TaxTMI 
TaxTMI 
2018 (10) TMI 510
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....on the product's base price of Rs. 3.96/- per pack, however, after the GST rate was reduced from 18% to 12% w.e.f. 15.11.2017, the Respondent had started charging 12% GST on the product's increased base price of Rs. 4.17/- per pack. Thus, the Applicant No. 1 had further alleged that the Respondent had increased the base price of the product from Rs. 3.96/- to Rs. 4.17/- after the GST rate applicable on the product was reduced from 18% to 12%. The Applicant had also claimed that by increasing the base price of the product it's cum-tax price had remained unchanged at Rs. 4.67/- which showed that the Respondent had not passed on the benefit of the reduction of GST rate to him. The application was examined by the Standing Committee on Anti-Profiteering in it's meeting held on 20.12.2017, wherein it was decided to refer the matter to the Director General of Safeguards (DGSG), now re-designated as Director General Anti-Profiteering (DGAP) in order to initiate an investigation and collect evidence necessary to determine whether the benefit of reduction in the rate of tax on the above product had been passed on by the Respondent to the Applicant or not? 2. On receipt of the reference fr....
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.... reduced MRP of Rs. 11/- and thus, the benefit in respect of Rs. 5/- MRP pack had been passed on by reducing the price of other packs of Maggi Noodles by more than what was required. Therefore, the Respondent had claimed that the benefit of GST rate reduction had been passed on in respect of Maggie Noodles as a whole. The Respondent had also submitted the following documents: - a) Balance Sheet, Profit and Loss Account for the year 2016-17. b) Copies of the GSTR- 3B returns for the period from October, 2017 to February, 2018. c) Copies of the GSTR-1 returns for the period from October, 2017 to February, 2018. d) GST TRAN 1 for July, 2017 e) Purchase invoices for the period from November, 2017 to March, 2018 f) Sales calculation sheet for the month of November, 2017. g) Sample sales invoices for the month of November, 2017. h) Price lists before 15.11.2017 and w.e.f. 15.11.2017. 4. The DGAP has analysed the application, the reply of the Respondent and the documents/evidence brought on record and has also looked into whether the rate of GST on the product was reduced w.e.f. 15.11.2017 and if so, whether the benefit of such reduction in the rate of tax had b....
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....as not passed on the benefit of GST rate reduction to the recipients of the product including the Applicant No. 1. Accordingly, the DGAP has calculated the profiteered amount of Rs. 90,778/- including the profiteered amount of Rs. 2,253/- charged by the Respondent from the Applicant No.1 as has been shown below:- (Amount in Rs.) Sr.No. Product MRP 1st Nov. to 14th Nov. 2017 15th Nov. 2017 to 28th Feb. 2018 Commensurate Price per unit Profiteering Per unit Total Profiteering Amount Charged Base Price GST Rate Qty. Sold Amount Charged Base Price GST Rate Qty. Sold A B C D E F G H I J K L=112% of E M=[H-L] N=[K*M] 1 MAGGI 2-MIN Mas Ndls 35Gms 5.00 4.67 3.96 18% 12468 4.67 4.17 12% 382048 4.43 0.24 90,778/- Total Profiteering on sale of the Product 90,778/- 5. The DGAP has also reported that the Applicant No.1 vide his letter dated 15.06.2018 has sought to withdraw his application and requested for closure of the case, however, he has contended that as the application filed by the above Applicant had been invest....
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....e settled in the present proceedings:- 1) Whether the benefit accrued due to reduction in the rate of tax of one product can be passed on via another product or not? 2) Whether there was any violation of the provisions of Section 171 of the CGST Act, 2017 in this case? 3) If yes then what was the quantum of profiteering? 9. Perusal of Section 171 of the CGST Act shows that it provides as under:- (1). "Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices." (2). The Central Government may, on recommendations of the Council, by notification, constitute an Authority, or empower an existing Authority constituted under any law for the time being in force, to examine whether input tax credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him. (3). The Authority referred to in sub-section (2) shall exercise such powers and discharge such functions as may be prescribed. 171. (1) 10. It is apparent from the perusal of ....
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....ar that the Maggi Noodle pack of 35 Gms. is distinct from a 70 Gms. pack and both the packs may be bought by the different recipients/customers and hence the benefit accruing to one customer can not be given or denied to another nor can the benefit given to one set of customers arbitrarily enhanced and set off against the another. No such adjustments are permissible under the Act. 13. Based on the above discussion the quantum of profiteering is determined as Rs. 90,778/- including the profiteering of Rs. 2,253/- made by the Respondent from the Applicant No. 1. Accordingly, the Respondent is directed to reduce the price of the product commensurate to the reduction in the rate of tax. He is also directed to refund an amount of Rs. 2,253/- to the Applicant No. 1 alongwith interest @ 18% P. A. from the date form which the above amount was collected by the Respondent from him. Since the other customers of the product are not identifiable, the Respondent is hereby directed to deposit the balance amount of Rs. 88,525/- along with the interest at 18% P.A. till the date of deposit in the respective Central or State Consumer Welfare Fund within a period of 3 months from the date of receip....