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TMI Blog2019 (1) TMI 1419X X X X Extracts X X X X X X X X Extracts X X X X ..... reduction in respect of the 109 products supplied by him during the period between 15.11.2017 to 31.05.2018 and hence, it is established beyond doubt that the Respondent had resorted to profiteering of 6,06,752.72/-, as has been elaborated in Annexure-Il of the DGAP’s Report. The Respondent has not raised any objection against the calculation of the profiteered amount by the DGAP and hence this Authority determines the above amount as the profiteered amount. It has also been found that all the supplies were made by the Respondent in the NCT of Delhi. Imposition of penalty - Held that:- It is clear from the facts of the present case that the Respondent was fully aware of the provisions of Section 171 of the COST Act, 2017 as well as the Notification dated 14.11.2017 whereby he was bound to pass on the benefit arising due to reduction in the rate of tax to his customers. However, the Respondent has deliberately acted in defiance of the above law and hence he is guilty of the conduct which is contumacious and violative of the provisions of the above Section - appellant has committed offence under Section 122 (1) (i) of the CGST Act, 2017. Therefore, notice be issued asking him to expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The DGAP has mentioned in his Report that the Respondent vide his reply dated 15.06.2018 had stated that he was getting commission on the purchases he made from the manufacturer and was also getting a discount of approx. 33% when the rate of tax was 28%, which was reduced to approx. 22% when the rate of tax had come down to 18%. He has also stated that the Respondent was charging a fixed commission of 5% on the basis of the purchases made by him. The Respondent had also submitted copies of the purchase and the sale invoices for the pre-rate reduction and post-rate reduction periods to the DGAP. 7. The Respondent vide his letter dated 04.07.2018 addressed to the DGAP had also submitted the copies of the GSTR- 1 Returns for the months of December, 2017 and March, 2018 to May, 2018 and GSTR- 3B Returns for the months of November, 2017 to May, 2018. The Respondent vide his e-mails dated 15.07.2018, 31.07.2018 and 30.09.2018 had also submitted the sales register for the months of November, 2017 to May, 2018, price lists applicable as on 31.10.2017 and 15.11.2017, the details of invoice-wise outward taxable supplies (other than zero rated, nil rated and exempted) and the price list appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucts comprising of 65 HSN codes, out of which 154 products constituting 24 HSN codes were affected by the reduction in the rate of tax from 28% to 18% w.e.f. 15.11.2017. The DGAP has also contended that out of the above 154 products, 48 products were not supplied during the period between 01.11.2017 to 14.11.2017 and they included 13 new products which were introduced for sale after 15.11.2017. He has further contended that for the remaining 35 products, the pre 15.11.2017 reference prices for calculating the profiteered amount were taken from the price list which was effective before 15.11.2017 and was submitted by the Respondent vide his email dated 30.09.2018 and these prices were found to be lower than the post 15.11.2017 base prices. The DGAP has also submitted that out of the remaining 106 (154-48) items the base prices of 74 products were increased and the base prices of 32 products were reduced post 15.11.2017. He has also maintained that out of the total 154 products affected by the reduction in the GST rate, the base prices of 109 (74+35) products were increased post 15.1 1.2017 and in respect of 32 products, the base prices were reduced post 15.11.2017 whereas 13 product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as again sold at the MRP of ₹ 62.22. Therefore, it is clear that the Respondent had increased the base price by ₹ 4.13 per unit and maintained the same base price which he was charging before the reduction in the rate of tax. Therefore, it is established that the Respondent had denied benefit of reduction in the rate of tax to his customers by increasing the base price exactly by the amount by which the tax was reduced and therefore, he had resorted to profiterring in violation of the provisions of Section 171 of the CGST Act, 2017. The Respondent had further compelled the recipients to pay additional GST on the increased price @ 18% and had he not increased the base price and charged additional GST his customers would have got benefit of further reduction in the MRP. Therefore, the additional amount of tax collected also amounts to profiteering made by the Respondent. 16. It is also revealed from the perusal of Annexure-Il prepared by the DGAP after examining the details of the outward taxable supplies of all the products supplied by the Respondent that the base prices of most of the products sold by him were increased after the tax was reduced from 28% to 18% w.e.f. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt the provisions of Section 171 of the above Act being the supplier of the goods. He has not produced any evidence to show that he was not aware of the Notification dated 14.11.2017 vide which the rate of tax was reduced from 28% to 18% or he had made any correspondence with the manufacturer to reimburse him the amount of benefit which he was required to be passed on to his customers. The best course for him would have been to pass on the benefit as per the provisions of Section 171 of the above Act and then to claim compensation from the manufacturer. The Respondent can not be absolved of his legal obligation on the plea that he had no control on the fixing of the MPRs. 18. The Respondent has also claimed that he had only charged commission @ 5% on the sales made by him which he was charging before and after coming in to force of the GST and hence he had not profiteered. However, it is clear from the narration of the facts mentioned above that the Respondent had increased the base prices of 109 products which were being supplied by him after the rate of GST was reduced w.e.f. 15.11.2017 and forced his customers to pay more prices than what they should have paid and thus he had d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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