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TMI Blog2019 (1) TMI 807X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.2017. In the present case, the Respondent has admittedly accepted the fact that there was no reduction in the prices post 15.11.2017 on any of the products sold by him. Therefore, the Authority holds that the Respondent has violated the provisions of section 171 in as much as the prices have remained the same inspite of reduction in the tax rate. His plea that the base prices were drastically lowered when GST came in effect cannot absolve him from not passing on the benefit. Penalty u/r 133(3)(d) of the CGST Rules, 2017 - Held that:- The Respondent has indulged in profiteering in violation of the provisions of Section 171 of the CGST Act, 2017 and has not passed on the benefit of reduction of tax as per the Notification 41/2017-Central Tax(Rate) dated 14.11.2017 in respect of the above products to his customers and therefore, he is liable for penalty under Rule 133(3)(d) of the CGST Rules, 2017. Penalty u/s 122 (1) (i) of the Act - Held that:- As it is clear from the facts of the present case that the Respondent was fully aware of the Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017 whereby the rate of GST was reduced from 28% to 18% and he was also fully a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iff Act, 1944 and that he had been availing SSI exemption and charging VAT @ 12.5 % on the base prices. He had further submitted that on introduction of the GST, 28% tax was levied and since this disturbed his pricing pattern he had reduced the base prices. He had also stated that w.e.f. 15.11 .2017, when the CST rate on his products in question was reduced from 28% to 18%, though the base prices were increased, they were much less than the base prices in the Pre-GST era. 3. The DGAP's report submitted that the Respondent had also filed details of invoice-wise outward taxable supplies (other than zero rated) and State-wise details for all the products from 01.11.2017 to 31.03.2018 along with copies of GSTR-1, GSTR-3B, Audited Balance Sheet and the Sample invoices. The DGAP after examining the facts of the case and the record available has reported that on scrutiny of the outward sales data of the Respondent covering the period w.e.f. 01.11.2017 to 14.11.2017, it was noticed that the base prices of Fortune ADW Detergent 1 Kg. and Fortune Rinse Aid 500 ml. were ₹ 171.80 and ₹ 117.18 respectively, prior to 15.11.2017. Taking this base price into account the cum-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to July, 28% from July to November and 18% from 15th November onwards, however during this entire period, the prices to the consumers had remained the same and accordingly, the consumers had paid lower prices even though the rate of tax was enhanced. He has also quoted the Hon'ble Finance Minister stating that the GST rate of 28% was tax neutral and only pertained to those units which were paying 12% Central Excise Duty and VAT @ 12.5%. However, this rate did not apply to him as he was availing exemption under the SSI notification. The above submissions of the Respondent were forwarded to the DGAP for reply who vide his submission dated 22.10.2018 stated that the Respondent has reiterated the earlier submissions and nothing more was to be added by the DGAP. Final price to the consumers, as per the submissions made by the Respondent, is as per the table given below:- Final rice to the Consumers Year Month/Qtr. ADW Rinse Aid ADW Rinse Aid VAT 12.5% GST @ 28% GST @ 18% 2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15.11.2017 220 150 186.44 127.12 0 0 0 0 33.56 22.88 December 220 150 186 44 127.12 0 0 0 0 33.56 22.88 2018 January 220 150 186.44 127.12 0 0 0 0 33.56 22.88 February 220 150 186.44 127.12 0 0 0 0 33.56 22.88 March 220 150 186.44 127.12 0 0 0 0 33.56 22.8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 127.12 after rate reduction in November 2017, the base price had remained less than ₹ 133.40 which was prevalent prior to the introduction of GST. Thus the Respondent has claimed that the consumer had effectively paid the same price or less price which was prevalent in pre GST era. However, this argument of the Respondent does not hold good as not to increase the MRPs when tax rates were increased on account of implementation of the GST, was the business call taken by him and therefore he cannot claim any concession on this ground. The benefits arising due to the GST rate reduction cannot be denied to the consumers just because in the earlier scenario MRPs were not changed to extend some extra benefit to the consumers. It has also been found that the base price of both the above products has been increased irrespective of the fact that there was GST rate reduction from 28% to 18%, which is reflected in the table given below:- Product Base price post rate reduction per unit Actual selling price Base price Pre rate reduction per unit Commensurate price per unit Profitee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prices have remained the same inspite of reduction in the tax rate. His plea that the base prices were drastically lowered when GST came in effect cannot absolve him from not passing on the benefit. 9. Accordingly, the Respondent is directed to reduce the sale price of the above products immediately, commensurate to the reduction in the rate of tax, as was notified on 14.11.2017 so as to pass on the benefit of reduction in the rate of the tax to his customers as per Rule 133(3)(a) of the CGST Rules, 2017. The Respondent is also directed to deposit the profiteered amount of ₹ 4,64,849.74 into the Consumer Welfare Fund as per the provisions of Rule 133 (3) (c) in the ratio of 50:50 in the Central and the State Consumer Welfare Funds, along with interest at the rate of 18% to be calculated from the date of collection of the higher amount till the date of deposit into the Consumer Welfare Fund. Out of the entire profiteered amount of ₹ 4,64,849.74, an amount of ₹ 2,32,424.87 will be deposited into the Central Consumer Welfare Fund and the balance amount shall be deposited into the State Consumer Welfare Fund as per the Table-I given below. The Authority, as per Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24. Rajasthan 3434.85 25. Sikkim 75.55 26 Tamil Nadu 22009.61 27. Telangana 16388.405 28. Tripura 2912.635 29. Uttar Pradesh 11290.365 30. Uttarakhand 1601.4 31 West Bengal 8467.565 32. Dadar Nagar Haveli 28.37 Grand Total 232424 .87 10. It is clear from the narration of the facts stated above that the Respondent has indulged in profiteering in violation of the provisions of Section 171 of the CGST Act, 2017 and has not passed on the benefit of reduction of tax as per the Notification 41/2017-Central Tax(Rate) dated 14.11.2017 in respect of the above products to his customers and therefore, he is liable for penalty under Rule 133(3)(d) of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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