TaxTMI 
TaxTMI 
2019 (12) TMI 993
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....eduction level. In this connection, two invoices issued by the Respondent to M/S Raj Super Store, bearing No. KTCG30375 dated 14.11.2017 and KTCG633331 dated 05.12.2017 for supply of "Kit Kat 4 Finger 18" (here-in-after referred to as the product), were also received by the Committee. The above reference was examined by the above Committee and was referred to the DGAP, vide minutes of its meeting dated 13.04.2018 for detailed investigations under Rule 129 (1) of the CGST Rules, 2017. 2. The DGAP had called upon the Respondent to submit his reply on the above allegation and had 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 31.05.2018. The Respondent had submitted replies vide his letters/e-mails dated 20.07.2018, 04.09.2018, 28.09.2018, 16.10.2018 and 22.10.2018 and submitted that he was working on a margin of 5%; that the infrastructure with respect to the billing, prices etc. was provided by M/s. Nestle India Ltd.; that he had no authority to change or modify the said infrastructure and software; that he had no role in pricing of the goods; that the stoc....
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....fective benefit of 7.8% that was required to be passed on to the recipients. He has further submitted that Section 171 (1) of the Central Goods and Services Tax Act, 2017 required that "a 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." Thus, the Respondent's contention that higher benefit compared to the benefit accruing had been passed on to the customers on other product packs under the same HSN code, was not acceptable and as a supplier registered under the GST (GSTIN 07AITPA0656R1ZO), it was the Respondent's statutory responsibility to pass on the benefit of reduction in the GST rate to his customers. The DGAP had also stated that by increasing the base price of the above product and more or less maintaining the pre-GST rate reduction cum-tax price, the benefit of the GST rate reduction was not passed on to the recipients. 5. The DGAP had also claimed that the Respondent had submitted the details of outward taxable supplies of all his products which revealed that the base prices of most of the products were increased after reduction in the t....
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....ndent orally submitted that his billing software was fully managed/controlled by the manufacturer viz. M/s. Nestle India Ltd. and he couldn't make any change in it expect that of quantity. He further submitted that his godown had been sealed by the local Municipal Authorities and he was not in a position to produce relevant documents to defend his case. This Authority after considering his above request allowed him to file his reply on 08.01.2019 which was further extended to 16.01.2019 in the interest of justice. On 16.01.2019 Sh. R. P. Jindal, Advocate and Sh. Ganesh Aggarwal, Authorised Representative appeared on behalf of the Respondent and submitted that the impugned Report of the DGAP was based on misconception of law and erroneous understanding and application of the Anti-Profiteering provisions enshrined in Section 171 of the CGST Act, 2017 and he had passed on the GST benefit on account of the rate reduction consistent with the law. The rate reductions announced on 15.11.2017 and 25.01.2018 were with immediate effect and accordingly, he had carried out price reductions based on the price reductions made by the manufacturer M/s. Nestle India Ltd. and there has been no p....
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....d the profiteered amount on which the rate of tax was reduced from 18% to 12% vide Notification No. 06/2018-Central Tax (Rate) dated 25.01.2018. 8. Therefore, vide order dated 24.04.2019 the case was sent back to the DGAP under Rule 133 (4) of the CGST Rules, 2017 for further investigation to furnish the details of the profiteered amount and the products on which the rates of tax were reduced. The DGAP vide his Report dated 19.06.2019 has submitted the details of the 116 products impacted due to GST rate reductions as follows:- Notification No. and Date Reduction in rate of tax No. of Products impacted Profiteering (in Rs.) 41/2017 dated 14.11.2017 28% -18% 81 14,62,981 41/2017 dated 14.11.2017 18% -12% 32 1,69,379 06/2018 dated 25.01.2018 18% -12% 3 13,199 Total 116 16,45,559 9. We have carefully heard both the parties and have also gone through the record of the case placed before us and it has been revealed that the Central Govt. had reduced the rate of GST from 28% to 18% and from 18% to 12% vide Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017 and from 18% to 12% vide Notification No. 06....
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....he cannot deny to them on the ground that profiteering proceedings were pending against the above Company. The Respondent has admitted in his submissions that he was aware of the above tax reductions and hence he should have immediately reduced his sale prices commensurate with the rate reductions. He also cannot claim that he has not reduced the prices of the above 116 products as their prices were not reduced by M/s. Nestle India Ltd. The Respondent has also not produced any evidence to prove that M/s. Nestle India Ltd. had increased the prices after the rate reductions. There is also no evidence to suggest that the Respondent had raised the issue of price reductions with M/s. Nestle India Ltd. after the tax reductions were notified, therefore, he cannot shift his responsibility to comply with the provisions of Section 171 (1) of the above Act on M/s. Nestle India Ltd. Pendency of profiteering proceedings against M/s. India Ltd. also has no connection while determining accountability of the Respondent for profiteering under Section 171 (1) of the above Act as he is responsible for passing on the benefit on his own account. Granting of discounts also does not amount to passing on ....
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....- 14. Accordingly, a sum of Rs. 16,45,559/- is determined as the profiteered amount in respect of the 116 products including an amount of Rs. 14,62,981/- which has been profiteered in respect of 81 products on which the rate of tax was reduced from 28% to 18% and an amount of Rs. 1,69,379/- on 32 products on which the GST was reduced from 18% to 12% w.e.f. 15.1112017 and 3 products on which the tax rate was reduced from 18% to 12% w.e.f. 25.01.2018, as per the provisions of Rule 133 (1) of the CGST Rules, 2017. The Respondent is directed to reduce the sale prices of the above products immediately commensurate with the reductions in the rates of tax as were notified on 14.11.2017 and 25.01.2018 respectively and pass on the benefit of reductions in the rates of tax to his customers. Since the recipients in this case are not identifiable, the Respondent is directed to deposit the amount of profiteering of Rs. 8,22,779.50 in the Central Consumer Welfare Fund (CWF) and Rs. 8,22,779.50 in the Delhi State CWF as per the provisions of Rule 133 (3) (c) of the CGST Rules, 2017, along with 18% interest PA from the date from which the above amount was realised by the Respondent from his cus....