TaxTMI 
TaxTMI 
TaxTMI 
2019 (2) TMI 295
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....port) was filed by the Applicant No. 1 against the Respondent stating that he had purchased 1 SGB Stuffed GB (Garlic Bread) and 1 Med NHT Veg Extrava (Medium Veg Pizza) after paying Rs. 129/- and Rs. 440/- per item respectively vide tax Invoice No. 66065/17/66210 dated 20.10.2017 (Annexure-2 of the Report) from the restaurant being run by the Respondent in Bengaluru. He had also stated that he had purchased the above 2 items again vide tax Invoice No. 66294/17/40249 dated 19.11.2017 (Annexure-3 of the Report) by paying an amount of Rs. 139/- and Rs. 485/- respectively from the Respondent. He had alleged that though the Goods & Services Tax (GST) rate on restaurant services was reduced from 18% to 5% w.e.f. 15.11.2017, the Respondent had increased the base prices of the above food items and charged the same base prices which he was charging before the rate of tax was reduced and had he maintained the same base prices which he was charging before the tax reduction the consumers would have been benefited but in this case it had not happened. He had therefore alleged that the Respondent had resorted to profiteering and accordingly action should be taken against him. He had also stated ....
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.... in the menu were exclusive of all taxes/GST except in the State of Maharashtra prior to 01.07.2017. (b) That the Respondent had denied the allegation of profiteering and stated that there was no profiteering by him as the tax reduction in respect of restaurant services had been made along with denial of Input Tax Credit (ITC) which had become a cost for him as he was required to pay GST on the inputs without benefit of the ITC. (c) That the menu prices were exclusive of taxes/GST and hence any comparison had to be made between the cum-tax prices and not the base prices. The Respondent had also stated that the revised base prices had taken into account the cost of non-creditable input GST, however there had been no increase in the ultimate prices inclusive of GST to be paid by the customers. (d) That he had increased the base prices of Medium Veg Pizza and Garlic Bread, however their selling prices inclusive of GST had actually decreased as could be seen from the following table:- Type of product Price up to 14.11.2017 (Rs.) Price w.e.f.15.11.2017 (Rs.) Increase in base price Decrease in total price Base price GST 18% Actual Price to Consumer Base price GST @ 5% ....
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....had further contented that various factors like Competition pricing, Strategies for market penetration, Profit margins for sustaining in market, Life cycle of the product, Economic and political conditions, Credit period offered to vendors and Costs of procurement etc. had influenced pricing of his products. (h) That as per general practice, he was increasing his base prices every year due to inflation and for Stuffed Garlic Bread the base price was increased by 17.3% over a period of 3 years which came to around 5.8% annually. He has also claimed that the annual increase in base prices ranged between 1% to 5% depending upon the product and he had made increase of at least 5% in November, 2017. (i) The Respondent has also claimed that in respect of the Medium Veg Pizza and the Garlic Bread he had not only passed on the benefits by reduction in the tax rate but had also reduced their prices and incurred substantial losses. (j) He has further claimed that after 15.11.2017, he had not availed any ITC for the restaurant services and the ITC claimed after 15.1 1.2017 pertained to the States where he had commissary or warehouses which made stock transfers and had output GST liability.....
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....1.03.2018 (Annexure-19 of the Report) it was clear that the Respondent's business activity fell within a single business segment, i.e. Food and Beverages. The DGAP has further contended that the Statement of Audited Financial Results for the current and previous periods submitted by the Respondent showed that post 15.11.2017, there was a distinct sharp increase in the profits made by him without a corresponding increase in the sale of his products and this increase was to the tune of 406.33% during March, 2018 quarter and 184.97% during the Financial Year (FY) 2017-18 as against the decline in the profits during the previous periods. The Report also stated that the increase in the sales was only of 27.26% during March, 2018 quarter and 17.06% during the FY 2017-18 and this negated the Respondent's claim that he had not factored in the loss of ITC in the increase which he had made in the prices and had also not taken in to account inflation in the cost of inputs while fixing the revised base prices and hence he had faced decline in his profit margins. A summary of the sales and the profit before exceptional items and tax of the Respondent has been supplied by the DGAP as per the Tab....
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.... accordingly he has calculated the same by taking into consideration the period from 01.07.2017 to 31.10.2017 and not up to 14.11.2017 due to the following reasons:- (a) The Respondent has reversed the ITC on the closing stock of inputs and the capital goods as on 14.11.2017 and this credit was not available in the GSTR-3B return of November, 2017. As these inputs would have been used after 15.11.2017, their ITC had been left out as no ITC could be claimed after the above date. (b) The details of the invoice-wise outward taxable turnover for the month of November, 2017 were not supplied by the Respondent to calculate the taxable turnover for the period between 01.11.2017 to 14.11.2017. (c) Random checks of the invoices on which the ITC was availed by the Respondent during the month of November, 2017 revealed that in a few cases credit was taken by the Respondent without fulfilling the prescribed conditions and a number of discrepancies were found in the ITC availed e.g. the Respondent had availed ITC of Rs. 44.90 Lakh on 14.11.2017 on invoice No. 6145505874 dated 18.10.2017 issued by M/S Nilkamal Limited and of Rs. 4.20 Lakh on 14.11.2017 on invoice No. CDP117000816 dated 13.11.....
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.... 24,71,23,168 22,77,09,524 78,27,50,870 Less: Tax on Inter unit branch transfers as per Sales register (B) 4,86,70,456 6,34,79,714 5,65,75,226 5,9015,082 22,77,40,478 Net Input Tax Credit available for the period July, 2017 to October, 2017 (C)=(A-B) 4,72,51,377 14,85,16,631 19,05,47,942 16,86,94,442 55,50,10,392 Total Outward Taxable Turnover as per GSTR-1 (D) 2,78,61,32,213 2,99,11,80,009 2,93,77,50,465 3,04,74,93,204 11,76,25,55,891 Less: Inter unit branch transfers Included in B2B Sales as per Sale Register (E) 39,18,73,402 49,69,53,429 44,71,12,802 49,47,41,644 1,83,06,81,277 Net Outward Taxable Turnover for the period July, 2017 to October, 2017 (F)=(D-E) 2,39,42,58,811 2,49,42,26,580 2,49,06,37,663 2,55,27,51,560 9,93,18,74,614 Ratio of Input Tax Credit to Net Outward Taxable Turnover (G): (C/F) 5.59% 11. The DGAP's Report also states that on the basis of the analysis of the details of the item-wise outward taxable supplies made during the period between 15.11.2017 to 31.05.2018, it was revealed that the Respondent had increased the base prices of a number of items supplied as a part of restaurant services to make up for the denial of ITC ....
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...., 17.09.2018, 05.10.2018 and on 22.10.2018. In his initial submissions dated 13.08.2018, the Respondent has stated that the Standing Committee had erred in referring the matter to the DGAP for further investigation, as the Applicant No. 1 had filed complaint in respect of 'medium veg. pizza', while the invoices submitted by the above Applicant showed that the pizzas ordered by him were of different variety. The pizza ordered by the above Applicant vide invoice dated 20.10.2017 was 'Medium Veg Extravaganza Pizza Normal Crust Hand Tossed, whereas the pizza ordered by him vide invoice dated 19.11.2017 was 'Medium Veg Extravaganza Pizza Pan Crust'. Therefore, the Respondent has contended that the application was filed for two different and incomparable products, the prices of which couldn't be compared. The Respondent has also submitted that the investigation report had gone beyond the application and investigated all the 393 SKUs sold by the Respondent for profiteering which couldn't have been done. In this regard, the Respondent has also relied upon the 2 cases viz. M/s. Dinesh Mohan Bhardwaj Proprietor U. P. Sales & Services v. M/s. Vrandavaneshwree Automotive Private Limited 2018-V....
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....n account of implementation of GST, the Malaysian Government had promulgated the 'Price Control and Anti-Profiteering (Mechanism to Determine Unreasonably High Profit) (Net Profit Margin) Regulations, 2014, which provided for the mechanism to calculate the profiteered amount on account of GST. He has further stated that the anti-profiteering measures in Australia were based on the 'Net Dollar Margin Rule' on which profiteering was calculated. Relying on the cases mentioned below he has claimed that unless the methodology was in place no action could be initiated:- (1) Commissioner of Income Tax, Bangalore v. B. C. Srinivasa Setty (1981) 2 SCC 460 = 1981 (2) TMI 1 - SUPREME COURT, in which the Hon'ble Supreme Court had held that charging section was not attracted where corresponding computation provision was inapplicable. (2) Eternit Everest Ltd. v. Union of India 1997 (89) ELT 28 (Mad.) = 1996 (6) TMI 90 - MADRAS HIGH COURT, where the Hon'ble Madras High Court had held that in the absence of machinery provisions pertaining to determination and adjudication upon a claim or objection, the statutory provision will not be applicable. 17. The Respondent has also claimed that the comp....
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....eparate entities as per the GST law. He has further alleged that the DGAP had taken into account the total price charged from the customers all over India for arriving at the alleged profiteered amount which was incorrect. The Respondent has also objected to the methodology adopted by the DGAP in not 'netting off' the increase and decrease from the optimum price as he should have considered the positive and negative price variations in respect of all the SKUs which were above and below the optimal price to arrive at the profiteered amount. Accordingly he has claimed that it was necessary to define the term 'commensurate' appearing in Section 171 and Rule 127. He has further stated that the Legislature had qualified the word 'reduction' by using the word 'commensurate' and therefore the word 'commensurate' in this context would mean 'appropriate', 'adequate' or 'proportionate'. He has also cited the following dictionary definitions of the word 'commensurate' to support his claim:- (i) Random House Compact Unabridged Dictionary, Special Second Edition: 1. Having the same measure; of equal extent or duration. 2. Corresponding in amount, magnitude or degree. 3. Proportionate, a....
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....was used by the anti-dumping authorities in certain countries which while calculating the dumping margins took only those SKUs in account which were being dumped and those SKU's which were not being dumped were not considered. The Respondent has further claimed that the Government of India (GOI) had objected to this methodology at the WTO and argued that while determining the dumping margins, all the SKUs should be taken into consideration. He has also cited the Report No. WT/DS141/AB/R dated 01.03.2001 of the Appellate Body of WTO in his support and claimed that the plea of the GOI was accepted by the Appellate Body and both positive and the negative margins were ordered to be taken in to account to determine the dumping margins and the same methodology of 'netting off' should be applied in his case also to determine the profiteered amount as the methodology applied by the DGAP in the present case was opposite of the stand taken by the GOI. The Respondent has also claimed that the profiteered amount should be calculated at the entity level and not on SKU level and should also take in to account the price reductions as well as the price increases. He has further claimed that his un....
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....Rs. 540/- to Rs. 585/- which constituted increase of 8.33%, keeping in view the increase in the purchase price and hence the law settled in the above case was fully applicable in the present case also as increase in the cost was a reason for price increase and frequent price increases were very common in the food and the beverage industry, however, the DGAP had not taken in to account the normal inflation and presumed that the Respondent was entitled to increase his prices on account of denial of ITC only. He has also argued that in case the impact of nominal inflation in cost of 1.99% was considered, then the profiteered amount would reduce by Rs. 12.75 Crore. 24. The Respondent has also claimed that the conclusion of the DGAP at paragraph 12 of his Report that there was a sharp increase in the profits made by the Respondent without corresponding increase in the sale of his products was wrong as during the Quarter Ending (QE) March 2018 as compared to the QE March 2017 profits had increased by 406% while the sales had increased only by 27% and the profits during the FY 2017-18 had increased by 185% whereas the sales had shown increase of 17% as compared to the previous year. In r....
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....ned to the period when he was eligible to claim ITC. He has also stated that the TRAN-1 credit of Rs. 1.84 Crore was claimed in the month of November, 2017 only once and not twice which could be verified from the ITC register as well as the GSTR-3B return. He has also averred that he was entitled to claim ITC of Rs. 20.72 Crore till 14.11.2017 which should have been allowed to him. He has also alleged that the DGAP had considered the period between 01.11.2017 to 14.11.2017 for all other calculations except for the computation of ITC which had adversely affected him. The Respondent has further alleged that the DGAP had considered the ITC on the Inter-State Stock transfers on the basis of the Sales Register, while the actual ITC availed was less in the ITC Register, as the ITC on such transfers for the last 2-3 days of a particular month was availed during the next month and in case the ITC on these transfers was considered from the ITC Register the Respondent would be eligible for increase in prices of 7% instead of 5.59% due to denial of ITC and the profiteered amount would decrease by Rs. 9.21 Crore. 26. The Respondent has also submitted that the DGAP has wrongly used average sal....
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....e menu prices were considered instead of net sale realization the profiteered amount would be reduced by Rs. 15.72 Crore and if the incorrect menu prices for some SKUs were corrected the above amount would be further reduced by Rs. 4.64 Crore. 27. The Respondent vide his submissions dated 21.08.2018 has claimed that at the time of investigation he could not provide invoice wise details to the DGAP as the number of the invoices for the period between 15.11.2017 to 31.5.2018 was more than 4 Crore which he wanted to submit now to demonstrate that there was no profiteering by him to the extent the DGAP has calculated. The Respondent has also stated that he would have no objection if the order in this case was passed beyond the statutory period of 3 months due to recalculation of the profiteered amount on invoice basis. He has also claimed that he had collected details of 72,88,764 invoices issued during the month of December, 2017 which had revealed that that there was no profiteering in respect of 50% cases and the recipients had got more benefit. He has further claimed that as per the methodology adopted by the DGAP the profiteered amount would be Rs. 5,19,76,634/- as against Rs. 7,....
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....as also contended that he had increased the prices of some of the SKUs due to the denial of the ITC and on account of other commercial grounds which this Authority could not examine as such issues were not covered under the provisions of Section 171. He has further contended that the present proceedings had been launched as reduction in tax rate and denial of ITC had occurred simultaneously and in case the rate of tax would have remained the same and the ITC would have been denied, then these proceedings would not have been started. He has also claimed that reduction in the tax rate and denial of ITC should be taken as separate and unrelated events and in case it was done his case would not fall under the ambit of Section 171. He has further claimed that when the increase in prices made by a supplier, due to reasons other than mentioned in Section 171 is investigated and disallowed by this Authority or the DGAP they become price regulating bodies which is beyond the scope of Section 171. He has also stated that a supplier took in to account various factors like direct and indirect costs, demand & supply, customer perception, competition, product positioning, legal compliances and p....
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....(2) TMI 62 - SUPREME COURT OF INDIA, Vasta Bio-Tech Pvt. Ltd. v. Assistant Commissioner 2018 (360) ELT 234 = 2018 (1) TMI 1437 - MADRAS HIGH COURT, Dharampal Satyapal Ltd. v. Deputy Commissioner of Central Excise 2015 (320) ELT 3 = 2015 (5) TMI 500 - SUPREME COURT, Anrak Aluminium Ltd. v. Commissioner 2017 (4) GSTL 248 = 2017 (5) TMI 1200 - CESTAT HYDERABAD and Goyal Tobbaco v. Commissioner 2015 (329) ELT 619 = 2015 (11) TMI 249 - CESTAT NEW DELHI in his support. 30. The Respondent has also claimed that the rate of tax was reduced from 18% to 5% without benefit of ITC as per the Notification No. 46/2017-CT (Rate) dated 14.11.2017 for restaurant services and on 14.11.2017 he had reversed an amount of Rs. 7.73 Crore which was available on the closing stock and Rs. 37 Lakh on account of the common credit related to exempted supplies. He has further claimed that he used to increase prices of all SKUs 2-3 times in a year between 5% to 7% due to commercial reasons, which was not same for all the SKUs. He has also contended that he used to increase his prices between July-November every year which he had deferred due to implementation of the GST. The Respondent has further contended....
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....on No. 46/2017-Central Tax Rate 8. Complaint "6 Hara BharaKabab Sub" Para-1 Medium Veg Pizza and Garlic Bread 9. Increase in base price Rs. 130/- to 145/- Para-1 Pizza: Rs. 440 to FRS. 450/(Type A) Garlic Bread: Rs. 129/-to 139/- 10. Period examined for loss of ITC July 2017 to November 2017 Para-4 July 2017 to October 2017 (Request by Noticee for considering period of July 2017 to 14th November 2017) 11. Period for comparison for outward taxable supplies 15.11.2017 to 28.02.2018 Para-4 15.11.2017 to 31.05.2018 12. Loss of ITC as per DGAP 11.80% Para-4 5.59% (ITC Loss will be 7% if November is also taken into account) 13. Average increase in base prices 12.14% para-4 4.49% 14. Difference between Average increase in base price and loss of ITC (S.No.13-S.No 12) 0.34% Derived (-) 1.10% 32. The DGAP in his supplementary Reports dated 17.08.2018, 06.09.2018, 01.10.2018 and 31.10.2018 filed in response to the submissions made by the Respondent has stated that the claim of the Respondent that Applicant No. 1 had filed complaint for Medium Veg Pizza only and there was error in referring the matter by the Standing Committee ....
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....e Respondent and accordingly he had asked the Respondent to submit the product/SKU-wise sales for the period w.e.f. 01.10.2017 to 14.11.2017 vide his letter dated 11.04.2018 and the details for the period between March 2018 to May 2018 vide his letter dated 26.06.2018. He has further submitted that the anti-profiteering provisions were for the benefit of the recipients as each recipient must get benefit of reduction in the rate of tax or increase in the ITC on each and every supply of goods or services or both. Therefore, he has submitted that he was justified in applying the provisions of anti-profiteering at the Product/SKUs level in the absence of invoice-wise outward taxable supplies data. 36. The DGAP has also claimed with respect to the allegation of the Respondent that profiteered amount had been inflated by adding 5% GST by stating that the prices include both basic price and also the tax charged on them and therefore, any excess amount collected from the recipients amounted to profiteering which must be returned to the recipients, and in case the recipients were not identifiable, the same was required to be deposited in the CWF. He has further claimed that the anti-profit....
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....claim of increase in cost of inputs and input services had not been considered. 38. The DGAP has further replied that there seemed to be contradiction in the claim made by the Respondent of inflation of 1.99% with his profitability statement, as per the Table given below:- (in Lakhs) Particulars FY 2016-17 % to Sales FY 2017-18 % to Sales Income from Operation A 2,54,607 2,98,044 Cost of Material Consumed B 61 ,597 24.19% 75,143 25.21% Total Variable Expenses C 66,115 25.97% 69,855 23.44% Total Variable Cost (Material + Vari. Exp.) D=(B+C) 1,27,712 50.16% 1,44,997 48.65% Contribution E=(A-D) 1,26,895 49.84% 1,53,047 51.35% Fixed Expenses including Depreciation F 1,17,351 46.09% 1,23,995 41.60% Profit before Other Income, exception items & tax G=(E-F) 9,544 3.75% 29,051 9.75% Add: Other Income H 1,448 0.57% 2,272 0.76% Profit Before Tax I=(G+H) 10,992 4.32% 31,324 10.51% Therefore, the DGAP has claimed that the Total Variable cost (D) had reduced from 50.16% in FY 2016-17 to 48.65% in FY 2017-18 i.e. by 1.51%. The DGAP has further claimed that the Respondent has submi....
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....22,267 1.50% (12,779) 52,09,489 2.07% 8-Nov-17 76,99,658 2.22% - 76,99,658 3.06% 9-Nov-17 121,75,526 3.50% (41,659) 121,33,867 4.82% 10-Nov-17 75,83,972 2.18% (32,495) 75,51,477 3.00% 11-Nov-17 74,03,363 2.13% (18,37,604) 55,65,759 2.21% 12-Nov-17 119,66,406 3.44% (2,15,162) 117,51,244 4.67% 13-Nov-17 439,67,943 12.66% (1,08,330) 438,59,614 17,43% 14-Nov-17 2253,35,459 64.86% (931,32,430) 1322,03,029 52.54% Grand Total 3474,09,825 100% (957,96,986) 2516,12,839 100% Therefore he has argued that the ITC of Rs. 22.53 Crore (64.86% of ITC availed in November, 2017) was availed on a single date i.e. on 14.11.2017 which may not be possible to avail on a single date and the actual date of availment couldn't be ascertained in the absence of specific details. He has further argued that as per the ITC Register, net ITC of Rs. 25,16,12,839 was availed whereas as per the GSTR-3B return, the net ITC availed was Rs. 26,05,88,014, thus, the Respondent had availed excess ITC of Rs. 89,75,175/in the month of November, 2017 which was informed to the jurisdictional authorities for necessary action. The DGAP has also claimed that the Respondent has ....
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....Act provided that the value of the supply would not include any discount which had been given before or at the time of the supply if such discount had been duly recorded in the invoice issued in respect of such supply, therefore, the GST was chargeable on actual transaction value after excluding any discount both conditional as well as unconditional and therefore, for the purpose of computation of profiteering menu price or MRP couldn't be considered whereas actual transaction value was the correct amount which had been considered for such computation, as the menu price was the maximum price at which an item might be sold but it was not the actual sale price. The DGAP has also argued that the SKU wise net realization from 01.10.2017 to 14.11.2017 (45 days) period was compared with post rate reduction sale from 15.11.2017 to 31.05.2018 to consider the magnitude of the various discounts offered by the Respondent both prior to the GST rate reduction and post GST rate reduction. He has further argued that vide e-mail dated 11.07.2018 the Respondent had informed that the net sales considered for computing the average sale price were arrived at after factoring in the discount given to th....
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.... items from the Respondent on 20.10.2017 before the rate of tax was reduced and again on 19.11.2017 when the rate had been reduced however, the Respondent had increased the base prices of both these items and had charged the same prices which he was charging before the tax reduction and hence he had been denied the benefit of tax reduction. The Respondent has alleged that the Pizza ordered by the Applicant No. 1 vide invoice dated20.10.2017 (prior to reduction in GST rate) was 'Medium Veg Extravaganza Pizza Normal Crust Hand Tossed (Type A), whereas the Pizza ordered by the above Applicant vide invoice dated 19.11.2017 (post reduction in GST rate) was 'Medium Veg Extravaganza Pizza Pan Crust' (Type B), therefore, the complaint was made by the above Applicant in respect of two distinct and incomparable products and hence he could not be held accountable for profiteering as their prices could not be compared. However, it is revealed from the record that the Respondent had himself admitted before the DGAP, as has been mentioned in Para 4 (e) supra that the price of Type A Pizza was Rs. 440/- per unit and that of Type B was Rs. 470/- per unit respectively up to 14.11.2017, before the r....
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....THE NATIONAL ANTI-PROFITEERING AUTHORITY and Rishi Gupta v. M/S Flipkart Internet Pvt. Ltd. 2018-VlL-04-NAA = 2018 (7) TMI 1490 - NATIONAL ANTI-PROFITEERING AUTHORITY quoted by the Respondent in his support are entirely different than the facts of the present case as in the former case the benefit of tax reduction was given to the applicant and in the latter case M/S Flipkart was not the supplier and there was no evidence to investigate rest of the products being sold by them and hence both these cases do not help the Respondent. 44. It is also revealed from the record that the Respondent had been selling 393 products while supplying restaurant services before and after 15.11.2017 and he had increased the base prices after the reduction in the rate of tax w.e.f. 15.11.2017, in respect of 314 items which constituted 79.90% of 393 items as is apparent from Annexure-21 attached with the Report. It is further revealed that the GST rate of 5% had been charged on the increased base prices of these 314 items, after the reduction in the rate of tax w.e.f. 15.11.2017, however, because of the increase in the base prices the cum-tax price paid by the consumers had not been reduced commensura....
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....47. The Respondent has alleged that no methodology has been prescribed for determination and calculation of profiteering. In this connection it would be relevant to point out that this Authority has already notified the Procedure and the Methodology' vide its Notification dated 28.03.2018 under the provisions of Rule 126 of the CGST Rules, 2017 which is available on its website. As far as the method of calculation of profiteered amount is concerned no fixed method can be prescribed as the various parameters which are required to be taken in to account while making such computation vary from industry to industry and from one product to another. The factors which need to be considered while determining profiteering in the case of a real estate builder cannot be applied in the case of a consumer goods industry and hence the computation varies from sector to sector and from product to product. Within various products also the products which are sold on MRP and the products which are sold under the cost of production methodology the method of calculation of the profiteered amount will vary. Similarly -in the case of services and within services also in the case of construction services ....
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....ed no evidence to prove his contention. There was no reason for him not to increase his price between July-September as implementation of the GST had no connection with the price rise on the basis of inflation. The Respondent was well aware of the inflation which he had encountered during the FY 2016-17 and therefore, he should have increased his prices anytime from April to October 2017 and had no reason to increase them from the midnight of 14/15th November, 2017 coinciding with the reduction in the rate of tax which shows that his action was malafide and illegal. Therefore, there is no doubt that he had raised the prices w.e.f. 15.11.2017 only with the intention of appropriating the benefit of tax reduction by denying the same to his customers. Mere charging of tax @ 5% after the tax reduction cannot be taken to mean that he had passed on the benefit of such reduction when he had increased the base prices to negate the impact of tax reduction. The Respondent has also cited the case of Kumar Gandharv v. KRBL Ltd. 2018-VlL-02 NAA = 2018 (5) TMI 760 - NATIONAL ANTI-PROFITEERING AUTHORITY decided by this Authority in his support however the *same does not apply in this case as there....
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....re twice as per TRAN-I Statement as well as GSTR-3B return and hence the same has been rightly not taken in to account. There is also difference in the amount of ITC as per the ITC register and the GSTR-3B return and the Respondent has availed excess ITC of Rs. 89,75,175/- in the month of November, 2017. The Respondent has also availed ITC of Rs. 25,16,12,839/- on a single day on 14.11.2017 which does not appear to be correct as has been shown in Para 39 supra. The DGAP has considered the ITC on the basis of the record submitted by the Respondent himself and hence there appears to be no mistake in calculating the same. Therefore, the claim made by the Respondent that he was entitled to increase his prices by 7% instead of 5.59% due to denial of ITC is completely exaggerated and hence it cannot be accepted. The Respondent has also claimed that he had calculated the above ratio of 7% on the basis of P & L method adopted by the Malaysian Govt. but he has not explained the factors which he had taken in to account while applying the above method and hence the calculation made by him cannot be taken cognizance of. There was also no occasion for the DGAP to stop investigating the profitee....
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....nt himself and it does not discriminate him as the DGAP has taken average selling price of the products in to his account and hence the same cannot be rejected. He has also cited the case of Rishi Gupta supra in this regard in which the facts as narrated above were different which cannot help his case. 53. Perusal of the submissions made by the Respondent shows that he is labouring under the utterly wrong impression that the central focus of Section 171 of the Act was he and his products whereas the central focus is the recipient or the customer who is required to be given both the above benefits commensurately when he buys even a single product. Denial of these benefits would be hit by Article 14 of the Constitution if he is not given them on the ground that the Respondent had passed on the benefit on a particular product in place of another product which he may not buy. Each and every customer is entitled to receive both the above benefits without discrimination. Therefore, the provisions of antiprofiteering have to be applied at each and every Product/SKU level and the Respondent has no unfettered discretion to allow them selectively or as per his own whims and fancies. The Res....
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....on in Section 11 (D) of the Act of any provision whatsoever to initiate any proceedings or entertain and adjudicate upon any dispute with reference to the liability to pay any amount set to have been collected by a person .................;however in the instant case Section 171 of the CGST Act, 2017 read with the CGST Rules makes it very clear that once a complaint is filed the same is prime-facie examined by the Screening Committee/ Standing Committee and then forwarded to the DGAP for detailed investigation. On submission of the investigation report by the DGAP this Authority following the principles of natural justice determines whether any profiteering as alleged by the complainant has been established. Hence full-fledged mechanism is in place as far as the anti-profiteering provisions are concerned; therefore the above case does not advance the case of the Respondent. 54. The allegation of the Respondent that the profiteered amount has been inflated by adding 5% GST which he had collected on the increased prices and deposited with the Govt. is also not tenable as the above amount has been rightly held to be the profiteered amount by the DGAP since the benefit of tax reductio....
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....f which the price increase was within the permissible limit of 5.59%, since there was no profiteering in their case they were not required to be considered. Even if each restaurant owned by the Respondent was assessed separately for profiteering the conclusion would have been the same as the Respondent was charging the same prices in each of his outlets and was also centrally fixing the prices and hence he has been rightly assessed for profiteering collectively. There is also no justification for 'netting off' the increases and the decreases in the prices of the various products as the benefit is required to be passed on each SKU and profiteering is required to be computed only in respect of those SKUs where prices have been increased more than 5.59%. 56. The Respondent has admitted that the word 'commensurate' as per its dictionary meaning meant appropriate, adequate and proportionate therefore, it is clear that every recipient must receive appropriate, adequate and proportionate benefit of tax reduction which cannot be done in case the Respondent is treated as a single entity and all the customers as a group. It is also apparent from the record that the Respondent had increased ....
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....spondent that the products mentioned in an invoice generally included both type of products on which rate had been increased and reduced and the benefit has been passed as the reduction is more than the increase is completely farfetched and has no basis whatsoever and the hence the same is rejected as no such 'netting off' can result in passing of the above benefits. 58 The Respondent has also stated that the provisions of Section 171 of the above Act could not be invoked in his case however, the contention of the Respondent is not tenable as mere charging of 5% GST after the rate reduction does not amount to compliance of the above Section as he was required not to increase the prices more than the quantum of denial of ITC whereas he had exceed the above limit. The case of Pawan Sharma v. M/s. Sharma Trading Company, Case No. 6/2018 = 2018 (9) TMI 625 - THE NATIONAL ANTI-PROFITEERING AUTHORITY also does not help him as there was no finding to the effect in that case that mere charging of the reduced rate of tax will meet the provisions of the above Section rather it was held that the above Company should not have increased the base prices which were existing on 14.11.2017 and sho....
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.... the Respondent along with all the Annexures attached with the Report. The Respondent was also informed that the Report filed by the DGAP had been duly considered by the Authority and it had been decided to give him opportunity to file submissions on the findings of the DGAP. A copy of the complaint made by the Applicant No. 1 was also supplied to him by the DGAP and a notice for investigation was also issued to him by the DGAP on 25.01.2018 asking him whether he admitted that he had passed on the benefit of tax reduction or not. Therefore, it is apparent that the Respondent was fully aware of the allegations which had been levelled against him as well as the findings of the DGAP in which he had been alleged to have resorted to profiteering. The Respondent had also filed detailed submissions to the Report on 13.08.2018, 21.08.2018 and 1 1.09.2018 and at no stage he had raised the issue of non-issuance of the show cause notice which shows that the present objection which has been raised by him on 17.09.2018 is as an afterthought to evade the consequences of his illegal act. The Respondent being a very large organisation could also not have been ignorant of the fact that he was liabl....
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....hority in the case of M/s. Hardcastle Restaurants Pvt. Ltd. decided on 16.11.2018 = 2018 (11) TMI 1073 - NATIONAL ANTI-PROFITEERING AUTHORITY, the facts of which are similar to the facts of this case, has clearly held that based on the denial of ITC, the above Company could increase its prices only to the extent of denial and any increase made over and above the denial of ITC would amount to denial of benefit of tax reduction resulting in infringement of the provisions of Section 171 of the Act. Accordingly, in the present case the benefit of denial of ITC works out to be 5.59% and as has been discussed in Para 10 above, the Respondent could have increased his prices to the extent of 5.59%. However, as is apparent from Annexure-23 of the DGAP's Report the prices of the products have been increased by the Respondent from 5.75% to 84.55%. The DGAP has therefore, considered only those products on which there has been increase of more than 5.59%, accordingly 170 products have been impacted and the profiteered amount on these products has been rightly computed as Rs. 41,42,97,635/-. 61. In view of the above discussion it is held that the Respondent has not passed on the benefit of redu....