TaxTMI 
TaxTMI 
2022 (5) TMI 782
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....pre-rate reduction base price have been compared with 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 sa....
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....re with the discounted monthly average of the supply made during the period 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 o....
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.... rated, nil rated and exempted supplies) of the impacted products during the period 27.07.2018 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....
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....t dated 29.10.2020 was provided to the Respondent as per the Minutes of the meeting of Authority held on 03.11.2020 and as conveyed vide letter dated 05.11.2020. The Respondent vide E-mail dated 08.04.2021 informed that complete submissions 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 o....
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....the Order dated 26.06.2020, DGAP has written a letter dated 10.07.2020 enclosing a pro-forma seeking details in respect of the goods sold by them. It was followed by reminder dated 24.07.2020. The Respondent had sought extension of time due to prevailing Corona situation 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 good....
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....8% 7. Commensurate Selling price (post Rate reduction) (including GST) G=118% of E 654.56 8. Invoice No. H 0894\2018-19 7. Invoice Date I 31.08.2018 8. Total quantity (as per invoice indicated in H) J 1 9. Total Invoice Value (including GST) K 700/- 10. Actual Selling price (post rate reduction) (including GST) L=K/J 700/- 11. Excess amount charged of Profiteering M=L-G 45/- 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 co....
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....o be issued. 16. The concerned jurisdictional CGST/SGST Commissioner is also directed to ensure compliance of this Order. It may be ensured that the benefit of ITC has been deposited an amount of Rs. 4,19,069/- in two equal parts of Rs. 2,09,534.50/- each in the Central Consumer Welfare Fund and the Karnataka Consumer Welfare Fund as per the provisions of Rule 133 (3) (c) of the CGST Rules 2017, along with interest payable @ 18%. 17. 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 05.03.2020 the order was to be passed on or before 04.09.2020. However, due to prevalent pandemic of COV1D-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 Suo moto Writ Petition (C) No. 3/2020 vide its Order dated 10.01.2022 has directed that:- "I. The order dated 23.03.2020 is restored an....