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2022 (5) TMI 782 - NAPA - GSTProfiteering - Reduction in rate of GST on Paint from 28% to 18% - comparing the average pre-rate reduction base price of the products which were impacted by the tax rate reduction w.e.f 27.7.2018 with the actual post rate reduction base prices of the impacted products - violation of the provisions of Section 171 of the CGST Act, 2017 or not - quantum of profiteering - HELD THAT - On random verification of the calculation compiled by DGAP in pursuant to the direction contained in its order dated 27.06.2020, The Authority finds that the calculation carried out by DGAP is correct. As stated, the Respondent was provided with adequate opportunity to provide relevant documents and records and also to extend necessary assistance to DGAP in the matter, but, they chose to remain inactive and did not extend necessary assistance. The Respondent has not raised any objection to quantification of profiteered amount of Rs. 4.19,069/- calculated in the DGAP Report dated 27.10.2020, a copy of which was provided to them - there are no reason to differ from the Report of the DGAP and we therefore agree with the findings of the DGAP that the provisions of Section 171 of the CGST Act 2017 have been contravened in this case and the Authority determine the profiteered amount at Rs. 4,19,069/- under the provision of Rule 133 (1) of the CGST Rules. The profiteered amount is determined as Rs 4,19,069/- as has been computed in Annexure-8 of the DGAP's Report dated 27.10.2020. Accordingly, the Respondent is directed to reduce his prices commensurately in terms of Rule 133 (3) (a) of the CGST Rules, 2017. Further, since the recipients of the benefit, as determined, are not identifiable, the Respondent is directed to deposit an amount of Rs. 4,19,069/- in two equal parts of Rs. 2,09,534.50/- each in the Central Consumer Welfare Fund and the Karnataka Consumer Welfare Fund as per the provisions of Rule 133 (3) (c) of the CGST Rules 2017, along with interest payable @ 18% to be calculated from the dates on which the amount was realized by the Respondent from his recipients till the date of its deposit in the said fund. The above amount of Rs. 4,19,069/- shall be deposited, as specified above, within a period of 3 months from the date of receipt of this order failing which it shall be recovered by the jurisdictional CGST/SGST Commissioners. Penalty - HELD THAT - It is evident from the narration of facts that Respondent 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. 27.07.2018 to 30.09.2018, hence the penalty prescribed under the Section cannot be imposed on Respondent 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. Application disposed off.
Issues Involved:
1. Violation of Section 171 of the CGST Act, 2017. 2. Quantum of profiteering. Issue-wise Detailed Analysis: 1. Violation of Section 171 of the CGST Act, 2017: The National Anti-Profiteering Authority (NAA) examined whether the Respondent violated Section 171 of the CGST Act, 2017, which mandates that any reduction in the rate of tax on any supply of goods or services must be passed on to the recipient by way of commensurate reduction in prices. The NAA found that the Respondent did not pass on the benefit of the reduction in GST rate from 28% to 18% on paints, effective from 27.07.2018, to the customers. Instead, the Respondent increased the base prices of the paints, thereby nullifying the effect of the tax reduction. This was established through the Directorate General of Anti-Profiteering's (DGAP) investigation, which concluded that the Respondent had realized an additional amount of Rs. 3,76,360/- from the recipients during the period from 27.07.2018 to 30.09.2018. 2. Quantum of Profiteering: The DGAP was directed to reinvestigate the matter using a different methodology, comparing the average pre-rate reduction base prices with the actual post-rate reduction base prices of the impacted products. Despite the Respondent's lack of cooperation and failure to provide necessary documents, the DGAP proceeded with the available data and determined the revised amount of profiteering to be Rs. 4,19,069/-. This amount was calculated by comparing the average base prices (after discount) of the goods sold during the period 01.06.2018 to 26.07.2018 with the actual invoice-wise base prices (after discount) of such goods sold during the period 27.07.2018 to 30.09.2018. Order and Compliance: The NAA directed the Respondent to reduce his prices commensurately and deposit the profiteered amount of Rs. 4,19,069/- in two equal parts in the Central Consumer Welfare Fund and the Karnataka Consumer Welfare Fund, along with interest payable at 18% from the dates the amount was realized till the date of deposit. The Respondent was given three months to comply with this order, failing which the amount would be recovered by the jurisdictional CGST/SGST Commissioners. Penalty: The NAA noted that the Respondent had committed an offense under Section 171 (3A) of the CGST Act, 2017, by denying the benefit of tax reduction to the customers. However, since the provisions of Section 171 (3A) came into force on 01.01.2020, and the violation occurred between 27.07.2018 and 30.09.2018, the penalty under this section could not be imposed retrospectively. Conclusion: The NAA concluded that the Respondent had contravened the provisions of Section 171 of the CGST Act, 2017, and determined the profiteered amount to be Rs. 4,19,069/-. The Respondent was directed to deposit this amount in the specified consumer welfare funds and reduce his prices commensurately. The jurisdictional CGST/SGST Commissioner was directed to ensure compliance with this order. The delay in passing the order was attributed to the COVID-19 pandemic, and the NAA referenced the Hon'ble Supreme Court's order to justify the extended timeline for issuing the judgment.
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