15431"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=15431"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\n2. The DGAP had called upon the Respondent to submit his reply on the above allegation and also asked him to suo moto determine the quantum of benefit which had not been passed on by the Respondent after the GST rate reduction for the period w.e.f. 15.11.2017 to 31.03.2018. The Respondent had submitted replies vide his letters dated 12.02.2018, 27.02.2018, 21.03.2018, 16.04.2018, 24.04.2018 and 02.05.2018 and admitted that he had sold the above products to the applicant vide invoices dated 10.11.2017 and 16.11.2017 after charging the tax at the prevalent rates of 28% and 18% on the base prices and he had not made any additional profit after the reduction in the GST rate. He had also replied that since their base prices had been increased by the<\/p>\n
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\nprice Charged (Rs.) (including CST)
\n299238
\n10.11.2017
\nNestle Munch Nuts 32 Gm.Chocolate
\n15.63
\n28%
\n20.00
\nCadbury Dairy Milk Chocolate
\n31 .25
\n28%
\n40.00
\n311392
\n16.1 1.2017
\nNestle Munch Nuts 32 Gm. Chocolate
\n16.95
\n18%
\n20.00
\nCadbury Dairy Milk Chocolate
\n33.90
\n18%
\n40.00
\n\t
\nPre 15.11.207
\n\t
\nPost 15.11.2017
\n\t
\nDescription of product
\nBase Purchase price (Rs.)
\nBase Sale price (Rs.)
\nMargin of Profit
\nBase Purchase Price (Rs.)
\nBase Sale price (Rs.)
\nMargin of profit
\nA
\nB
\nC
\nD=(C-B)\/B
\nE
\nF
\nG=(F-E)\/E
\nNestle Munch Nuts 32 Gm. Chocolate
\n14.01
\n15.63
\n11.50%
\n15.20
\n16.95
\n11.50%
\nCadbury Dairy Milk Chocolate
\n27.90
\n31.25
\n12.00%
\n30.27
\n33.90
\n12.00%
\n3. The DGAP's Report has submitted that the Respondent had also filed Purchase & Sale invoices from November 2017 to March 2018, copies of the GSTR-3B from November, 2017 to March, 2018 along with copies of GSTR-I from November, 2017 to February, 2018 but did not provide the details of<\/p>\n
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\n4. The DGAP's Report further stated that from the records submitted by the Respondent it was revealed that he had purchased 910 units of Nestle Munch Nuts 32 Gm. and 4646 units of Cadbury Dairy Milk Chocolate during the period between 15.11.2017 to 31.03.2018. He has also reported that the Respondent had failed to supply the details of the invoices of the outward supplies pertaining to the above period and hence he had presumed that the above quantity of the Chocolates was sold by him during the period between 15.11.2017 to 31.03.2018. The DGAP had therefore, concluded that the Respondent had resorted to profiteering of Rs. 15,958\/- as per the details given in the table below. He has also reported that the Respondent had profiteered an amount of Rs. 4.69 from the Applicant No. 1 vide invoice date 16.11.2017 while selling two units of the above products to him.
\nProduct
\nMRP (Rs.)
\nBefore 14.11.2017 (Rs.)
\n15.11.2017 to<\/p>\n
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\n7. The Respondent has also claimed that he had purchased Cadbury Dairy Milk Chocolates from M\/S CTC at the base price of Rs. 27.90 per unit before15.11.2017 and at the base price Rs. 30.27 per unit after 15.11.2017. He has further claimed that since the Distributor had increased the basic purchase price, he was also forced to increase his basic sale price however, he had not increased his profit margin. The Respondent has also pleaded that M\/S CTC through it's sale invoices issued to him on different dates during the pre and post GST period was giving him quantity discounts through various schemes which could not be construed as discounts on the basic prices a<\/p>\n
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\n9. The Respondent has also raised objection against para 12 of the Investigation Report which stated that it was the responsibility and statutory obligation of the Respondent to pass on the benefit of tax r<\/p>\n
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\n10. The above submissions filed by the Respondent were forwarded to the DGAP who vide his reply dated 16th August 2018 has stated that the Respondent was a supplier who was registered vide GSTIN 06AABCH2910GIZ3 and the Applicant No. 1 had alleged that he had not passed the benefit of tax reduction to him. He has also stated that the Respondent was required to sell the products at the basic prices which were prevalent before 15.11.2017 by levying GST @ 18% to pass on the benefit of reduction in the rate of tax. The DGAP has also contended that being a registered supplier under the CGST\/SGST Act, 2017 the Respondent was legally bound to pass on the benefit of reduction in rate of tax to his customers. The DGAP has further contended that the point raised by Respondent regarding calculation of the profiteered amount in <\/p>\n
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\n4,731
\n1 ,024
\nSale Made during 01.11.2017 to 14.11.2017 as per Sales Calculation Sheet submitted by Noticee (Units)(B)
\n85
\n114
\nTotal Sale deemed to have been made during 15.11.2017 to 31.03.2018 (Units) (C)=(A)-(B)
\n4646
\n910
\nProfiteering Per Unit (In Rs.) (D)
\n3.13
\n1.56
\nTotal Profiteering (In Rs.) (E)=(C)*(D)
\n14542
\n1,416
\n11. The Authority had decided to call the representatives of the Distributors viz. M\/S CTC and M\/S NE as the Respondent had specifically alleged that both of them had increased the base prices after 15.11.2017 and had also not given him any discounts to pass on the benefit of rate reduction. On 21.08.2018 Mr. Rajesh Chandna on behalf of M\/S CTC and Sh. Rajeev on behalf of M\/S appeared for the hearing. Both the above Distributors vide their written submissions stated that their billing softwares were fully managed\/controlled by the manufacturers viz. M\/S Mondelez India Foods Private Ltd (Cadbury) & M\/S Nestle Limited India respectively and they couldn'<\/p>\n
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\n12. Both the written submissions filed by the Distributors were forwarded to the DGAP for his reply. The DGAP vide his reply dated 11.09.2018 had submitted that the invoices of M\/S NE from Nestle India Limited and invoices of M\/S CTC from M\/S Mondelez India Foods Private Ltd. were not relevant to the present case filed against the Respondent. He had further submitted that the invoices submitted by both the above Distributors had been examined vide paras 11 and 12 of his Report dated 18.06.2018 and it was found that on some of the products on some dates discounts had been given with the remark 'GST transaction discount 6.6%' and comments such as 'anti profiteering provisions under GST require that you pass on to consumers, benefits of GST reduction given to you' and 'with GST benefits where applicable' were recorde<\/p>\n
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\n15. It is also revealed from the perusal of the tax invoice dated 10.11.2017 issued by the Respondent in favour of the Applicant No. 1 that he had sold one unit of Nestle Munch Nuts 32 Gm. Chocolate at the base price of Rs. 15.63 and after levying GST @ 28% realised MRP of Rs. 20\/- from him. It is also revealed from the above invoice that the Respondent had charged Rs. 31.25 per bar for the Cadbury Dairy Milk Chocolate and sold it @ MRP of Rs. 40\/after realising GST of 28%. Perusal of the tax invoice dated 16.11.2017 shows that the Responde<\/p>\n
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\n17. The Respondent has also argued that M\/S CTC and M\/S NE had not given him<\/p>\n
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\n21. 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 dated 14.11.2017 supra in respect of the above products to his customers and therefore, he is liable for action under Rule 133 of the CGST Rules, 2017, the relevant provisions of which state as under:-
\n“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
\n(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 –
\n (a) reduction in prices:
\n (b) return to the recipient, an amount equivalent to the amount not passed on by the way of commens<\/p>\n
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