AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (3) TMI 558
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.... to conduct a detailed investigation in respect of an application dated 30.07.2018. (Annexure-1) filed by the Applicant No. 1 against the Respondent in respect of supply of Deodorant 'Wild Stone Deo Chrome BX 120 ml. The Applicant No 1 had stated that the above product had been shipped by the Respondent to M/s. Big Bazar, Inderlok on 28.09.2017 under Purchase Order No. 8114615731 with the MRP of Rs. 250/-, was again supplied on 04.12.2017 under purchase Order No. 81.15262327 with the MRP of Rs. 250/- and on 16.06.2018 it was again sold under Purchase Order No. 4518224285 with the same MRP of Rs. 250/-. The above Applicant had alleged that the Respondent had not pass on the benefit of reduction in the GST rate from 28% to 18% w.e.f. 15.11.2017 which was reduced vide Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017 in terms of Section 171 of the CGST Act ,2017 and instead, he had increased the base price of 'Wild Stone Deo Chrome BX 120 ml. Deodorant to maintain the same MRP of Rs. 250/-. 2. The DGAP in his above Report has stated that the Standing Committee in its meeting held on 11.03.2019 had examined the above said reference and it had referred the applicatio....
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....has further stated that vide the aforesaid letters, the Respondent had submitted the following documents/information:- a. GSTR-1 & GSTR-3B Returns for the period from October, 2017 to March, 2019 for all the registrations held all over India. b. Details of invoice-wise outward taxable supplies during the period from July, 2017 to December, 2019. c. Price Lists (pre and post November, 2017) for all the products, specifically indicating the SKUs impacted by the GST rate reduction w.e.f. 15.11.2017. d. Sample copies of invoices issued to the dealers, pre and post 15.11.2017. 7. The DGAP in his report has also submitted that the reference from the Standing Committee on Anti-Profiteering, various replies of the Respondent and the: documents/evidence placed on record had been carefully examined by him and the main issues to be examined were whether the Respondent had reduced the rate of GST from 28% to 18% on the goods supplied by him w.e.f. 15.11.2017 and if so, whether the benefit of such reduction in the rate of GST had been passed on by the Respondent to the recipients, in terms, of Section 171 of the CGST Act, 2017. 8. The DGAP has further m....
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.... 1. DEL/GTI-641 14/11/2017 Delhi Delhi Affair (BS) 150ml 40 115.72 2. DEL/GTI-703 24/11/2017 Delhi Delhi Affair (BS) 150ml 40 127.81 3. DEL/GTI-705 24/11/2017 Delhi Delhi Affair (BS) 150ml 40 127.81 5. DEL/GTI-729 29/11/2017 Delhi Delhi Affair (BS) 150ml 40 120.91 6. DEL/GTI-730 29/11/2017 Delhi Delhi Affair (BS) 150ml 80 120.91 7. DEL/GTI-779 09/12/2017 Delhi Delhi Affair (BS) 150ml 80 120.91 11. The DGAP has further reported that it was evident from the Table-A that the Respondent had increased the base price of the above product after GST rate reduction (post 14.11.2017) and then reduced the same but still kept the increased base price (i.e. Rs. 120.91 as against Rs. 115.72) as compared to the pre-GST rate reduction price. The DGAP has therefore, concluded that the claim of the Respondent was incorrect. 12. The DGAP in his Report has also stated that the next issue was to determine and quantify the profiteering made by the Respondent on account of not passing on the benefit of the reduction in the rate of GST on the goods suppli....
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....9. Uttar Pradesh 9 22273117 1996219 0 24269336 10. Bihar 10 5698092 621167 0 6319259 11. Sikkim 11 319134 0 0 319134 12. Arunachal Pradesh 12 194462 0 0 194462 13. Nagaland 13 811158 0 0 811158 14. Manipur 14 382678 0 0 382678 15. Mizoram 15 232524 0 0 232524 16. Tripura 16 1095268 3409 0 1098677 17. Meghalaya 17 457750 0 0 457750 18. Assam 18 7164063 636054 0 7800117 19. West Bengal 19 11436665 351961 0 11788626 20. Jharkhand 20 4522384 690168 0 5212552 21. Odisha 21 11706772 1176834 0 12883606 22. Chhattisgarh 22 8576800 0 0 8576800 23. Madhya Pradesh 23 24697908 528286 0 25226194 24. Gujarat 24 10138881 1753591 0 11892472 25. Maharashtra 27 19982374 7241984 1799 27226157 26. Karnataka 29 5798401 1574107 0 7372508 27. Goa 30 597649 5219 0 602868 28. Kerala 32 1209329 469677 ....
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....ich the proceedings have been initiated". Specific requirement to mention the description of the goods or services was a clear indication of the fact that the proceedings could be initiated only in' respect of those goods which were described in the notice. But in the present proceedings, the DGAP in his notice had nowhere mentioned that an investigation was being initiated for all the products by giving description of the. Perfumes, Talcum Powder, Shaving Creams and After-shave Lotions etc. Thus, the scope of the proceedings was restricted to the description of the product mentioned in the notice itself and could not be suo-motu expanded by the DGAP at a later stage. c. That reliance was placed by the Respondent on the orders passed by this Authority in the following cases wherein the investigation had been restricted to the products against which the complaint was filed:- • Rishi Gupta v. M/s. Flipkart Internet Pvt. Ltd. = 2018 (7) TMI 1490 - NATIONAL ANTI-PROFITEERING AUTHORITY • Ankur Jain v. M/s Kunj Lub Marketing Pvt. Ltd. = 2018 (10) TMI 510 - NATIONAL ANTI-PROFITEERING AUTHORITY • Sandeep Puri v. M/s. Glenmark Pharmaceuticals ....
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....t to the DGAP, as it was this Authority which could actually expand the scope of investigation. In-fact, even in that scenario, this Authority has to record reasons to come to the conclusion that there was contravention of the provisions of Section 171. g. That had the DGAP been given the powers to expand the scope of the investigation, there was no need to insert sub-rule 5 in Rule 133 granting power only to this Authority to expand the scope of investigation. Hence even after the amendment, it was only this Authority which had the power to expand the scope of the investigation, however, before this. Authority did so, it was incumbent upon it to clearly record the reasons for the same. h. That reliance was placed by the Respondent on the judgement passed in the case of Continental Commercial Corporation v. ITO = 1975 (1) TMI 26 - MADRAS HIGH COURT wherein the Hon'ble Madras High Court while dealing with an amendment that expanded the jurisdiction of income Tax Officer, had held that such an amendment must be prospective and could not have a retrospective effect. The relevant extract of Para 6 of the judgment has been quoted below:- "Even ....
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.... the language of the statute. Therefore, in the present proceedings even an endeavour by this Authority/DGAP to expand the scope shall be construed as ultra wires and bad in law. j. That the issue of suo-moto assuming jurisdictional powers by the DGAP had far greater significance because the anti-profiteering provisions purport to have stigmatic and penal consequences. The same was also highlighted by the Hon'ble Bombay High Court in the recent case of Hardcastle Restaurants Pvt. Ltd. v. Union of India = 2019 (10) TMI 864 - BOMBAY HIGH COURT wherein, while guiding this Authority on the. importance of fair-decision making, the Hon'ble Court has stated that the term profiteering was used under the CGST Act and Rules in a pejorative sense with penal consequences that even extended to cancellation of registration. Hence, the authorities (DGAP, NAA) ought to be circumspect while exercising their powers while undertaking investigation and issuing rulings. k. That it was also settled rule of law that when a statute was penal in character, it must be strictly followed. In the case of State of Jharkhand v. Ambay Cements = 2004 (11) TMI 319 - SUPREME COURT,&n....
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....e of the statute. n. That the Respondent has provided complete information/details as sought by the DGAP as a responsible corporate assessee to facilitate the investigation although all along, he had been fully aware of the expanded scope of the investigation in his case. This act by no stretch of imagination should be considered as an acquiescence of the fact that the. DGAP had jurisdictional powers to investigate in respect of all the products. o. That in any event, in so far as the issue of jurisdiction was concerned, the provisions had to be strictly construed and no authority could confer on itself a jurisdiction wider than that vested in it. It was well settled that where there was an absence of jurisdiction, even by the consent of parties, the jurisdiction could not be expanded. Reliance in this regard was placed on the case of CIT v. Dalipur Construction Pvt. Ltd. = 2017 (1) TMI 1709 - ALLAHABAD HIGH COURT decided by the Hon'ble Allahabad High Court wherein the Department inter-alia argued that once objection regarding jurisdiction was riot taken before the Assessing Officer, the order could not be challenged. However, the Hon'ble Court while rej....
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....prises v. CCE = 2007 (12) TMI 11 - SUPREME COURT. The issue raised before the Hon'ble Supreme Court was whether the High Court has power to condone the delay after the lapse of prescribed extension of 30 days. The Hon'ble Supreme Court in Para 8 inter-alia observed as under:- "8. The Commissioner of Central Excise (Appeals) as also the Tribunal being creatures of statute are not vested with jurisdiction to condone the delay beyond the permissible period provided under the statute. The period up to which the prayer for condonation can be accepted is statutorily provided. It was submitted that the logic of Section 5 of the Limitation Act, 1963 (in short "the Limitation Act') can be availed for condonation of delay. The first proviso to Section 35 makes the position clear that the appeal has to be preferred within three months from the date of communication to him of the decision or order. However, if the Commissioner is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of 60 days, he can allow it to be presented within a further period of 30 days. In other words, this clearly shows that the appeal has to be ....
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.....2019, the said period of two months could be extended only for a month by this Authority with reasons to be recorded in writing. Understandably, the purpose of giving reasons in writing was to ensure that the power to extend the period of limitation was exercised for valid reasons based on material considerations and that the power was not abused by irrelevant considerations or extraneous purposes. v. That after the lapse of time period of two months, the Standing Committee was not vested with the right to examine the matter any longer. To the best of the knowledge of the Respondent, no reasons for expansion of this period were ever recorded and none were supplied to the Respondent or formed part of the record. Even otherwise, as stated earlier, the extended period had also lapsed and the Standing Committee had lost its jurisdiction to proceed further in the matter. On expiry of the limitation period, the right of the Standing Committee to examine the matter was extinguished and a very valuable right had come to vest in the Respondent that the investigation could not be proceeded further. In this regard, reference was made to the judgment of Esha Bhattacharjee v. Man....
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....mitation expires." x. That similar proposition with regard to immunity to being subject to further investigation and extinction of the right of the officer to investigate on expiry of period of limitation had been espoused in the case of Bharat Heavy Electricals Limited V. CCT = 2001 (8) TMI 1367 - KARNATAKA HIGH COURT as well as in the case of Thirumalai Chemicals V. Union of India = 2011 (4) TMI 489 - SUPREME COURT. y. That the Hon'ble Madras High Court in the case of A. M. Ahamed & Co. v. Commissioner of Customs. (Imports) = 2014 (9) TMI 237 - MADRAS HIGH COURT, Chennai wherein the proceeding's initiated after the legally prescribed time limit 'Were set aside on the ground that the notice issued by the Department was time barred. The relevant extract of the ruling in the case of A.M. Ahamed (supra) has been quoted herein below:- "25. In the case on hand, it is not the contention of the respondents that the time limit prescribed in Regulation 22(1) is only directory and not mandatory. It is not even the contention of the respondents that the time limit prescribed in Regulation 22(1) need not be strictly adhered to....
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....ded the procedure pertaining to investigation and hearing but no method has been notified/prescribed pertaining to calculation of profiteered amount and there has been no indication on how to conclude that there was profiteering due to change in the rate of tax and whether such computation has to be done invoice-wise, product-wise, business vertical-wise or state-wise etc. The statutory provisions, the CGST Rules and even the methodology prescribed was completely silent on the computation 'provision according to which it could be concluded that a supplier has indulged in profiteering. The Respondent was left to the subjective discretion of the DGAP without any guiding factors/instructions or safeguards. In the absence of any guidelines in the statute or rules, the power given to this Authority to determine methodology was a case of "excessive delegation" of powers. cc. That the same issue was also raised by the Advisor to the Chief Minister, Punjab as well as the Chief Economic Advisor in the 17th GST Council Meeting held on 18.06.2017. dd. That this Authority in the case of M/s Jubilant Foodworks Ltd. = 2019 (2) TMI 295 - NATIONAL ANTI-PROFITEERING AUTHORITY....
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....iteering against the Respondent was in gross violation of the principles of natural justice. Reliance on the decision of the Hon'ble Supreme Court in the case of Automotive Tyre Manufacturers Association v. Designated Authority = 2011 (1) TMI 7 - SUPREME COURT, was placed wherein the Directorate General of Anti-dumping and Allied Duties (DGAD) had passed an order without granting personal hearing to the parties and the order was quashed as it was found to be in violation of principles of natural justice. The relevant extract from the judgment is quoted herein below:- "83 The procedure prescribed in the 1995 Rules imposes a duty on the DA to afford to all the parties, who have filed objections and adduced evidence, a personal hearing before taking a final decision in the matter. Even written arguments are no substitute for an oral hearing. A personal hearing enables the authority concerned to watch the demeanour of the witnesses, etc. and also clear up his doubts during the course of the arguments. Moreover, it was also observed in Gullapalli [AIR 1959 SC 308 = 1958 (11) TMI 28 - SUPREME COURT], if one person hears and other decides, then personal h....
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....Tax Gujarat v. Vadilal Lallubhai = 1972 (8) TMI 134 - SUPREME COURT wherein the Hon'ble Apex Court had held that the 'marginal note also gives an indication as to what exactly was the mischief that was intended to be remedied." Similarly, in the case of Indian Aluminium Company v. Kerala State Electricity Board = 1975 (7) TMI 158 - SUPREME COURT the Hon'ble Supreme Court had held that marginal notes could be relied to show what the section was dealing with. kk. That meaning of the terms "Profiteering" was provided as under:- Profiteering taking advantage of unusual or exceptional circumstances to make excessive profits Black's Law Dictionary Make or seek to make an excessive profit Shorter Oxford English Dictionary To seek or obtain excessive profits, one who is given to making excessive profits Law Lexicon ll. That the aforesaid definitions suggested that profiteering was only when a person made excessive, unreasonable of exorbitant profits. The act of earning profits per se was not profiteering. in the present, case, the Respondent had not made any exorbitant or unreasonable profits in an unlawful manner. Accordingly, it could....
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....bsp; M/s. Johnson & Johnson = 2019 (11) TMI 1084 - NATIONAL ANTI-PROFITEERING AUTHORITY, this Authority has itself stated in Para 44 that the intention of anti-profiteering legislation was to protect the interest of the consumers. ss. That the Respondent has also relied upon the case of Pawan Sharma v. M/s Sharma Trading Company = 2018 (9) TMI 625 - THE NATIONAL ANTI-PROFITEERING AUTHORITY, wherein this Authority has stated that where the tax rate was reduced from 28% to 18%, the Respondent should have reduced the same amount (10%) by a mathematical calculation from the MRP at which goods were sold. Application of the said ratio to the present case clearly demonstrated that the Respondent had fulfilled this requirement by reducing the rate of tax charged from 28% to 18%. tt. That he had passed on the entire benefit of reduction in the tax rate by way of reduction in MRPs. Further, in order to expedite the passing of benefit to the consumers by way of reduced MRPs, he had revised the older MRPs with new MRP stickers. The same was also communicated to all his channel partners vide letters and emails dated 27.11.2017 and/or 28.11 2017 He had also submi....
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.....11.2017 to 27.11.2017 should be considered as a reasonable time required by the Respondent to reduce the MRPs of his products. yy. That there were numerous other products in respect of which the MRPs were reduced pursuant to the GST rate reduction. The details have been furnished as under:- Product Name MRP as on Pre GST reduction Post GST reduction Wild Stone Deo Chrome BX 120 ml (Subject Goods) 250 230 Wild Stone Ultra Sensual 40 ml 65 60 Wild Stone Ultra Sensual 150 ml 195 180 Wild Stone Night Rider 150ml 195 180 Wild Stone Forest Spice Spray Perfume 50ml 299 275 In respect of the above claim, the Respondent has alsp submitted sample invoices showing reduced MRPs (Annexure-6). zz. That the provisions of Section 171 had been a double whammy for him. Despite the fact that the cost of the impacted goods had increased, he had to reduce the prices in order to comply with the law. He had precisely passed the benefit to the consumers by way of an absolute reduction in the. MRPs of his products while under Section 171 of the CGST Act, he was only required to pass the benefit by way of "commens....
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....usiness response, the MRPs of the goods were increased w.e.f. 15.03,2018. This was in tandem with the price moves of the competitors (sample invoices attached as Annexure-8). An illustration in this regard has been furnished by the Respondent as under:- Competitor Product MRP Pre GST rate reduction MRP post GST rate reduction (Dec-17-Jan-18) MRP Revision (Feb-18-Mar-18) Remarks JK Helene Curtis Ltd. Park Avenue Body Deo 199 199 199 The competitor maintained the same MRP post the GST rate reduction so there was no subsequent rise in MRP during Feb-March. Vanesa Care Pvt, Ltd. Denver Hamilton 210 199 210 The competitor increased the MRP before onset of summers during Feb-March. It was incumbent upon the Respondent to raise MRP of the Subject Goods c. That his competitors-M/s JK Helene Curtis Limited had maintained the same MRP of Rs. 199 on its "Park Avenue Body Deo 150 ml" deodorant even after reduction in the GST rate. Therefore he did not feel the need to further increase his prices during Feb-11/larch'18 when the o....
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.... the right of the Respondent to increase prices in the normal course of business for such a prolonged period. The DGAP had assumed that the powers under Chapter XV of the CGST Rules were akin to price control mechanism which sought to impinge on the fundamental right of the Respondent to decide the selling price of the goods. e. That there were no guidelines regarding the period for which further prices could or could not be revised.. As per the Impugned Report, the alleged profiteering figures had been calculated for the price increase had been undertaken upto the period of March 2019. This was completely arbitrary and directly in the teeth of settled principles of law. The DGAP had stretched the investigation to nearly 1.5 years and appeared to have formed an opinion that there could be no subsequent rise in prices of the goods consequent to the reduction of tax rate w.e.f. 15.11.2017. There was no rhyme or reason for the DGAP to adopt such a course or form such an opinion. f. That the DGAP's Report was silent till when the increase in prices undertaken by the Respondent would be considered as profiteering. In the absence of any period of limitation, it would im....
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....s subjected to inter-party agreements executed between the Respondent and his distributors and retailers and the ultimate consumer was nowhere affected. The actual price payable by the consumer had indeed been reduced commensurate with the reduction in the GST rate. ddd. That initially (on introduction of GST) he had increased the profit margins of the distributors and the retailers from 6% to 6,75% and from 1.5% to 17% respectively. The reason for increase in margins was the additional working capital blockage that the intermediaries (i.e distributors and retailers) had to incur on 'account of increased payment of GST at the rate of 28%. In order to maintain the same return on investment by the intermediaries, this was a business necessity. Subsequently, when the GST rate was reduced from 28% to 18%, there was reduction in the working capital blocked by the distributors and the retailers. Therefore, he had reduced the profit margins of distributors and retailers from 6.75% to 6.20% and from 17% to 15.50% respectively. The letters sent by the Respondent communicating the revised margin structure were attached as Annexure-10. eee. That the revision in base prices w....
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....prices in order to determine contravention of Section 171 of the CGST Act. Even at a base price level the computation by the DGAP was conceptually. inaccurate. In this regard, the Various instances have been summated by the Respondent hereunder:- i. Averaging Prices at pan India Level was conceptually Inappropriate:- a. That the DGAP in his impugned Report had considered the product-wise average base price for the base period at an all-India level and then compared it with the invoice-wise actual base prices during the Impugned Period. The said methodology was conceptually wrong as a single average base price across country for a product could not be taken when the prices for different depots (markets) might vary according to their respective economic dynamics (including factors such as (a) varied transportation, warehousing 8, logistics cost (b) competition pricing (c) varied market penetration strategies (d) credit period offered to various vendors (e) price elasticity of demand and (f) organizational objectives, among others). Sample invoices showing price variation at depots were attached as Annexure-11. ....
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....er General Trade instead of Modern Trade 1 Shree Ganesh Enterprises 2 M.K. Enterprises 3 Ramesh Sales Agencies' MT 4 Om Agency (MT) 5 Maa Enterprise 6 Shivam Enterprises 7 Mahaveer Agencies 8 Atharva Enterprises, Nasik 9 Swastik Distributors 10 Om Agencies (Thane) b. That if the customers were rightly categorized under the Modern Trade, the alleged profiteering amount would be reduced by Rs. 13,22,335/-. The working of the same has been attached as Annexure-12. iii. The DGAP has ignored the negative values and resorted to 'zeroing' to yield higher profiteering:- a. That the DGAP while calculating the amount of alleged profiteering has ignored the transactions where the prices were effectively reduced. in essence, it meant that where tax benefit had been passed on to the customers by the Respondent (w.r.t. specific products) in excess of the required amount, the DGAP has conveniently chosen to ignore such instances. This effectively meant that the DGAP did not offset positive profiteering (Rs. 20) against the negative profiteering (-Rs. 20) (treating these as 'zero' for the purpose of profit....
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.... taken together. Post this landmark decision, European Commission had to give up the zeroing method in the bed linen case and other subsequent cases. e. That the Government of India has consistently opposed the zeroing methodology before the WTO whereas the DGAP under the anti-profiteering provisions was taking completely opposite position when it came to the calculation of the so called 'profiteering'. Hence, it was requested to accept the method of 'netting off'. This was because the methodology adopted by the DGAP was contrary to the stand taken by the Government of India. In case 'netting off' was adopted by the DGAP in his working, the alleged profiteering amount shall be reduced by Rs. 2,52,84,303/-. The workings of the same have been attached as Annexure-13. iv. Wrong Inclusion of Sales Made from 15.03.2018:- a. That the DGAP had arbitrarily stretched the scope of the investigation till March 2019 and had formed an opinion that there could be no subsequent rise in prices of goods consequent to the reduction of tax rate w.e.f. 15.11.2017. At the cost of repetition, such revision in prices from 15 03.2018 had happened due to various commercial factor....
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....n 37(1) uses the expressions, in relation to forfeiture, 'any sum collected by the person ... shall be forfeited". What does "collected" mean here? Words cannot be construed effectively without reference to their context. The setting colours the sense of the word. The spirit of the provision lends force to the construction that "collected" means "collected and kept as his" by the trader." d. That the amount of GST collected from the customers was a liability of tax (reflected under the head of 'Liabilities' in the Balance Sheet) which was subsequently deposited with the Government. The accounting treatment accorded to account for the applicable GST was as has been depicted below:- Transaction Journal Entry Amount (Rs.) Amount (Rs.) Outward Sales - Creation of GST Liability Customer A/c................ Dr. 118 To Sales Outward Cr......... 100 To IGST Tax Payable Dr. 18 Payment of GST Liability to Government IGST Tax Payable...............Dr. 18 To Bank..................................Cr. 18 e. That since the amount collected as GST from the recipients on alleged ....
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....eturned and there was no question of making any profiteering. b. That in the case of Grasim Industries Ltd. v. State of Kerala, the Hon'ble High Court of Kerala = 1994 (5) TMI 256 - KERALA HIGH COURT had held that sales returned meant a return of the very goods purchased by the buyer in whole or in part and it was a reversal of the sale, as if the sale had not taken place in respect of the returned goods. viii. Exclusion of Supplies to KCHP Technologies as they are Un-comparable:- a. That the goods sold to one of the buyers i.e. M/s KCHP Technologies Private Limited (KCHP) could not be considered by the DGAP while computing, the amount of profiteering. There were apparent differences between the terms of trade with KCHP and the other distributors. A comparison of KCHP with the other e-commerce distributors should be akin to comparing apples and oranges. b. That the DGAP while arriving at the alleged profiteering amount had considered KCHP at par with other e-commerce distributors and had considered the average base prices for the products which were applicable to the other e-commerce distributors. However, the terms agreed. with KCHP we....
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....aken for the computations, the discounts given through credit notes and freebies should be reduced from the alleged profiteering amount. The DGAP had ignored such credit notes and freebies provided by the Respondent while arriving at the alleged profiteering amount. b. That it was a known practice that discounts could also be given by way of credit notes and free items. It could not be said that only the discount which was shown at the invoice level should be allowed as a deduction and the discount which was provided through credit notes should be ignored. The Respondent had received only the net amount of the invoice less the discount given by way of the credit notes. c. That in the case of Union of India v. Bombay Tyres International (P) Ltd. the Hon'ble Supreme Court = 1983 (11) TMI 70 - SUPREME COURT inter-alia had held that discounts allowed in trade should be deductible from the sale price:- "(1) Trade discounts - Discounts allowed in the trade (by whatever name such discount is described) should be allowed to be deducted from the 'sale price having regard to the nature of the goods, if established under agreements or under term....
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.... below.- a. Scenario-1:- Considering the period from 15.11.2017 to 31.03.2019:- Particulars (Depot-wise) Amount (Rs.) Period from 15.11.17 to 27.11.17 4,050,634 Period from 28,11.17 to 14.03.18 18,899,180 Period from 15.03.18 to 31.03.18 7,532,280 Period from 01.04.18 to 31.03.19 132,540,550 Sub-Total 163,022,644 Deductions on account of.. Less: Sales Return (767,363) Less: Negative Profiteering (3,943,436) Less: Margin Re-alignment of Intermediaries (21,410,842) Less: Rise in Cost (176,339,618) Less: Credit Notes and Freebies (269,295,509) Less: Sales made to. KCHP Technologies (958,985) Less: Party Swapping (648,862) Net Amount of Profiteering/(No Profiteering) (310,341,971) b. Scenario-2:- Considering the period from 15.11.2017 to 14.03.2018:- Particulars (Depot-wise) Amount (Rs.) Period from 15.11.17 to 27.11.17 4,050,634 Period from 28. 1.17 to 14.03.18 18,899,180 Total 22,949,814 Less: Negative Profiteering (529,412) Less: Margin Re-alignment 6,310,751) Less: Rise in Cost 30,511499) Less: Credit Notes and Freebie....
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....d been taken for example in the Report dated 04.09.2019. It did not imply that the profiteering was computed only on the goods illustrated in the example. Here the issue involved was that the Respondent had not passed on the benefit of reduction in the tax rate (reduced from 28% to 18% vide Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017) by not reducing the price of the impacted products commensurately to his customers. The Respondent was comparing two products which had nothing to do with the anti-profiteering measures defined under Section 171 of the CGST Act, 2017 read with Chapter XV of the CGST Rules, 2017. iv. That the DGAP was not bound to seek clarification or approval from the Standing Committee which goods were to be included in the investigation. As per Rule 129 (1) of the Rules, it was clear that when Standing Committee referred the case to the DGAP for detailed investigation where the supplier had not passed on the benefit of reduction in the rate of tax on the supply of goods or services to the recipients by way of commensurate reduction in prices, then the investigation had to be carried out in detail on all the goods impacted by the rate....
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....AP has conducted his investigation within the scope of Section 171 of the CGST Act, 2017 and the Rules made thereunder. In the instant case, since this Authority had not invoked the provisions of Rule 133 (5) (a) as amended vide Notification No. 31/2019-Central Tax dated 28 06 2019 there was no question of the retrospective effect of the same. viii. That the Hon'ble High Court of Delhi vide Order dated 19.07.2019 in the W.P. (C) 7743/2019 = 2019 (7) TMI 1135 - DELHI HIGH COURT has directed that, till the next date, the petitioner was not required to furnish the information to the DGAP other than the information pertaining to the complained product, accordingly the investigation was limited to the complained product only. However, the Hon'ble High Court in its next order dated 22.08.2019 has made its previous order dated 19.07.2019 absolute during the pendency of writ petition which was still pending before the Hon'ble Court. Therefore, the interim relief granted to the petitioner in that case could not be applied notionally to other cases of investigation. ix. That initially an application dated 30.07.2018 was filed before the Standi....
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.... or not, the pre and post-tax rate reduction transaction values were compared to determine profiteering. In case of closing stock carrying higher MRP', while the manufacturer was under statutory obligation to affix the addiction revised MRP, everybody in the supply chain was legally required to pass on the benefit of tax rate reduction by maintaining the base price and charging GST at the reduced rate on such base price. Therefore, under the provisions of the Section 171 of the CGST Act, 2017, no supplier could increase the base prices of the products overnight in such a manner that even with reduction in the rate of tax, the cum-tax selling price would remain unchanged. There was no significance of MRP in establishing any profiteering, especially when the transaction was not at the retail stage. xiii. That the Report dated 04.09.2019 was submitted by the DGAP on the basis of category-wise sales data submitted by the. Respondent. On due verification from the data submitted by the Respondent it was observed that the Respondent had classified the 10 buyers mentioned in his submissions 04.12.2019 under 'General Trade Category' and accordingly profiteering had been calcu....
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...., a document after supply had been effected would be considered only if an agreement was there and it was specifically linked with the invoices and the ITC had been reversed by his recipients. Further the particulars which were to mentioned in the credit note were stated in Rule 54 (1) (A) of the above Rules. In the present case, since, the Respondent had failed to submit the copies of credit notes showing that this condition has been satisfied, the benefit could not be given to him. 17. The Respondent vide submissions dated 20.01.2020 has stated that a new vital fact had been brought to his notice by the DGAP in his supplementary Reports by stating that the present investigation was not started on the basis of the application dated 30.07.2018 but it was started on the basis of the application which was received in the month of February, 2019. The above fact was not mentioned by the DGAP in his notice or the Report and hence the present proceedings were not maintainable. He has also stated that the Hon'ble Supreme Court in the case of CCE Bangalore v. Brindavan Beverages (P) Limited = 2007 (6) TMI 4 - SUPREME COURT has held that:- "There is no allegation ....
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....lso requested to provide the following documents:- • Date on which the complaint dated 30.07.2018 was returned by the Standing Committee. • Copy of complaint filed in February 2019 along with its supporting evidences. • Date on which the complaint was filed in the month of February 2019. 18. The Respondent has filed the following submissions on 27.01.2020:- a. That the DGAP in his reply dated 18.12.2019 has stated that value of sales return should be excluded from the amount of alleged profiteering once the Respondent submitted documentary evidence like sales return and credit notes etc. In this regard the Respondent has submitted documentary evidences vide Annexures 1 to 12. b. That as per the DGAP's submissions dated 18.12.2019, it was observed that the complaint which was the basis of the present investigation against the Respondent was again received in February 2019. Therefore, the complaint was the very basis of investigation for jurisdictional facts and in the interest of justice and fair play, he should be supplied the connected documents. 19. Supplementary Report was also called from the DGAP under Rule 133 (2A....
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.... 1095268 3409 0 1098677 30. Uttar Pradesh 9 22138663 1995031 0 24133694 31. Uttarakhand 5 2070786 75635 0 2146420 32. West Bengal 19 11384660 351961 0 11736621 Grand Total 187,699,280 29,030,817 1,749,694 218,479,790 ii. Further, para-wise clarifications except those which have already been mentioned in the paras mentioned above, on the Respondents additional written submission, submitted, by the DGAP are as under;- Para 2 to 17 The issue has already been addressed by the DGAP in his reply to Para 2.2 of his reply dated 18.12.2019 which is reproduced below: Para 2:2. It is clarified that initially an application dated 30.07.2018 was filed before the Standing Committee on Anti-Profiteering under Rule 128 of the CGST Rules, 2017. On the directions of the Standing Committee, the said application was returned back to the Applicant for the want of proper invoice& The complaint was again received by the. Standing Committee on Anti-profiteering in the month of February, 2019. The Standing Committee on Anti-Profiteering in its meeting held on 11.03.2019, decided to refer the matte....
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....fit from the supplier. The benefit of one recipient cannot be adjusted with the other recipient: Para 32 The submission of the Respondent has been considered and profiteering has been revised accordingly as stated under Para 2 above. Para 33 to 35 The issue has already been addressed in his reply dated 18 12.2019 vide Para 3.4 (h) which is reproduced below: Para 3.4 (h) During the investigation, the Respondent did not make any such submission. Therefore, in absence of any documentary evidence, this claim of the Respondent is unacceptable at this point of time. Further, the trade with KCHP is not substantially different with that of other distributors as it is primarily doing online product promotion which is not very costly. Para 36 This issue has been addressed by this office in its reply dated 10.01.2020 which is reproduced below: Para 3.4. (b) Incorrect inclusion of Modern Trade Buyers as General Trade. Buyers: - It is clarified that during the investigation, the Respondent had submitted category-wise sales data on the basis of which Report dated 04.09.2019 was submitted. On verification of the data/information sub....
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....l facts and the Respondent vide his additional written submissions and a letter dated 21.01.2020 sought connected information as under:- • Date on which the Invalid complaint dated 30.07.2018 was retuned by the Standing Committee, Date on which complaint was filed again in the month of February 2019, • Copy of complaint filed in February 2019 along with new supporting invoices (evidences curing the defect for which the earlier invalid complaint was returned), • Minutes of the meeting held by the Standing Committee on 11.03.2019 21. This Authority has carefully examined the DGAP's Reports, the written submissions of the above Applicants as well as that of the Respondent. The issues to be decided by this Authority in the present case are as under:- 1) Whether the Respondent is liable to pass on the benefit of tax reduction w.e.f. 15.11.2017 to his buyers? 2) Whether there has been any violation of the provisions of Section 171 of the CGST Act, 2017 by the 'Respondent? 3) If yes then what is the quantum of profiteered amount? 22. In this connection it would be appropriate to refer to the provisions of Section 171 ....
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....ts and was computing the revised MRPs. To verify the above claim made by the Respondent the DGAP has examined the prices of his product "Affair BS 150 ml" as per the data submitted by him for different dates as has been illustrated in the following Table-A: - Table-A S.No. Vch. No. Date PLACE OF SUPPLY GOODS DESCRIPTION QTY (PCS) Base Price (RATE/UNIT) 1. DEL/GTI-641 14/11/2017 Delhi Delhi Affair (BS) 150ml 40 115.72 2. DEL/GTI-703 24/11/2017 Delhi Delhi Affair (BS) 150ml 40 127.81 3. DEL/GTI-705 24/11/2017 Delhi Delhi Affair (BS) 150ml 40 127.81 5. DEL/GTI-729 29/11/2017 Delhi Delhi Affair (BS) 150ml 40 120.91 6. DEL/GTI-730 29/11/2017 Delhi Delhi Affair (BS) 150ml 80 120.91 7. DEL/GTI-779 09/12/2017 Delhi Delhi Affair (BS) 150ml 80 120.91 25. it is evident from the Table-A that the base price of the above product was Rs. 115.72 per unit on 14.11 2017 before the tax reduction and it was increased to Rs. 127.81 per unit on 24.11,2017 after the rate reduction. The base price was reduced to Rs. 120.91 per unit....
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....h of October, 2017 as no supplies of these products had been made during the period from 01.11.2017 to 14.11.2017. These base prices were compared by the DGAP with the actual base prices charged by the Respondent between the period from 15.11.2017 to 31.03.2019 and it was found by him that the Respondent had charged more base prices than what were prevalent during the pre rate reduction period. The DGAP has computed the profiteered amount separately for the supplies made by the Respondent to the CSD Canteens, E-commerce Platforms, General Trade and Modern Trade as the Respondent had charged different base prices to each of them. 28. The DGAP has compared the average pre rate reduction base prices with the actual post rate reduction prices due to the reasons that (i) it was not possible to compare the average base prices pre and post rate reduction as the post rate reduction the benefit has to be legally passed to each buyer on the actual transaction value received by the Respondent from each of such buyer (ii) it was also not possible to compare the actual to actual base prices pre and post rate reduction as the same buyer may have not purchased the same produc....
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....ions that the benefit of tax reduction or ITC is to be passed on by each registered person by commensurate reduction in prices on each supply to every recipient by commensurate reduction in the prices and this Authority is empowered to examine whether these benefits have been passed on or not. To assist this Authority an investigating agency designated as the DGAP has been created under Rule 129 of the CGST Rules, 2017 to conduct detailed investigation and submit Report to this Authority under Rule 129 (6) to determine whether the above benefits have been passed or not in terms of Section 171 (1) and Rule 133 (1) of the above Rules. Under Rule 129 (2) the DGAP has mandate to conduct investigation and collect necessary evidence to determine whether these benefits have been passed on. Further, the Government of India, Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs vide its Office Order No. 05/Ad.IV/2018 dated 12.06.2018 in pursuance of the Government of India (Allocation of Business) 34th Amendment Rules, 2018 has assigned the following duties to the DGAP:- a) Conduct of investigation to collect evidence necessary to determine whether....
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....illustration by the DGAP to establish that the Respondent had not reduced the base prices after the rate reduction w.e.f. 15.11.2017. The DGAP has also investigated the Deodorant "Wild Stone Deo Chrome BX 120 ml" and therefore, the above contention of the. Respondent is incorrect. 33.The Respondent has also claimed that as per Rule 129 (3) of the above Rules, the DGAP had not mentioned "the description of the other goods or services" other than "Wild Stone. Deo Chrome BX 120 ml" Deodorant in his notice and hence he could not have investigated the other products. Perusal of the notice dated 08.04.2019 issued by the DGAP for initiating investigation shows that it no where stipulates that the investigation would be restricted to the above Deodorant only. Para 2 of the above notice clearly states that the Respondent was required to furnish his reply stating whether he admitted that the benefit of reduction in the rate of tax from 28% to 18% w.e.f. 15.11.2017 has not been passed on to the recipients by way of commensurate reduction in price and he should also sou moto determine the quantum of benefit not passed on. Vide para 4 of the notice the Respondent was also asked to ....
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....provisions of Section 171 (2) quoted above this Authority had inherent power to examine all the products in respect of which benefit of tax reduction or ITC is to be passed on in terms of Section 171 (1) even before the amendment dated 28.06.2019 was brought. The above amendment only explains the provisions of Section 171 (2) further to make them more explicit. As mentioned above the DGAP as investigating arm of this Authority has mandate to investigate all infringements of the above Section as per the provisions of Rule 129 as well as the Office Order dated 12.06.2018 Therefore, the DGAP is bound to investigate all the products on which the rate of tax has been reduced and therefore, there is no question of his expanding the investigation suo moto. Hence, the above argument of the Respondent is not tenable. 37. The Respondent has also cited the judgements passed in the cases of Continental Commercial Corporation v. ITO (1975) 100 ITR 170 = 1975 (1) TMI 26 - MADRAS HIGH COURT and Purbanchal Cables and Conductors Pvt. Ltd. v. Assam State Electricity Board (2012) 7 SCC 462 = 2013 (3) TMI 518 - SUPREME COURT in his support. In this connection it is submitted tha....
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....ion that the benefit of tax reduction has not been passed on. Hence, the law settled in the above case is not being relied upon. 39. The Respondent has also submitted that he has fully co-operated during the investigation and his this act should not be considered as acquiescence of the fact that the DGAP had jurisdictional power to investigate him in respect of all the products. In this connection it would be pertinent to mention that as has been mentioned above the DGAP has full legal sanction to investigate all the products being supplied by the Respondent on which rate of tax was reduced and the Respondent was duly aware of this fact due to which he has voluntarily submitted himself to such investigation. It is only as an afterthought that he is raising objections on his jurisdiction when the DGAP has found him liable for violation of the provisions of Section 171. The Respondent cannot extricate himself from the consequences of the above violation once he has voluntarily submitted to the investigation by the DGAP. 40. The Respondent has also cited the judgements passed in the cases of CIT v. Dalipur Construction Pvt. Ltd. Income Tax Appeal No. 45 of 2015 at Lucknow =....
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.... 18%. The above complaint is received from a member of Local Circles. Local Circles is India's leading Community Social Media Platform". A copy of the complaint received from Sh. Anil Mehta, a member of the Local Circles mentioned above, was also attached with the email which stated as under:- "Complaint against Deodorant manufacturers I have received information from a friend at Big Bazaar that suggests that Deodorant manufacturers (Vini Cosmetics -maker of FOGG, Raymonds - maker of Park Avenue and Monroe maker of Wild Stone) have engaged in profiteering by not reducing MRPs. Here is the evidence: Vini Cosmetics shipped Fogg Deo Fougere BX 150 ml to Big Bazaar Inderlok on 9/11/17 under PO number 8114996814 with MRP 299, after GST rate reduction on Nov 15, 17 Vini Cosmetics shipped the same deo to Big Bazaar Inderlok under PO No. 8115259654 on 8/12117 with MRP 299. Again on May 8, 2018 Vini Cosmetics shipped the same product to Big Bazaar Inderlok under PO Number 4517361778 with MRP 299, so basically Vini Cosmetics did not change the MRP despite GST rate reducing from 28 to 18% on Nov 15, 17. Monroe shipped Wild Stone De....
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....e 123 (1) of the CGST Rules, 2017. The above communication made by the Applicant No. 1 was discussed in detail by the Standing Committee comprising of S/Sh. H. Rajesh Prasad Commissioner, Department of Trade & Taxes, Govt. of NCT of Delhi, Amit Kumar Aggarwal, Excise & Taxation Commissioner, Govt. Of Haryana, Sanjay Mangal, Commissioner Central Tax (Audit) and Pranesh Pathak, Commissioner Central Tax in its meeting held on 11.03.2019 and vide 'Sr. No. 26 of minutes of the meeting recorded in respect of the above complaint which was mentioned. in Annexure-1C, it was decided to forward the same to the DGAP for investigation. It is also apparent from the perusal of the minutes that the above complaint was treated to have been received in the month of February, 2019. 44. It is apparent from the above facts that the complaint made by the Applicant No. 1 vide his email dated 30.07.2018 had been returned by the Standing Committee to the Applicant No. 1 as per the minutes of the meetings of the Committee held on 07.08.2018 and 08.08.2018 and hence, the proceedings in respect of the above complaint had terminated w.e.f. 08 08 2019. It is further clear from the record that the above....
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....e does not seek extension in routine and is also not granted such extension in routine. The above period of limitation can also not be, mandatory as no consequences have been provided for not adhering to it in Rule 128 Therefore, the above contentions o the Respondent are untenable and therefore, the investigation conducted by the DGAP is legally correct and the present proceedings are not void. 47. In this regard, the Respondent has made reference to the judgments passed in the cases of Esha Bhattacharjee v. Managing Committee of Raghunathpur Nafar Academy and others (2013) 12 SCC 649 = 2015 (1) TMI 1053 - SUPREME COURT, State of Punjab v. Shreyans Industries Ltd. (2016) 4 SCC 769 = 2016 (3) TMI 331 - SUPREME COURT, Bharat Heavy Electricals Limited v. CCT (2006) 143 STC 10 (Kar}, Thirumalai Chemicals v. Union of India (2011) 6 SCC 739 = 2011 (4) TMI 489 - SUPREME COURT and A.M. Ahamed & Co. v. Commissioner of Customs (Imports) Chennai 2014 (309) ELT 433 (Mad.) = 2014 (9) TMI 237 - MADRAS HIGH COURT. However, it is mentioned that the Standing Committee has not violated the period of limitation prescribed under Rule 128 (1) and hence the a....
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....nce it would vary from SKU to SKU or unit to unit and hence no fixed methodology can be prescribed to determine the amount of benefit which a supplier is required to pass on to a recipient or for computation of the profiteered amount. However, to give further elaborate upon this legislative intent behind the law, this Authority has been empowered to determine the 'Procedure and Methodology' which has been done by this Authority vide its Notification dated 28.03.2018 under Rule 126 of the CGST Rules, 2017. However, no fixed formula which fits all the cases of profiteering can be set while determining such "Methodology and Procedure" as the facts of each case are different. In one real estate project, date of start and completion of the project, price of the house/commercial unit, mode of payment of price, stage of completion of the project, rates of taxes, amount of ITC availed, total saleable area, area sold and the taxable turnover realised before and after the GST implementation would always be different than the other project and hence the amount of benefit of additional ITC to be passed on in respect of one project would not be similar to another project. Therefore, no set para....
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....ence, no Methodology & Procedure is required to be determined by this Authority separately. This Authority has already notified the Procedure and Methodology' vide its. Notification dated 28.03.2018 under Rule 126 and not on 19.07.2018 as has been claimed by the Respondent which is available on its website. As discussed above computation of profiteering has to be done SKU and unit of construction wise and not invoice-wise, product-wise, business vertical-wise or state-wise etc. as every buyer has fundamental right to get the benefit which is due to him. It is also clear from the Explanation attached to Section 171 what is to be construed as the profiteered amount and hence the Respondent should have no difficulty in computing and passing on the benefit of tax reduction. 51. The Respondent has also pleaded that in the absence of any guidelines in the statute or rules, the powers given to this Authority to determine methodology was a case of "excessive delegation" of powers. In this regard it would be relevant to mention that the Methodology & Procedure to determine profiteering is succinctly mentioned in Section 171 itself and hence there is no question of excessive delegat....
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....) TMI 1 - SUPREME COURT and stated that there was no machinery provision in the anti-profiteering measures and hence they could not be enforced. On this aspect it is to be noted that no tax has been imposed under the above measures and hence the law settled in the. above cases is not applicable. However, it would be relevant to mention here that Section 171 (2) of the CGST Act, 2017 and Rule 122, 123 , 129 and 136 of the CGST Rules, 2017 have provided an elaborate machinery in the form of this Authority, the Standing and Screening Committees, the DGAP and a large number of field officers of the Central and the State Taxes to implement the anti-profiteering provisions. Therefore, the Respondent cannot allege that no machinery has been provided to implement the above measures. 54. The Respondent has also claimed that during the course of the investigation or even thereafter he was never put to notice or offered any reasoning through grant of a hearing or otherwise as to how the DGAP was going to derive profiteering. In this regard it is mentioned that the DGAP being an investigating agency has no power to grant opportunity of hearing to the Respondent. However, it is ap....
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.... 16.5 months when many other investigations were between 2 to 4.5 months, clearly manifested arbitrariness. It would be relevant to mention here that in the cases bearing No. 20/2018, 02/2019 59/2019, 46/2019, 14/2018 and 08/2018, decided by this Authority, in which the investigation was conducted for the period ranging between 2 months to 4.5 months, the period of investigation was limited to the period, when the complaint was received, as has been done in the present case. Had the Respondent passed on the benefit before 31.03.2019 he would have been investigated only till that date. No supplier can be investigated for the benefit which he is required to pass on in the future. Hence, the above contention of the Respondent is not tenable. 57. The respondent has further contended that earning profits through lawful means was not a sin and he could be held liable if he had earned profit by unlawful means. He has also cited the definitions given in Black's Law Dictionary, Shorter Oxford English Dictionary and Law Lexicon on profiteering. In this connection it would be appropriate to refer to the definition of profiteered amount given in the Explanation attached to Section 171....
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....ptroller and Auditor General of India in June; 2010 in this regard. In this connection. it would be relevant to mention that the contents of the Report are absolutely Correct as it has been repeatedly found that the suppliers have not passed- on the benefit of tax reduction in a large number of cases. The Respondent has also correctly cited the flier released by the Central Board of Indirect Taxes & Customs and the case of Sandeep Puri v. M/s Johnson & Johnson 2019 (11) TMI 1084, which make it abundantly clear that the objective of the anti-profiteering provisions is to protect the interests of the consumers therefore, it is responsibility of the anti-profiteering mechanism to ensure that the benefits of tax reduction and ITC are passed on to the unorganised, voiceless and vulnerable customers and the suppliers are not allowed to misappropriate them. However, there is no evidence to come to the conclusion that the Respondent has reduced his MRPs as was ruled by this Authority in the case of Pawan Sharma V. M/s Sharma Trading Company 2018 (9) TMI 625. 61. The respondent has also submitted that he had passed on the entire benefit of reduction in the tax rate b....
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....has also averred that in terms of the legal maxim of "Lex Non Cogit Ad Impossibilia" applied by the Hon'ble Apex Court in the case of State of MP v. Narmada Bachao Andalan (2011) 7 SCC 639 = 2011 (5) TMI 914 - SUPREME COURT he could not be forced to perform an impossible act. However, keeping in view the observations made in the para above the above case does not cone to the rescue of the Respondent as the Respondent was not required to do an impossible act. 64. The Respondent has further averred that he had reduced the MRPs of 5 other SKUs, sample invoices of which were attached. by him as Annexure-6, Perusal of these invoices shows: that they do not reflect the commensurate price. Which the Respondent could have Charged on the basis of the tax reduction and hence no reliance can be placed on them. 65. The Respondent has also stated that he had increased the MRPs of the impacted goods only w.e.f. 15.03.2018 due to several factors viz. (a) rise in cost (b) response to the pricing strategy of the competitors and (c) change in season, among others. However, it is revealed from the record that the: Respondent had not reduced his prices commensurat....
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....rices as per his directions and hence, there has been no infringement of fundamental right of the Respondent to decide his selling prices. 69. The Respondent has also contended that there were no guidelines regarding the period during which prices could not be revised. In this regard it is to be noted that the Respondent can fix his prices as per his own strategy however, he has not produced any evidence during the course of the present investigation which can prove that he has passed on the benefit of tax reduction till 31.03.2019 and therefore, any increase made in the prices by the Respondent amounts to profiteering. The Respondent cannot deny the benefit of tax reduction by taking shelter of Article 19 (1) (g) of the Constitution. The Respondent has also placed reliance on the case of Petroleum and Natural Gas Regulatory Board v. lndraprastha Gas Limited & Qrs. (2015) 9 SCC 209 = 2015 (7) TMI 1130 - SUPREME COURT in this regard. Since, the: DGAP has not interfered with the right of the Respondent to fix his prices the law settled in the above case is not being relied. 70. He has further contended that he had revised his base prices on account of marg....
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.... NAPA = 2019 (3) TMI 751 - THE NATIONAL ANTI-PROFITEERING AUTHORITY wherein this Authority had held that increase in the base price on account of reduction in discount offered from dealer's margin did not amount to profiteering; However, there is no evidence to the effect in this case that the Respondent has increased his base prices due to withdrawal of the discount and hence the above case does not further the cause of the Respondent. Realignment of margins cannot be compared with the discounts as no dealer was bound to offer discounts from his margins and hence the profiteered amount cannot be reduced by Rs. 2,73,07,915/- as has been claimed by the Respondent. 72. The Respondent has further argued that averaging of prices at pan India level was conceptually inappropriate. In this regard it would be relevant to mention that since the Respondent was charging different prices to his various customers there was no alternative except to compute average of these prices for comparison with the actual base prices post rate reduction to arrive at the conclusion whether the benefit of tax reduction had been passed by the Respondent or not. The Respondent has also compared th....
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....all be determined as the profiteered amount. if this methodology is applied the Respondent shall be entitled to subtract the amount of benefit which he has not passed on from the amount of benefit which he has claimed to have passed, which will result in complete denial of benefit to the customers who were entitled to receive it. Every recipient of goods or services is entitled to the benefit of tax rate reduction by way of reduced prices and Section 171 does not offer the Respondent to suo moto decide on any other modality to pass on the benefit of reduction in the rate of tax to his recipients. Therefore, any benefit of tax rate reduction passed on to a particular recipient or customer cannot be appropriated or adjusted against the benefit of tax rate reduction due to another recipient or customer. Hence, this methodology of 'netting off cannot be, applied in the present case as the customers have to be considered as individual beneficiaries and they cannot be compared with dumped goods and netted off. This Authority has also clarified in its various orders that the benefit cannot be computed at the product service or the entity level as the benefit has to be passed on each suppl....
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....cess GST. Had he not charged the excess GST the customers would have paid less price while purchasing goods from the Respondent and hence the above amount has rightly been included in the profiteered amount as it denotes the amount of benefit denied by the Respondent. The above amount can also not be paid to the eligible buyers from the Consumer Welfare Funds as the Respondent has not deposited it in the above Fund. Therefore, the above contention of the Respondent is untenable and hence it cannot be accepted. Accordingly, an amount of Rs. 33,484,248/- cannot be subtracted from the profiteered amount as per Annexure-15. In support of his above claim, the. Respondent has relied upon the decision given by the Hon'ble Apex Court in the case of R.S. Joshi Sales Tax Officer Gujarat v. Ajit Mills Limited (1977) 4 SCC 98 = 1977 (8) TMI 140 - SUPREME COURT. However, keeping in view the facts of the present case the law settled in the above case cannot be relied upon. 77. The Respondent has also stated that he has increased his prices w.e.f. 15.03.2018 as a normal business decision taking into account various factors including rise in the cost of material, other direct an....
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....dent cannot be accepted. 80. The Respondent has further contended that the DGAP, while computing the profiteered amount, has ignored the discounts and freebies given to the recipients and the same should be reduced from the profiteered amount: The above contention of the Respondent is not correct because the investigation carried out by the DGAP reveals that the profiteering has been computed on the transaction value as per the provisions of Section 15 of the CGST Act, 2017 and all the discounts which do not form part of such value cannot be included in the price of the product. The Respondent has accepted that the discounts offered by him were in accordance with the general discount pattern Which was, being followed by him in the course of his business which every other supplier was also doing to promote his sales. Therefore, the above discounts and freebies cannot not be construed to have been given due to the GST rate reduction. Further it is revealed from the DGAP's Report that the Respondent has not submitted the copies of credit notes as per the provisions of Section 15,(3) (b) of CGST Act, 2017 and Rule 54 (1) (A) of the, CGST Rules, 2017 and hence, the above claim of the....
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.... levelled against him. There was no legal obligation on the. DGAP to provide details of the proceedings which had taken place before the Standing Committee on Anti-Profiteering nor they were required to be mentioned in the above Notice or the Report furnished by the DGAP. The Respondent has been given full opportunity of defending himself during the course of the present proceedings on: the allegations levelled against him and hence no prejudice has been caused to him. Since, the present investigation has been conducted by the DGAP in consonance with the provisions of Section 171 read with Rule 129 the current proceedings against the Respondent are maintainable. 83. The Respondent has also cited the judgements passed in the cases of CCE Bangalore v. Brindavan Beverages (P) Limited 2007 (213) E.L.T. 487 (SC) = 2007 (6) TMI 4 - SUPREME COURT, Shipli Enterprises v. CCE Allahabad 2017 (349) ELT 308 (Tri.-All) = 2016 (12) TMI 1263 - CESTAT ALLAHABAD, Delta International Limited v. Commissioner of Customs 2012 (281) E.L.T. 400 (Cal.) = 2012 (9) TMI 144 - CALCUTTA HIGH COURT and United Arab Shipping Agency Co. (1) P. Ltd. v. CC (Import) 2014 (310) E.L.T. ....
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....tifiable, as per the provisions of Rule 133 (3) (c) of the above Rules alongwith 18% interest payable from the dates from which the above amount was realised by him from his recipients till the date of its deposit. The above amount shall be deposited within a period of 3 months from the date of passing of this order failing which it shall be recovered by the concerned Commissioners CGST/SGST. The State/Union Territory wise amount of benefit to be deposited by the Respondent in the concerned CWF is as under:- S.No. Row Labels State Code General trade Modern Trade E-Commerce trade Final Profiteering 1. Andhra Pradesh 37 5227562 1121697 0 6349258 2. Arunachal Pradesh 12 194462 0 0 194462 3. Assam 18 7138419 636054 0 7774474 4. Bihar 10 5692599 621167 0 6313766 5. Chandigarh 4 573872 0 0 573872 6. Chhattisgarh 22 8545118 500829 0 904597 7. Delhi 7 9732859 1983347 1660 11717866 8. Goa 30 597649 5219 0 602869 9. Gujarat 24 10112053 1753591 0 11865645 10. Haryana 6 40978....