TaxTMI 
TaxTMI 
2022 (5) TMI 782
X X X X Extracts X X X X
X X X X Extracts X X X X
....ith the actual post rate reduction prices to compute the profiteered amount. Further, in case the mathematical methodology of comparing the average to average base prices employed by the DGAP is adopted, it would not be possible to compute the benefit of tax reduction which is due to each customer to each supply. The profiteered amount computed by DGAP would not be correct. Hence the above mathematical methodology adopted by the DGAP is not correct, logical, appropriate and in consonance with the provisions of Section 171 of the CGST Act, 2017. Therefore, the Reports dated 23.3.2019 and 10.10.2019 furnished by the DGAP cannot be accepted. Accordingly, the DGAP is directed to reinvestigate the above case under Rule 133 (4) of the CGST Rules, 2017. The DGAP directed to compare the average pre-rate reduction base prices of the products which were impacted by the tax rate reduction w.e.f 27.7.2018 with the actual rate reduction base price of the impacted products." The above said order of the NAA was not challenged by any party on the direction of methodology for working out the profiteered amount in the instant matter; hence, the said direction of methodology in the instant case beco....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 27.07.2018 to 30.09.2019 (Post-rate reduction period under investigation). The details of pre-rate reduction basic price, commensurate selling price, actual selling price and the amount of profiteering are in Annex-15 of the report dated 29.03.2019. It was also submitted that the submission made by the Respondent regarding variations in the prices on account of addition of colour to his products cannot be substantiated as it is nowhere available in the details of outward taxable supplies of the Respondent. It was also observed from Annex-15 of the report dated 29.03.2019 that the Respondent have profiteered on the supply of Wall Putty (HSN 3214) and on supply of Primer, which did not involve any colour cost. iv. However. the Authority after considering the various submissions made by the Respondent & the DGAP report, vide its Internal Order No. 20/2020 dated 26.06.2020, referred the matter back to the DGAP and directed to compare the average pre rate reduction base prices of the products which were impacted by the tax rate reduction w.e.f 27.07.2018 with the actual post rate reduction base prices of the impacted products. 3. Accordingly, the DGAP has carried out necessary re-in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....7.2018 to 30.09.2018, in compliance of the directions contained in aforesaid Internal Order dated 26.06.2020. It was informed that as per the direction given by the Authority, they (DGAP) had worked out the profiteered amount by comparing the average of the base prices (after discount) of the goods sold during the period 01.06.2018 to 26.07.2018 with the actual invoice-wise base prices (after discount) of such goods sold during the period 27.07.2018 to 30.09.2018. The excess GST so collected from the Recipients, was also included in the aforesaid profiteered amount as the excess price collected from the Recipients also included the GST charged on the increased base price. The revised amount of net higher sales realization due to increase in the base prices of the impacted goods, despite the reduction in the GST rate from 28% to 18% i.e. the profiteered amount comes to Rs. 4,19,069/-. The details of the computation were given in Annex-8 of the said Report. The DGAP has explained the said methodology with the help of one illustration viz. of a particular item "White Wood Primer 1 Ltr", sold during the period 01.06.2018 to 26.07.2018 (pre-GST rate reduction). An average base price (af....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bmissions were made during the early hearing along with the paperwork. No new document or submission was to be filed as whatever documents were placed, are on the record. Personal Hearings in the matter were scheduled on 15.03.2022 and 25.3.2022. Neither the Applicant No.1 nor Respondent appeared in the Personal Hearing. However, Respondent vide E-mail dated 25.03.2022 informed that he had already provided all the documents/details available with them in this case to the DGAP and he did not have any additional information on it. 8. This Authority has carefully examined the DGAP's Report and various submissions placed on record. The issues to be decided by the Authority are as under:- i. Whether there was any violation of the provisions of Section 171 of the CGST Act, 2017 in this case? ii. If yes, then what was the quantum of profiteering? 9. Section 171 of the CGST Act provides as under:- (1). "Any reduction in rate of tax on any supply of goods or services or the benefit of ITC shall be passed on to the recipient by way of commensurate reduction in prices." It is clear from the plain reading of Section 171 (1) mentioned above that it deals with two situations of comm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tuation claiming that their Office was falling under the containment zone. DGAP issued reminders on 20.8.2020 and 11.09.2020 to the Respondent and a summon dated 25.09.2020 was also issued seeking the relevant information/details. However, Respondent did not respond to any of these letters/summon. The Authority also notes that during the earlier round of proceedings, when Authority was deciding the matter, Respondent was offered personal hearings on 05.11.2019, 20.11.2019, 02.12.2019, 06.12.2019 and 27.12.2019; but Respondent did not avail any of the above Personal Hearings. The Authority finds that despite giving sufficient opportunities to the Respondent, they chose not to provide necessary documents or to extend any assistance to DGAP in speedy conclusion of investigation. The Authority finds from the earlier report of the DGAP dated 29.03.2019 that relevant information relating to actual sale price of the impacted goods were already available with them (DGAP) but they chose to give their findings/conclusion based on the average pre-GST rate reduction price of the impacted goods with average post reduction price of such impacted goods. Since, the relevant information relating to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....12. Total Profiteering N= J M 45/- On random verification of the calculation compiled by DGAP in pursuant to the direction contained in its order dated 27.06.2020, The Authority finds that the calculation carried out by DGAP is correct. As stated in the earlier paragraphs, the Respondent was provided with adequate opportunity to provide relevant documents and records and also to extend necessary assistance to DGAP in the matter, but, they chose to remain inactive and did not extend necessary assistance. The Respondent has not raised any objection to quantification of profiteered amount of Rs. 4.19,069/- calculated in the DGAP Report dated 27.10.2020, a copy of which was provided to them. For the reasons mentioned hereinabove and in the given facts and circumstances and also stated position of law, we find no reason to differ from the Report of the DGAP and we therefore agree with the findings of the DGAP that the provisions of Section 171 of the CGST Act 2017 have been contravened in this case and the Authority determine the profiteered amount at Rs. 4,19,069/- under the provision of Rule 133 (1) of the CGST Rules. 14. Based on the above facts, the profiteered amount is dete....