TaxTMI 
TaxTMI 
2022 (6) TMI 1253
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....er the provisions of Section 17 (2) of the CGST Act, 2017 read with Rule 42 of the CGST Rules, 2017 and his findings shall be recorded in the Report. iii. The issue of benefit of discounts shall be examined by the DGAP in terms of Section 15 (3) of the CGST Act, 2017 as per details submitted by the Respondent and a detailed Report shall be filed by him in this regard. iv. The profiteered amount shall be again computed by the DGAP on the closing and the fresh stocks separately and mentioned in his Report. 2. The brief facts of the case are that the Applicant No. 1 vide his complaint had alleged that the Respondent had not passed on the benefit of reduction in tax rate from 12% to Nil in the light of Notification No. 19/2018-CTR dated 26.07.2018 w.e.f. 27.07.2018 on the purchase of Stayfree Sanitary Napkins. The said complaint was examined by the Standing Committee on Anti-Profiteering in its meeting held on 27.03.2019 and forwarded to the DGAP for detailed investigation in the matter. On receipt of said reference from the Standing Committee on Anti-Profiteering, the DGAP had investigated the aforesaid matter and submitted his Report dated 24.09.2019 concluding that the Responde....
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....in a manner as specified in the Rule. Thus, the issue of common ITC and verification of common ITC reversal post rate reduction was to be done in terms of Rule 42(1) of the Rules. To substantiate the Respondent's claim of reversal, the amount of credit reversed by him, had been verified with the GSTR-3B Returns of the corresponding month and ledgers, as submitted by him. It is found that the ITC amount reversed in the Return was more than that of his submissions for common input tax credit reversal with respect to impugned products. Thus, the claim of reversal of credit was correct and it would impact the cost of the impugned product. To arrive at the base price for post-rate reduction, that reversal of common credit amounting to Rs. 13,02,995/- was to be distributed proportionately to the turnover of Rs. 13,15,87,568/- of the sanitary napkins during the investigation period, which is 0.99% of the turnover. Hence, the base price would increase by 0.99% for calculation of profiteering for the fresh stock. b. In respect of issue mentioned at para 1 (ii) supra, the Respondent vide his submissions had revised the claim of reversal of common credit from Rs. 13,07,118/- to Rs. 13,0....
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....., Rs. 76.02/- per unit. Ongoing through the outward supply data of closing stock, as submitted by the Respondent, DGAP had observed that the Respondent had sold the same at Rs. 80/- per unit vide invoice no. UBO3-29100 dated 05.09.2018. Thus, the profiteering amount for "Whisper Ultra Overnight Sanitary Pads XL Plus wings (7 Count)" for one unit is Rs. 3.98/-. Following the similar methodology, profiteering has been computed on the closing stock and the profiteered amount works out to Rs. 5,37,208/-. (ii). The profiteered amount on fresh stock: During the post-rate reduction period (27.07.2018 to 30.09.2018), the purchase price of the goods "Whisper Ultra Overnight Sanitary Pads XL Plus wings (7 Count)" for the Respondent increased to Rs. 73.61/-. Hence, the commensurate selling price of the Respondent for the stock purchased after rate reduction w.e.f. 27.07,2018 should have been the sum of Rs 73.61/- (basic purchase price), Rs. 1.08/-(profit margin for that SKU) and Rs. 0.73 (0.99% of basic purchase price, as discussed in above, i.e. Rs. 75.42/-. Ongoing through the data of outward supplies for the month of September, 2018, as submitted by the Respondent, the DGAP had observed....
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....5,37,208 4,47,146 9,84,354 4. The above Report dated 31.12.2020 was considered by this Authority in its meeting held on 05.01.2021. Accordingly a Notice dated 05.01.2021 (enclosing the DGAP's Report dated 31.12.2020) was issued to the Respondent to explain why the above Report of the DGAP should not be accepted and his liability for profiteering should not be determined under Section 171 of the CGST Act, 2017. 5. Therefore, the Respondent vide his submissions dated 01.03.2021, has furnished his reply to this Authority, wherein the Respondent has reiterated and re-asserted the grounds taken by him in his previous submissions dated 11.11.2019 as well as Rejoinder dated 03.03.2020 and submitted that:- a. the benefit of total common credit reversed should be accorded to him. i. The DGAP has worked out the benefit of common credit reversal by working out Commensurate Base Price: Pre-exemption Profit Margin + Post- exemption Purchase Price + Common Credit Reversal (0.99% of Post- exemption Purchase Price). ii. The above said commensurate base price was then compared with the Actual Selling Price at invoice-level data in the outward supply data of the fresh stock. Line items....
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....s, or for restricted purposes listed in Section 17(5) of the CGST Act, from the total input tax; (b) Crediting the differential input tax in the electronic credit ledger; (c) From such differential input tax credit availed, the input tax attributable exclusively to taxable supplies is segregated; (d) What remains is common credit, on which the formula prescribed in Rule 42 is to be applied to compute the common credit reversal. iii. Common credit was availed in addition to input tax credit pertaining exclusively to any supply and from the above rule, it could be seen that reversal of common credit was over and above the reversal of exclusive credits on account of exempt supplies. iv. The benefit of common credit reversed on account of exempt outward supplies of such closing stock has not been accorded to him. 6. On receipt of the above said submissions dated 01.03.2021 of the Respondent, this Authority vide its Order dated 02.03.2021 had forwarded the same to the DGAP for his clarifications under Rule 133 (2A) of the CGST Rules 2017. The DGAP vide his Report dated 16.03.2021 had submitted his clarifications as under; i. On the contention of the Respondent that the tota....
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....ed that the benefit of common credit reversal should be considered for arriving at the alleged profiteering in case of closing stock which was given to him. 8. Considering the above said rejoinder 31.05.2021 of the Respondent and his request for Personal Hearing, this Authority has granted a hearing on 28.04.2022 through video conferencing to the Respondent and the Applicant No.1. However the Respondent vide his letter dated 27.04.2022, has submitted that he does not wish to contest this matter and is ready to pay the profiteered amount as computed by the DGAP in his above said Report dated 31.12.2020 without admitting the liability and requested to conclude the proceedings in the instant matter. 9. This Authority has carefully considered the above said Report dated 31.12.2020 furnished by the DGAP, the submissions made by the Respondent and the other material placed on record. On examining the various submissions the Authority finds that the following issues need to be addressed:- a. Whether there was any violation of the provisions of Section 171 of the CGST Act, 2017 in this case? b. If yes, then what was the quantum of profiteering? 10. A plain reading of Section 171 (1)....
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....n in the prices in terms of Section 171 (1) of the CGST Act, 2017 during the above period, by the Respondent. Further, it is also observed that the Respondent vide his letter dated 27.04.2022, has submitted that he is ready to pay the profiteered amount as calculated by the DGAP in his above said Report dated 31.12.2020. 13. As per the above discussion and findings, this Authority as per the provisions of Section 171 of the CGST Act, 2017, determines the profiteered amount as Rs. 9,84,354/- for period from 27.07.2018 to 30,03.2019 by the Respondent. The Authority finds that such amount needs to be passed on by the Respondent alongwith interest @ 18% as prescribed to the recipients of supply/customers other than the Applicant No. 1 as the profiteering in respect of the Applicant No. 1 has been found to be Nil as per the DGAP Report dated 24.09.2019. As the recipients other than the Applicant No. 1, of such supply are not identifiable, the Authority directs that, the Respondent shall deposit the said amount with interest in the Consumer Welfare Funds (CWP) of the Central and State Governments as prescribed under Rule 133 (3)(e) of the CGST Rules 2017, within three months of the date....
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....e provisions of Section 171 (3A) of the said Act. However, since, the provisions of Section 171 (3A) have come in to force w.e.f. 01.01.2020 and the offence pertains to the period from 27.07.2018 to 31.03.2019, hence penalty under the above section cannot be imposed retrospectively on the Respondent. 15. The jurisdictional Commissioners of CGST/SGST are also directed to ensure compliance of this order. They are directed to send a Report to this Authority and the DGAP in this regard, within four months of the date of receipt of this order. 16. The Hon'ble Supreme Court in Miscellaneous Application No 21 of 2022 in MA 665 of 2021 in Suo Moto Writ Petition (C) No. 3 of 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 limitation remaining as on 03.10.2021, if any, shall become....