TaxTMI 
TaxTMI 
2026 (6) TMI 426
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....Whether the Respondent i.e. M/s Lifestyle International Pvt. Ltd., Mahagun Metro Mall, Plot No. VC-3, Sector-3, Vaishali, Ghaziabad, Uttar Pradesh-201010, has profiteered an amount of Rs. 13,61,51,254/- by not passing the benefit of reduction of rate of GST on Fast moving consumer goods (FMCG) dealt by it from 28 % to 18 % with effect from 15.11.2017 to 31.01.2018? 2. The facts giving rise to the present proceedings are that a reference was received on 18.12.2017 from the Standing Committee on Anti-profiteering under Rule 129 of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as "the Rules"), to conduct a detailed investigation in respect of an application filed by Ms. Neeru Varshney, R/o Flat No. 312, Sector-17A, Vasundhara, Ghaziabad-201012, Uttar Pradesh (hereinafter referred to as "the Complainant"), alleging profiteering by M/s Lifestyle International Pvt. Ltd., Mahagun Metro Mall, Plot No. VC-3, Sector-3, Vaishali, Ghaziabad, Uttar Pradesh-201010 (hereinafter referred to as "the Respondent"). The Complainant submitted that she had purchased a product, namely "Maybelline Fit Me Foundation", from the Respondent and alleged that the Respondent had not ....
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.... the case on the basis of the Respondent's submissions dated 18.02.2020 and 24.02.2020. 7. After receipt of the I.O No. 18/2020 from the erstwhile NAA a letter dated 15.06.2020 was issued to the NAA seeking copies of the submissions dated 18.02.2020 and 24.02.2020 filed by the Respondent, as referred to in Para-26 of I.O No. 18/2020 dated 04.06.2020. However, vide e-mails dated 23.06.2020 and 26.06.2020, the Authority advised this office to obtain the requisite documents directly from the Respondent. 8. On the basis of pre and post-GST rate reduction data and the revised details of outward taxable supplies furnished by the Respondent for the period from 15.11.2017 to 31.01.2018, the profiteered amount has been re-computed in compliance with I.O dated 04.06.2020. It was observed that the Respondent had increased the base prices of impacted goods despite reduction in GST rate from 28% to 18%, resulting in net higher realization amounting to Rs. 13,61,51,254/-. The computation was carried out category-wise and goods code-wise by comparing the average base price (after discount) prevailing during 01.11.2017 to 14.11.2017, or October 2017 where applicable, with the actual invoice-....
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....-'B' below: Table-'B' S. No. Name of State State Code Total Profiteering (Rs.) 1 Andhra Pradesh 37 51,11,372 2 Assam 18 5,163 3 Bihar 10 5,084 4 Chandigarh 04 14,41,541 5 Chhattisgarh 22 2,743 6 Delhi 07 97,64,413 7 Gujarat 24 18,14,365 8 Haryana 06 88,61,768 9 Jammu and Kashmir 01 4,94,693 10 Jharkhand 20 12,526 11 Karnataka 29 2,12,92,107 12 Kerala 32 51,40,417 13 Madhya Pradesh 23 5,48,814 14 Maharashtra 27 2,78,14,595 15 Odisha 21 22,161 16 Puducherry 34 14,177 17 Punjab 03 39,82,733 18 Rajasthan 08 12,73,793 19 Tamil Nadu 33 2,15,13,949 20 Telangana 36 1,07,92,233 21 Uttar Pradesh 09 1,11,67,671 22 Uttarakhand 05 7,65,060 23 West Bengal 19 43,09,876 Grand Total 13,61,51,254 10. The DGAP concluded that the Respondent profiteered by Rs. 13,61,51,254/- which was required to be passed on to the recipients by commensurate price reduction under Section 171. Since recipients were not ident....
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....n the Respondent. 15. In addition to the aforesaid legal issues, the respondent also raised the following factual aspects of the case:- i. Retail Sale Price (RSP) is erroneously conflated with averaging of taxable value adopted by DGAP so as to justify the report, whereas the Hon'ble Delhi High Court in Reckitt Benckiser's case has not supported such an approach. ii. The erstwhile NAA has affirmed to follow MRP based approach. iii. Maximum Retail Price (MRP) was equal to RSP in the first report. Methodology has changed from MRP to averaging. iv. Products which were bought and sold at the same GST rate (18%) did not undergo any rate change requiring any reduction in rate benefit to be passed on in terms of Section 171 of the CGST Act. 16. The Respondent has also raised the following issues:- a) The amount of profiteering calculated in excess of the reduction in the rate of GST is arbitrary, incorrect and not justifiable. b) Methodology of Discounted Average Sale Price for the period from 1st November 2017 to 14th November 2017 basis PAN India sales value, as adopted by the DGAP for calculating the amount of profiteering is ....
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.... Hence, the Hon'ble Supreme Court held that the exercise of power for varying the tariff can only be done as per statutory provisions and not under the inherent power. This case is also distinguishable. 19. The Respondent also relies upon the reported case of All India Overseas Bank vs UOI (1996) 6 SCC 606 (para 10,11). The SC held that the SC ST Commission cannot issue order of injunction for grant of promotion, etc., with pending departmental enquiry. 20. The aforesaid judgements are distinguishable from present case in view of the facts and also law governing the proceedings under Section 171 of the CGST Act. For this purpose, we take note of Sub-rule (4) of Rule 133 of the CGST Rules, 2017, it is quoted below:- Rule 133 (4) If the report of the [Director General of Anti-profiteering] referred to in sub-rule (6) of rule 129 recommends that there is contravention or even non-contravention of the provisions of section 171 or these rules, but the Authority is of the opinion that further investigation or inquiry is called for in the matter, it may, for reasons to be recorded in writing, refer the matter to the 3[Director General of Anti-profiteering] to cause further ....
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....fore, we come to the conclusion the erstwhile NAA has jurisdiction to direct further investigation, given the peculiar facts of the case. 24. Sub Rule (5) is clarification and it does not confer the additional jurisdiction upon the NAA. Moreover, it is the respondent who has claim that other customer may not have been passed on to the other customers. So, they have invited the order from the NAA indirectly for further investigation. Now, that the further investigation is taken up, they cannot claim the NAA has no jurisdiction to direct investigation into the other products of the Respondent. Thus, 1st contention of the Respondent is answered. 25. It is further submitted that no statutory authority or tribunal can assume jurisdiction in respect of subject matter which the statute does not confer on it and inherent powers are available only to Courts/Tribunals or judicial bodies. The Respondent relied upon the following decisions: a) Manohar Lal Chopra vs Rai Bahadur Rao 1962 AIR SC 527 (para 23) b) Union of India v. Paras Laminates AIR 1991 SC 696 (para 8) c) Smt. Shrisht Dhawan v. Shaw Brothers (1992) 1 SCC 534 (para 19) d) Prayag Upnivesh ....
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....n the context of similar powers of investigation exercised by the Director General under the Competition Act, 2002, the Supreme Court in Excel Crop Care Limited v. Competition Commission of India [(2017) 8 SCC 47.], has held that the Director General would be well within its powers to investigate and report on matters not covered by the complaint or the reference order of the Commission, and an interpretation to the contrary would render the entire purpose of investigation nugatory. The High Court of Delhi in Cadila Healthcare Ltd. v. CCI [Cadila Healthcare Ltd. v. Competition Commission of India, 2018 SCC OnLine Del 11229.], relying on the judgment of the Supreme Court in Excel Crop Care [(2017) 8 SCC 47.] has clarified in express terms that the scope of investigation by the Director General is not restricted to the matter stated in the Complaint and includes other allied as well as unenumerated matters. Consequently, the expansion of investigation or proceedings beyond the scope of the complaint is not ultra vires the statute. 27. Thus, if the powers of the investigating authority is so wide as held by the Delhi High Court in the aforesaid case, a natural corollary to such obs....
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....4/2022-Central Tax dated 23.12.2022, the Rules stated above were omitted, there was also amendment to Rule 127 and 137, in 127 in the marginal heading for the word 'duties', the word 'functions' shall be substituted. Thus, Rule 127 which provided "duties for the authority" were made to provide "functions of the Authority". In case of "it shall be duty of the Authority," the words "the authority shall discharge the following functions namely":- was substituted. After the Rule 137, an explanation was added which reads as follows: "[authority means authority notified under sub-section 2 of Section 171 of the act]". Thus, it is clear, on the recommendation of GST Council, the Government of India has taken away the authority from the erstwhile NAA and also made amendment to the rule to define the rule of authority which is to be notified under sub-section 2 of the Section 171 of the Act. 32. Competition Commission of India, (hereinafter referred as CCI for brevity) was conferred with the powers to look into the matters of Anti-Profiteering which was earlier being entrusted with the NAA Notification 24/2022-Central Tax dated 23.12.2022. Thus, it is clear that there has bee....
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....furnishing of report by DGAP. The Supreme Court in P.T. Rajan v. T.P.M. Sahir [(2003) 8 SCC 498.] has held that "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." and that "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." Consequently, the time limit provided for furnishing of report by DGAP is directory in nature and not mandatory. 34. From the above and by applying the said principles, we come to the conclusion that sub-rule (1) of Rule 133 of the CGST Rules 2017 provides for a time limit for deciding a case without providing the consequences for non-compliance is a directory provision and not mandatory provision. Moreover, we have consistently held that Section 171 is benevolent legislation and should receive liberal and pragmatic construction and avoid restrictive, parochial and pedantic approach. A liberal construction that serves the consumer and promotes the intent of the Act should be resorted to. Thus, we come to the concl....
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.... or services, exclusive 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 only mandated 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. 37. Again, in the aforesaid case of Reckitt Benckiser, the Delhi High Court in para 119 accepted the submission of learned 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 these must necessarily be a reduction in prices of the goods and services is a rebuttable presumption. The Court further held 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. 3....
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....e Respondent would also submit that the imposition of GST on the alleged profiteered is illegal, as the Respondent has already paid the GST to the Government and if the Tribunal come to the conclusion that reduction of GST has not been passed on to the customers by the Respondent, then it should direct the government to refund the GST to the Respondent. We are of the of opinion such submission is fallacious on the face of it as it is not the duty of the GSTAT, in its Anti-Profiteering Division, to pass a money decree in favor of the Respondent. Infact the Union of India is not a party. We are not here to see whether Respondent paid any additional tax to the Revenue. If it is the case of the Respondent that it has paid more tax than he is liable to pay, then Respondent to take appropriate remedies under the Act. The Anti-Profiteering division is not a proper forum to address this issue. 42. The Respondent has claimed that DGAP has not followed the same methodology in both of their reports. The methodology resorted to by taking Selling price by the Life style for calculating the profit. In the first report, the DGAP alleges that that MRP of the product was Rs. 550, while the retai....
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.... the advances received nor the construction activity is uniform throughout the life cycle of the project, the accrual of input-tax credit is not related to the amount collected from the buyers. This court is in agreement with learned counsel of the petitioners that one needs to calculate the total savings on account of introduction of goods and services tax for each project and then divide the same by total area to arrive at the per square feet benefit to be passed on to each flat buyer. This would ensure that flat-buyers with equal square feet area received equal benefit. The court, while hearing the present batch of matters on merits, shall take the aforesaid direction/interpretation into account. It is the prerogative of the legislature to decide how the benefit is to be passed on to the consumers. (underlined to lay emphasis) Hence, we find no error in taking average prices of the pre-GST period. 44. We have carefully considered the DGAP's Report dated 23.11.2020, the submissions made by the Respondent and all the materials placed on record. It is revealed that the Respondent has failed to pass on the benefit of GST rate reduction to customers who have purchased ....