TaxTMI 
TaxTMI 
2026 (9) TMI 274
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.... to as "the DGAP") on 24.01.2020, referred the matter to the DGAP for detailed investigation under Rule 129 of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as "the CGST Rules, 2017"). 3. Accordingly, notice under Rule 129 of the Central Goods and Services Tax Rules, 2017 was issued by the DGAP to the Respondent on 29.01.2020, directing the Respondent to show cause as to why the Respondent should not be held liable for contravention of the provisions of Section 171 of the CGST Act, 2017, by allegedly failing to pass on the benefit of reduction in the rate of tax to the recipients by way of commensurate reduction in prices. 4. The Respondent submitted multiple replies during the period from 25.02.2020 to 25.03.2021, contending, inter alia, that it had duly complied with the provisions of Section 171 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as "the CGST Act, 2017") and had passed on the requisite benefit to the recipients. 5. Upon examination of the invoices and outward taxable supply details pertaining to the period from 01.11.2018 to 31.12.2018, being the pre-rate reduction period, and the period from 01.01.2019 to ....
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....ement. Electronic Gift Vouchers, being conditional, time-bound, and restricted in usage, do not ensure actual and unconditional Further, they relied upon Reckitt Benckiser India Pvt. Ltd. v. Union of India, (2024) 14 Centax 374 (Delhi). "131. In the present instance, the legislative mandate is that reduction of the tax rate or the benefit of Input Tax Credit must not only be reflected in reduction of prices but it must also reach the recipient of the goods or services. Such a mandate cannot be tampered with by the supplier by substituting the benefit in the form of reduction of actual price with any other form such as increase in volume or weight or by supply of additional or free material or festival discount like 'Diwali Dhamaka' or cross-subsidisation. 132. Further, the requirement that the benefit of the rate reduction and Input Tax Credit reach the final consumer by way of 'cash in hand' through 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 passe....
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....ication on the submissions made by the Respondent In compliance therewith, the DGAP filed its clarification dated 12.08.2026, wherein it inter alia stated as under: 12.1 The DGAP reiterated that the intent of the law is to ensure that the benefit of tax reduction or input tax credit is passed on to the recipients by way of commensurate reduction in prices or by direct monetary reimbursement. It was contended that EGVs do not constitute a valid or acceptable method for passing on the benefit to recipients, relying upon the observations of the Hon'ble Delhi High Court in the case of M/s Reckitt Benckiser India Pvt. Ltd (Supra), particularly paragraphs 131 and 132, which emphasize the requirement for the benefit to reach the final consumer by way of 'cash in hand' through commensurate reduction in prices. 12.2 The DGAP further clarified that the period mentioned in paragraph 19 of the Investigation Report dated 30.03.2021 i.e., 01.01.2019 to 31.03.2019 was only a typographical error, and that the actual investigation period was from 01.01.2019 to 31.12.2019, as consistently reflected in the profiteering calculation annexed to the Investigation Report and ....
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....V balance represents a monetary value standing to the credit of the customer, and therefore, the issuance of EGVs constitutes a monetary transfer of the benefit amount by the Company to the customer. 16.3 This Tribunal also notes that the objective of the anti-profiteering provisions under Section 171 of the CGST Act, 2017 is to ensure that the benefit of GST rate reduction is passed on to the consumers/customers and that the supplier of goods and services should not make profit from the reduction of the tax rate under GST. The provision does not prescribe any particular mode or manner in which the benefit is required to be passed on. What is essential is that the benefit reaches the ultimate recipient and the supplier does not retain the same. 16.4 The reliance on the "cash in hand" observations from Reckitt Benckiser must be understood in its proper context. The Delhi High Court in that case held that Section 171 relates "only to the indirect-tax component of the price of goods and services and does not impinge upon the freedom of suppliers to fix their own prices keeping in view relevant commercial and economic factors". The statutory objective is to prevent unjust enrichm....
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....Offers and cashback" negates the passing of GST benefit. 17.1 The DGAP has contended that the reason reflected in the screenshots was stated as "Offers and cash back," which bore no nexus with the GST rate reduction. The Respondent has submitted that this is merely the nomenclature that is used and is automatically picked by the system when any amount is credited in the EGV e-wallet. 17.2 This Tribunal observes that the issuance of EGVs to eligible customers was done on the basis of identified transactions, i.e., the customers who purchased the product during the relevant period were individually identified and the corresponding EGVs were credited to their accounts in the amount equivalent to the benefit of the rate reduction. The credit in the EGV is duly supported by the chain of documents and details, viz. order ID, invoice number, invoice date, price charged, and the excess amount pursuant to GST rate change. 17.3 The DGAP has not disputed that the EGVs are clearly identifiable and traceable to the specific supplies made to customers. In such circumstances, the mere fact that the system-generated reason states "Offers and cashback" cannot be cited as ....
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.... 2,21,056/- to 174 customers in respect of transactions which were either cancelled or in which the goods were returned. Since no supply ultimately took place in respect of such transactions, the DGAP accepted the said Credit Notes and excluded the corresponding amounts from the computation of profiteering. After giving effect to the said adjustment, as per the DGAP clarification dated 12.08.2026 the profiteered amount was determined at Rs. 5,58,891/-. 19.3 The Respondent also issued EGVs amounting to Rs. 5,48,650/- to 488 customers. On reconciliation of the EGVs with the profiteered amount determined by the DGAP, a difference of Rs. 10,241/- was noticed by the bench. 19.4 During the course of hearing, the Bench required the Learned Counsel for the Respondent to furnish an explanation regarding the aforesaid difference. The Learned counsel appearing for the Respondent submitted that the said amount could not be traced to any particular customer or invoice. The Respondent, therefore, expressed its willingness to deposit the said amount in the Central Consumer Welfare Fund as the state wise data of customer is not available. 19.5 We have considered the subm....