TaxTMI 
TaxTMI 
2022 (5) TMI 737
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...."ECLAT SERUM", when the GST rate was reduced from 28% to 18% w.e.f. 15.11.2017. The Applicant No.1 has alleged that the Respondent had not passed on the benefit of reduction in the GST rate by the way of commensurate reduction in prices. The Applicant No. 1 had also submitted the copies of invoices of pre-rate reduction and post rate reduction prices of the product. The above application was initially examined by the Maharashtra State Screening Committee, which observed that the the Respondent had not passed on the appropriate benefits to his customers on account of reduction in tax rate and forwarded the complaint to the Standing Committee on Anti-profiteering for further action. The above application was examined by the Standing Committee on Anti-profiteering, in its meeting held on 13.09.2019, whereby it was decided to refer the same to the DGAP, to conduct a detailed investigation in the matter, in terms of Rule 129 of the CGST Rules, 2017. 2. The DGAP, on receipt of the aforesaid reference from the Standing Committee on Anti-profiteering, issued a Notice under Rule 129 of the Rules on 23.10.2019, calling upon the Respondent to reply as to whether he admitted that the benefi....
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....rate reduction in prices, in terms of Section 171 of the CGST Act, 2017. 6. The DGAP has further stated that the Central Government, on the recommendation of the GST Council, had reduced the GST rate on "the subject Goods" from 28% to 18% w.e.f. 15.11.2017, vide Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017. The DGAP has also stated that on the examination of Section 171 of the Central Goods and Services Tax Act, 2017 which governed the anti-profiteering provisions under GST, Section 171 (1) of the Central Goods and Services Tax Act, 2017 reads as "any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices," Thus, the legal requirement was abundantly clear that in the event of benefit of input tax credit or reduction in rate of tax, there must be a commensurate reduction in the prices of the goods or services. Such reduction could only be in monetary terms, so that the final price payable by a recipient got reduced commensurate with the reduction in the tax rate or benefit of input tax credit which was the legally prescribed mechanism to pass on t....
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.... 6300 11. Actual Selling price per unit (post rate reduction-with GST) L=K/J 1260 12. Excess amount charged or profiteering M=L-G 200 13. Total Profiteering N= M*J 1000 8. The DGAP has claimed from the above Table that the Respondent has not reduced the selling price of the "Eclat Serum 30GM", when the GST rate was reduced from 28% to 18% w.e.f. 15.11.2017, vide Notification No. 41/2017 Central Tax (Rate) dated 14.11.2017 and hence profiteered an amount of Rs. 1000/- on a particular Invoice No. 000907 dated 29.09.2018 and thus the benefit of reduction in GST rate was not passed on to the recipients by way of commensurate reduction in the price, in terms of Section 171 of the Central Goods and Services Tax Act, 2017. The DGAP, on the basis of aforesaid calculation as illustrated in Table A above, has found that profiteering in case of al1 goods impacted by the GST rate reduction vide Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017, supplied by the Respondent during the period 15.11.2017 to 30.09.2019 has also been arrived in similar way. 9. The DGAP has further reported that based on the aforesaid pre and post-reduct....
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.... that the Respondent had made the supply of the impacted goods in the State of Maharashtra only:- Table-'B' S.No. Description Total 1. Total no. of impacted products sold between 01.07.2017 to 14.11.2017 4 2. Total no. of Invoices issued during the period 15.11.2017 to 30.09.2019 516 3. Total Value of Invoices issued during the period 15.11.2017 to 30.09.2019 Rs. 68,16,544/- 4. Total no. of Product against which profiteering has been found 3 5. Total no. of Invoice on which profiteering was found 81 6. Total value of Invoices of the products on which Rs. profiteering was observed Rs. 15,96,007/- 7. Total Profiteering against the impacted products Rs. 1,54,138/- 10. The DGAP has concluded that the allegation of the Applicant No.1 was that the base prices of the subject goods were increased when there was a reduction in the GST rate from 28% to 18% w.e.f. 15 11.2017. The benefit of such reduction in GST rate was not passed on to the recipients by way of commensurate reduction in price. The DGAP has also observed that the allegation of profiteering by way of increasing the base prices of the products w.e....
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....in his Report dated 23.03.2020. Hence, the DGAP was directed to provide necessary guidance to the Respondent so that he could pay the above amount. The DGAP vide letter dated 15.12.2020 has asserted that the Respondent had issued the Demand Drafts (DDs) on 01.12.2020 for payment of Rs. 1000/- to the Applicant No. 1 and Rs. 76,569/- to Central Consumer Welfare Fund (CWF) and Maharashtra State CWF each. However, no documentary evidence was furnished by the Respondent. Therefore, the DGAP vide email dated 02.12.2020 asked the Respondent to remit the interest amount also and furnish all the documentary evidence to the DGAP. In compliance, the Respondent vide email dated 09.12.2020 has furnished the copies of 6 Cheques/ Demand Drafts as detailed below:- SI.No. Name of Bank the Instrument Details Favouring Amount Remarks Instrument No. Date 1 HDFC Bank Manager's Cheque 015503 01.12.2020 Dr Meenakshi Agrawal 1,000 Basic Profiteered amount of the Applicant No. 1 2 HDFC Bank Demand Draft 002223 01.12.2020 Central Consumer Welfare Fund 76,569 Basic Profiteered amount for Central CWF 3 HDFC Bank Manager....
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....Delhi. Thereafter, the DGAP has confirmed that the Respondent has submitted a correct Demand Draft No. 002229 dated 16.01.2021 amounting to Rs. 32,250/- in the above office which has been deposited in the Fund's Account vide Challan No. 059 dated 20.01.2021. Hence, the Respondent has remitted entire profiteered amount along with applicable interest. 15. The DGAP has also stated that in respect of Maharashtra State Consumer Welfare Fund, the Respondent vide his email dated 20.01.2021 submitted that he had submitted two Demand Drafts bearing No. 015540 & 015541 both dated 19.12.2020 for Rs. 32,250/- and 76,569/- favouring "Maharashtra State Consumer Welfare Fund" to the State GST Office, Mazgaon, Mumbai and got the acknowledgement of the same which was forwarded by the Respondent as attachment to the email dated 20.01.2021. The DGAP vide email dated 21.01.2021, requested the State GST Office, Mazgaon, Mumbai for confirmation of the deposition of above amounts in the Consumer Welfare Fund (Maharashtra State). Dr. Pramod B. Bhosale, Dy. Commissioner of State Tax, HQ-7, SME-GST Refunds, GST Bhavan, Mazgaon, Mumbai, vide email dated 25.01.2021, confirmed that the two Demand Drafts....
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....unt of not passing the benefit of reduction in rate of tax on supply of goods or services or both or the benefit of input tax credit to the recipient by way of commensurate reduction in the price of the goods or services of both." 18. It is also observed from the record that the Respondent is engaged in selling of medicines from his retail stores having GSTIN 27BDVPM0061N1ZZ. It is also revealed from the plain reading of Section 171 (1) supra that it deals with two situations one relating to the passing on the benefit of reduction in the rate of tax and the second about the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the record that there has been a reduction in the rate of tax from 28% to 18% w.e.f. 15.11.2017, on "the subject goods" being supplied by the Respondent, vide Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017. Therefore, the Respondent is liable to pass on the benefit of tax reduction to his customers in terms of Section 171 (1) of the above Act. It is also apparent that the DGAP has carried out the present investigation w.e.f. 15.11.2017 to 30.09.2019. 19. It is also evident that the Respondent has....
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....eping in view the reduction in the rate of tax so that the benefit is passed on to the recipients. Accordingly, the Respondent is required to deposit the profiteered amount of Rs. 1,54,138/- 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 the other recipients (other than the Applicant No. 1), in this case, are not identifiable, the Respondent is directed to deposit the amount of profiteering of Rs. 1,53,138/- along with interest in the CWFs of the Central and Maharashtra State Government as per the provisions of Rule 133 (3) (c) of the CGST Rules, 2017 in the ratio of 50:50 along with interest @ 18% till the same is deposited. 22. The DGAP has verified that the Applicant No. 1 vide email dated 11.12.2020 had also confirmed the receipt of the profiteered amount of Rs. 1,000/- along with interest of Rs. 350/- from the Respondent. In respect of Maharashtra State CWF, the DGAP has confirmed that the Respondent has submitted the Demand Draft No. 015504 dated 01.12.2020 of Rs. 76,569/- for payment of the profiteered ....
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....it the investigation report within 3 months of passing of this order. 26. As per the provisions of Rule 133 (1) of the CGST Rules, 2017 this order was required to be passed within a period of 6 months from the date of receipt of the Report from the DGAP under Rule 129 (6) of the above Rules. Since, the present Report has been received by this Authority on 16.04.2020 the order was to be passed on or before 15.10.2020. However, due to prevalent pandemic of COVID-19 in the Country this order could not be passed on or before the above date. In this regard it would be relevant to mention that the Hon'ble Supreme Court in Miscellaneous Application No 21 of 2022 in MA 665 of 2021 in Suo Moto Writ Petition (C) No. 03/2020 vide its Order dated 10.1.2022 has directed that:- "I. The order dated 23.03.2020 is restored and in continuation of the subsequent orders dated 08.03.2021, 27,04.2021 and 23.09.2021, it is directed that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings. II. Consequently, the balance period of....