AI Drafter 
TaxTMI 
TaxTMI 
2020 (3) TMI 406
X X X X Extracts X X X X
X X X X Extracts X X X X
.... product supplied by him, although the rate of GST was reduced from 28% to 18% w.e.f. 27.07.2018 vide Notification no. 18/2018-Central Tax (Rate) dated 26.07.2018, by way of commensurate reduction in price, in terms of Section 171 of the CGST Act, 2017. 2. The above complaint was examined by the Standing Committee on Anti Profiteering and vide the minutes of its meeting dated 13.12.2018, the matter was forwarded to the DGAP to conduct a detailed investigation. On receipt thereof, the DGAP observed that the supporting documentary evidence was not received alongwith the said minutes and thus, a letter dated 18.01.2019 was sent by the DGAP to the Standing Committee requesting that the supporting documentary evidence be provided. The requisite documentary evidence was received by the DGAP on 28.02.2019 and thereafter, the investigation commenced w.e.f. 28.02.2019. 3. Thereafter the DGAP on receipt of the reference from the Standing Committee on Anti-profiteering and the supporting documents, issued a Notice under Rule 129 of the Rules on 15.03.2019 calling upon the Respondent to reply as to whether he admitted that the benefit of reduction in GST rate w.e.f. 27.07.2018 had not be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....during the period April, 2018 to February, 2019. (iii) Sample invoices of products impacted by the GST rate reduction w.e.f. 27.07.18, both pre and post GST rate reduction. (iv) The details of the purchase prices of the products. 7. The Respondent did not claim any confidentiality in terms of Rule 130 of the CGST Rules in respect of any of the data/information furnished by him. 8. The DGAP upon examining the application, scrutinizing the various replies of the Respondent and studying the various documents/evidences on record, observed that the main issues that required to be addressed were:- (i) Whether the rate of GST on the goods supplied by the Respondent was reduced from 28% to 18% w.e.f. 27.07.2018. (ii) If so, whether the benefit of such reduction in the rate of GST had been passed on by the Respondent to his recipients, in terms of Section 171 of the CGST Act, 2017. 9. The DGAP has reported that the Central Government, on the recommendation of the GST Council, reduced the GST rate on the goods supplied by the Respondent from 28% to 18% w.e.f. 27.07.2018, vide S. No. 376AC, 376AD and 378A of the Schedule III attached to the Notific....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o 30.06.2018 for the products not sold during the period 01.07.2018 to 26.07.2018), with the actual invoice-wise base prices of such products sold during the period 27.07.2018 to 28.02 2019. The profiteered amount also included the GST charged on the increased base prices. The DGAP also reported that the Respondent had supplied products in the State of Haryana only. 12. Thus, the allegation that the base prices of the goods were increased when there was reduction in the GST rate from 28% to 18% w.e.f. 27.07.2018 appeared to be correct and by doing so the commensurate benefit of reduction in GST rate from 28% to 18%, was not passed on by the Respondent to his recipients and that Section 171(1) of the CGST Act, 2017 had been contravened. 13. The above Report was received on 04.09.2019 and was considered by this Authority in its meeting held on 11.09.2019 and it was decided to hear the Applicants and the Respondent on 27.09.2019. 14. During the hearings held on 27.09.2019, 17.10.2019 and 15.11.2019 none appeared for the Applicant No. 1, none appeared for the Applicant No. 2 and none appeared for the Respondent. 15. The Respondent filed his written submissions dated 24.09.2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ther clarified that the discounts offered by the Respondent were pursuant to a discretionary business Strategy wherein he willingly cut into his profit margins to offer appropriate discounts time and again. Further, Section 15 (3) (a) provided that the value of the supply shall not include any discount which was given before or at the time of supply if the said discount has been duly recorded in the invoice issued in respect of such supply. Thus GST was chargeable on the actual transaction value after excluding any discount and therefore, for the purpose of computation of profiteering, MRP could not be considered. The actual transaction value was the correct amount which was to be considered to determine whether any reduction in the rate of tax on any supply of goods or services has been passed on to the recipient by way of commensurate reduction in price. The DGAP also stated that the profiteering has been calculated on the basis of the invoice/transaction value which was after allowing discount. Further, as informed by the Respondent that he had deposited the excess charged amount of GST @ 28% after rate reduction that he had unintentionally recovered from the buyers, the DGAP ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ordingly the DGAP vide Annexure-9 of his Report has correctly arrived at the profiteered amount Rs. 30,153/-. The Respondent has also agreed with the DGAP's Report. 24. The Respondent is therefore directed to reduce the prices of his products as per the provisions of Rule 133 (3) (a) of the CGST Rules, 2017, keeping in view the reduction in the rate of tax so that the benefit is passed on to the recipients. The Respondent is also directed to deposit the profiteered amount of Rs. 30,153/- along with the interest to be calculated @ 18% from the date when the above amount was collected by him from the recipients till the above amount is deposited in terms of Rule 133 (3) (b) of the CGST Rules, 2017. Since, rest of the recipients in this case are not identifiable, the above Respondent is directed to deposit the amount of profiteering of Rs. 30,153/- along with interest in the Consumer Welfare Fund of the Central and the concerned State Governments as per the provisions of Rule 133 (3) (c) of the CGST Rules, 2017 in the ratio of 50:50 in the Central and State CWFs along with interest @ 18% till the same is deposited. 25. The above amount shall be deposited within a period of 3 mon....