TaxTMI 
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2022 (7) TMI 34
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....r referred to as "NAA" or "the Authority" also) direction contained in Interim Order (I.O). No. 05/2020 dated 03.01.2020 in the matter of Respondent, whereby the matter was referred back to the DGAP under Rule 133(4) of the Central Goods and Services Tax Rules, 2017 to conduct further investigation with the following observations/directions:- (i) DGAP has submitted that an amount of Rs. 19,75,12,265/- can be reduced on account of rectification of the non-averaging of base prices where description was used for comparison {01.10.2017 to 14.11.2017 (Goods Desc.) and 01.09.2017 to 30.09.2017 (Goods Desc.)}. However, the DGAP has also stated that the above rectification could be made if it was decided to do so by this Authority. The DGAP has not mentioned the reasons on the basis of which such an approach can be approved by this Authority. He has also not explained why the above approach was not applied by him at the time of preparing of his Report dated 05.07.2019. (ii) DGAP has also submitted that an amount of Rs. 4,80,88,937/- can be excluded from the original profiteered amount due to rectification of inconsistency in the sequence followed by him in respect of certain line items....
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....account, the Respondent has realized an additional amount to the tune of Rs. 2,16,49,61,535/- from the recipients during the period from 15.11.2017 to 31.12.2018, which includes both the profiteered amount and GST on the said profiteered amount. The conclusion was based on the documents and information submitted by the Respondent during the course of original investigation. The aforesaid amount was revised to Rs. 1,86,39,57,058/- vide DGAP letter dated 23.12.2019 after rectifying certain inadvertent discrepancies as submitted by the Respondent during the course of hearings held before the Authority. 3. The above said Investigation Report dated 5.7.2019 and subsequent revision of the quantification of the profiteered amount conveyed vide letter dated 23.12.2019 was shared with the Respondent. Personal hearing was given by the Authority to the Respondent on 01.01.2020 and the proceedings culminated in passing of its I.O. No. 05/2019 dated 03.01.2020 with a direction to the DGAP to conduct further investigation on the observations as mentioned in paragraph 1 above. The Authority also directed DGAP to supply detailed list of the Stock Keeping Units (SKUs) impacted by the rate reductio....
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.... highlighted by the Respondent in his submissions dated 01.11.2019. Since this base price is for product with Old Grammage, the Respondent computed commensurate base price of the SKU sold post rate reduction by adjusting the base price for the increased grammage. The Respondent has used this commensurate base price to calculate the amount of increase in grammage. (v) Commensurate increase in the Weight/Volume required post rate reduction with computations: The Respondent submits that the commensurate increase required in the Weight/Volume to pass on the benefit of reduction in rate of tax comes to 8.48%. Respondent submitted that it has increased the grammage by 10%, 18.18% and 41.30% at 11-digit code level, which is much higher than the 8.48% commensurate increase in grammage required. (vi) Actual Increase in the weight in grams/mis: The Respondent has increased grammage by 10%, 18.18% and 41.30% respectively in respect of products supplied by him, and the details of increased grammage at 11-digit code level. This grammage increase is more than the 8.48% grammage increase required to pass on the benefit of reduction in rate of tax. The Respondent has also provided supporting d....
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....State/Union territory wise details based on calculation of alleged profiteering provided by DGAP. (xi) Amount of profiteering computed by DGAP on the SKU as Der DGAP letter dated 23.12.2019: The amount of profiteering computed by DGAP as adjusted for base price discrepancies and weighted average price of products with latest MRP. (xii) Amount of profiteering computed by DGAP on these SKUs State/Union Territory wise: The amount of profiteering computed by DGAP as adjusted for base price discrepancies and weighted average price of products with latest MRP as per Respondent's submission dated 01.11.2019. 4.3 The Respondent submits that an amount of INR 26,96,31,164 (restricted to profiteering amount at line item level) passed on by the Respondent by way of increase in grammage (calculated based on weighted average price of products with latest MRP) should be reduced from the total profiteering alleged to have been made by the Respondent. Further, the Respondent has on totality basis passed on INR 82,97,36,596 by way of higher grammage. 4.4 However, the Respondent vide E-mail dated 22.08.2020 has submitted that there was an inadvertent formula error in 2 files out of total 35....
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....2017 (Goods Desc.)]: DGAP has adopted the Average base price (arrived by dividing the total taxable value by total quantity sold) in pre-rate reduction period and compared it with the actual transaction value in post-rate reduction period. However, in case one product having same description is sold in multiple product code, then DGAP has adopted the average base price available at first place in the same product. The same has happened due to the proprietary of VLOOKUP function (used to lookup a value in a table by matching on the first column) in MS-Excel, which in case of duplicate values, find the first match when the match mode is exact. Respondent has submitted that instead of taking average price at first place, the pre-rate reduction base price should be taken as one out of the following three approaches: (a) Weighted Average Base Price of the product having same description with all the MRPs. (b) Average Base Price of the product with latest MRP of the latest product code introduced immediately prior to rate-reduction. (c) Weighted Average Base Price of the products with latest MRP prevailing in pre-rate reduction period. Accordingly, Respondent has re-computed th....
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....ing weighted average base price of Rs. 226.03/-, the profiteering amount will reduce by Rs. 7,70,237/- resulting into revised profiteering of Rs. 20,02,733/- [Rs. 27,72,970/- (-) Rs. 7,70,237] for the State- Delhi General Trade. Another example of the product with description "MAIIREL (NEW) SHADE NO.3", for General Trade Channel, of which the details are furnished in table below: No. Product Code Product Description HSN MRP Quantity Taxable Amount Average Price 2435 MRCIP300-70 MAJIREL (NEW) SHADE NO.3 33059040 310 1,01,854 224,92,710 220.83 2436 MRCIP300-80 MAJIREL (NEW) SHADE NO.3 33059040 335 23,106 55,14,061 238.64 Total 1,24,960 2,80,06,771 224.12 In the post rate reduction period, DGAP has adopted the pre-rate reduction base price as Rs. 220.83/-(available at first place) and determined the profiteering for product sold in post-rate reduction period amounting to Rs. 28,81,815/-(for the state Delhi- General Trade). However, Respondent submitted that as per approach (c) Weighted average price of latest MRP of Rs. 238.64/- should be adopted and profiteering reduced by Rs. 26,17,512/- resulting into profiteering....
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....f the average base price available at first place in the same product (having multiple product codes), if the price was not obtained at Step-2 (due to non-availability of price in particular channel) then, DGAP has proceeded to Step-3 and so on to find the pre-rate reduction base price for computation of profiteering. Therefore, the claim made by the Respondent before the Authority that Weighted Average Base Price of the product having same description is available at step two itself has merit and accordingly the profiteering is to be revised. However, to address the issue of following incorrect sequence for few line items identified by the Respondent due to adopting first line item, as discussed above, approach (a) where Weighted Average Base Price of the product having same description with all the MRPs is the correct approach which was adopted for pre-rate reduction base price and accordingly, the total profiteering will further reduce by an amount of Rs. 4,80,88,937/- as against Rs. 5,28,32,173/- claimed by the Respondent, for approach (c). (iii). Adoption of average price of description wherever comparable product code is used: In addition to the steps mentioned in point (....
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....also be considered as correct comparable and accordingly, the average price of all the codes having the same comparable description must be considered instead of considering the price of 1 product code alone. The above contention of the Respondent has merit and as already discussed in detail in point- (i) above, considering the approach (a) where Weighted Average Base Price of the product having same description with all the MRPs is adopted for pre-rate reduction base price, the total profiteering will further reduce by an amount of Rs. 5,18,75,235/- as against Rs. 5,72,41,346/- claimed by the Respondent, for approach (c). (iv) Benefit of rate reduction passed on by increasing the grammage/volume of the products: The concern raised by the Respondent has already been addressed in para-14 & 17 of Investigation Report dated 05.07.2019 which is re-produced below: "14. Before enquiring into the allegation of profiteering, it is important to examine Section 171 of the Central Goods and Services Tax Act, 2017 which governs the anti-profiteering provisions under GST. The said Section 171(1) reads as any reduction in rate of tax on any supply of goods or services or the benefit of inp....
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.... tax by increasing the grammage/volume amounting to Rs. 27,49,45,942/-(restricted to profiteering amount computed at transaction level). The same was quantified on specific direction of the Authority without admitting the claim of the Respondent. 4.9 The profiteering has been computed at each transaction level (approximately 52 lakh transactions) consisting of 35 files, therefore, the detailed list of the SKUs impacted by the rate reduction w.e.f. 15.11.2017 along with the pre-rate reduction base price (Column 45) and the commensurate reduced base price post rate reduction (Column AE) with percentage increase/reduction made by the Respondent in respect of such SKU are provided in column BF in each 35 files of Annex-6 of the Report. 4.10 After examining the various contentions raised by the Respondent vide letter dated 05.11.2019 before the Authority, DGAP has revised his profiteering amount to Rs. 1,86,39,57,058/- vide table-'C' in para-4 of DGAP's letter of even no. 1172 dated 23.12.2019, which is reproduced in table below: S.No. Particulars Amount (in Rs.) Remark 1. Reported Profiteering as per DGAP's Report dated 05.07.2017 (A) 2,16,49,61,535/- Para-2....
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.... 77,55,612 2,48,78,719 5. Bihar 10 3,30,11,667 89,07,480 2,41,04,187 6. Chandigarh 4 1,37,87,443 8,28,849 1,29,58,595 7. Chhattisgarh 22 1,74,40,804 35,78,123 1,38,62,681 8. Dadra and Nagar Haveli 26 3,16,680 84,008 2,32,672 9. Daman and Diu 25 4,96,288 1,59,447 3,36,841 10 Delhi 7 23,05,94,750 2,08,17,829 20,97,76,921 11. Goa 30 1,21,32,941 19,26,455 1,02,06,486 12. Gujarat 24 11,95,97,065 2,16,20,776 9,79,76,289 13. Haryana 6 9,58,25,575 1,12,00,203 8,46,25,372 14. Himachal Pradesh 2 77,75,294 15,95,812 61,79,482 15. Jammu & Kashmir 1 1,62,28,548 38,20,248 1,24,08,299 16. Jharkhand 20 2,33,41,894 51,08,609 1,82,33,285 17. Karnataka 29 15,40,52,967 2,06,76,923 13,33,76,044 18. Kerala 32 2,70,97,666 44,85,782 2,26,11,883 19. Madhya Pradesh 23 4,38,21,931 84,93,520 3,53,28,411 20. Maharashtra 27 37,57,54,539 3,95,11,422 33,62,43,117 21. Manipur 14 48,17,508 4,56,526 43,60,982 22. Meghalaya 17 52,45,762 9,85,463 42,60,299 23. Mizoram 15 39,27,568 3,40,460 35,87,108 24. Nagaland 13 74,20,071 17,67,448 56,52,623 25. Orissa ....
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....led written submission dated 14.9.2019 and 20.10.2020; and consolidated submission dated 26.11.2020. In the consolidated written submission, the Respondent, inter-alia, contended as under:- 5.1 The goods manufactured by the Respondent are distributed from the factory to customers in the following manner: 5.2 GST @ 28% (CGST of 14% and SGST of 14% or IGST of 28%) was applicable from 1.07.2017 to 14.11.2017 on most products supplied by the Respondent. The Central Government vide Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017 reduced the rate of CGST on many consumer goods including the goods supplied by the Respondent from 14% to 9%. Simultaneously, State Governments also issued notifications to reduce the SGST from 14% to 9% effective from 15.11.2017. The details of the products impacted by the aforesaid GST rate reduction with effect from 15.11.2017 along with the corresponding HSN codes are tabulated as under: Category Product HSN Impacted category Hair Care Shampoo, Conditioner, Serum etc. 3305 Yes (except Hair Oil) Hair Color L'Oreal Paris, Garnier 3305 Yes Skin Care Cream 3304 Yes Make Up Kajal, Maybelline, etc., 3304 Yes (e....
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....changes were successfully implemented by the Respondent on the midnight of November 14th to fully comply with the law and the Respondent charged the revised GST rate of 18% for all supplies made effective from November 15, 2017. 10.11.2017 to 30.11.2017 The Respondent prepared the plan immediately from the date of issue of notification to pass the net commensurate benefit through combination of price reductions in majority of the cases and by way of increase in quantity in respect of three product lines (shampoo, conditioner and colour naturals) considering the nature of SKUs, free higher grammage and higher post supply price reduction (discounts). The Respondent communicated the price reduction plan to its recipients from November 2017 onwards and also educated them of their obligations to ensure they further pass on the net benefits arising from GST rate reduction to their customers to ensure that the benefits reach the end consumers. The Respondent allowed price claims to the customers for the supplies made by the customers at reduced prices after GST rate reduction. The Respondent had advised the recipients to submit claims for this purpose to compensate them for the higher ....
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....the CGST Rules dated 28.08.2020 i.e. 2nd DGAP report are incorrect and are devoid of legal merits. The Respondent has not retained any benefit from the reduction in rate of GST and hence has not profiteered. Therefore, the Respondent does not agree with the conclusions drawn by the DGAP and challenges the 1st and 2nd DGAP report on the following grounds which are independent and without prejudice to one another. The detailed submissions are mentioned in the subsequent paragraphs. 5.7 Vide this written statement, the Respondent submits the following: i. Preliminary objections - The time limit for passing of order in the case of the Respondent has already expired and hence the proceedings are barred by limitation. ii. The methodology adopted by DGAP of comparing the average price pre-rate reduction with actual price post-rate reduction is not equitable comparison, is erroneous, without logical reasoning and requires reconsideration. The methodology adopted by the Respondent should be considered as correct. iii. Submissions of the Respondent on grounds A to S provided below need to be considered 5.8 Preliminary objections of the Respondent 5.8.1 In terms of rule 133 (1) of th....
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....mplies that the fresh time limit is not available u/r 133 (4). As a consequence of this, the fresh time limit available to a new investigation is not available to a further investigation u/r 133 (4), and that the further investigation u/r 133 (4) needs to be completed and final order of the NM needs to be passed within the overall time limit of 6 months from the date of receipt of original report of DGAP provided in rule 133(1). 5.8.5 Every time an order is passed by the NM u/r 133(4) of the CGST Rules, if a fresh time limit is made available to DGAP to furnish report based on further investigation to be carried out by it and for NM to pass an order, it will lead to a situation where the proceedings will not attain finality at any point of time and will lead to a situation of ever-greening, which cannot be permitted. Prolonging the time period permitted for investigations is likely to result in adverse impact. The Respondent submits following dates and events which are relevant to its facts: SI.No. Events Date 1 Report furnished by DGAP 05.07.2019 2 Personal Hearing before NAA 30.08.2019, 01.10.2019, 30.10.2019, 27.12.2019 and 01.01.2020 3 Written submissions filed by....
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....ns of these Tribunals, rendered in cases that they are specifically empowered to adjudicate upon by virtue of their parent statutes, will also be subject to scrutiny before a Division Bench of their respective High Courts. We may add that the Tribunals will, however, continue to act as the only courts of first instance in respect of areas of law for which they have been constituted. By this, we mean that it will not be open for litigants to directly approach the High Courts even in cases where they question the vires of statutory legislations (except, as mentioned, where the legislation which creates the particular Tribunal is challenged) by overlooking the jurisdiction of the Tribunal concerned." (emphasis supplied) 5.8.9 The guidelines issued by NAA vide File No. Admn (NAA)/P&M/81/2019/ dated 04.10.2019 specify in para 10 that the Reports submitted by the Director General of Anti-profiteering under Rule 133 (4) shall be construed to be fresh Reports for the purpose of Rule 133 (1). 5.8.10 Para 10 of the Authority's guidelines dated 04.10.2019 treating report u/r 133 (4) (in respect of further investigation) as a fresh report will tantamount to amendment in rule 133(4) on t....
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.... without logical reasoning and requires reconsideration. The methodology adopted by the Respondent should be considered as correct. 5.9.1 Neither the CGST Act nor the CGST Rules provide for methodology by which benefit of reduction in rate of tax needs to be passed on. In the absence of any prescribed methodology, the Respondent passed on the benefit in following manner: (i) Post-supply price discounts on account of GST rate reduction (ii) Reduction in prices and MRP of products (iii) Increase in grammage 5.9.2 While considering the above methods of passing benefit, the Respondent followed entity level approach, thereby allowing higher price reductions/ higher increase in grammage on some SKUs which would be offset against other SKUs. 5.9.3 Further, the Respondent had to adjust losses on account of various factors while arriving at the benefit required to be passed on. Such losses include reduction in budgetary support due to reduction in GST rate from 28% to 18%, increased Customs Duty. If all the above factors are considered, the Respondent has passed on a total benefit of INR 276.48 crores, which is way more than the total profiteering of INR 186.40 crores alleged by th....
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....l w.e.f. 2Z07.2018, the base price has been worked out item by item. Our attention has been drawn to the tabulation filed by the petitioner before the DGAP, which shows that in respect of several items sold by the petitioner, after the reduction of GST to nil, the price actually fell, however, while computing the profiteered amount; such cases have been excluded from consideration. Prima fade, it appears to us that the impugned order needs consideration and the petitioner has been able to make out a strong case for grant of interim relief Till the next date, we stay the operation of the impugned order. List on 24.09.2020. No penalty proceedings shall be initiated against the petitioner in the meantime." 5.10 Without prejudice to the preliminary objections as above and the Respondent's submissions regarding the methodology adopted by it, and the incorrect methodology adopted by DGAP, the Respondent makes following submissions as per grounds A to S: GROUNDS A. PERIOD ADOPTED FOR INVESTIGATION IS ARBITRARY (a) Period covering about 14 months not having statutory basis (b) FMCG business, in which the Respondent operates, is very dynamic and periodic price revisions are un....
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....nt about the period till when the Respondent will be investigated for alleged profiteering, if any. This can lead to an inference that in the absence of any specified time period, increase in the price, if any, undertaken by the Respondent will be considered as profiteering till the time Respondent is in business. Such exercise is contrary to the true intent and spirit of the anti-profiteering provisions contained in the CGST Act which by their very essence are transitionary in nature and therefore, cannot be applied in perpetuity. A.2 The methodology adopted for calculating the reduction in price and MRP required to be adopted was as follows, which was submitted before the DGAP: a. To compute the taxes forming part of MRP in the pre-GST regime and under GST regime @ 18%, and to reduce the MRP to the extent required to maintain similar level of MRP less taxes in the supply chain, i.e. by comparing pre-GST MRP less taxes with MRP less taxes @ 18% GST. b. Tax cost considered in GST regime was GST @ 18% embedded in MRP (less budgetary support, if any, for products manufactured in Baddi). Tax costs considered in pre-GST regime were VAT, excise duty/CVD on finished/imported product....
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....703, wherein the following was held: "14. In this context it is important to emphasize that the absence of arbitrary power is the first essential of the rule of law upon which our whole constitutional system is based. In a system governed by the rule of law, discretion, when conferred upon executive authorities, must be confined within clearly defined limits. The rule of law from this point of view means that decisions should be made by the application of known principles and rules and, in general, such decisions should be predictable and the citizen should know where he is. If a decision is taken without any principle or without any rule it is unpredictable and such a decision is the antithesis of a decision taken in accordance with the rule of law (see Dicey--Law of the Constitution--Tenth edition, Introduction cx). " Law has reached its finest moments, " stated Douglas J. in United States v. Wunderuck, " when it has freed man from the unlimited discretion of some ruler ... Where discretion is absolute, man has always suffered ". It is in this sense that the rule of law may be said to be the sworn enemy of caprice. Discretion, as Lord Mansfield stated it in classic terms in the....
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....133(4) and furnish fresh report. B.3 The DGAP in his report dated 28.08.2020 has accepted the computation error and deducted the amount for SI. No. 5 to 7 as submitted by the Respondent. However, as regards SI. No. 1 to 3 of the above table, the DGAP has stated that the benefit can be allowed only to the extent of INR 29.75 crores, break - up of which is as follows: SI.No. of DGAP report Particulars Amount (Rs. in Crores) as allowed by DGAP Amount (Rs. in Crores) as submitted by Respondent 2 Rectification of non-averaging of base price where description is used for comparison (01.10.2017 to 14.11.2017 (Goods Desc.) and 01.09.2017 to 30.09.2017 (Goods Desc.)) 19.75 30.52 3 Rectification of inconsistency in sequence followed for some line items 4.81 5.28 4 Adoption of average price of description wherever comparable product code is used 5.19 5.72 Total 29.75 41.52 B.4 The difference in amounts is due to the difference in methodology adopted by the DGAP and the Respondent, which can be explained with the below illustration taken from the DGAP report. B.5 For instance, the Respondent was selling product Majirel (New) Shade No. 4 in the pre-rate reduction ....
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....ond line item (SI. No. 425 and 426) was being sold during the pre-rate reduction period (from 01.10.2017 to 14.11.2017) only for the reason that the stock already in hand as on 30.09.2017 had to be liquidated during that period. However, once the said stock was phased out, the Respondent would have sold the product at the new MRP only, as per SI. No. 427 to 429 of the above table. The Respondent, therefore, submits that the DGAP's assumption that since the product was being sold pre-rate reduction at old MRP, the said line item also needs to be considered to compute the average price pre-rate reduction is incorrect. B.10 The Respondent submits that the price at SI. No. 425 and 426 above already stood revised pre-rate reduction itself. Even if there had been no rate reduction, once the stock with MRP of INR 175 and INR 180 would have been exhausted, the Respondent would sell products with revised MRP of INR 190 only. In that case, even without rate reduction, the Respondent would have sold the product in the range of INR 123.08 to 123.57 only (or higher than that, considering the said prices are average and not actual prices). The prices of INR 113.98 and INR 117.23 had become ....
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....R 11,77,81,480. C. GST RATE REDUCTION BENEFIT PASSED ON THROUGH POST-SUPPLY DISCOUNTS C.1 As an immediate measure after the notification dated 15-11-2017 repeating the GST rates, the Respondent started giving ad-hoc post-supply discount of 5%-12.5% till such time a solution was found to pass on the benefit in respect of stocks with old MRP on pack. C.2 The Respondent had internal meetings to analyse the pros and cons of various methods, checked the practices followed by competitors in the industry, etc., to find a way to pass on the benefit. After serious deliberations, it was felt that post-supply price reduction was the most effective manner by which this benefit could be passed on and the same was continued till the time new artwork with revised MRP became ready. The process by which Respondent granted post supply price reduction is as follows: a. L'Oreal makes sales to its customers. b. Customers make a further sale to their customers at a discounted price to pass on the benefit of reduction in rate of GST c. Such discount is claimed back by customers from L'Oreal, effectively ensuring compliance for both L'Oreal and customer Discounts are admissible deduc....
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....sold to you, post supply of such stock when made by you to the retailer / salons at the reduced price as shown above. Such benefit will be passed by way of claims. It should be ensured that the benefits should be transferred to the ultimate customer" C.7 The relevant declarations from the Respondent 's invoice are extracted below: Declaration of old and reduced MRP: C.8 An illustrative set of documents containing the details of credit notes issued to customers along with corresponding sample credit note copies have already been submitted to the DG by the Respondent as Annexure-1 to Respondent's Vetter dated 19.06.2019. Further, vide e-mail dated 20.06.2019, in respect of one credit note amounting to Rs.10,15,587.31 issued by it, the Respondent has also provided the sales register of distributor to his retailers containing the GST scheme discount along with sample invoices issued by him which also provide for a declaration that the benefit is being passed on by distributor pursuant to anti-profiteering provisions, the relevant portion is extracted as under: "GST Price Reduction Declaration Considering the anti-profiteering provisions under GST, we are passing ....
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....o one-to-one correlation between supplies made and the discounts given. C.12 The observation of DG that there is no one-to-one correlation is a completely misplaced one. For instance, in the claim file submitted to DG for one of our customers (Delhi Trading Co.), it can be clearly seen that the discount is based on the actual sale made by distributor to retailer for a given product. For instance, the discount offered in respect of one invoice by customer to retailer for product DGL Eye Liner Studio Gel and the related claim made by the customer on L'Oreal is as follows: C.13 Invoice shows the MRP, Reduced MRP and the Scheme Discount (Sch Disc) is calculated based on the rate per unit of product, as applicable based on difference between old and reduced MRP. Discount per unit given by customer to retailer - INR 35.91 per unit Claim made by customer on L'Oreal and processed by L'Oreal C.14 The claim made by customer on L'Oreal shows the very same invoice line item sold by customer to retailer. Bill Date Bill No Retailer Name Shipping Address Product Code Product Name Sales Qty GST Scheme Discount 11-01-20118 LCBL041341701898 PRABHA COLLECTION KAMLA ....
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....discounts extended on account of GST rate reduction. In respect of modern trade modern retail customers, such discounts were extended by way of settlement of invoices raised by such MT customers on L'Oreal. It is submitted that recipients of L'Oreal treated these price reductions / discounts as service in view of the fact that there were disputes under the erstwhile service tax legislation between the department and the dealers of the automobile companies who were receiving the incentives from the manufacturers post sale. The incentive received by the dealers was considered by the department as consideration for the service provided by the dealers to the manufacturers and service tax was demanded on such incentives. In order to avoid dispute regarding future tax liability and interest thereon, if any, L'Oreal took a position to accept the claim for price reductions from the recipient with tax as it was revenue neutral, being creditable in the hands of the Respondent. The Respondent submits that the amount paid was towards price reduction, passed on by modern retail customers on account of GST only. C.21 In this regard, the Respondent submitted that as a part of its reg....
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....pondent is assured of the fact that the benefit of such price reduction is passed on further to the trade partners below in the supply chain, after carrying out appropriate verification. C.27 The Respondent submitted that allegation of profiteering (if any) should have been made after taking into account the amount passed on by way of post supply discount claims as that alone reflects the net realization of the Respondent. These discounts were given on account of GST rate reduction and the practice of post-supply discount followed by the Respondent is as per the established practice followed in the past for giving discounts not only by the Respondent but by the entire FMCG industry. It is submitted that once discount is allowed as per established practice, the same should be allowed to be deducted from the sale price of the goods. In this regard, the Respondent relies on the decision of Hon'ble Supreme Court in the case of Union of India vs. Bombay Tyres International 1984 (17) E.L.T. 329 (S.C.) wherein it was held that 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 ....
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....able by a recipient gets reduced commensurate with the reduction in the tax rate or benefit of input tax credit. This is the only legally prescribed mechanism to pass on the benefit of input tax credit or reduction in the rate of tax under the GST regime and there is no other method which a supplier can adopt to pass on such benefits." C.31 The Respondent passed on the benefit of tax rate reduction by way of reducing the price subsequent to supply. It is submitted that in common parlance discount is nothing but reduction in price. The amount by which the price is reduced is discount. It is settled law that discounts known in advance to the customer are deductible from the value, irrespective of its form or nomenclature, as discussed earlier. C.32 It is submitted that the price reduction has been given in the monetary form to the recipients on the basis of documents received from the recipients. It is nowhere prescribed that benefit of GST rate reduction should be given on the invoice itself. The benefit can be given subsequent to the supply by way of adjustments in books of accounts of the recipient and supplier. In the present case admittedly, the price reduction had been given ....
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....n respect of DGAP's observations in its report dt. 05.07.2019. However, without acknowledging the submissions made by the Respondent and providing a finding or response to the same, the DGAP has simply referred back to paras 15-17 of its own report dt. 05.07.2019 without dealing specifically with any of the submissions made by the Respondent. C.37 Further, the DGAP once again cited an example of sample document in which invoice is raised by trade partner for provision of services, advertising, sales promotion, etc. to deny the benefit of discount passed on by the Respondent. In this regard, the Respondent submitted that the GST post-supply discounts have been processed by the Respondent in separate modes for General Trade (through credit notes) and modern trade/ e-commerce (through service invoices). The GST post-supply discounts are as follows: * General trade: In respect of these customers, once they passed on the amount to their customers, they became entitled to claim the said amount from the Respondent. Once the Respondent processed their claims on account of GST post-supply discounts, same were settled through issuance of credit notes by Respondent. This was unlike the....
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....d the Respondent communicate the fact that customers shall be eligible for post-supply discount on account of GST rate reduction, the same was also reflected through declaration on invoices for supplies made by Respondent to its customers. Accordingly, the Respondent reiterates the submissions made by it in its written submissions filed on 05.11.2019 and requests the Authority to allow reduction to the tune of INR 73.59 crores (INR 51.93 crores + INR 21.66 crores) which has been passed on by the Respondent by way of post-supply price reduction on account of GST rate reduction. C.40 The DGAP has not dealt with the aforesaid submissions in its report dated 28.08.2020 u/r 133 (4). In the absence of any findings in this regard in the report, the Respondent requests to accept their submissions and reduce an amount of INR 73.59 crores as above from the profiteering alleged by the DGAP. C.41 The DGAP has in its reply u/s 133 (2A) dated 05.11.2020 on this issue reiterated its earlier stand that it was Respondent 's own business decision to extend consumer promotion the cost of which cannot be offset. Further, it has referred to the sample document in case of Modern Trade customer sho....
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....2017. Irrespective of this change in nomenclature / description in the system, the Respondent submits that the benefit was passed on account of GST rate reduction only. Further, to substantiate its claim that the benefit of 5% / 12.5% was on account of GST rate reduction, the Respondent has provided an internal email dated 25.11.2017, which clearly reflects that the Respondent has introduced a new "12.5% GST benefit scheme". C.44 The Respondent has also submitted copies of credit notes which reflect that the benefit is on account of GST price reduction. The Respondent provided a copy an additional credit note dated 16.04.2018 issued to M/s. Ankita Enterprises for total amount of 1NR 1,61,645.05, which clearly reflects that it is on account of GST price reduction. A screenshot of the credit note is also provided below: C.45 Further, it has also been observed by DGAP that the said credit notes nowhere indicated that those were related to benefit of reduction in GST rate from 28% to 18% w.e.f. 15.11.2017. In this regard, the Respondent submits that the credit notes pertaining to period from January 2018 onwards clearly indicate that they are for "GST PRICE REDUCTION". Therefore, the....
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....n only. The Respondent is not trying to make any undue or false claims and has provided all the details as required from time to time to support its claim that the benefit passed on by it is indeed on account of GST rate reduction. Therefore, the Respondent requests the Authority to accept the submissions and reduce an amount of INR 73.59 crores from the total alleged profiteering computed by DGAP. The correct breakup of 1NR 73.59 crores into various types of customers is as follows: Type of customer Amount (in crs.) General Trade 54.19 MR / E-comm (i.e. other than General Trade) 19.40 Total 73.59 D. BENEFIT OF GST RATE REDUCTION PASSED ON BY WAY OF INCREASED QUANITITY (HIGHER GRAMMAGE) ON CERTAIN SKUS NOT CONSIDERED BY DG D.1 In the absence of any prescribed methodology for passing of benefit of GST rate reduction, the Respondent had passed on the benefit by various methods. The same also included providing increased quantity of the same product at the same/ reduced price per grammage. The Respondent as a part of GST rate reduction pass through plan, had passed the benefit through higher grammage on certain SKUs. In this regard, the Respondent vide paras 5.11 to 5.13 o....
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....y of his products. D.5 In the present case, the Respondent has passed on the benefit of GST rate reduction by way of increasing the quantity of the product while retaining the same/reduced selling price including tax. For an illustration, please see below: Customer type Product code Description Selling price incl. tax Base price as per DG incl. tax Profiteering as per DG New grammage Old grammage General Trade HESEC640-20 HEX ExtraOrd Clay SH 704 ml 371.68 341.09 30.59 704 ml 640 ml Per nil price: Period Selling price incl. tax Grammage Per ml price Post rate reduction 371.68 704 ml 0.528 Pre rate reduction 341.09 640 ml 0.533 D.6 From the above illustration, it can be seen that if the price comparison is made on per ml basis, the price of INR 0.528 charged after 15th November 2017 is lower than the price of INR 0.533 charged before 15th November 2017. The price per ml charged post rate reduction is lower than the price per ml pre-rate reduction. D.7 The Respondent also submitted in Para C.7 of written submissions dated 03.09.2019 and para E of written submissions dated 30.09.2019 that it has passed on benefit of GST rate reduction by way of increa....
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.....12.2019. However, the Authority in its Interim Order No. 5/2020 dated 03.01.2020 was pleased to note the order in the case of M/s Hindustan Unilever Limited mentioned supra and accordingly directed the Respondent to furnish certain additional information, which shall be examined by the DGAP and included in the fresh Report to be filed by him in consequence of the said Order. The Respondent was directed to furnish the following details: i. Name of the SKU ii. Base price of the SKU pre rate reduction with documentary evidence iii. Weight/volume of the SKU pre rate reduction with documentary evidence iv. Commensurate base price of the SKU post rate reduction with details of computations v. Commensurate increase in the weight/Volume required post rate reduction with computations v. Increase in the weight in grams/mis vi. Whether the increase is commensurate with the rate reduction vii. Date of passing on the benefit of tax reduction with documentary evidence viii. Amount of benefit of tax reduction passed on the SKU ix. Amount of benefit of tax reduction passed on State/Union Territory wise D.13 Accordingly, the DGAP vide letter dated 14.01.2020 directed the Respo....
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....ent by way of increase in grammage, which the Authority may be pleased to deduct from the total profiteering alleged by the Respondent. D.16 Further, the Respondent submits that if the submissions made by it in Para B above are accepted, the benefit passed on by way of increase in grammage will be INR 26.96 crores (restricted to profiteering alleged at line item level by considering approach (c) of Weighted Average Base Price of the products having same description with latest MRP for pre-rate reduction period). D. 17 The DGAP has merely reiterated its stand as per report u/r 133 (4) dated 28.08.2020. Accordingly, the Respondent reiterates its above submissions and submits that once it has been accepted by this Authority that grammage is also a mode of passing on benefit of GST rate reduction, the DGAP cannot adopt a different stand and accordingly the grammage benefit as computed by the DGAP may be considered and reduced from the total alleged profiteering. E. INCREASE IN CUSTOMS DUTY E.1 The Respondent submitted that vide the Second Schedule to the Finance Bill 2018 (SI. No. 2), First Schedule of the Customs Tariff Act, 1975 was amended with effect from 1st February 2018 to i....
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.... Duty Paid w.e.f. March 18-Total') to L'Oreal, which is a significant change in business environment as applicable for such imported products and hence, such SKUs must be removed from the computation of profiteering at least from the date of increase in Customs Duty rate. Both GST and Customs Duty are the taxes payable by L'Oreal directly linked to the product. E.4 The Respondent further submitted that in previous 5 years, there was no increase in Customs Duty rate of products imported and traded as such. As and when the Customs Duty had reduced, the market forces would come into picture and based on competition and demand in the market, new price would be determined. E.5 The Respondent in its reply dated 11.12.2019 stated that the concern of the Respondent of not considering the price increase in Customs Duty on the products imported by him has been addressed in Para 18 of DGAP report dated 05.07.2019. Para 18 of the DGAP report is extracted below: "18. The contention of the Respondent that the base prices were increased to offset the increase in the cost of production / imports, raw materials, packing material, labour, transportation, rentals, advertising & other ....
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....ustration for Product 1: Product Code BLSPA500-10 with product description Blond Studio Platinum Amm-Free 500GM Sr. No. Invoice date Actual sale price per unit Commensurate sale price as per DGAP Profiteering p.u. as per DGAP Customs Duty p.u. (before 01.02.2018) Customs Duty p.u. (post 01.02.2018) Increase in Customs Duty p.u. 4335 19-11-17 1276.56 1176.82 99.74 53.98 155319 14-03-18 1276.56 1176.82 99.74 115.30 61.32 Illustration for Product 2: Product Code DCFFN021-00 with product description Dream Cushion Fdn 21 Nude Sr. No. Invoice date Actual sale price per unit Commensurate sale price as per DGAP Profiteering p.u. as per DGAP Customs Duty p.u. (before 01.02.2018) Customs Duty p.u. (post 01.02.2018) Increase in Customs Duty p.u. 731 18-11-17 783.17 721.99 61.19 24.64 155319 05-03-2018 783.17 721.99 61.19 52.62 27.99 Illustration for Product 3: Product Code CSFFC005-00 with product description C SMOOTH AIO R2016 04 HY EB Sr. No. Invoice date Actual sale price per unit Commensurate sale price as per DGAP Profiteering p.u. as per DGAP Customs Duty p.u. (before 01.02.2018) ....
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....20. Increase in Customs Duty had taken place within 3 months from the date of rate reduction and falls during the period of investigation. E.11 In the absence of any findings in this regard in the DGAP's report u/r 133 (4) dated 28.08.2020, the Respondent requests to accept Respondent 's submissions regarding reduction in alleged profiteering due to increase in Customs Duty and reduce an amount of INR 19,18,68,113 as stated above. E.12 The DGAP has merely reiterated its stand as provided earlier in its clarification dated 11.12.2019. Accordingly, the Respondent reiterates its above submissions. As submitted in Para E.6, the DGAP, while disallowing Respondent's claim for not computing profiteering in respect of products impacted by Customs Duty, has stated that the contention cannot be accepted as such increase in base prices could not have happened overnight to exactly coincide with the GST rate reduction w.e.f. 15.11.2017. In this regard, it is submitted that the Respondent has not claimed that the Customs Duty increase has coincided with GST rate reduction overnight on 15.11.2017. In fact, the increase in Customs Duty has only happened on 01.02.2018 and the Responde....
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....F.2 The Respondent submitted that Section 171(1) of the CGST Act mandates any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit to be passed on to the recipient by way of commensurate reduction in prices. F.3 The Respondent further submitted that according to the provisions of Section 171 of the CGST Act, The Authority is mandated to investigate through DGAP and determine the quantum of commensurate benefit arising out of reduction in tax rate which has not been passed on by a supplier. Therefore, allegation of profiteering (if any) can only be to the extent of reduction in GST rates. F.4 In the instant case, there has been a reduction in tax rates by 10% (From 28% to 18% w.e.f. 15.11.2017) which as per the DG's computation methodology can be given effect to by keeping the pre-tax price (base price) constant. The same can be illustrated as follows: Period Base price (excl. GST) GST Base price (incl. GST) Pre-reduction 69.14 28% (19.36) 88.50 Post-reduction 69.14 18% (12.45) 81.59 Commensurate reduction as per DG INR 6.91 (Note - Pre-reduction price is the base price adopted by DG for sale of produ....
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.... 171. In other words, this differential amount of INR 21.11 cannot be alleged as profiteered as per Section 171 of the CGST Act, as the scope of Section 171 is limited to commensurate reduction in prices to the extent of reduction in rate of tax or benefit of input tax credit. F.9 The Respondent submits that if the business profits are also treated as profiteered amount, the same may amount to 'price control' which is neither intended nor mandated by Section 171 of the CGST Act. The Respondent wishes to draw the attention of the Authority to the order passed in the case of Lifestyle Retail Pvt. Ltd.- Case No. 8/2018 dated 25.09.2018 [vide Para No. 20 of the order}, wherein the Authority has observed that it is not functioning as a 'price regulator'. F.10 The Respondent had submitted that the computation of aggregate reduction in the amount alleged as profiteered due to the above error committed by DGAP can be made by the Respondent only if the basis of computation of base price is made available to the Respondent. Accordingly, post receipt of base price computation data from The Authority on 13.09.2019, the Respondent has computed this amount and based on the weig....
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....rices of any supply of goods or services. Therefore, the Respondent is under legal obligation to pass on the benefit of ITC or reduction in rate of tax by way of commensurate reduction in price of each and every supply of goods or services. F.15 Anti-profiteering provisions are for the benefit of the recipients and each recipient must get benefit of reduction in rate of tax or increase in ITC on each and every supply of goods or services or both. Further, the transactions where base price is not increased were excluded from the computation of profiteering. F.16 The Respondent had submitted that the allegation of profiteering can only be for reduction in rate of GST. If the Respondent is required to pass on the benefit of reduction in rate of tax from 28% to 18% and fails to do so, the Respondent can be alleged to have profiteered only to the extent of such reduction from 28% to 18%. The DGAP in its reply dated 11.12.2019 has re-iterated that the base prices should be kept constant and any amount charged in excess of the base price shall be considered as profiteering, without understanding the submission of Respondent. F.17 Section 171 requires that any reduction in rate of tax s....
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....pproach for determining profiteering, if any. F.21 In the absence of any findings in this regard in the DGAP's report u/r 133 (4) dated 28.08.2020, the Respondent requests to accept Respondent's submissions and reduce an amount of INR 14.39 crores from the total profiteering amount. F.22 The DGAP has merely reiterated its stand as provided earlier in its clarification dated 11.12.2019. Accordingly, the Respondent reiterates its above submissions. The Respondent has provided specific illustration in paras F.4 to F.8, from which it can be clearly seen that the DGAP has exceeded its mandate u/s 171 of the CGST Act. Since the reduction in rate of tax is 10%, the maximum profiteering that can be alleged in a transaction cannot exceed 10%. Thus, the profiteering has to be capped at 10% of the price pre-rate reduction and cannot exceed the said amount. The Respondent requests this Authority to consider this submission and accordingly provide relief on this account. G. HIGHER BENEFIT PASSED ON IN RESPECT OF CERTAIN SKUs NOT CONSIDERED - DG HAS ERRONEOUSLY RESORTED TO 'ZEROING' WHICH IS INCORRECT G.1 The Respondent vide its submissions dated 04.11.2019 submitted that the....
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....y anti-dumping authorities in certain countries like European Union. According to the said methodology, while calculating the dumping margin only those SKUs were considered which were being dumped and those SKUs which were not being dumped were not considered. The Government of India disputed this practice and has taken a stand against such methodology at the WTO and argued that while determining the dumping margin, all SKUs should be taken into consideration rather than only those which show positive dumping. G.6 In this regard, attention is invited to Report No. WT/D5141/AB/R dated 1.3.2001 of the Appellate Body, WTO regarding Anti-Dumping Duties on imports of Cotton-Type Bed Linen from India. In the subject case, Indian exporters faced an anti-dumping action by EU and the exporter was exporting different variety of bed linen to EU. In some cases, the exporter was exporting at positive dumping margin, wherein in many cases there was negative dumping margin, i.e., the export price was more than the normal value at which goods were sold in India. G.7 The European Commission applied their usual practice of not netting off the positive and negative dumping margins. In fact, they ap....
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....1 crores (56,01,05,432), considering weighted average price of products with latest MRP. c. Price reduction more than required in cases where fiscal incentives have reduced: The Respondent has suffered reduced realization in cases where the fiscal incentives have reduced on account of reduction in GST rate from 28% to 18%. However, the Respondent reduced prices of certain supplies more than required after considering the impact of reduced fiscal incentives. For instance, the Respondent was earlier realizing INR 100 from customer + INR 2 from Government by way of budgetary support. Although the budgetary support may have reduced to INR 0.5 due to GST rate reduction from 28% to 18%, the Respondent did not increase the prices or increased the prices less than INR 1.5 - reduction in fiscal incentives (for instance, say price was increased to INR 101 and no increase was taken to the extent of INR 0.5). Amount passed on by this measure alone is INR 1538 crores (15,37,84,257), considering weighted average price of products with latest MRP. G.10 The Respondent further submitted that if a customer is charged INR 2 extra for 1 SKU and is provided a higher than required price reduction of ....
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....vices must pass on the benefit of ITC or reduction in rate of tax to the recipients by way of reducing the prices thereof paid by the recipient. G.15 It is submitted that as long as the above condition is being fulfilled, it does not matter whether the same is given for Product X or Product Y, in as much as it is given to the very same customer. Accordingly, it is submitted that even if profiteering has been alleged to the extent of approx. INR 175.28 crores (after considering base price discrepancies as per weighted average prices of products with latest MRP), the Respondent has already passed on more than INR 117.72 crore by way of higher price reduction even if such higher benefit passed on is restricted to profiteering at customer + GSTIN level. In effect, the excess amount stands (alleged profiteering) at customer+ GSTIN level reduces to INR 57.56 crores (as per Annexure-1 zeroing summary). After adjusting for amount passed on in light of other submissions made by the Respondent, it is submitted that the Respondent has fully passed on the benefit of rate reduction. G.16 In this regard, it is also submitted that a transaction must be viewed from the perspective of a man of co....
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....der passed by Hon'ble Delhi High Court is extracted below: "We have heard learned senior counsel for the petitioner as well as the counsel for the respondent on the aspect of grant of interim relief It is pointed out by learned senior counsel for the petitioner that the respondents have acted unreasonably, inasmuch, as, for the period prior to reduction of GST from 12% to nil w. e. f 27.07.2018, the DGAP had computed the base price on average basis. However, for the period after the GST rate became nil w.e.f. 27.07.2018, the base price has been worked out item by item. Our attention has been drawn to the tabulation filed by the petitioner before the DGAP, which shows that in respect of several items sold by the petitioner, after the reduction of GST to nil, the price actually fell, however, while computing the profiteered amount; such cases have been excluded from consideration. Prima fade, it appears to us that the impugned order needs consideration and the petitioner has been able to make out a strong case for grant of interim relief Till the next date, we stay the operation of the impugned order. List on 24.09.2020 No penalty proceedings shall be initiated against th....
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.... a loss to the tune of Rs.74,41,87,041 in respect of its own manufacturing plant in Baddi had been suffered, the calculation of which can be seen at Annexure 11 of submission dated 21.06.2019 of Respondent before DGAP. This loss was computed by comparing the reduced refund available to it under GST regime (which is 58% of amount paid in cash, by adopting 90% of sale price as transaction value) with the refund which was available under pre-GST regime (100% of excise duty paid in cash was available as refund/exemption was available whereby no excise duty was payable and CENVAT credit was not available). Value on which excise duty was calculated was almost equal to the sale price of L'Oreal. H.3 The Respondent also suffered loss due to substantial reduction in the benefit available on introduction of GST, for products manufactured by sub-contractor factories. This loss on account of implementation of GST during the period of investigation is INR 38.72 crores (38,72,53,979). H.4 However, the same has been rejected by DG on the ground that the Respondent is entitled to the same proportion of 58% of CGST component paid in cash as earlier and hence, the amount of refund has not redu....
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....th the following example: H.9 Particulars Pre-rate reduction Post rate reduction (no ITC change) Post rate reduction (ITC reduction) Stock transfer price 100 100 100 Output IGST 28 18 18 Purchase cost 70 70 70 Purchase GST 15% = 10.5 15% = 10.5 12% = 8.4 Tax paid in cash 28-10.5=17.5 18-10.5=7.5 18-8.4=9.6 Refund @ 29% 5.07 2.18 2.78 Loss 5.07-2.18=2.89 5.07-2.78=2.29* As can be seen from the above, the net loss being claimed by Respondent is only lower than the actual loss on account of GST rate reduction in outward supply of products H.10 Accordingly, the Respondent has reworked the quantum of reduced refund solely on account of reduction in rate of tax from 28% to 18% without considering loss on account of refund restricted to 58% of CGST/29% of IGST instead of Respondent 's expectation of 100% refund of CGST/50% refund of IGST. The refund reduced solely on account of reduction in rate of tax from 28% to 18% works out to INR 16.76 crores (16,75,98,492), which should be adjusted while arriving at profiteering, if any. H.11 The Respondent submitted that with the reduction in GST rates ....
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....h. No. 1 Black Sr. No. Invoice date Actual sale price per unit incl. GST Commensurate sale price as per DGAP Profiteering g p.u. as per DGAP Budgetary support (after 15.11.2017) Budgetary support (before 15.11.2017) Reduction in Budgetary support 25 16-11-17 66.69 61.48 5.21 1.57 3.03 1.46 H.17 In the absence of any findings in this regard in the DGAP's report u/r 133 (4) dated 28.08.2020, the Respondent requests to accept Respondent's submissions. The Respondent once again submits that the refund reduced solely on account of reduction in rate of tax from 28% to 18% works out to INR 16.76 crores (16,75,98,492), which should be adjusted while arriving at profiteering, if any. H.18 The DGAP has merely reiterated its stand as provided earlier in its report dated 05.07.2019. Since the DGAP has not dealt with the submissions made by Respondent, the Respondent reiterates its above submissions. The Respondent has demonstrated with illustration that reduction in GST rate has led to reduction in budgetary support in relative terms, thereby reducing the absolute quantum of budgetary support. Such reduction in budgetary support due to reduction in GST rate oug....
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....alleged that the excess price collected from the recipients also includes the GST charged on the increased base price. J.2 The Respondent submitted that while arriving at the total alleged profiteering amount, the DG has incorrectly inflated the pre-rate reduction price by adding 18% GST to it and comparing it with the actual sale price including 18% GST, without adducing grounds as to why this amount has been added. J.3 Whatever amount was charged as GST by the Respondent, the same has been duly deposited in government account. There has been no allegation that the amount termed as excess GST in the Report is not GST per se and that such excess tax has not been paid to the government. J.4 Assuming, without admitting, that the Respondent has profiteered and GST has been collected thereon and said GST is to be paid in Consumer Welfare Fund then instead of Respondent, the Government can transfer the amount equivalent to GST on the profiteered amount to the Consumer Welfare Fund. J.5 The Respondent further submitted that addition of 18% would have been correct if the case of DG was that the amount has been collected and retained by the Respondent and not deposited with the Governm....
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....y. K.3 There may be multiple prices for the same supply at different points of time viz., one before the supply and one after the supply when the price is finalized based on terms of sale like discounts or price reductions based on schemes, turnover, etc. To cover such situations, the word 'prices' is used in Section 171. The law also uses the word 'any' before supply of goods and the same has been used to denote singular as against the plural for price. K.4 Commensurate reduction is not restricted to passing of benefit of tax rate reduction in monetary terms which is normally the price. Section 171 does not use the words 'pass on the benefit by reduction in price'. The effect of commensurate reduction in price is increased benefit to the recipient due to tax rate reduction. If the recipient gets the benefit in monetary or non-monetary form proportionate to tax rate reduction, Section 171 is complied with. Price in this regard is the consideration paid or payable for the supply. K.5 As per Indian Contract Act, 1872, consideration includes any act or abstinence. While consideration for supply is generally measured in monetary terms, the same can also inclu....
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....OFITEERED, CAN BE REFUNDED TO RECIPIENTS. L.1 The Respondent in its submissions dated 04.11.2019 submitted that it has not violated Section 171 and rules made thereunder and the allegation of profiteering consequent to GST rate reduction is not sustainable. In the unlikely event of the Authority holding that some amount has been profiteered by the Respondent, then the same will be refunded by the Respondent to its recipients. L.2 Rule 133 of CGST Rules provides that where the Authority determines that a registered person has not passed on the benefit of the reduction of rate of tax, the Authority may, inter alia, order return to the recipient an amount equivalent to the amount not passed on. It further provides for deposit of such amount in Consumer Welfare Fund constituted under Section 57 of CGST Act where the eligible person does not claim return of the amount or where such person is not identifiable. L.3 The Respondent submitted that recipients of the Respondent are identifiable as they are its distributors, modern retail, e-commerce customers etc. and therefore, in the unlikelihood of the Authority holding any amount as profiteered, appropriate orders may be passed to enabl....
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....ave any direct transaction with the consumer, i.e. the consumer is not liable to pay consideration directly to the Respondent. L.7 The Respondent submits that section 171 of the CGST Act uses the term recipient which is defined in the CGST Act. Thus, when the definition is provided in the Act itself, the DGAP cannot adopt a different interpretation. Section 171 does not use the term "consumer". Thus, by construing recipient to be the consumer, the DGAP is substituting the term used by the legislature. The Respondent submits that the legislature has consciously used the term "recipient" which has been defined in the CGST Act. When a defined term has been used in a provision, the meaning has to be derived from the said definition only and no other meaning can be adopted. Therefore, the Respondent submits that the DGAP's interpretation that recipient should mean the consumer is not in accordance with the accepted principles of statutory interpretation and therefore requests this Authority to reject this interpretation and accept Respondent 's submissions. M. MANUFACTURER IS NOT UNDER LEGAL OBLIGATION TO AFFIX STICKERS FOR CHANGE OF MRP ON THE GOODS LYING IN DISTRIBUTION CHAI....
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....ributors, dealers or retailers. The law recognizes that the product may be anywhere in the distribution channel and all such persons like dealers and retailers may affix sticker to show reduced MRP. M.5. As submitted above, in case of increase in MRP, relaxation was granted to manufacturers, importers and packers by the above said circular dated 04.07.2017 to affix sticker to declare changed MRP on unsold stock as existing on 1st July, 2017. In case of reduction of MRP, all persons including dealers and retailers have been provided the discretion to affix stickers as per Rule 6(3). In respect of reduction of MRP on the goods lying with dealers and others, law has taken into account practical considerations. It is not possible for manufacturers to affix stickers with reduced MRP on the products which have already been sold and lying with dealers and retailers. The manufacturers are not liable to affix sticker with reduced MRP when GST rate was reduced in respect of goods lying with others. M.6. Accordingly, the Respondent submitted that a commensurate reduction in price of supply of goods is the only mandate under section 171 of the CGST Act and further that affixing of stickers w....
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....ion 19(3) of the Competition Act, 2002, lays down the factors to be taken into consideration while determining whether an agreement has an appreciable adverse effect. O. IN THE ABSENCE OF ISSUANCE OF SHOW CAUSE NOTICE, PROCEEDINGS INITIATED ARE IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. O.1 The present proceedings have been issued in violation of principles of natural justice as show cause notice has not been issued to the Respondent proposing the action to be taken by the NM. O.2 The first principle of natural justice viz., audi alteram part-ern requires that the person concerned should be heard. In other words, nobody should be condemned unheard. Hon'ble Supreme Court in the case of Canara Bank and Others II, Debasis Das and Others reported at (2003) 4 SCC 557, where the Hon'ble SC held that a notice apprises the party of the case it has to meet. The Court held: "15. Notice is the first limb of this principle. It must be precise and unambiguous. It should apprise the party determinatively of the case he has to meet. Time given for the purpose should be adequate enough so as to enable him to make his representation. In the absence of a notice of the kind and such ....
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....ered amounting to Rs. 186.40 Crores during the period 15.11.2017 to 31.08.2018, which is based on the documents/information submitted by the Respondent. Further, the computation of aforesaid profiteering is clearly outlined in the Report itself. b. It was contended by the Respondent that the methodology adopted by DGAP of comparing the average price pre-rate reduction with actual post-rate reduction price is not equitable comparison, is erroneous, without logical reasoning and required reconsideration. The Methodology adopted by the Respondent should be considered as correct. In this regard, it has been submitted by DGAP that the average base price in the pre rate reduction period has been calculated separately for each product and each channel of sale on the basis of data supplied by the Respondent. This base price is exclusive of GST which has been calculated over a period of one and half month prior to rate reduction. In case the base price of some products is not available, then DGAP has taken previous month's data for calculating the base price. Thus, he has got the base price for a particular product for a particular channel of sale which has been then compared with the....
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....fferent invoices during a single day or during a period of one month. Further, this could have led to a situation when in the pre rate reduction period a consumer who had not purchased any product could have been deprived of the benefit which the Legislature intended to pass on to all the recipients. The profiteering, in terms of Section 171 of the Act, if any, needs to be calculated independently for each and every transaction as each purchaser is entitled to get the benefit on each supply from the supplier. For example, if a consumer "Y" purchases an impacted product in post rate reduction period and claims that he should be given the benefit of rate reduction, then his claim could have been rejected as he had not purchased any product in pre rate reduction period and there could not have been any comparison with the pre rate reduction price. As this method was also against the purpose of the legislation, the same was not considered for computation of profiteering. (iii) Comparison of Average to Average Price The method of comparison of Average price of Pre rate reduction with Average price of Post rate reduction for computation of profiteering also does not serve the purpose....
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.... been prescribed either in the Central Goods and Services Tax Act, 2017 or in the corresponding Rules/Notifications. DGAP has received the reference from the Standing Committee on Anti-profiteering on 07.01.2019 to investigate the matter, the period from 15.11.2017 up to the latest month of receipt of reference was taken up for investigation, i.e. from 15.11.2017 to 31.12.2018. d. As regard the base price discrepancies resulting in inflated alleged profiteering calculation by DGAP, it was informed that the concern raised by the Respondent has been duly addressed vide para -12(i) to 12(iii) of DGAP Report dated 28.08.2020 which are reproduced below: "12. (i). Non-averaging of base price where description is used for comparison [01.10.2017 to 14.11.2017 (Goods Desc.) and 01.09.2017 to 30.09.2017 (Goods Desc.)]: In this regard, it is submitted that DGAP has adopted the Average base price (arrived by dividing the total taxable value by total quantity sold) in pre-rate reduction period and compared it with the actual transaction value in post-rate reduction period. However, in case one product having same description is sold in multiple product code, then DGAP has adopted the averag....
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.... by Rs. 26,38,779/- resulting into profiteering of Rs. 1,34,191/- [Rs. 27,72,970/- (-) Rs. 26,38,779/]. The above submission of the Respondent is not appropriate as Respondent has sold 73,906 units of Rs. 3 10/- MRP and only 30,465 units of Rs. 335/- MRP during pre-rate reduction period which shows both MRPs were in market and neither was obsolete. Similarly, approach (b) does not hold good as adopting average price of product with latest MRP is not appropriate when old/other MRPs were also prevailing in pre-rate reduction period. Therefore, approach (a) where Weighted Average Base Price of the product having same description with all the MRPs is the correct approach to be adopted for pre-rate reduction base price to address the issue of adopting old MRP/first line item. Following the approach as per (a) above, and adopting weighted average base price of Rs.226.03/-, the profiteering amount will reduce by Rs. 7,70,237/- resulting into revised profiteering of Rs. 20,02,733/- [Rs. 27,72,970/- () Rs. 7,70,237] for the State- Delhi General Trade. Another example of the product with description "MIUIREL (NEW) SHADE NO.3", for General Trade Channel, the details are furnished in tab....
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....DGAP has compared pre-rate reduction average base price (during the period 01.10.2017 to 14.11,2017) with post-rate reduction actual base price using product codes and wherever, products codes were not found, DGAP used product description to compare the pre-rate reduction average base price (during the period 01.10.2017 to 14.11.2017) with post-rate reduction actual base price at step two. In similar manner, wherever, price was still not found, DGAP used pre-rate reduction average base price (during the period 01.09.2017 to 30.09.2017) with post-rate reduction actual base price using product code at step three and used product description to compare the pre-rate reduction average base price (during the period 01.09.2017 to 30.09.2017) with post-rate reduction actual base price at step four and so on. However, due to adoption of the average base price available at first place in the same product (having multiple product codes), if the price was not obtained at Step-2 (due to non-availability of price in particular channel) then, DGAP proceeds for Step-3 and so on to find the pre-rate reduction base price for computation of profiteering. Therefore, the claim made by the Respondent ....
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.... 33049990 99 1,96,034 1,21,84,724 62.80 Total 1,99,340 1,23,64,305 62.03 Further, in case one product having same description is sold in multiple product code, then DGAP has adopted the average base price available at first place in the same product. The same was happened due to the proprietary of VLOOKUP function (used to lookup a value in a table by matching on the first column) in MS-Excel, which in case of duplicate values, find the first match when the match mode is exact. However, the Respondent contented that if the aforesaid product code SYMAF050-00 having product description AcnoFight Facewash 50 ml is a correct comparable, then all the other products viz. SYMAF050-30 and SYMAF050-40 having the same description AcnoFight Facewash 50 ml should also be considered as correct comparable and accordingly, the average price of all the codes having the same comparable description must be considered instead of considering the price of 1 product code alone. The above contention of the Respondent have merit and as already discussed in detail in point- (i) above, considering the approach (a) where Weighted Average Base Price of the product ....
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....Jan'17. Copy of said invoice is furnished on the next page: The Respondent has claimed the above Credit Note being on account of passing of benefit of reduction in rate of tax which is absolutely incorrect and therefore denied," Further, vide e-mail dated 25.06.2020 (Annex-10 to DGAP Report dated 05.07.2019), the Respondent has submitted sample credit notes (505 out of total 12,214 Credit Notes) issued to his General Trade Customers to substantiate his claim of passing on the benefit of 51.93 crores to the General Trade Customers. On examination of these credit Notes, it is observed that most of these are issued towards "TRADE SCHEMES". Moreover, the said credit notes nowhere indicated that those were related to the benefit of reduction in the GST rate from 28% to 18% w.e.f. 15.11.2017. No SKU-wise correlation could be made between the claim texts appearing in the credit notes and the details of invoice-wise outward supply submitted by the Respondent. Besides, it is observed that Credit notes were issued even prior to reduction in rate of tax. In one of such credit note no. 520383546 dated 14.09.2017 (While rates were reduced w.e.f. 15.11.2017), the Respondent has claimed ....
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....ce, the claim of the Respondent that they had passed on the benefit of GST rate reduction on certain SKUs by increasing the quantity or grammage of the product while maintaining the earlier pre-rate reduction MRP of such SKUs, is also not acceptable." 13. However, as per directions of the Authority contained in para-103 of aforesaid Internal order no. 05/2019 dated 03.01.2020, DGAP has examined the documents submitted by the Respondent regarding his claim of passing on the benefit of reduction in rate of tax by increasing the grammage/volume and observed that there were formula errors in three columns viz. Column-BA "Commensurate Base Price with Grammage including GST,' column-BB "Grammage Benefit-Gross" and column-BC "Grammage Benefit-Net restricted to Alleged Profiteering incl. GST". However, on specific pointing out, the Respondent inadvertently revised and corrected only two columns i.e. column BB & BC. Therefore, the formula error in Column-BA "Commensurate Base Price with Grammage including GST" remains in the 2 files submitted by the Respondent vide their e-mail dated 22.08.2020. The same was examined and corrected by DGAP in their working sheets. Accordingly, consid....
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.... been calculated with reference to a base price which includes the profit margin, if any on any product on the basis of data provided by the Respondent. Further, 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 is abundantly clear that in the event of a benefit of ITC or reduction in rate of tax, there must be a commensurate reduction in prices of the any supply of goods or services. Therefore, Respondent is under legal obligation to pass on the benefit of ITC or reduction in rate of tax by way of commensurate reduction in price of each and every supply of goods or services. Anti-profiteering provisions are for the benefit of the recipients and each recipient must get benefit of reduction in rate of tax or increase in ITC on each and every supply of goods or services or both. Further, the transactions where base price is not increased were excluded from the computation of profiteering." i. As regard to the contention of the Respondent that higher....
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....larified that concern raised by the Respondent has been duly addressed vide DGAP's letter of even no. 3075 dated 11.12.2020 which is reproduced below: "The concern raised by the Respondent is duly addressed in Para-19 of the DGAP's report dated 05.07.2019." k. As regard to the contention of the Respondent that profiteering should not be computed for luxury products, it was clarified that the concern raised by the Respondent has been duly addressed vide DGAP's letter of even no. 3075 dated 11.12.2020 which is reproduced below: "Section 171 of the Central Goods and Services Tax Act does not make any differentiation between necessity and luxury products. DGAP's investigation report covers all the products which were impacted by the GST rate reduction w.e.f. 15.11.2017 which attract the provisions of Section 171 of the Central Goods and Services Tax Act, 2017 read with Chapter XV of the Rules as these were to be treated as supply of goods by the Respondent. The transactions excluded by DGAP are addressed in para-20 of DGAP Report dated 05.07.2019." I. As regard to the contention of the Respondent that profiteered amount has been incorrectly inflated in the repor....
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....be only one selling price and one commensurate price, the difference of which would be the profiteered amount. The word "any" is used before the word "supply" to indicate the benefit of reduction in rate of tax has to be passed on for each and every supply. The word "registered person" has been used as Section 171 of the CGST Act, 2017 cannot be applied on suppliers who are not registered under the GST Act, and it is clear from the word "recipient" (in singular) that the benefit has to be passed on each and every recipient, who may buy a single SKU also. Thus, the profiteering has to be determined at the SKU-level. The text of the law is very clear according to which the benefit of reduction in rate of tax has to be passed on to each recipient on every supply. Thus, there is no scope for interpretation of the marginal notes." n. As regard to the contention of the Respondent that amount, if any, held as profiteered, can be refunded to recipients, it was clarified that the concern raised by the Respondent has been duly addressed vide DGAP's letter of even no. 3075 dated 11.12.2020 which is reproduced below: "In this regard, it is submitted that the benefit must be passe....
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.... 15.11.1017 and not on the goods lying in the distribution chain." p. As regard to the contention of the Respondent that in the absence of any prescribed methodology of calculation of profiteering in the CGST Act, the CGST Rules or the procedure prescribed by NAA, the proceedings are liable to be dropped, it was clarified that the contentions of the Respondent made in these paras are wrong as the Report has been prepared in accordance with the provisions of Section 171 of CGST Act, 2017. The main contours of the 'Procedure and Methodology' for passing on the benefits of reduction in the rate of tax and the benefit of ITC are enshrined in Section 171 (1) of the CGST Act, 2017 itself which states that '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. "It is clear from the perusal of the above provision that it mentions "reduction in the rate of tax on any supply of goods or services" which does not mean that the reduction in the rate of tax is to be taken at the level of an entity/group/company for the entire supplies made by it. Therefore, t....
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....'ble Court are limited to the facts of the said case and cannot be applied to the present case. 7. Personal hearings in the matter were scheduled on 24.12.2020 and 18.01.2021. However, the subsequent proceedings in the matter could not be completed by the Authority due to lack of required quorum of members in the Authority during the period 29.04.2021 till 23.02.2022, and that the minimum quorum was restored only w.e.f. 23.02.2022 and hence the matter was taken up for further proceedings vide Order dated 24.02.2022. 7.1 Personal hearing in the matter took place on 5.5.2022, which was attended by Shri V. Laxmikumaran, Advocate; Shri K. Sreekant, Advocate; Shri Darshan Maccher, CA, Shri Mahesh Morye, Shri Rohit Gupta and Shri Anand Nagda on behalf of the Respondent and Shri Lal Bahadur, Assistant Commissioner for DGAP. During the personal hearing, the learned advocate made a PowerPoint presentation and reiterated his submissions made earlier. The Respondent requested for one week's time to file consolidated written submissions including purchase order/design placed on the suppliers of packing material to affect delivery of increased grammage, etc., 7.2 The Respondent vide ....
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....hat the rate of tax was reduced on the above products w.e.f. 15.11.2017 and therefore, the Respondent is liable to pass on the benefit of tax reduction to the customers as per the provisions of Section 171. A list of the goods which were impacted by the above rate reduction is given as under:- Category Product HSN Impacted Hair Care Shampoo, Conditioner, Serum etc. 3305 Yes (except Hair Oil) Hair Color L'Oreal Paris, Garnier 3305 Yes Skin Care Cream 3304 Yes Make Up Kajal, Maybelline, etc., 3304 Yes (except Kajal) Luxury Products Giorgio Armani, Diesel, etc. 3303 Yes 9.1 It is an admitted fact that the GST rates on several products manufactured and sold by the Respondent were reduced vide Notification No 41/2017-CT dated 14.11.2017 and notifications issued by the State governments. The relevant provisions of the law to decide the matter in the given facts and circumstances as discussed hereinabove are as under: Section 171 of CGST Act 2017 "1) 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. (2) The Central Governme....
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....10.2020 and consolidated submission dated 26.11.2020 including grounds mentioned in those submissions and the submissions made during the course of personal hearing, the Authority finds that following points/issues need decision:- a. Whether proceedings are time-barred under the provisions of Rule 133? b. Whether in absence of any prescribed methodology in the CGST Act to calculate profiteering or the procedure prescribed by Authority, the whole proceedings are arbitrary and liable to be dropped? c. Whether period of investigation has been selected in arbitrary manner? d. Whether base price discrepancies have resulted in inflated profiteered amount? e. Whether claim of benefits like discounts or by way of price reduction post supply of goods to recipients by way of price reduction is considerable? f. Whether increased quantity of grammage on certain SKUs can be permitted as commensurate reduction under section 171 (1) of the Act? g. Whether increase of Customs Duty on certain products needs to be considered for calculating the profiteered amount? h. Whether GST already collected needs to be deducted from the profiteered amount? i. Whether higher benefits passed in....
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....e present case was passed as the Authority could not have passed a reasoned and just order on the said Report dated 05.07.2019, after considering the Respondent's submissions and personal hearings. The Respondent has also submitted the dates and events of the present proceedings to prove his above contention, however, perusal of the record shows that the Report from the DGAP was received on 05.07.2019 and the respondent was directed to appear on 02.08.2019 however, he had sought repeated adjournments for filing replies and had taken a period of about 5 months w.e.f. 30.07.2019 to 01.01.2020 to file the same. The Respondent has not explained why the above period of 5 months should be counted in the period of 6 months prescribed under Rule 133(1) while passing order after receipt of the Report under Rule 133 (4). Further investigation was required to be done as a consequence of which the profiteered amount has been reduced to Rs. 1,86,39,57,058/- from Rs. 2,16,49,61,535/-. The Respondent cannot contend that the entire investigation including the further investigation ordered under Rule 133 (4) should be completed within a period of 6 months when it involved fresh appreciation of ....
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....e Respondent the Authority was fully entitled to order further investigation as per Rule 133 (4). The Respondent further has no ground to misconstrue the provisions of Rule 133 (5) and claim that the period of 6 months was not available for conducting further investigation under Rule 133 (4). Such a claim would be against the principles of natural justice as during every fresh investigation due opportunity has to be given to the interested parties including the Respondent and the DGAP to collect fresh evidence and seek replies from the parties. Therefore, the above claim of the Respondent is unacceptable. 10.3 The Respondent has also claimed that Para 10 of the Guidelines dated 04.10.2019 issued by the Authority was illegal as it amounted to amendment in Rule 133 (4) and it would also be bad as per the law settled in the case of L. Chandra Kumar v. Union of India (1997) SCC 261, wherein it had been held that the Tribunals shall act as the only courts of first instance in respect of areas of law for which they have been constituted. Accordingly, the Respondent has requested this Authority to consider his aforesaid submissions and hold that no additional time limit was available in ....
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....rred on this Authority under Rule 126, which has been framed under Section 171 (3) and 164 of the above Act, this Authority is competent to clarify vide Para 10 of the above Guidelines that the Report furnished by the DGAP after further investigation ordered under Rule 133 (4) shall be treated as a fresh Report under Rule 133 (1) and accordingly order on such Report can be passed within a period of 6 months. Therefore, there is no requirement of modifying the above Para and hold that the present proceedings are time barred as it does not amount to amendment in Rule 133(4) in line with Rule 133(5). 10.5 Further, this Authority under Section 171 (3) of the above Act has been empowered by Rule 126 to determine its own "Methodology & Procedure". Accordingly, under the above Rule read with the OM No. F. No. 13/1/2017-Ad-I dated 09.09.2019, issued by the Government of India, Ministry of Finance, Department of Revenue, as per Para 10 of the Guidelines issued vide File No. Admn (NAA)/P&M)/81/2019 dated 04.10.2019 this Authority has stated that "It is clarified that the Reports submitted by the DGAP under Rule 133(4) shall be construed to be fresh Reports for the purpose of Rule 133(17'....
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....vision but also by considering its nature, its design and consequences which would follow from construing it the one way or other, as observed by the Apex Court in some of the judgement. It is an admitted fact that anti-profiteering provisions provided under the CGST Ad are a beneficial enactment with a view to provide relief to the common person, where the government sacrifices its revenue. 10.8 The Authority finds that the statute has not provided for any consequences for failure to adhere to the time limit and it has not provided that in case of such failure of time limit, the whole proceedings would be null and void. Hon'ble Supreme Court in the case of Rajsekhar Gogoi v State of Assam AIR 2001 SC 2313 p2315 has held that when the consequences of nullification on failure to comply with a prescribed requirement is provided by the statute itself, there can be no manner of doubt that such statutory requirement must be interpreted as mandatory. As mentioned above, no such consequences have been provided in the CGST Act 2017 or rules made thereunder for failure of completing the investigation by DGAP within six months or passing of the order on the investigation report of DGAP ....
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....e Supreme Court in the case of P.T: Rajan v. T. P. M. Sahir and Ors. (2003) 8 SCC 498:- "48. It is well-settled principle of law that where a statutory functionary is asked to perform a statutory duty within the time prescribed therefore, the same would be directory and not mandatory. (See Shiveshwar Prasad Sinha v. The District Magistrate of Monghur & Anr. AIR (1966) Patna 144, Nomita Chowdhury v. The State of West Bengal & Ors. (1999) CLJ 21 and Garbari Union Co-operative Agricultural Credit Society Limited & Anr. V. Swapan Kumar Jana & Ors. (1997) 1 CHN 189). 49. Furthermore, a provision in a statute which is procedural in nature although employs the word "shall" may not be held to be mandatory if thereby no prejudice is caused." 10.10 The Authority also find that it has passed Interim Order No. 5/2020 dated 3.1.2020 directing the DGAP to carry out further investigation under the provisions of Rule 133 (4). The Respondent did not oppose the said interim order, and participated in subsequent proceedings including personal hearing. If the Respondent had any grievance against the said interim order, being violative of relevant provisions of the law, he had the option of seekin....
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....the base prices w.e.f. 15.11.2017 he could have very easily replaced one entry of rate reduction. No guidelines and methodology or elaborate mathematical calculations are required to be prescribed separately under Rule 126 for passing on the benefit of tax reduction or for computation of the profiteered amount. The Respondent cannot deny the benefit of tax reduction to his customers on the above ground and enrich himself at the expense of his buyers as Section 171 provides clear cut methodology and procedure to compute the benefit of tax reduction and the profiteered amount. 11.2 The Respondent was also required to fix and display revised MRPs because as a manufacture he was legally responsible for fixing the revised MRPs as per the provisions of Rule 6 of the Legal Metrology (Packaged Commodities) Rules, 2011. However, he has not re-fixed the MRPs after rate reductions. He was also required to stamp or re-sticker or reprint the MRPs on all the impacted SKUs as per the letter issued by the Ministry of Consumer Affairs, Food and Public Distribution, Govt. of India, dated: 16.11.2017 which states as under:- "WM-10(31)/2017 Government of India Ministry of Consumer Affairs, Food an....
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....nt by way of commensurate reduction in prices." It is clear from the plain reading of the above provision that it mentions "reduction in the rate of tax or benefit of ITC" which means that if any reduction in the rate of tax is ordered by the Central and the State Governments or a registered supplier avails benefit of additional ITC, the same have to be passed on by him to his recipients since both the above benefits are being given by the above Governments out of their tax revenue. It also provides that the above benefits are to be passed on any supply i.e. on each product to every buyer and in case they are not passed on, the quantum of denial of these benefits or the profiteered amount has to be computed for which investigation has to be conducted in respect of all such products/units/services by the DGAP. 11.4 The 'profiteered amount' has been clearly defined in the explanation attached to Section 171. These benefits can also not be passed on at the entity / organisation / branch/ invoice/ business vertical level as they have to be passed on to each and every buyer at each product/unit/service level by treating them equally. The above provision also mentions "any suppl....
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....rovision, this Authority has been authorised to determine the 'Procedure and Methodology' which has been done by it vide its Notification dated 28.03.2018 under Rule 126 of the CGST Rules, 2017. However, no fixed mathematical formula, in respect of all the Sectors or the products or the services, can be set for passing on the above benefits or for computation of the profiteered amount, as the facts of each case are different. 11.7 This Authority under Rule 126 has been empowered to 'determine' Methodology & Procedure and not to 'prescribe' it. Similarly, the facts of the cases relating to the sectors of Fast Moving Consumer Goods (FMCG), restaurant service, construction service and cinema service are completely different from each other and therefore, the mathematical methodology adopted in the case of one sector cannot be applied to the other sector. Moreover, both the above benefits are being given by the Central as well as the State Governments as a special concession out of their tax revenue in the public interest and hence the suppliers are not required to pay them from their own pocket and therefore, they are bound to pass on the above benefits as per....
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....bmitted that the DGAP's interpretation of the term 'any' supply as 'each and every' supply was wholly misplaced and therefore, if a recipient has been supplied 2 SKUs and if any additional price charged on 1st SKU has been offset by passing on higher benefit on the 2nd SKU, then the profiteering should be determined after offsetting the higher benefit passed on to the very same recipient. The above claim of the Respondent is highly misplaced as the benefit has to be passed on each SKU to each recipient and it cannot be offset against the other SKU as every recipient may not buy the SKU on which more benefit has been passed on. Such an approach is inequitable as a recipient who has been denied benefit of tax reduction on a SKU in respect of which price has not been reduced commensurately cannot be compelled to get his benefit from the other recipient who has got the benefit on the SKU purchased by him. The above claim of the Respondent is not only against the provisions of Section 171 (1) but it is also against Article 14 of the Constitution. 11.10 The Respondent cannot deny the benefit of tax reduction to his customers on the above ground and enrich himself at ....
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....the Respondent has claimed that there has been increase in the Customs Duty on the imported material of his in February 2018, adjustment of which the profiteered amount was required to be done: This aspect of increase in Customs Duty impact will be discussed in the subsequent paragraphs. 12.2 It is logical to expect that the Respondent is liable to be investigated till the date he can prove that he has passed on the benefit of tax reduction. Since, the details of complaint made against the Respondent were received on 07.01.2019, he has been investigated till 31.12.2018 so that a reference point is available to conduct the investigation as no investigation can be conducted without a fixed time frame. Further, the Respondent has failed to produce any evidence during the course of the present proceedings that he has passed on the benefit, hence he is still profiteering in violation of the provisions of Section 171 (1) and any subsequent price increase made by him also amounts to profiteering. The contention of the Respondent that one could be investigated in perpetuity is not correct as such a person would be ordered to reduce his prices immediately per as the provisions of Rule 133 ....
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....pondent being brought under the price control regime as there is no such provision under Section 171(1). 12.4 The Respondent has also argued that period of investigation of around 14 months vis-a-vis investigation period of around 2 to 5 months in respect of some other registered person is discriminatory in nature. However, the Respondent has not provided any detail as to when the complaint/application in respect of these registered persons was received by the DGAP. The Respondent has submitted a list of cases in which this Authority has passed orders in which period of investigation was from 2 to 5 months. In this regard, it may be observed that in majority of these cases, investigation was started immediately after the rate reduction was notified on 15.11.2017 and therefore, they were investigated for not passing on the benefit till the previous month in which the complaint was received by the DGAP for investigation. The Respondent does not mean to contend that the DGAP should have waited for another year so that the period of investigation would be equal to the period of investigation in his case or till the period of investigation was similar in all such cases. Further in all ....
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....on is merely an afterthought. Conducting of investigation till 31.12.2018 causes no discrimination to the Respondent as it has been established after investigation that he has not passed on the benefit till 31.012.2018. It is absolutely clear from the provisions of Section 171 (1) that "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." and therefore, every such person who has not passed on the above benefits is liable to be investigated till he passes on the benefits. Rule 129(2) also specifies that the DGAP shall conduct investigation and collect necessary evidence to determine whether the above benefits have been passed on. Accordingly, investigation has to be carried out till the date the benefit of tax reduction is not passed on by the Respondent which in this case is limited till 31.12.2018 but can be extended till he passes on the benefit. Therefore, there are clear cut provisions under the above Act and the Rules till what period the investigation is to be conducted and it cannot be restricted to a period of 3 months as contended by the Respondent....
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....en further submitted by the Respondent through various tables that for a single day, the selling price to the same buyer for the same product may vary for variety of reasons. Obviously, it would lead to a situation whereby devising any methodology for working out the profiteered amount would be a challenging task and assistance of the various mathematical models may have to be critically examined and a particular model has to be adopted for arriving at best solution. In fact, the three options suggested by the Respondent himself have given three different profiteered amounts. Three methodologies as suggested by the Respondent are mentioned herein below: a. Weighted average base price of product having same description with all the MRPs. b. Average base price of the product with latest MRP of the latest product code introduced immediately prior to rate reduction. c. Weighted average base price of the product with latest MRP prevailing in the pre-rate reduction period. 13.3 From the facts mentioned hereinabove, it emerges that DGAP has compared average pre-GST rate reduction price of the product with the actual selling price post GST rate reduction to arrive at profiteered amo....
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.... has been adopted and all required rectification of the profiteered amount has been made in the Report dated 28.8.2020. 13.5 The Respondent has given certain tabulation in respect of some of his products in the written submissions to challenge the methodology adopted by the DGAP. As mentioned in the earlier paragraphs that the submissions made by the Respondent were critically analysed by the DGAP and necessary clarifications were given. One of the models, which can best capture the situation in respect of the Respondent could be comparison of the average base price in the pre-rate reduction period with the actual transaction wise base price after the date of rate reduction. 13.6 The methodology proposed by the Respondent has taken MRP of the product for working out the profiteered amount. MRP is the maximum retail price of any product, which is required to be affixed on the product under the provisions of Legal Metrology Act/ Legal Metrology (Packaged Commodities) Rules, 2011 and it denotes the maximum price up to which product can be sold in the retail market. The retailer cannot sell the products at a price more than the MRP. The amount received by the Respondent through his i....
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....as under:- "15(1) The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply." 15(3) The value of the supply shall not include any discount which is given - (a) before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply;" Therefore, as per Section 15 (3) (a) of the above Act, the value of the supply does not include any discount which was given before or at the time of the supply if such discount had been duly recorded in the invoice issued in respect of such supply and thus, the GST was chargeable on the actual transaction value after excluding any discount (conditional as well as unconditional) and therefore, actual transaction value has been considered for computation of profiteering. Since, the DGAP has compared the transaction values of a SKU mentioned by the Respondent in his pre and post rate reduction invoices there is no question of comparing the net price of SKU (Gro....
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....so found that documents submitted by the Respondent claiming to be passing on benefit to modern retail/e-commerce customers, relates to advertising services. The Respondent has countered the above said observation of the DGAP by claiming that the SKU wise correlation has been submitted to the DGAP but has not been considered. As regard to the nomenclatures of Trade Schemes shown and the documents, it was claimed that the system could not be changed immediately and ad- hoc discount of 5%/12.5% on account of GST was extended. As regard to the one credit note dated 14.9.2017, the same was incorrectly reflected due to selection of old printout format in the system and the said credit note actually dated 21.02.2018. 14.1 The Authority has gone through the claims and counter claims made by the Respondent and DGAP. The observation of the Authority in respect of some of the documents discussed in the earlier paragraph is as under: 14.1.1 Credit note dated 14.9.2017: The Respondent has submitted to the DGAP the Credit Note bearing Document No. 520383546 dated 14.9.2017 in support of his contention that benefit of GST rate reduction has been passed on to the distributor (i.e. Ankita Enterp....
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....o documents, it would emerge that the basis of these documents is one document i.e. CTS17000100. While in the document dated 14.9.2017, it has been stated as 'claim' in the other document it has been mentioned as 'PO' (perhaps purchase order). All other relevant information in these two documents is same except the dates. iv. The contention of the Respondent that the above said discrepancy is on account of selection of old print layout in system does not appear to be convincing. It is a known fact that data (like date, time, values, description, documentation number, rate, quantity, etc.) are very sacrosanct in the business, more so in respect of multinational corporations. They are stored in comprehensive and robust database and they cannot be changed easily and operated through tamperproof secure software like SAP, etc. Anyone who takes printout in any format irrespective of any print layout, important parameters like date and time cannot change from such database. v. It is general practice that FMCG or several other consumer goods companies launch and implement various trade incentive promotional schemes from time to time with the view to promote sales and to....
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.....47. It is not understood as to how the unit price of the product has been increased from Rs. 365.40 to Rs. 395 by the customer of Respondent i.e M/S Delhi Trading Co. It would appear from the above said documents that the unit price was raised by the customer (M/S Delhi Trading Company) by around Rs 30 per piece and on which scheme discount is given. If the indicated discount amount is taken into consideration from the unit price to the retailer, it would be Rs. 359.09 per unit. If that be so, the claim of the Respondent that discount offered per unit is Rs. 35.91 is wrong but discount of Rs. 6.30 per unit only has been given. Further, the invoice raised by the customer i.e. M/S Delhi Trading Co. upon the retailer only mentions 'Sch Disc' without disclosing as to whether it is normal trade discount or any other discount like GST rate reduction discount. 14.2 DGAP in his reports has also found that some of the credit notes adduced by the Respondent to support his contention that GST rate reduction was passed on through such credit notes, were in fact found to be relating to advertisements or sales promotions. Obviously, when the documents speak for themselves, only the sai....
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.... increased grammage for some. The Respondent offered discounts in the form of post supply price reductions till the time MRP reduction or higher grammage was given. The point which is required to be looked into these two paragraphs i.e. 5.4 and 5.10 is that when Respondent claims to have reduced the prices on invoices to its recipients commencing from January 2018, the 'GST PRICE REDUCTION- CPD' in the month of March 2018 and in subsequent months through the credit note are in contradiction of such claim. Hence, the claims of the Respondent are not trustworthy and not substantiated. 14.3 Further, as per the provisions of Section 171(1) the benefit can be passed on only by commensurate reduction in the price and it cannot be passed through promotion schemes. Many manufactures including Respondent usually float such promotion schemes in the ordinary course of his business, the main aim of which is to increase his sales as the name itself suggests and not to pass on the benefit of tax reduction. Moreover, these schemes benefit his distributors and retailers more than the ordinary consumers. The Respondent has also not been able to establish any correlation between such promo....
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....ent deliberately to palm off the incentive given by him for sale promotion as passing on of the benefit. The benefit was required to be passed on by commensurate reduction in the price and not by post supply discounts or incentives. Moreover, no correlation has been established by the Respondent between the taxable value reported in the GST Returns and the post supply discounts given on any SKU. Therefore, it cannot be claimed that the post supply discounts were given on account of tax reduction. Since the discounts have been shown as promotion or advertisement services in the books of account, they cannot be treated as passing on of the benefit. There is also no correlation between the promotional amount and the sales made to the distributors which could establish that this amount was paid on account of passing on the benefit of tax reduction. Hence, the claim made by the Respondent on the above grounds is wrong and misleading and hence the same cannot be accepted. He has also placed reliance on the cases of Union of India v. Bombay Tyres International 1984 (17) EL. T. 329 (SC) and M/s. Moped India Ltd. v. Asst. Collector 1986 (23) E.L.T. 8 (SC) both of which do not apply in the f....
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....oducts sold were with price fixed with respect to grammage. It is also not a case, where the price of the product is mentioned in immediate vicinity of the grams on the packet or vice versa. In fact, in one of the advertisements the quantity is shown as 175 ML with 15 ML as free. The contention of the Respondent may have some persuasive value if they would have been selling their product on the weight basis or volume basis. It is settled law that statute has to be read as per the language in the general manner and the meaning provided therein and import of any other word or meaning should be avoided, if the language is simple and is not open for two or many interpretations. 15.3 Further, the contention of the Respondent that section 171 (1) provides for 'prices', which means that it has plural connotation. It is contended by him that increase in grammage of individual product would result in a reduction of the prices of the said product. However, as discussed in the earlier paragraph that no evidence or document has been shown during the whole proceedings, which would indicate that the transaction between the Respondent and his recipients are based on units of grams or mil....
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....ams ( i.e, 6.5 grams, less than a Tola) in some cases and in other cases it is around 20- 36 grams (except one case, where increase is 64 gms). Some of the products have been packed in the multiples of 0.5 grams! It is not possible to believe that the consumer goes to buy products, such as, are sold by the Respondent, in units of 0.5 gms (500 mg). Scanned copy of Minutes of Meeting dated 21.12.2017 is pasted below : 15.5 The Respondent was requested to provide details of design, purchase orders placed on the supplier of the packing materials after the Notification dated 15.11.2007, so as to ascertain that the increased quantity of products could be filled in them. From the details of the packing material provided by the Respondent, it is found that they have merely changed the outside artwork by indicating words like '10% extra', etc. Some of these artworks or the advertisements indicate that additional quantity is either provided free or as promotion. It is found that increased quantity of around 7 grams and above have been filled in the existing unit containers/bottles. 15.6 The Respondent has argued that the Authority has favourably considered increase in grammage as ....
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....e benefit of tax reduction by increasing the quantity of his SKUs: (i) Name of the SKU. (ii) Base price of the SKU pre rate reduction with documentary evidence. (iii) Weight/Volume of the SKU pre rate reduction with documentary evidence. (iv) Commensurate base price of the SKU post rate reduction with details of computation. (v) Commensurate increase in the weight/volume required post rate reduction with computations. (vi) Increase in weight in grams/mls. (vii) Whether the increase is commensurate with the rate reduction. (viii) Date of passing on the benefit of tax reduction with documentary evidence. (ix) Amount of benefit of tax reduction passed on the SKU. (x) Amount of benefit of tax reduction passed on State/Union Territory wise. b. The Respondent has submitted the details as asked above vide his reply dated 03.02.2020 which has been furnished to the Authority by the DGAP with his Report dated 28.08.2020. With his reply, the Respondent has enclosed the Minutes of the Meeting held on 21.12.2017 in which it was decided to pass on the benefit of GST by increase in the grammage. Perusal of the minutes shows that it includes 31 SKUs in respect of which the e....
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....actions of all the other States and Union Territories and the grammage given on account of GST benefit is apparently not commensurate with the reduction in the prices of the SKUs and an attempt is being made to palm of the excess grammage as passing on the benefit of rate reduction. f. It seemed from the above that there is no co-relation between the commensurate prices and the grammage, which was to be given to each buyer. If the increase in grammage was in pursuant to reduction of GST rate and the intention of the Respondent to pass on the benefits with such method, there should have been some level of consistency. Even if it is presumed that this method of passing benefit under section 171 is permissible, the Respondent has totally failed to justify passing on of the benefit of tax reduction by increase in the Grammage. The data supplied by the Respondent is full of inconsistencies and hence the same cannot be relied upon. 15.9 For the reasons mentioned and discussed hereinabove and with the position of the law as provided under the section 171(1) of the CGST Act, 2017, the Authority do not concur with the contention of the Respondent that increase in grammage would be covere....
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.....11.2017-30.11.2017 with the invoice raised in the month of March 2018 and as may be seen from the above illustrations that the actual sale price per unit including GST has remained same during both periods. It has been indicated in the illustrations that Customs Duty before 1.2.2018 was about half of the value after 1.2.2018. The DGAP has not proposed any relief on account of the increase in Customs Duty holding that though there has been an increase in Customs Duty, actual selling price per unit has not undergone any change during the period November 2017 to March 2018. It was also contended by the DGAP that increase in the base price could not have happened overnight to exactly coincide with the GST rate reduction w.e.f. 15.11.2017. It is also contended by the DGAP that increase in the cost of raw material/input services, if any, has no relevance in the context of GST rate reduction w.e.f 15.11.2017 and section 171 of the CGST Act, 2017 does not provide for any scope for adjustment of increase in cost against the benefit of reduced tax rate. 16.2 Also, From the illustration enclosed by the Respondent one finds that the selling price of the product, claiming to be having impact ....
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....een duly deposited with the Government and it cannot be alleged to have been profiteered in respect of amount not retained by him. The Authority finds no merit in this submission of the Respondent. The Authority holds that if any registered person has charged any excess tax from any recipient of supply, the statutory provisions under Section 171 of the CGST Act, 2017, would require that such amount be refunded to the eligible recipients. It is the obligation of the Supplier to return/pass on such amount and it is the vested right of the recipient as vested in him by the Statute. 17.1 In this connection it would be appropriate to mention that the Respondent has not only collected excess base prices from his customers which they were not required to pay due to the reduction in the rate of tax but he has also compelled them to pay additional GST on these excess base prices which they should not have paid. The Respondent has thus defeated the objective of both the Central and the State Governments to provide the benefit of rate reduction to the ordinary customers by sacrificing their tax revenue. The Respondent was legally not required to collect the excess GST and therefore, he has n....
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.... any supply to any recipient, the same cannot be adjusted against the profiteered amount in relation to some other supply. 18.1 The Respondent has also contended that the DGAP has applied the methodology of "Zeroing" while computing the profiteered amount which was held to be incorrect by the Appellate Body of the WTO. In this regard, the Respondent has referred to the Report No. WT/DS141/AB/R dated 01.03.2001 of the Appellate Body of the WTO regarding Anti-Dumping Duties on imports of Cotton-Type Bed Linen from India, vide which it was held that the methodology of 'Zeroing' could not be applied and both the negative and positive margins have to be considered while applying the anti-dumping provisions. The above contention of the Respondent is not correct as no 'netting off' can be applied in the cases of profiteering as the benefit has to be passed on to each customer, which has to be computed on each SKU. Netting off implies that the amount of benefit not passed on certain SKUs will be subtracted from the amount of benefit passed on other SKUs and the resultant amount would be determined as the profiteered amount. If this methodology is applied the Respondent wou....
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.... availing benefit of area-based exemption under the erstwhile Central Excise regime. With the introduction of the GST, upfront exemption to such units was withdrawn and he is required to pay GST on the goods supplied and seek the refund. The refund available under the new scheme in the GST regime is also restricted to specified percentage of tax paid by cash after utilising ITC. 19.1 The Authority finds that the GST was implemented from 1.7.2017 and the above said provision of refund was in operation since then. However, the case of profiteering has been investigated by the DGAP after Notification No 41/2017-CT dated 14.11.2017, whereby the GST rates on certain products supplied by the Respondent were reduced. Further, DGAP in its calculations has taken the average price of pre-GST rate reduction for the period from 1.9.2017. Hence, the withdrawal of budgetary support w.e.f. 01.07.2017, may not be a factor during the period 1.9.2017 to 14.11.2017, when the average price was determined for the purpose of calculating profiteering. 19.2 The Respondent has further claimed that there has been reduction in the area based fiscal incentives as a result of reduction in the rate of GST, wh....
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....nt on this ground is incorrect and therefore, it is untenable. 19.3 As such, in view of the above said facts, the contention of the Respondent regarding impact on the price of the product on account of budgetary support scheme is not sustainable and is rejected. Issue relating to luxury goods 20. The Respondent has contended that the profiteering should not be computed on luxury goods as the pricing of these products and services are based on the perception of the consumer in the market. The Authority finds that this argument is without any basis. The fact remains that if the prices of such products have not been reduced after reduction in the tax rates under Notification dated 14.11.2017; such products would undoubtedly come under the ambit of profiteering in term of Section 171 of the CGST Act, 2017. This contention of the Respondent is unsustainable and hence rejected. Issue relating to profiteered amount to be given to the recipients/distributors/ecommerce 21. It is contended by the Respondent that if any amount of profiteering is calculated and determined against him, it should be given to the recipients and in this case the recipients are identifiable i.e. distributors, ....
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....ecipients of the Respondent. 21.3 In view of the above said discussion and for the reasons thereof, the contention of the Respondent that in case the profiteered amount is determined, such amount should be transferred to distributors, modern trade retailers, e-commerce, etc. is rejected. Issue relating to denial of principle of Natural Justice 22. The Respondent has contended that in the present proceedings, he has not been issued show cause notice proposing the action to be taken by this Authority. The Report consequent to investigation by the DGAP was neither a show cause notice nor could it be treated as substitute to a show cause notice. This Authority should have issued a notice that should contain the description of the goods and services in respect of which the proceedings have been initiated; grounds / reasons on the basis of which profiteering has been alleged; issues proposed to be examined by this Authority and action proposed to be taken by this Authority against the Respondent invoking applicable statutory provisions. 22.1 The above contention of the Respondent is not correct. Perusal of Rule 129(6) of the CGST Rules, 2017 makes it clear that the DGAP shall complet....
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....dingly, the above claim of the Respondent is far from truth and not acceptable. The Respondent has also cited the judgments of the Hon'ble Supreme Court passed in the cases of Uma Nath Pandeyand Others v. State of UP (2009) 12 SCC 40, Collector of Central Excise v. ITC Ltd. 1994 (71) E.L.T. 324 (SC), Dharampal Satyapal Ltd. v. Dy. Commissioner of C. Ex. 2015 (320) E.L.T. 3 (SC) and Union of India v. Hanil Era Textiles Ltd. 2017 (349) E.L.T. 384 (SC) in his support. But since due show cause notice was given to the Respondent for imposition of consequences prescribed under Rule 133, the case laws cited by the Respondent are not relevant in the case in hand. 22.3 In view of the above said facts and settled position of law, the contention of violation of principle of natural justice claimed by the Respondent is untenable and rejected. Issue relating to Judicial Member 23. The Respondent has contended that in the absence of a Judicial Member, the constitution of this Authority is improper. Section 171 (2) of the CGST Act, 2017 provides for the role of this Authority as "to examine whether input tax credits availed by any registered person or the reduction in the tax rate have act....
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.... in the SEBI which has been constituted under the Securities and Exchange Board of India Act, 1992. Neither the statute nor any decision of the Court requires the SEBI to be composed of a Judicial Member simply because it also performs quasi-judicial functions under the Act apart from its other roles. SEBI's composition has been provided in Section 4 (1) of the aforementioned Act. The Hon'ble Supreme Court in the case of Clariant International Ltd. & Anr. v. Securities and Exchange Board of India (2004) 8 SCC 524 has held that SEBI exercises its legislative power, executive power and judicial power:- "77. The Board exercises its legislative power by making regulations, executive power by administering the regulations framed by it and taking action against any entity violating these regulations and judicial power by adjudicating disputes in the implementation thereof." Similarly, the TRAI which also performs quasi-judicial functions has been constituted under the Telecom Regulatory Authority Act, 1997 but does not have a Judicial Member. Section 3 of the said Act provides for the composition of the Authority. Again, the Medical Council of India has been constituted under ....
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....nal and hence the mandate of having a Judicial Member cannot be said to apply to this Authority. Issue relating to section 171- violative of Article 14 and19(1)(g) of the Constitution 24. The Respondent has contended that Section 171 of the CGST Act and Rules made thereunder pertaining to anti-profiteering are unconstitutional being violative of Article 14 and Article 19(1)(g) of Constitution of India. In this connection it would be correct to point out that this Authority has not acted in any way as price controller or regulator as it doesn't have the mandate to regulate the same. The Respondent is absolutely free to exercise his right to practise any profession, or to carry on any occupation, trade or business, as per the provisions of Article 14 and 19 (1) (g) of the Constitution. He can also fix his prices and profit margins in respect of the supplies made by him. Under Section 171 this Authority has only been mandated to ensure that both the benefits of tax reduction and ITC which are the sacrifices of precious tax revenue made from the kitty of the Central and the State Governments are passed on to the end consumers who bear the burden of tax. 24.1 The Respondent has a....
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.... there is no violation of Article 14 and Article 19 (1) (g) of the Constitution. Issue relating to excessive delegation under Rule 122, 127 & 133 of the CGST Rules 25. The Respondent has further contended that Rule 122, 127 & 133 of the CGST Rules, 2017 suffered from the vice of excessive delegation. In this regard it would be pertinent to mention that the above mentioned CGST Rules have been framed by the Central Government under Section 164 of the CGST Act, 2017 on the recommendation of the GST Council which is a constitutional body established under the 101st Amendment of the Constitution and comprises of all the Finance/Taxation Ministers of the States and the Union Finance Minister. Hence, the above Rules have express approval of the Parliament, all the State Legislatures, the Central and all the State Governments and the GST Council and therefore, constitution of this Authority under above Rules is legal and does not amount to excessive delegation. It is also mentioned that the Rule 122 only prescribes the qualifications of the members of the Authority whereas its constitution has been duly provided in Section 171 (2). Further it has been specifically provided in Section 17....
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....tral Consumer Welfare Fund and the balance amount is to be deposited in the CWF of the concerned State, as per the amount indicated here under:- S.No. State Amount 1 01-JAMMU AND KASHMIR 8114274 2 02-HIMACHAL PRADESH 3887647 3 03-PUNJAB 41522580.5 4 04-CHANDIGARH 6893721.5 5 05-UTTARAKHAND 7100816 6 06-HARYANA 47912787.5 7 07-DELHI 115297375 8 08-RAJASTHAN 30411173.5 9 09-UTTAR PRADESH 71118682.5 10 10-BIHAR 16505833.5 11 11-SIKKIM 1539554.5 12 12-ARUNACHAL PRADESH 1242155 13 13-NAGALAND 3710035.5 14 14-MANIPUR 2408754 15 15-MIZORAM 1963784 16 16-TRIPURA 1546872.5 17 17-MEGHLAYA 2622881 18 18-ASSAM 16317165.5 19 19-WEST BENGAL 81232685 20 20-JHARKHAND 11670947 21 21-ODISHA 12861077.5 22 22-CHATISGARH 8720402 23 23-MADHYA PRADESH 21910965.5 24 24-GUJARAT 59798532.5 25 25-DAMAN AND DIU 248144 26 26-DADRA AND NAGAR HAVELI 158340 27 27-MAHARASHTRA 187877269.5 28 29-KARNATAKA 77026483.5 29 30-GOA 6066470.5 30 32-KERALA 13548833 31 33-TAMIL NADU 31055259.5 32 34-PUDUCHERRY 821653.5 33 35-ANDAMAN AND NICOBAR ISLANDS 365688 34 36-TELANGANA 28838091 35 ....