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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 ..... detergents sold by him, so that there was no reduction in the prices to the recipients. In support of his allegation, the Applicant No. 1 submitted copies of two sale invoices of Fortune ADW Detergent 1 Kg. and Fortune Rinse Aid 500 ml. bearing No. 6413 dated 07.09.2017 and No. 17497 dated 26.12.2017 respectively, issued by the Respondent. After examining the application, the Standing Committee on Anti-Profiteering, as per the minutes of it's meeting dated 28.2.2018, forwarded the same to the DGAP for detailed investigation under Rule 129 (1) of the CGST Rules, 2017. 2. The DGAP, on receipt of the application, issued notice to the Respondent seeking his reply as to whether the benefit of reduction of GST rate has been passed on to the consumers or not? The Respondent had replied vide his letters dated 1 1.04.2018 and 19.05.2018 that prior to coming into force of the GST, he was a SSI unit, manufacturing synthetic detergents falling under Chapter 34 of the erstwhile Central Excise Tariff 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... behalf of the Respondent, no one appeared on behalf of the Applicant No. 1, and Ms. Gayatri, Deputy Commissioner appeared on behalf of the DGAP. 5. The Respondent in his written submissions dated 10.10.2018 submitted that he was a SSI unit manufacturing detergents and was availing benefit of SSI units granted under the Central Excise Act, 1944 and therefore, he was selling his products after charging VAT @ 12.5% on the base prices. He has also submitted that w.e.f. the introduction of the GST from 1st July 2017 his products were levied GST @ 28% which had caused confusion and disturbed his pricing pattern. He has further submitted that though in the Pre GST era of VAT, which was levied @ 12.5% the rate of tax was increased to 28% in the GST era, but he had not increased the base prices and absorbed the increased burden of taxes from 12.5% to 28% himself. He has also claimed that in the same financial year 2017-18 he had three rates of tax viz. 12.5% prior 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 vide Notification No. 41/2017- Central Tax (Rate) dated 14.1 1 .2017 and has also not disputed the calculation made by the DGAP based on his outward sales data. The DGAP vide Annexure-II of his report has quantified profiteered amount as Rs. 4,64,849/- in which he has taken the actual selling price of Fortune ADW Detergent 1 Kg. i.e. Rs. 220/- and worked out the base price and the commensurate cum-tax price. The base price of the above product before rate reduction on 14.11.2017 was Rs. 171.80 and the Post-GST rate reduction it was Rs. 186.44 which has not been disputed as can be seen from the written submissions filed by the Respondent on 10.10.2018. Similarly in the case of Fortune Rinse AID 500 ml. the selling price was Rs. 150/- while the base price before rate reduction was Rs. 117.18, the base price Post-GST rate reduction was Rs. 127.12 which has also not been disputed by the Respondent. The only claim made by the Respondent is that from April 2016 to June 2017 though his selling price was constant at Rs. 220/- for Fortune ADW Detergent 1Kg., the base price of the product has varied from Rs. 195.50 (April to December 2016) to Rs. 171.87 (July to November 2017) and then Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s profiteered an amount of Rs. 4,64,849.74 for the period w.e.f. 15.11.2017 to 31.03.2018. However as far as the Applicant No. 1 is concerned he has bought both the above products @ Rs. 186.99 (Fortune ADW Detergent 1 Kg.) and at Rs. 127.49 (Fortune Rinse AID 500 ml.) which are lower than the commensurate cum tax prices. Therefore there is no profiteering in respect of the products purchased by him. 8. From the above discussions, it is clear that the Respondent has admittedly not passed on the benefit of tax reduction since the base prices of the above two products were increased to maintain the same selling prices which were existing before the reduction in the rate of tax. The Respondent, who is a registered manufacturer, is liable to pass on the benefit to the recipients irrespective of the fact whether the base prices are still lower as compared to the pre-GST price or not. Moreover, from the documents submitted to the DGAP by the Respondent it is also established that the base prices of the two products in question were increased to maintain the same selling prices (inclusive of GST), although there was a reduction in the GST rate from 28% to 18% w.e.f. 15.11.2017. In the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 67.74 17. Maharasthra 50796.785 18 Manipur 46.1 19. Meghalaya 138.02 20. Madhya Pradesh 1989.225 21 Odisha 653.49 22. Puducherry 538.235 23. Punjab 4397.285 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 the CGST Rules, 2017, the relevant provisions of which state as under:- "133. x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-xx-x-x-x-x-x-x-x-x-x-x-x-x-x-x-xx-x (3) Where the Authority determines that a registered person has not passed on the benefit of the reduction in the rate of tax on the supply of goods or services or the benefit of input tax cre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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