TaxTMI 
TaxTMI 
2025 (8) TMI 1196
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....tter appreciation is placed below: - S.No. Date Event Remarks 1. 01.07.2017 GST Act, come into force Rate of GST for the Cosmetics Products was 28% 2. 14.11.2017 Effective date 15.11.2017 Rate of GST on Cosmetics Products was reduced from 28% to 18% On the Recommendation of GST Council, Rate of GST on Cosmetics Products was reduced from 28% to 18% vide Notification No. 41/2017 3. 28.11.2017 National Anti-Profiteering was formed Under section 171 of the CGST Act, 2017, to ensure that the benefits of reduction in GST rates or Input Tax Credit are passed on to consumers by way of commensurate reduction in prices, and to prevent profiteering by businesses. 4. 12.03.2028 Forwarding Complaint with respect to Anti-profiteering to the Standing Committee By Secretary, National Anti-Profiteering Authority 5. 09.05.2019 Reference received from the Standing Committee on Anti-profiteering to DGAP 6. 08.08.2018 received on 13.08.2018 DGAP's first Report received in National Anti-Profiteering Authority Under Rule 129(6) of CGST Rules, 2017 7. 16.08.2018 Notice Issued to Respondent on Report ....
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....ases was provided to Pr. Bench GSTAT, with effect from 01.10.2024. 22. 12.06.2025 Methodology and Procedure Rules, 2025, were notified 23. 01.07.2025, Hearing Notice was issued to the Respondent by the Pr. Bench GSTAT to appear Sh. Mukesh Malik appeared on behalf of the Respondent. 24. 08.07.2025 Hearing Notices were issued to the Respondent and to the L'Oreal India Pvt. Ltd. Ms. Mehak Mehra, Advocate, appears on behalf of L'Oreal India Pvt. Ltd 25. 29.07.2025 Hearing Concluded and matter reserved for judgment/order 3. It may be noted here that there is no dispute with regard to the fact that the rate of GST on Beauty and make up preparation and preparation for the care of the skin (other than medicaments), including sunscreen or sun tan preparations, manicure or pedicure preparations (other than kajal, Kumkum, Bindi, Sindur, Alta) and preparations for use on the hair etc. was reduced from 28% to 18%, vide Notification No. 41/2017-Central Tax (Rate) dated with effect from 15.11.2017; and that the unit sale prices of various products of the Respondent remained unchanged even after the said reduction of ra....
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....dent during the relevant period, out of which 388 (6HSN) were impacted by rate reduction vide the notification 41/2017 dated 14.11.2017. Upon comparing the average selling prices as per details submitted by the Respondent for the period 01.07.2017 to 14.11.2017 and the actual selling prices post rate reduction, i.e. with effect from 15.11.2017, it was seen that the GST rate of 18% had been charged on the increased base price which established that though the tax amount was computed @ 28% before 15.11.2017 and @ 18% w.e.f. 15.11.2017, the fact was that because of the increase in base prices, the cum-tax price paid by the consumers was not reduced commensurately, despite the reduction in the GST rate. Therefore, having established that the base prices were increased after 15.11.2017. f) Further, the DGAP has illustrated the calculation in respect of a specific item i.e. LP HEX 6 OIL Shampoo 360 ML. The average base price of this item was then compared with the actual selling price of the same item sold post-GST rate reduction i.e, on or after 01.04.2018, as given in Table "A" Table "A" SI.No. Descriptions Factors Pre Rate Reduction (From 01.11.2017to 14.11.201....
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....M/s Raj & Company was a distributer of M/s L'Oreal India Pvt. Ltd. and NAA vide Order No. 26/2022 dated 23.06.2022 had also confirmed profiteering to the tune of Rs. 186,39,57,058/- against L'oreal India Pvt. Ltd. for the period from 15.11.2017 to 31.12.2018. 5. In view of the above, erstwhile NAA vide its Interim Order No. 20/2022 dated 28.09.2022, referred the matter back to the DGAP to reinvestigate the matter as per provisions of Rule 133 (4) of the CGST Rules, 2017. We consider it apposite to quote the order of the NAA, it reads as follows: (i) Para 4. We have carefully considered the Report furnished by the DGAP, the clarifications filed by and the records of the case. There is no dispute with regard to the reduction of the tax in respect of subject products supplied by the Respondent with effect from 15-11-2017. The Government by Notification No 41/2017-CT (Rate) dated 14-11-2017 has reduced rates on subject products. In view of the above said facts and the records, the Authority has observed that the Respondent, M/s Raj & Company was a distributor of M/s L'oreal India Pvt. Ltd. The Authority finds that M/ s L'oreal India Pvt. Ltd. was investigate....
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....e period of investigation in respect of the Respondent was 01.04.2018 to 31.12.2018 and the period of investigation in respect of M/s. L'Oreal India Pvt. Ltd. was 15.11.2017 to 31.12.2018. In this regard, the DGAP has observed that in the case of M/s. L'oreal India Pvt. Ltd. profiteered amount 6,95,433/- was apportioned to the Respondent for the period April, 2018 to December, 2018. II. Nevertheless, in the supply chain, M/s Raj & Co., the Respondent (GSTIN:07AAGPM9486L1ZW), who are separately registered under the GST Act, becomes an independent supplier of goods. On receipt of a complaint of profiteering through the Standing Committee, the case of the Respondent was independently investigated. In order to investigate the case of the Respondent, all data/information in respect of the Respondent were taken. For the pre-rate reduction period, the average base price of all the goods supplied by the Respondent was worked out. This average base price was then compared with the actual base sale price of the same goods during the post-rate reduction period. It was observed that the prices of the goods were not reduced commensurate with the reduction in the tax rate. ....
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..../s Loreal Pvt. Ltd. in their invoices mention specific and detailed description of the products, whereas the Respondent mention only a general description of the products supplied by them. (c) Accordingly, it is concluded that the investigation against the Respondent was correctly done under Section 171 of the CGST Act, 2017 and they are obliged to further pass on the said benefit. In view of the above, it is not possible to work out duplication and doubling of the profiteered amount, if any, at the end of the Respondent. V. During this investigation, reliance has been placed on the Order No. 25/2018 dated 27.12.2018 issued by the NAA wherein vide para no. 17 the profiteering amount has been determined in respect of the Respondent (M/s Raj & Co.) for the period 15.11.2017 to 31.03.2018 as Rs. 3,43,109/- and the Respondent was directed to deposit anti-profiteering amount along with the interest @ 18%. The above Order was issued by the NAA in an identical case in respect of the Respondent, though for a prior period. As the NAA has confirmed the profiteered amount for the Respondent for the earlier period (15.11.2017 to 31.03.2018). The present period covere....
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.... Pvt. Ltd. is being done on the basis of profiteering made by him from his customers, as the benefit was needed to be passed on by him to his customers, which he hasn't done. Further, Section 171(1) of the CGST Act, 2017 itself states that " Any reduction in rate of tax on any supply of Goods and Services or the benefit of Input Tax Credit shall be passed on to the recipient by way of commensurate reduction in prices".Here recipient is the one which should be benefitted irrespective of whether the supplier is being benefitted or not by his supplier, So the contention of the Respondent that he as a distributor, has no role to play with GST and he couldn't pass on GST benefit as he hadn't received nor he had a clue about is completely wrong, since he was free to raise a complaint against his supplier who hadn't passed on the benefit of tax rate reduction to his customers. He is not relieved from the duty as a supplier of goods to pass on the benefit further. 11. Further, the Respondent was directed by the CCI to file a rejoinder if any, against the DGAP clarifications dated 26.09.2023. However, no rejoinder was filed by the Respondent. 12. W.e.f 01.10.2024, the ....
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....o. that L'Oreal through its software-"Suvidha" controls the pricing of products sold by the distributors was completely false and baseless. In this regard, it was submitted that the distributors were free to sell the finished goods at a price less than the recommended price to their customers. The same was substantiated from the Distribution Agreement, relevant extracts of which are reproduced as follows: "7.1 Products delivered by Company shall be invoiced in accordance with the price list containing the 'maximum retail price' for each product (to be applied on each Product as per prevailing Indian aw) communicated to Distributor and the commercial terms as mentioned in Schedule-1. The Distributor shall be entitled to sell the Products at a price determined by it, subject to the maximum retail price and as per commercial terms specified in Schedule 1. The prices of the Products are exclusive from VAT or any other applicable tax. The Company shall be entitled to vary the price list of Products at any time without prior notice when deemed necessary to take into account the evolution of the economic circumstances and such change shall be intimated to the Distribu....
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....sive of the GST or Input Tax Credit component. The Supplier is at liberty to set his base prices and vary them in accordance with the relevant commercial and economic factors or any applicable laws. Consequently, NAA is mandated only to ensure that the benefit of reduced rates of taxes and Input tax Credit is passed on. NAA cannot force the petitioners to sell their goods or services at reduced prices. The Delhi High Court is further of the view that the manufacturer/supplier despite reduction on rate of tax or benefit of Input Tax Credits can raise the prices based on commercial factors, as long as the same is not a pretense. The Court took note of the concession made by the Counsel appearing for the Revenue that in some cases, commercial factors might necessitate an increase in price despite reduction in rate of tax or increase in availability of benefit of Input Tax Credit. The Court was further in agreement with the Amicus Curiae that if there is any variation on account of other factors, such as any costs necessitating the setting off of such reduction of price, the same needs to be justified by the supplier. The inherent presumption that there must necessarily be a redu....