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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 ..... g No. 1429 dated 12.11.2017 and 427 dated 29.11.2017 for supply of 'Beauty Cream 50 GM', a product manufactured by M/S Patanjali Ayurveda Ltd. were sent to the DGAP for further action. 2. This reference was sent by the DGAP to the Standing Committee on Anti-profiteering on 12.03.2018 under Rule 128 of the CGST Rules, 2017 for examination, which in it's meeting held on 13.04.2018 had decided to forward this case to the DGAP for investigation. 3. The DGAP after completing the investigation for the period between 15.1 1.2017 to 31 05.2018 has submitted his Report under Rule 129 (6) of CGST Rules, 2017 on 16.10.2018 to this Authority. 4. The DGAP has stated in his Report that the notice under Rule 129 of the CGST Rules, 2017 was issued to the Respondent on 31.05.2018, calling upon him to intimate whether he admitted that the benefit of reduction in the rate of tax had not been passed on to the recipients by way of commensurate reduction in prices and to also suo moto determine the quantum of benefit not passed on and mention the same in his reply. The Respondent was also provided opportunity by the DGAP to inspect the non-confidential record, however, he didn't avail of this opportu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.11.2017:- Sr. No. Invoice No. and date Description of products Discounted Base Price (in Rs.) Rate of GST Price charged (inclusive of GST) in Rs. 1 1429 12.11.2017 Beauty Cream 50 GM 48.60 28% 62.21 2 427 29.11.2017 Beauty Cream 50 GM 52.73 18% 62.22 11. The DGAP has also mentioned that the Respondent was registered vide GSTIN 07ACFPY9833NIZM as a supplier and therefore he was legally bound to pass on the benefit of reduction in the GST rate to his customers which he had not done as was apparent from the invoices dated 12.11.2017 and 29.11.2017. He has further mentioned that the perusal of these invoices showed that the base price of the above product was increased by the Respondent after the rate of tax was reduced from 28% to 18% w.e.f. 15.11.2017, by maintaining the pre-GST rate reduction cum-tax price, as was evident from the price lists submitted by the Respondent which revealed that the base price of 'Beauty Cream 50 GM' was Rs. 48.60 per unit before 15.1 1.2017 which was raised to Rs. 52.73 per unit, during the period between 15.11.2017 to 31.05.2018 after coming in to force of the GST. 12. The DGAP has also alleged that the base prices of most of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l over the Maximum Retail Prices (MRPs) as the same were fixed by the manufacture viz. M/s. Patanjali Ayurveda Ltd. and he was bound to charge the same as per the instructions of the manufacturer. He has also stated that he was charging margin of 5% on the sales made by him which he had not increased after the rate of tax was reduced and hence he had not profiteered. He has further stated that he was not aware whether basic prices had been increased by M/S Patanjali Ayurveda Ltd. after the reduction in the GST rate or during the regular course of business. 15. We have carefully considered the material placed before us as well as the claims made by both the parties and it has been revealed that the Central Government on the recommendation of the GST Council had reduced the rate of GST on a number of FMCGs including the Beauty Cream 50 GM' w.e.f. 15.11.2017 vide Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017. It is also revealed from the perusal of the invoice No. 1429 dated 12.1 1.2017 that the discounted base price of 'Beauty Cream 50 GM' was Rs. 48.60 per unit when the rate of tax was 28% and it was being sold at the MRP of Rs. 62.21 per unit. It is further revealed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rate of tax, the base prices of 109 (74+35) items were increased w.e.f. 15.11.2017; in respect of 32 products, the base prices were reduced after 15.11.2017; whereas 13 products were newly introduced after 15.11.2017. Therefore, it is quite clear that the Respondent had not passed on the benefit of tax 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 Rs. 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. 17. The only argument advanced by the Respondent is that the MRPs were fixed by the manufacturer viz. M/s. Patanjali Ayurveda Ltd. which he was bound to charge and he could not reduce the same on his own. However, this plea of the Respondent is not tenable as he was bound to reduce the MRPs of the products which were sold by him p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be recovered by the concerned Commissioner CGST and SGST as per the provisions of the CGST/SGST Acts under the supervision of the DGAP. The above amount shall be deposited within a period of 3 months by the Respondent from the date of receipt of this order. 20. We have also carefully considered the issue of imposition of penalty on the Respondent as the allegation of profiteering has been duly established against him. 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. He has further acted in conscious disregard of the obligation which was imposed upon him by the law, by issuing incorrect invoices in which the base prices were deliberately increased by the amount by which the rate of tax was reduced and thus he had denied the benefit of reduction in the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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