TaxTMI 
TaxTMI 
Where the supplier had increased the base prices of 109 products which were being supplied by it after the rate of GST was reduced w.e.f. 15.11.2017 and forced its customers to pay more prices than what they should have paid and thus it had denied the benefit of rate reduction to them, the NAA confirmed that the supplier had indulged in profiteering in contravention of section 171 of CGST Act, 2017.
In DGAP, CBIC, New Delhi v. M/s Satya Enterprises, New Delhi 2019 (1) TMI 1419 - NATIONAL ANTI-PROFITEERING AUTHORITY; the complaint is based on a reference by NAA to DGAP that certain major manufacturers of Fast Moving Consumer Goods (FMCG) have not passed on the benefit of reduction in the GST rate from 28% to 18% w.e.f. 15.11.2017, by maintaining the prices of their products at the pre-GST rate reduction levels. The product in question was beauty cream manufactured by Patanjali Ayurveda Ltd.
DGAP report stated that GST Council had reduced the GST rate on a number of FMCGs from 28% to 18% w.e.f. 15.11.2017, including the 'Beauty Cream 50 GM' vide Notification No. 41/2017-Central Tax (Rate), dated 14.11.2017, which had been also admitted by the supplier. The invoices revealed that the supplier had increased the base price of the 'Beauty Cream’ when the rate of tax was reduced from 28% to 18%.
The NAA observed that the perusal of invoices showed that the base price of the above product was increased by the supplier after the rate of tax was reduced from 28% to 18% w.e.f. 15.11.2017, by maintaining the pre-GST rate reduction cum-tax price, as was evident from the price lists which revealed that the base price of 'Beauty Cream 50 GM' was ₹ 48.60 per unit before 15.11.2017 which was raised to ₹ 52.73 per unit, during the period between 15.11.2017 to 31.05.2018 after coming into force of the GST.
The NAA concluded the supplier had increased the base prices of 109 products which were being supplied by him after the rate of GST was reduced w.e.f. 15.11.2017 and forced his customers to pay more prices than what they should have paid and thus he had denied the benefit of rate reduction to them. He had also compelled them to pay additional GST on the increased quantum of base price otherwise this would also have further resulted in passing on the benefit of rate reduction to them. Mere charging of the fixed commission does not amount passing on the above benefit and hence the above plea of the Respondent is frivolous and cannot be accepted.
The NAA directed the supplier to reduce the sale prices of all the products the base prices of which he has increased w.e.f. 15.11.2017 immediately commensurate to the reduction in the rate of tax and pass on the benefit to customers. It was also directed to deposit an amount of ₹ 6,06,752.72 along with interest @ 18% payable from the date when this amount was realized by him from his customers till the date of deposit in the Central Consumer Welfare Fund (CCWF) and the CWF of the NCT of Delhi in the ratio of 50:50 as per the provisions of Rule 133 (3) (c) of the CGST Rules, 2017, failing which the above amount shall be recovered by the concerned Commissioner CGST and SGST as per the provisions of the CGST/SGST Acts under the supervision of the DGAP. The above amount shall be deposited within a period of 3 months.
It was held that had further acted in conscious disregard of the obligation which was imposed upon him by the law, by issuing incorrect invoices in which the base prices were deliberately increased by the amount by which the rate of tax was reduced and thus he had denied the benefit of reduction in the prices to his customers. It has further forced them to pay additional GST on the increased base prices which they were legally not required to pay, by issuing incorrect tax invoices. Accordingly, it had committed offence under Section 122 (1) (i) of the CGST Act, 2017.