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TMI Blog2020 (3) TMI 406X X X X Extracts X X X X X X X X Extracts X X X X ..... eposit the profiteered amount of ₹ 30,153/- along with the interest to be calculated @ 18% from the date when the above amount was collected by him from the recipients till the above amount is deposited in terms of Rule 133 (3) (b) of the CGST Rules, 2017 - Since, rest of the recipients in this case are not identifiable, the above Respondent is directed to deposit the amount of profiteering of ₹ 30,153/- along with interest in the Consumer Welfare Fund of the Central and the concerned State Governments as per the provisions of Rule 133 (3) (c) of the CGST Rules, 2017 in the ratio of 50:50 in the Central and State CWFs along with interest @ 18% till the same is deposited. Penalty - HELD THAT:- The Respondent has denied the benefit of rate reduction of the GST to the consumers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has thus resorted to profiteering. Hence, he has committed an offence under Section 171 (3A) of the CGST Act, 2017 and therefore, he is apparently liable to penalty under the provisions of the above Section - Accordingly, a Show Cause Notice be issued to him directing him to explain why the penalty prescribed under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his reply to the Notice as well as furnish all documents in support of his reply. The DGAP also offered an opportunity to the Respondent to inspect the non-confidential evidence/information submitted by the Applicant No.1 on any date from 25.03.2019 to 27.03.2019. However, the said opportunity was not availed by the Respondent. The DGAP also offered an opportunity to Applicant No. 1 to inspect the non-confidential documents/reply furnished by the Respondent on either 1.07.2019 or 2.07.2019, which he did not avail of. 4. Meanwhile, the DGAP sought extension of time for completing the investigation, which was granted by this Authority in terms of Rule 129 (6) of the CGST Rules, 2017 vide its order dated 21,05.2019. The period of the investigation undertaken by the DGAP was from 27.07.2018 to 28.02.2019. 5. The Respondent replied to the Notice issued by the DGAP, vide his letters/e-mails dated 18.03.2019 and 20.05.2019, vide which he stated that the reduction in the GST rate was to be given effect on 27.07.2018, but he was not aware of Notification No. 18/2018-Central Tax (Rate) dated 26.07.2018. He further submitted that he started passing on the benefit of the reduction in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter of fact which had also not been contested by the Respondent. 10. The DGAP further stated that the Section 171(1) of the Act CGST Act reads as any reduction in rate of tax on any supply of goods or services or the benefit of ITC shall be passed on to the recipient by way of commensurate reduction in prices. Thus, the legal requirement was abundantly clear that in the event of benefit of ITC or reduction in the rate of tax, there must be a commensurate reduction in the prices of the goods or services. Such reduction in price could only be in terms of money, so that the final price payable by a recipient got reduced commensurate with the reduction in the tax rate or benefit of ITC. This was the only legally prescribed mechanism to pass on such benefit under the GST regime and that there was no other method which a supplier could adopt to pass on the benefits to his customers/recipients. 11. The DGAP also observed that from the outward sales data made available by the Respondent, it appeared that the Respondent had increased the base prices of the goods when the rate of GST was reduced from 28% to 18% w.e.f. 27.07.2018 and hence the commensurate benefit of GST rate reduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent. However, the DGAP vide his Report dated 04-09-2019 was totally silent about the submissions filed by the Respondent. There was also no mention of the reply/submissions or the documents submitted by the Respondent vide the aforesaid letter dated 02-06-2019. He further stated that he had not contravened any of the provisions of CGST Act, 2017 or Rules made thereunder and that he had deposited the amount of GST with the Government which was collected from the Applicant No. 1. The Respondent further submitted that his previous submissions might be taken on record and his personal presence may be dispensed with. The Respondent also enclosed his previous written submissions dated 02.06.2019 made before the DGAP. 16. The Respondent also filed written submissions on 26.09.2019 vide email vide which he agreed with the DGAP s Report and also requested to pass the order as per the Report of the DGAP. 17. Clarification was also sought from the DGAP on the Respondent s above mentioned submissions. The DGAP, vide his supplementary Report dated 10.10.2019, stated that the Respondent s submissions dated 24.09.2019 had been prepared by the Advocate on behalf of the Respondent wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad not been passed on as required in line with the provisions of Section 171 of the CGST Act, 2017. 19. The Respondent filed his next written submissions dated 14.10.2019 vide which he stated that his submissions dated 26.09.2019 may be considered wherein he agreed with the DGAP s Report dated 04.09.2019. He further submitted that he has nothing more to say in the matter and the case may be decided on merits. The Respondent vide his written submissions dated 14.11.2019 also requested not to grant him any more hearing and the case may be decided on the basis of his previous submissions. 20. We have carefully considered all the Reports filed by the DGAP, submissions of the Respondent and other material placed on record and it is revealed that the Central Govt. vide Notification No. 18/2018-Central Tax (Rate) dated 26.07.2018 had reduced the rate of GST for the product from 28% to 18% with effect from 27.07.2018 and the benefit of the same was required to be passed on to the recipients by the Respondent as per the provisions of Section 171 of the CGST Act, 2017. 21. The Respondent has raised objection that his submissions dated 02.06.2019 were not take into consideration by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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