TaxTMI 
TaxTMI 
2022 (5) TMI 1595
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....on was not passed on to the recipients. Accordingly, an investigation was initiated by the DGAP to collect evidence necessary to determine whether the benefit of GST rate reduction had been passed on by the Respondent to the recipients in respect of supply of subject goods. 2. Thereafter, the DGAP had issued a notice to the Respondent on 7-2-2020, under rule 129 of the CGST Rules, 2017, asking the Respondent's reply as to whether he admitted that the benefit of GST rate reduction had not been passed on to the recipients by way of commensurate reduction in prices and if so, to suo motu determine and indicate the same in his reply to the Notice as well as to furnish all supporting documents. Vide the said Notice the Respondent was given an opportunity to inspect the non-confidential evidences/information furnished to him on 13-2-2020 or 14-2-2020., which the Respondent didn't avail. 3. The DGAP has submitted that in response to the Notice, the Respondent did not submit all the requisite documents by the due date, hence, reminders were issued to the Respondent on 16-3-2020, 30-4-2020, 13-5-2020 & 2-6-2020. The DGAP also stated that the Respondent did not submit requisite....
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....has stated that in compliance of the Hon'ble Delhi High Court's Orders dated 22-9-2020, and 30-9-2020, a fresh Notice was issued to the Respondent on 17-11-2020 with directions to furnish his reply on or before 1-12-2020, along with the requisite documents. Through the said Notice the Respondent was given an opportunity to inspect the relied upon documents on 26-11-2020 or 27-11-2020. Due to sudden surge in the Covid-19 cases, the Respondent vide letter dated 3-12-2020, requested the DGAP to supply the copies of relied upon documents. The DGAP had considered the request of the Respondent and supplied the copies of relied upon documents to the Respondent vide letter dated 24-12-2020. 6. The DGAP has also submitted that in response to the Notice, the Respondent did not submit complete requisite documents by due date. Hence reminder were issued to the Respondent on 3-12-2020 and 24-12-2020. The Respondent did not submit requisite documents even after several reminders, therefore, summons under section 70 of the CGST Act, 2017 read with rule 132 of the CGST Rules, 2017 were issued on 12-1-2021 to Sh. Vikram Jhala, AGM, Indirect Taxation of the Respondent to submit the requis....
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....ndent submitted his reply vide e-mails/letters dated 20-2-2020, 19-3-2020, 21-5-2020, 18-7-2020, 8-8-2020, 9-8-2020, 29-8-2020, 05-9-2020, 3-12-2020, 31-12-2020, 25-1-2021, 19-2-2021, 20-2-2021, 19-3-2021, 17-7-2021 and 11-11-2021. The replies of Respondent have been summed up by the DGAP as follows:- (i) That the rate reduction had happened only in respect of 28 products by virtue of Notification No. 41/2017 dated. 14-11-2017. The GST rate was reduced from 28% to 18% in respect of two product categories i.e. Detergent Powder and Scouring Bar w.e.f. 15-11-2017. (ii) That as on the cut-off date i.e. 15-11-2017, the Respondent was having unsold stocks at his factory and Depots which were sold after rate reduction. However, the Respondent had passed on the benefits of rate reduction by charging applicable rate without increase in its basic selling price which could be understood with the below given example: Product: Nirma Yellow Powder -1Kg (Before 15/11/2017) (After 15/11/2017) Basic Rate per Kg 28.05 28.05 (Selling Price) - GST @28% 7.85 - GST@18% 5.05 - Rate t....
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....19 8 19/2019 13-3-2019 Somany Ceramics, Morbi 22011/NAA/78/Somany/2150-2153 13-3-19 9 22/2019 28-3-2019 Peps Industries, Kerala 22011/NAA/90/Peps/2 018/2288 28-3-19 10 23/2019 03-4-2019 Saint Gobain India Pvt. Ltd. Bengaluru 22011/NAA/84/Saint Gobain/2018/2333-2337 3-04-19 11 24/2019 03-4-2019 Rosata Vitrified Pvt. Ltd, Morbi 22011/NAA/85/Rosata/2018/2339-2342 3-4-19 12 26/2019 25.04 2019 Mak Plywood Inds. Pvt. Ltd. Kerala 22011/NAA/77/Makply/2018 25-4-19 13 11/2020 04-3-2020 Bajaj Electricals Ltd. Mumbai 22011/NAA/69/Bajaj/2 019/1353-56 04-3-20 The Respondent based on his above had stated that in his case, there was no profiteering, hence he requested to close the proceedings initiated against him. (v) That he had a system of reviewing the cost vis-a-vis selling price of his products, normally on half yearly basis i.e. March/April and September/October unless there were some major factors affecting the cost of the products where immediate necessary changes in the selling prices of the products were to be made e.g. there was an increase in the rates in ....
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....;List of all GST registrations. 11. The DGAP has further submitted that the letter dated 18-4-2019 of this Authority received on 24-1-2020 from the Standing Committee vide Minutes of the Meeting dated 10-1-2020, the various replies of the Respondent and the documents/evidences on record had been examined by him and the main issues for determination were as under: (i) Whether the rate of GST on the products/goods supplied by the Respondent was reduced from 28% to 18% w.e.f. 15-11-2017 and if so, (ii) Whether the Respondent had passed on the benefit of such reduction in GST rate to the recipients, in terms of section 171 of the Central Goods and Services Tax Act, 2017. 12. The DGAP has also mentioned that on scrutiny of letter dated 18-4-2019 of this Authority received through the Standing Committee, he had observed that the Respondent had furnished a list dated 6-8-2018, wherein details of impacted products were given. Further, in the Minutes of the Meeting of the Standing Committee dated 10-1-2020, the remark given in respect of the Respondent was that there was non-reduction of prices commensurate with reduction in GST from 28% to 18%, whereas in ....
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....to pass on the benefit of input tax credit or reduction in rate of tax to the recipients under the GST regime. Moreover, the DGAP has also mentioned that section 171 simply did not provide a supplier of goods or services, any other means of passing on the benefit of input tax credit or reduction in rate of tax to the consumers. 14. The DGAP has further stated that based on the Respondent's submissions/documents and on perusing the invoices furnished by the Respondent, he had observed that the Respondent had not increased the base prices of the subject goods when the rate of GST was reduced from 28% to 18% w.e.f. 15-11-2017. The following Table- A reflects the base prices of all the products of the Respondent which were impacted vide Notification No. 41/2017-Central Tax (Rate), dated 14-11-2017. The table indicates that the base prices of all the impacted products were not changed after rate reduction. It also indicates that the base prices in some cases were revised and in some case were not revised at all. Table-'A' No. Product Details Pre-rate reduction Post-rate reduction Period from which the product rates are revised ....
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.... 31.25 Sold Only in Post-rate reduction period 7 Nirma Advance Detergent, 95 Gms 701032T117001123 dated 14-11-2017 34.15 701018TI17001789 dated 16-11-2017 34.15 Rates not revised Nirma Advance Detergent, 85 Gms 701134TI17001088 dated 14-11-2017 37,60 701035TI17001703 dated 15-11-2017 37.60 30-5-2018 Nirma Advance Detergent, 90 Gms - - 901004T117003871 dated 23-11-2017 38.10 Sold Only in Post-rate reduction period Nirma Advance Detergent, 75 Gms - - 901004T118001892 dated 3-8-2018 44.60 Sold Only in Post-rate reduction period Nirma Advance Detergent, 70 Gms - - 901008T119002368 dated 1-1-2019 47.45 Sold Only in Post-rate reduction period 8 Nirma Advance Detergent, 190 Gms 701033TI17001448 dated 14-11-2017 34.15 701033T117001473 dated 18-11-2017 34.15 Rates not revised Nirma Advance Detergent, 170 Gms 701134T117000929 dated 11-10-2017 37.60 701035T117001705 dated 15-11-2017 37.60 30-5-2018 Nirma Advance Detergent, 180 Gms - - 901008T117002283 dated 26-11-2017 38.10 Sold Only in Post-rate reduction period Nirma Advance Detergent....
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....002048 dated 14-11-2017 37.65 901008T117002050 dated 15-11-2017 37.65 25-6-2018 - - 901008TI17002376 dated 10-12-2017 38.10 Sold Only in Post-rate reduction period 15 Nirma Active Powder, 1 kgs 701006TI17002123 dated 10-11-2017 27.15 701006T117002167 dated 16-11-2017 27.15 Rates not revised 901002T117007577 dated 15-11-2017 28.25 701035TI17001691 dated 14-11-2017 28.25 31-5-2018 - 901002TI17008829 dated 26-12-2017 28.90 Sold Only in Post-rate reduction period 16 Nirma Active Powder, 2 kgs - - - - Product Not found 17 Nirma Active Powder, 500 Gms 701035TI17001691 dated 14-11-2017 27.00 701035TI17001714 dated 16 11.2017 27.00 25-12-2017 901002T117007546 dated 14-11-2017 28.15 901002T117007593 dated 15-11-2017 28.15 01-6-2018 18 Nirma Active Powder, 230 Gms 901002T117007504 dated 13-11-2017 27.85 701033T117001453 dated 15-11-2017 27.85 Rates not revised Nirma Active Powder, 250 Gms - - 901002T118010348 dated 9-2-2018 27.35 Sold Only in Post-rate reduction....
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....ar, 220 Gms (2+1) 10.560 Kg 701134T117001085 dated 14-11-2017 270.95 901002TI17007582 dated 15-11-2017 270.95 Rates not revised Nirma Bartan Bar, 240 Gms (2+1) 11.520 Kg - - 901004TI17004191 dated 15-12-2017 294.20 Sold Only in Post-rate reduction period 15. The DGAP has also submitted that on examination of the details of outward taxable supplies (other than zero-rated, nil rated and exempted supplies) of the impacted products during the period from 15-11-2017 to 31-1-2020, as furnished by the Respondent, it was observed that the Respondent had not increased the base price of the products "Detergent Powder and Scouring Bars", when the GST rate was reduced from 28% to 18% w.e.f. 15-11-2017. However, the DGAP has also observed that the Respondent had increased the base price of the impacted products only afterwards. For example out of 70 impacted product categories, prices of 16 were never revised; 23 were revised afterwards and maintained the same immediately after 15-11-2017; 29 were sold only during post-rate reduction period and 2 were not found as sold. 16. The DGAP has further stated that based on the submissions of th....
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....-12-2018 in the matter of M/s Kerala State Screening Committee on Anti-Profiterring v. Asian Granito India Ltd. 2019 (20) G.S.T.L. 389 (NAPA)/[2018] 100 taxmann.com 490/[2019] 71 GST 554 (NAA), Order No. 28/2018 dated 27-12-2018 in the matter of M/s State Level Screecing Committee on Anti-Profiteering v. Ahuja Radios 2019 (30) GST 306 (NAPA)/[2018] 100 taxmann.com 505/[2019] 71 GST 558 (NAA), Order No. 13/2019 dated 1-3-2019 in the matter of M/s Kerala State Screening Committee on Anti-Profiteering v. Velbon Vetrified Tiles (P.) Ltd. [2019] 103 taxmann.com 51 (NAA), Order No. 19/2019 dated 13-3-2019 in the matter of Kerala State Level Screening Committee on Anti-Profiteering v. Somany Ceramics Ltd. [2019] 103 taxmann.com 183 (NAA) Order No. 18/2019 dated 13-3-2019 in the matter of M/s Kerala State Screening Committee on Anti-Profiteering v. Asian Paints Ltd. [2019] 103 taxmann.com 184 (NAA)/[2019] 73 GST 83 (NAA) and Order No. 24/2019 dated 3-4-2019 in the matter of M/s Kerala State Screening Committee on Anti-Profiteering v. Rosata Vitrified Pvt. Ltd. [2019] 104 taxmann.com 120 (NAA) passed by this Authority to contend that since the base prices had not been increased by the Respo....
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....vened in the present case. 22. The above Report was received by this Authority from the DGAP on 17-12-2021 and was considered in its sitting held on 23-2-2022. Perusal of the record reveals that this Authority vide its letter File No. 22011/NAA/39/2018/2663-2666, dated 18-4-2019, had sent the information, regarding pre-and post-15-11-2017 MRPs of the Stock Keeping Units (SKU) which were being supplied by the Respondent, to the Standing Committee on Anti-Profiteering to examine under rule 128 whether any profiteering was involved or not. The information stated the names of the products sold by the Respondent, the details of the 27 SKUs of Detergent and 5 SKUs of Scouring Bar, MRP before 14-11-2017, GST Rate as on 14-11-2017, GST Rate as on 15-11-2017, MRP after 15-11-2017, Effective date of change in MRP, Quantity sold at old MRP and the Sale value of quantity sold at old MRP. The Standing Committee had examined the above information in its meeting held on 10-1-2020 and forwarded the same to the DGAP on 24-1-2020 to conduct detailed investigation as per the provisions of Rule 129. 23. The DGAP in his Report has stated that section 171 of the CGST Act, 2017 does not mention red....
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....provisions of Rule 6 (e) of the Legal Metrology (Packaged Commodities) Rules, 2011 framed by the Central Government under the 2009 Act, the retail price of the package has to be fixed and declared as defined under rule 2 (m), which states as under: "2 (m) "retail sale price" means the maximum price at which the commodity in packaged form may be sold to the ultimate consumer and the price shall be printed on the package in the manner given below; maximum or max. retail price Rs .....Rs. ..... inclusive of all taxes or in the form MRP Rs .... Rs. .......inclusive., of all taxes after taking into account the fraction of less than fifty paise to be rounded off to the preceding rupee and fraction of above 50 paise and up to 95 paise to be rounded off to fifty paise;" As per the letter No. WM-10 (31)/2017 dated 16-11-2017, the Respondent was further under legal obligation to affix an additional sticker or stamp or online print by declaring the MRP on all the SKUs which were lying unsold with him or his dealers as on 15-11-2017. Therefore, it is clear that the Respondent was required to refix, declare and reprint the MRPs on all the SKUs, which he is se....
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....ces on half yearly basis unless they required immediate review due to some major factors. He has further claimed that the Respondent had increased his prices in the month of December, 2017 post-rate reduction due to increase in the prices of the Crude Oil. However, it has not been explained how the prices of the SKUs mentioned at Sr. Nos. 1, 3, 17, 19 and 20 of Table-A were increased in the month of November 2017 immediately after the rate reduction on 15-11-2017, when the prices of Crude Oil had been increased in the month of December, 2017. There is also no evidence on record which shows that the prices of Crude Oil had in fact been increased. Mere assertion of the Respondent in this regard cannot be relied upon. Accordingly, the claim made by the DGAP in this regard cannot be accepted. 28. The DGAP has also contended that the Respondent vide his Circular dated 15-11-2017, had informed his Distributors that his selling prices to them would remain unchanged and they should charge 18% GST instead of 28% and should also persuade their Retailers to pass on the benefit of GST to the consumers. However, it is on record that the DGAP has not conducted any investigation on the issue w....
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.... consumer. In this connection it would be relevant to mention that this Authority in a number of its Orders has consistently held that the benefit of tax reduction has to be passed on to the ultimate consumer, who bears the burden of tax and not only to the Distributors/Wholesalers/Retailers who do not actually bear its burden. They can also not be enriched at the expense of the voiceless, vulnerable and unorganized customers. Reference in this regard can be made to Para 86 of one of the Orders passed by this Authority bearing No. 76/2020, dated 23-11-2020 in the case of DGAP v. Proctor & Gamble Home Products Pvt. Ltd.[2020] 122 taxmann.com 1 (NAA) vide which it has been ruled that "it has been clarified several times by the Union Finance Ministers, the Central Government and the GST Council that the benefit of tax reduction is required to be passed on to the ordinary customer who bears the burden of tax" and hence the claim made in this regard by the DGAP is not in accordance with the law settled by this Authority and also against the public policy and hence the same is untenable. 33. The DGAP has further stated that there was no actual invoice on record which could prove wheth....