TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 1196
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt 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 dated 08.08.2018 by Authority (NAA) Under Rule 129(3) of CGST Rules, 2017 8. 18.09.2018, 21.09.2018 & 25.09.201....
X X X X Extracts X X X X
X X X X Extracts X X X X
....AT 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 rate of GST. 4. The facts of the case, shorn of unnecessary details, are as follows :- a) A reference dated 27.02.2018, where a complaint was filed with the Secretary National Anti-Profiteering Authority (hereinafter referred to as NAA) alleging that certain major ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eduction, 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 14.11.2017 onwards) Pre Rate Reduction (From 15.11.2017 onwards) 1 Product Description A LP HEX 6 OIL SHAMPOO 360 ML 2 Notification No B 41/2017-Central Tax (Rate) dated 14.11.2017 3 Total quantity of item sold C 35 4 Total Taxable value D 6260.85 5 Average base price (Without GST) E=D/C 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....3 (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 investigated by the DGAP for allegations of profiteering and not passed on the benefit of reduction of GST rate after the said Notification dated 14.11.2017 and the Authority has found them violating the provisions of Section 171 of the CGST Act, 2017 for the products sold by them for the period from 01.04.2018 to31.12.2018 and this Authority vide Order No. 26/2022 dated 23.06.2022, has also confirmed profiteering to the tune of Rs. 186,39,57,058/- against M/s L'ore....
X X X X Extracts X X X X
X X X X Extracts X X X X
....W), 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. III. It is pertinent to mention here that profiteering is worked out on the goods supplied by the supplier and not on the goods purchased by the supplier. It is not known whether the goods supplied by the Respondent during the period of investigation were those which were purchased in the pre-rate reduction period or in the post-rate reduction period. Therefore, it is not possible to establish one-to-one correlation between the goods purchased by the Respondent from M/s. L'Oreal India Pv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....espondent. 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 covered now is in no way different from the earlier one. 7. Hence, the DGAP reported that there is no change in the amount of profiteering and is the same as was reported in DGAP's investigation report dated 25.01.2021. The final profiteering remains as Rs. 3,31.879/- only. 8. The Above report was carefully considered by Competition Commission of India, and a copy of the investigation report dated 29.03.2023 was provided to the Respondent vide Notice dated 04.08.2023 as per the Minutes of the meeting of the CCI held on27.07.2023 to file....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 Central Government, on recommendations of the GST council, has empowered the Principal Bench of the GST Appellate Tribunal (GSTAT, PB) constituted under sub-section (3) of section 109 of the CGST Act, 2017, to examine anti-profiteering cases in terms of Notification No. 18/2024-Central Tax dated 30.09.2024. Further, the Principal Bench, GSTAT (Anti-profiteering), Methodology and Procedure Rules, 2025 has been notified w.e.f 12.06.2025. 13. Therefore, in this case notice was issued, on 16.06.2025, to the Respondent to appear either in person or through Authorised Representati....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 Distributor as and when such new price list is implemented. 7.6 Distributor may, from time to time, at its sole discretion, offer discounts to its clientele /customers, and sell the Products at a price lower than the maximum resale price set by the Company. Such discounts shall not be recoverable by the Distributor from the Company. Such discounts shall not be recoverable by the Distributor from the Company. In addition to such discounts, the Company may, from time to time, run sales promotion schemes offering trade discounts/quantity-based schemes/price rebates in cash or kind in order to maxi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 reduction in prices of the goods and services is a rebuttable presumption. It is clarified that if the supplier is to assert reasons for offsetting the reduction, it must establish the same on cogent basis and must not use it merely as a device to circumvent the statutory obligation of reducing the prices in a commensurate manner contemplated under Section 171 of the Act, 2017. 17. The Indian Parliament, in its wisdom, thought it proper to include Section 171 of the CGST Act, to incorporate provisions for creating a framework that ensures that the benefits viz., reduction in rates of GST or Input Tax Cre....