TaxTMI 
TaxTMI 
2018 (9) TMI 625
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....ssed on the benefit of reduction in the rate of tax by lowering the price of Vaseline VTM 400 ml. , (here-in-after referred to as the product) which he had purchased from the respondent, when the Goods and Services Tax (GST) was reduced from 28% to 18% on this product on 15.11.2017. He had also alleged that he had bought the above product from the Respondent @ Rs. 213.63/- per unit vide tax invoice No. GSA25066 on 26.09.2017 which included GST @ 28% and the Respondent had charged the same price when he had purchased the above product vide tax invoice No. GSA37782 on 15.11.2017 when the GST had been reduced to 18%. He had thus claimed that the Respondent had indulged in profiteering in contravention of the provisions of Section 171 of the CGST Act, 2017 and hence appropriate action should be taken against him. 2. The above application was examined by the Standing Committee on Anti-Profiteering and was referred to the DGAP, vide minutes of it's meeting dated 29.11.2017 for detailed investigation under Rule 129 (1) of the CGST Rules, 2017. 3. The DGAP had issued notice to the Respondent on 29.12.2017 to submit his reply on the allegation levelled by the Applicant No. 1 and also ....
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....ion of the Respondent that no profiteering was involved in the present case as the Applicant No. 1 had returned the product on 15.12.2017 which was sold to him on 15.11.2017 and a credit note had been issued in his favour by the Respondent and hence the above transaction was null and void was not correct as Section 171 of CGST Act, 2017 required that the benefit of tax reduction should be passed on at the time of supply of the goods and services and any future event related to that supply would not render the transaction of original supply infructuous. The DGAP has also reported that the GST rate on the product had been reduced from 28% to 18% vide Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017, with effect from 15.11.2017 and hence the benefit of tax reduction was required to be passed on by the Respondent. He has further reported that the claim made by the Respondent that the benefit of GST rate reduction had been passed on by increasing the quantity of Vaseline from 300 ml. to 400 ml. without any increase in the MRP was not tenable as the Respondent was not competent to either increase the quantity of the product or to reduce the MRP w.e.f. 15.11.2017 as it was not....
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....ing chart which amounted to violation of the provisions of Section 171 of the CGST Act, 2017:- 7. The above report was considered by the Authority in it's meeting held on 23.03.2018 and it was decided to hear the Applicant No. 1 and 2 and the Respondent on 10.04.2018. However, the Applicant No. 1 did not appear during the hearing and vide his letter dated 09.04.2018 showed his satisfaction over the investigation report. The Applicant No. 2 was represented by Sh. Akshat Aggarwal, Assistant Commissioner and Sh. Bhupender Goyal, Assistant Director (Cost). Sh. Subhash Joshi proprietor appeared on behalf of the Respondent alongwith his Counsel Sh. Vivek Sharma during the process of hearing. The Id. Counsel for the Respondent submitted detailed written submissions on 10.4.2018 as well as additional written submissions on 23.4.2018 in which it was submitted that the Respondent was a distributor of HUL and he was bound to follow the price pattern and other sale policies decided by the HUL. He has also explained the entire chain of purchase of the product made by him from the HUL and it's subsequent sale to the retailers during the period prior to 15.11.2017, from 15.11.2017 to 07....
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....he higher rate of Rs. 172.77/- and paid CST, i.e. Rs. 31.10/which was availed by him as ITC. He has also submitted that the product was sold for Rs. 213.64/- per unit including GST and 4.06% margin and hence his margin had remained the same, therefore, no profiteering was done by him. He has further submitted that on 08.12.2017, the MRP of the product was reduced from Rs. 235/- to Rs. 233/- by the HUL due to which his purchase price had been reduced from Rs. 172.77/- to Rs. 171.30/- excluding CST. He has also claimed that he had bought the product from the HUL @ Rs. 171.30/- per unit on which GST of 18%, i.e. Rs. 30.83/- was paid by him and ITC was claimed and the product was sold for Rs. 211.82/per unit inclusive of 4.06% margin and 18% GST and therefore, his margin had remained the same. He has also claimed that actually, he had lost Rs. 0.07/- per unit during each transaction and hence even after reduction in the MRP w.e.f. 08.12.2017, no additional profit had accrued to him. The Respondent has further claimed that he was merely an intermediary in the supply chain and had not profited due to the reduction in the rate of tax. 10. The Respondent has also argued that the notice da....
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....registered person to bring about the necessary reduction in prices in view of the reduction in the GST rate since there were various practical issues as also various legal requirements which were required to be complied with. He has further averred that it was impossible to change the entire pricing mechanism, labelling and packaging overnight as it was settled that the law could not force a person to do a thing which was impossible as was enshrined in the legal maxim "Lex Non Cogit Ad Impossibilia" 12. The Respondent has also pleaded that para 16 of the Report dated 16.03.2018, had failed to consider the benefit of additional grammage as it was stated that the Respondent being an intermediary could not increase the grammage. He has contended that there was no provision in the law which debarred him from getting benefit of grammage as an intermediary and in the entire supply chain any benefit which was available to a manufacturer was also available to an intermediary and the GST law did not make any distinction on this account. He has further pleaded that had the increase in weight been considered, it would have established that the commensurate benefit had been passed-on. 13. Th....
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....e of GST was cut by 10%, rather the base price was increased by Rs. 14.11/- per unit by the Respondent. The same price was charged by him on all the transactions made by him between 15.11.2017 to 7.12.2017. The base price was reduced by Rs. 2/- w.e.f. 8.12.2018 by the HUL after which sale price of Rs. 211.82/was charged by the Respondent whereby there was excess realisation of Rs. 12.11/- per unit. The Respondent has further admitted that he had sold 10 units of the product to the Applicant No. 1 vide invoice No. GSA25066 dated 26.9.2017 on which the base price was charged as Rs. 166.90/- and the sale price including the GST @ 28% was realised as Rs. 213.63/-. It is also acknowledged by the Respondent that he had sold 20 units of the product to the above Applicant vide invoice No. GSA37782 dated 15.11.2017 in which the base price was shown as Rs. 181.05/- and the selling price was Rs. 213.63/- and hence the base price was enhanced by Rs. 14.15/- per unit by the Respondent. It has further been acknowledged by the Respondent that the above Applicant had purchased 11 units of the product from the Respondent vide invoice No. GSA42046 dated 28.11.2017 in which again an amount of Rs. 14....
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....s violated the provisions of Section 171 of the above Act. 17. The Respondent has also claimed that all the units of the product bought by the above Applicant on 15.11.2017 had been returned by him on 15.12.2017 and accordingly the transaction of supply had become infructuous and hence no profiteering could be alleged against him. However, this contention of the Respondent is not correct as the supply of goods stood completed on 15.11.2017 as soon as the tax invoice was issued by him after receipt of entire consideration and delivery of the goods was made to the above Applicant. This transaction was admittedly reflected by Respondent in his return for the month of November, 2017. The goods were returned by the above Applicant on 15.12.2017 on which the Respondent had issued a credit note in favour of the above Applicant vide which the cost of the goods as well as the GST charged was refunded to the above Applicant, which was again mentioned by him in his return for the month of December, 2017 as per the provisions of section 34 of the CGST Act, 2017. In case the transaction made on 15.11.2017 had been negated there was no question of its having been reflected in the return filed ....
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.... be passed on to the consumers as both are the concessions given by the Government from its own revenue and the suppliers cannot appropriate them as they are not entitled to do so. Both the benefits must go to the consumers and in case they are not identifiable the amount so collected by the suppliers should be deposited in the CWF so that it can be used in the public interest. In case of any legal or logistical difficulties the amount of benefit collected by the suppliers can always be deposited in the CWF but cannot be retained by the suppliers as it does not belong to them. The Respondent has made no effort to pass on the benefit which had become due after reduction in the rate of tax to his customers rather he had increased the base price and had infact illegally collected an amount equal to the reduction which had accrued due to the change in the rate of tax. He has also not followed the 2011 Rules supra citing his practical and logistical problems, which does not appear to be correct and hence he has contravened the provisions of the Section 171. The Respondent was at no stage required to perform an impossible act and hence the doctrine of "Lex non cogit ad impossibilia" does....
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....mount equivalent to the amount not passed on by the way of commensurate reduction in prices along with interest at the rate of eighteen percent from the date of collection of the higher amount till the date of the return of such amount or recovery of the amount including interest not returned, as the case may be; (c) the deposit of an amount equivalent to fifty percent of the amount determined under the above clause in the Fund constituted under section 57 and the remaining fifty percent of the amount in the Fund constituted under section 57 of the Goods and Services Tax Act, 2017 of the concerned State, where the eligible person does not claim return of the amount or is not identifiable; (d) imposition of penalty as specified under the Act; and (e) 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-x-x-x 22. Accordingly, the Respondent is directed to reduce the sale price of the product immediately commensurate to the reduction in the rate of tax as was notified on 14.11.2017 and pass on the benefit of reduction in the rate of the tax to his customers. 23. Since the price of the product and the GST charged by him from the above Applicant in respect of the tax inv....