Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (3) TMI 648 - NAPA - GSTProfiteering - restaurant service - Allegation is that the benefit of reduction in the GST rate not passed on by way of commensurate reduction in prices - contravention of Section 171 of the CGST Act 2017 - penalty - HELD THAT - It is observed from the record that Respondent No. 1 is providing restaurant services as a franchisee of Respondent No. 2 and is supplying various food products to the customers. It is also revealed from the plain reading of Section 171 (1) of the CGST Act 2017 that it deals with two situations one relating to the passing on the benefit of reduction in the rate of tax and the second about the passing on the benefit of the ITC. On the issue of reduction in the tax rate it is apparent from the record that there has been a reduction in the rate of tax from 18% to 5% w.e.f. 15.11.2017 on the restaurant service being supplied by Respondent No. 1 vide Notification No. 46/2017-Centra Tax (Rate) dated 14.11.2017 without the benefit of ITC. Therefore Respondent No. 1 is liable to pass on the benefit of tax reduction to his customers in terms of Section 171 (1) of the above Act. It is also apparent that the DGAP has carried out the present investigation w.e.f. 15.11.2017 to 31.03.2019. It is apparent that Respondent No. 1 has resorted to profiteering as the commensurate benefit of reduction in the rate of tax from 18% to 5% has not been passed on by him. However there was no profiteering in respect of the remaining 09 items on which there was either no increase in the base prices or the increase in base prices was less or equal to the denial of ITC or these were new products launched post-GST rate reduction. The profiteered amount is determined as 78, 41, 754/- as has been computed in Annexure-17 of the DGAP Report dated 28.08.2019. Accordingly we direct the Respondent No. 1 to reduce his prices commensurately in terms of Rule 133 (3) (a) of the above Rules. Further since the recipients of the benefit as determined above are not identifiable Respondent No. I is directed to deposit an amount of 78, 41, 754/- in two equal parts of 39, 20, 877/- each in the Central Consumer Welfare Fund and the Maharashtra State Consumer Welfare Fund as per the provisions of Section 171 read with Rule 133 (3) (c) of the CGST Rules 2017 along with interest payable @ 18% to be calculated from the dates on which the above amount was realized by the Respondent No. 1 from his recipients till the date of its deposit. The above amount of 78, 41, 754/- shall be deposited as specified above within a period of 3 months from the date of passing of this order failing which it shall be recovered by the concerned CGST/SGST Commissioner. Penalty - HELD THAT - Respondent No. 1 has denied the benefit of tax reduction to the customers in contravention of the provisions of Section 171 (1) of the CGST Act 2017 and he has thus committed an offence under Section 171 (3A) of the above Act and therefore he is liable for imposition of penalty under the provisions of the above Section. However since the provisions of Section 171 (3A) have come into force w.e.f. 01.01.2020 whereas the period during which violation has occurred is w.e.f. 01.07.2017 to 31.03.2019 hence the penalty prescribed under the above Section cannot be imposed on Respondent No. 1 retrospectively - Accordingly Show Cause Notice directing him to explain why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules 2017 should not be imposed on him is not required to be issued.
|