TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 57
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....the petition also challenges the order dated 7th September, 2018 (hereinafter, 'the impugned order') passed by the National Anti-Profiteering Authority (hereinafter, 'NAPA'), as also the Investigation Report dated 16th March, 2018 furnished by the Director General of Anti-Profiteering under Rule 129 (6) of the Rules, 2017. 4. The Coordinate bench of this Court, vide judgment dated 29th January, 2024 in a batch of matters with the lead matter being W.P.(C)7743/2019 titled Reckitt Benckiser India Pvt. Ltd. v. Union of India upheld the Constitutional validity of Section 171 of the Act, 2017 and Rules 122, 124, 126, 127, 129, 133 and 134 of the Rules, 2017. While deciding the said cases, the Court observed that the specific orders, which have been passed in each of the matters have to be adjudicated on merits. The relevant portions of the said judgment are set out below: "159. Section 171 of the Act, 2017 is widely worded and does not limit the scope of examination to only goods and services in respect of which a complaint is received. The scope of powers of the DGAP is provided for in Rule 129 of the Rules, 2017. From a reading of the said Rule especially the expression 'a....
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....ofiteering mechanism by enlarging the scope of the proceedings beyond the jurisdiction or on account of not considering the genuine basis of variations in other factors such as cost escalations on account of which the reduction stands offset, skewed input credit situations etc. However, the remedy for the same is to set aside such orders on merits. What will be struck down in such cases will not be the provision itself which invests such power on the concerned authority but the erroneous application of the power." 5. Thus, insofar as the prayer for striking down the said provisions of the Act, 2017 and Rules, 2017 is concerned, the same would no longer survive before this Court. 6. On facts, however, the matters have to be examined separately. Before proceeding to do so, it would be relevant to note that NAPA, which was originally notified under the Act, 2017 was thereafter substituted by the Competition Commission of India (hereinafter, 'CCI') vide Notification No. 23/2022-Central Tax dated 23rd November, 2022. When this Notification was issued, the various provisions of the Rules, 2017 were omitted/amended. 7. Thereafter, vide Notification No. 18/2024 dated 30th Septembe....
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....ffect from 01st July, 2017. In respect of the subject product, initially, the GST payable from 01st July, 2017 was 28%. Thereafter, Notification No. 41/2017-Central Tax (Rate) was issued on 14th November, 2017, amending the rate of GST from 28% to 18%. 12. At the time when these reductions took place, anti-profiteering measures were introduced to ensure that the benefit of reduction in rates of GST or the benefit of input tax credit would be passed on to the consumer by way of commensurate reduction in the rate/price. The anti-profiteering measures were thus meant to be in public interest to avoid unjust enrichment by manufacturers, retailers and other goods and service providers. 13. A complaint was filed against the Petitioner in respect of the subject product, stating that the Petitioner continued to charge the same amount, despite the reduction in rate of GST. This complaint was considered by the NAPA, which was the competent authority at the relevant point of time to deal with such complaints. Thereafter, the Investigation Report dated 16th March, 2018 was furnished by the Director General of Anti-Profiteering under Rule 129 (6) of the Rules, 2017. 14. Vide the impugn....
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....had purchased 11 units of the product from the Respondent vide invoice No. GSA42046 dated 28.11.2017 in which again an amount of Rs. 14.15/- per unit was over charged from him. The Respondent was also aware that the rate of tax had been reduced from 28% to 18% w.e.f. 15.11.2017 on the above product which has been correctly charged by him in the above 3 tax invoices issued by him to the above Applicant. Therefore, it is established from the record as well as the admission of the Respondent himself that he had resorted to profiteering by increasing the base price in violation of the provisions of Section 171 of the above Act and had thus not passed on the benefit of reduction in the rate of tax by commensurately reducing the price of his product rather the base price was increased by him exactly by the same amount by which the tax had been reduced. The Respondent has claimed that the HUL had changed the base price in its software and hence he was bound to charge the increased base price at the time of issuing invoices. However, the Respondent being a registered dealer having GSTIN 08AAEFS7072E1Z4 under the CGST/SGST Acts 2017 was fully aware of the reduction in the rate of tax of the....
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....he impugned order is further extracted herein below: "23. Since the price of the product and the GST charged by him from the above Applicant in respect of the tax invoice issued on 15.11.2017 has been returned by him to the Applicant No. 1 the amount of profiteering is not being determined however, in respect of the tax invoice issued by him to the above Applicant on 28.11.2017 the amount of profiteering is determined as Rs, 184/- as has been mentioned in para 16 supra which shall be returned by him to the Applicant No. 1 with interest @ 18% w.e.f. 28.11.2017 till the same is paid. Based on the details of the supplies made by the Respondent to the other recipients who are not identifiable the amount of profiteering is determined as Rs. 5,50,186/- excluding the amount of Rs. 184/-, which shall be deposited by him along with interest @ 18% to be calculated from the first of the subsequent month in which the profiteering was done as per the amount which has been mentioned in the Table shown in para 6 above, till it is paid. The DGAP shall ensure that in case the above amount pertaining to the Respondent in respect of the above product has been deposited by the HUL in the CWF,....
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....t 2017 sets out the function, duty, responsibility and power of NAA with exactitude. It stipulates that the pre-conditions for applicability of the provision are either the event of reduction in rate of tax or the availability of benefit of input tax credit (resulting in such reduction). Once the said prerequisites/ conditions exist, the direct consequence contemplated i.e. reduction of the price must follow. Therefore, if before such reduction of rate of taxes or benefit of Input Tax Credit, the price paid by the recipient inclusive of the applicable tax at the relevant time was a particular amount, then on account of the reduction of the tax rate or the benefit of the Input Tax Credit, there has to be reduction in the subject price. Further, the reduction in the tax rate or the benefit of Input Tax Credit which is mandated to be passed on to the recipient is a matter of right for the recipient and consequentially, the price reduction must be commensurate to such benefit. For instance, when the Goods and Services Tax rate on a service of Rs.100 is 28%, the MRP of the service at which it is sold to the consumer is Rs. 128. When the Goods and Services Tax rate is reduced by the Gove....
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....gh commensurate reduction in prices, cannot be said to be manifestly arbitrary. No fundamental or other rights of any of the petitioners are being affected in any manner by requiring that the benefit in reduction of tax rate or Input Tax Credits, be passed on to the recipients by way of commensurate reduction in prices. 133. This Court is in agreement with the submission of Mr. Zoheb Hossain, learned counsel for the Respondents, that the benefit of tax reduction has to be passed on at the level of each supply of SKU to each buyer and in case it is not passed on, the profiteered amount has to be calculated on each SKU. 134. The contention of the learned counsel for the Petitioners that it is legally impossible to pass on the benefits by reducing the price of goods in cases of low priced products is untenable in law. As pointed out by Mr.Zoheb Hossain, learned counsel for the Respondents, the provisions of the Legal Metrology (Packaged Commodities) Rules, 2011 are applicable. In cases for period prior to 31st December, 2017, the erstwhile Rule 2(m) of the Legal Metrology (Packaged Commodities) Rules, 2011 which provided detailed instructions for rounding off of the ....
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....cheme is being launched or the product is being sought to be given free with some other product or the grammage or the quantity of the product is being increased. 24. This Court is of the opinion that all schemes which may have been in operation, ought to have been recalibrated with the reduction in GST rates. There may be some transitional problems, however, the purpose of the reduction in GST rates cannot be defeated. Such problems are nothing but those for which the manufacturers and retailers ought to be prepared for. For eg., upon immediate reduction of GST rates, the product MRP may be the same, but the GST component has to be reduced, even if it means that the product is being sold for less than the MRP. The term MRP means `Maximum Retail Price' and thus sale below the said price is permissible. It is only sale above the said price which is impermissible. But to ensure that the GST benefit is not passed on, increasing the quantity of the product unknowingly and charging the same MRP is nothing but deception. The consumer's choice is being curtailed. The non-reduction of price cannot be sought to be justified on the ground that the quantity has been increased or that there....
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....ge, it is submitted on behalf of the Petitioner that the said amount was already deposited in the account of Directorate General of Anti Profiteering, New Delhi, and the same was converted into FDR in terms of the order dated 6th December, 2018, passed by this Court. The proof of deposit has also been furnished by the Petitioner. Let the same be taken on record. 32. In view thereof, let the amount realized from the FDR be transferred to the Consumer Welfare Fund. The details of the account are set out below: • Account Name - Central Bank of India • Account Number - 3000058471 • IFSC - CBIN0282169 33. Insofar as the imposition of penalty is concerned, the penalty proceedings would not be applicable in view of the observation of the Court in Reckitt Benckiser India (P) Ltd. (supra) which is as under: 154. Section 164 of the Act, 2017 gives power to the Government to make rules for carrying out provisions of the Act and in particular to provide for penalty. Section 164 of the Act, 2017 is reproduced hereinbelow:- "164. Power of Government to make rules (1) The Government may, on the recommendations of the Council,....