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TMI Blog2020 (5) TMI 442X X X X Extracts X X X X X X X X Extracts X X X X ..... as mandate to examine all such cases in which the above benefits are required to be passed on either suo moto or to get them investigated through the DGAP and its power to do so is not restricted to only those cases or products in respect of which complaint has been made. It is also apparent from the provisions of Rule 129 (1) that the DGAP shall investigate and collect necessary evidence in all such cases in which the rate of tax has been reduced or the benefit of ITC has been granted which is required to be passed on to the buyers and submit his Report to this Authority under Rule 129 (6). During the course of the investigation the DGAP had further found that the Respondents had not passed on the benefit of tax reduction in respect of other products also which were being supplied by them inspite of tax reduction and therefore, he was legally bound to investigate and bring this infringement of Section 171 to the notice of this Authority. The Respondents cannot be allowed to deny benefit of tax reduction to their customers on the ground of jurisdiction and misappropriate the amount of benefit of tax reduction which they are not required to pay from their own pockets. Accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2019, notified vide Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017, on the products which were being supplied by them to the consumers in contravention of the provisions of Section 171 (1) of the CGST Act. 2017 and have thus resorted to profiteering. Hence, they have committed an offence under Section 171 (3A) of the Central Goods Services Tax Act. 2017 and therefore, they are apparently liable for imposition of penalty under the provisions of the above Section - Accordingly, Show Cause Notices be issued to them directing them to explain why the penalty prescribed under Section 171 (3A) of the Act read with Rule 133 (3) (d) of the Central Goods Services Tax Rules, 2017 should not be imposed on them. As per the provisions of Rule 133 (1) of the CGST Rules, 2017 this order was to be passed on or before 24.03.2020 as the investigation Report was received from the DGAP on 25.09.2019. However, due to the COVID-19 pandemic prevailing in the Country the order could not be passed on or before the above date. Hence, the same is being passed today in terms of the Notification No. 35/2020-Central Tax dated 03.04.2020 issued by the Government of India, Ministry of Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He had also sought extension of the time limit to complete the investigation from this Authority under Rule 126 (6), which was granted to him. 4. The DGAP has stated in his above Report that M/s Raymond Ltd., had replied to the above Notice vide his letters dated 26.04.2019. 03 05 2019, 15.05.2019 and 17.05.2019 and submitted that the impugned goods were manufactured by the Respondent No. 1, an associate Company of M/s Raymond Ltd., which was also supplying them to the other marketing companies which further supplied them to the distributors. The distributors were supplying the above goods to retailers/mega stores such as M/s Big Bazaar, Inderlok which in turn were supplying these goods to the ultimate consumers and in the instant case as well M/s Big Bazaar being a mega store, ought to have received the goods from a distributor. He had also submitted that he was not distributor of the above goods and that he had not supplied the same to M/s Big Bazaar or any other retailer/mega store. Thus, he had claimed that the allegation that the complained goods were supplied by him to M/s Big Bazaar, Inderlok was not correct. M/s Raymond Ltd. had further submitted that the impugned Noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicable GST on the subject goods with effect from 15 11.2017. Vide the said letter he had advised them to pass on the excess input tax credit benefit to the consumers via MRP reduction as per the directive of the GST Council and also vide another letter dated 15.11.2017, he had informed them that as far as the subject goods lying in the stock as on 15.11.2017 were concerned i.e. the inventory in respect of which he was unable to modify the MRPs affixed on such goods, the reduction in the total MRPs/ selling prices would be passed on by giving an additional primary discount of 7.81% on the face of the invoices. (c) That the Hon ble High Court of Delhi in the case of M/s Reckitt Benckiser India (P) Ltd. v. Union of India in WP(C) 7743/2019 = 2019 (7) TMI 1135 - DELHI HIGH COURT , vide its order had directed that the inquiry as far as the complained product was concerned would continue till the final disposal of the petition and no inquiry would be held in respect of the other products being sold by the petitioner. Thus, he requested to conduct detailed investigation only in respect of the complained product i.e. Park Avenue Good Morning 50 ml After Shave Lotion. (d) T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e price. However, after introduction of GST, these products attracted GST at the rate of 28% but he had not increased the MRPs as the goods were already manufactured and the MRPs were already affixed on the packages/containers. He had no option but to bear the temporary additional loss in case of such products. Before he could affect increase in the MRPs on these products, the applicable GST rate was reduced to 18% w.e.f. 15.11.2017. In view of the new GST rate of 18% which was slightly higher than the tax incidence taken in to account at the time of determination of the MRPs, he had not changed the MRPs and in such cases. evidently, he had to bear the additional loss even when the GST rate was 18%. Thus, in these cases, there could not be any question of profiteering. v. At the time of launching of his products, he had offered an extra 25% net weight in content as free so as to attract more customers. The said initial offer was later withdrawn. Post withdrawal of such offer. the net weight of the product was increased and his sale price per unit of weight of the product was reduced. Thus even in these cases there was no profiteering. vi. Some of the supplies made within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le copies of invoices issued to the dealers, pre and post 15.11.2017. 7. The DGAP has further mentioned that the Respondent No. 2 has submitted the following documents:- a. Copies of GSTR-1 GSTR-3B Returns for the period from October, 2017 to March, 2019. b. Details of invoice wise impacted outward taxable supplies during the period from July, 2017 to March, 2019. c. Sample copies of invoices issued to his customers, pre and post 15.11.2017 8. The DGAP has also intimated that the Central Government, on the recommendation of the GST Council, had reduced the GST rate on the goods supplied by the Respondents from 28% to 18% w.e.f. 15.11.2017, vide Notification No.41/2017-Central Tax (Rate) dated 14.11.2017. 9. The DGAP has also stated that M/s Raymond Ltd. had submitted that the impugned goods were manufactured and supplied by the Respondent No. 1 and thus, participation of Respondent No. 1 in the said transactions was undeniable. The Respondent No. 1 s claim that he had asked his distributors to pass on the benefit of rate reduction vide letter dated 15.11,2017, by giving an additional primary discount of 7.81% on the face of the invoices could be taken as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en 7.81% represented discount on account of GST rate change and the excess towards other factors. The DGAP has also quoted Section 15 (1) of the Central Goods and Services Tax Act, 2017 which reads as under:- The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply, He has also claimed that Section 15 (3) (a) of the above Act provided that the value of the supply shall not include any discount which was given before or at the time of the supply if such discount had been duly recorded in the invoice issued in respect of such supply and thus, the DGAP has stated that the GST was chargeable on the actual transaction value after excluding any discount (conditional as well as unconditional and therefore, actual transaction value had been considered for computation of profiteering. He has further claimed that the reason cited by the Respondent No. 1 that there was no increase in the MRPs at the time of implementation of GST as the goods were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 71 of the Central Goods and Services Tax Act, 2017 did not provide any scope for adjustment of increase in the cost against the benefit of reduced tax rate. The DGAP has also added that the increase in the cost of inputs/input services might be a factor for determination of prices but this factor was independent of the output GST rate. It could not be argued that elements of cost were affected by the downward revision of the output GST rate. Therefore, the contention of the Respondent No. 1 that the various factors including quantity, time gap, additional cost such as on logistics, market factors and transactional peculiarities etc. should also be considered in the increase of base prices could not be accepted. The DGAP has also averred that a particular item i.e. PA Asl Good Morning Splash 50 ml, MRP 115/- per unit After Shave Lotion having item code NPAASG050008 , sold through a particular channel i.e. the General Trade (G T), during the period from 01.11.2017 to 14.11.2017 (pre-GST rate reduction) was taken and an average base price (after discount) was obtained after dividing the total taxable value by the total quantity of this item sold during the period. The average base ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 72.48/- 15. From the above Table, the DGAP has concluded that it was clear that the Respondent No. 1 did not reduce the selling price commensurately of the PA Asl Good Morning Splash 50ml (MRP 115/-) (NPAASG050008) product, when the GST rate was reduced from 28% to 18% w.e.f. 15.11.2017, vide Notification No. 41/2017 Central Tax (Rate) dated 14.11.2017 and hence he had profiteered an amount of ₹ 72.48/- on a particular invoice and thus the benefit of reduction in the GST rate was not passed on to the recipients by way of commensurate reduction in the price, in terms of Section 171 of the Central Goods and Services Tax Act, 2017. On the basis of above calculation as illustrated in the Table given above, profiteering in case of all the impacted goods of the Respondent No. 1 has been computed by the DGAP in the similar manner. However, he has claimed that the average base prices for other channels would be different from the channel which has been shown in Table above and accordingly, profiteering has been calculated channel-wise. 16. The DGAP has also stated that from the invoices made available by the Respondent No. 1, it appeared that he had increas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Arunachal Pradesh 12 34,078 - 34,078 4. Assam 18 24,31,584 5,41,810 29,73,394 5. Bihar 10 30,19,659 6,47,652 36,67,311 6. Chandigarh 4 3,05,386 19,166 3,24,552 7. Chhattisgarh 22 19,11,865 3,50,075 22,61,939 8. Dadra and Nagar Haveli 26 11,657 - 11,657 9. Daman and Diu 25 - 38,376 38,376 10. Delhi 7 68,66,663 43 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26. Puducherry 34 2,89,577 4,49,656 7,39,233 27. Punjab 3 13,83,199 10,95,085 24,78,285 28. Rajasthan 8 33,14,776 16,04,101 49,18,877 29. Sikkim 11 17,711 - 17,711 30. Tamil Nadu 33 98,42,417 78,17,703 1,76,60,119 31. Telangana 36 34,05,733 68,94,992 1,03,00,726 32. Tripura 16 2,73,629 43,366 3,16,996 33. Uttar Pradesh 9 68,97,864 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06 52,916 2 Delhi 07 38,04,137 3 Uttar Pradesh 09 7,838 Grand Total 38,64,891 19. After perusal of the DGAP s Report, this Authority in its meeting held or 01.10.2019 had decided to hear the Applicants and the Respondents on 24.10.2019 and accordingly notices were issued to all the interested parties. Notices were also issued to the Respondents on 03.10.2019 asking them to reply why the Report dated 24.09.2019 furnished by the DGAP should not be accepted and their liability for profiteering under Section 171 of the CGST Act, 2017 should not be fixed. On behalf of the Applicants none appeared whereas the Respondent No. 1 was represented by Sh. Alpesh Dalai, Director (Finance), Sh. Nirav Parek (Employee), Sh. V. Lakshmikumaran, Sh. K. Srikanth, Sh. Gokul Kishore and Sh. Darshan Machchhar Advocates and the Respondent No. 2 was represented by Sh. Tushar Mittal, Consultant, Sh. Vineet Bhathi, A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd. v. Union of India 2012 (282) ELT 33) = 2012 (5) TMI 210 - GUJARAT HIGH COURT . On the insistence of the Respondent No. 1 the above objections have been considered by this Authority and vide its Interim Order No. 10/2020 dated 17.02.2020 they have been found to be not tenable. Hence, the above contentions of the Respondent are not being mentioned in the present order. 22. The Respondent No 1 has filed further written submissions on 02.03.2020 and has also given Power Point Presentation. 23. The Respondent No 1 has submitted that the procedure followed by the DGAP during the investigation was not in accordance with Rule 128 and Rule 129 of the CGST Rules, 2017. He has also submitted that the complaint had been filed by the Applicant No. 1 by stating that M/s Raymond Ltd. had supplied Park Avenue After Shave Lotion Good Morning 50 ml , the price/value per unit pre and post GST rate reduction of which was INR 115/-. Accordingly, M/s. Raymond Ltd. had filed his reply inter alia stating that the said product was not supplied him but was sold by his associate company viz. the Respondent No. 1. M/s Raymond Ltd. had also mentioned the various steps which had been take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Post-rate reduction Date Base Price Discount Net base price Date Base price Discount(@7.81% of base price) Net base price 10.08.17 64.90 - 64.90 24.01.18 70.40 5.50 64.90 21.08.17 64.90 64.90 24.10.17 64.90 - 64.90 30.01.18 70.40 5.50 64.90 30.11.17 64.90 - 64.90 13.03.18 70.40 5.50 64.90 14.11.17 64.90 - 64.90 15.03.18 70.40 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after the GST rate reduction from 28% to 18% for most of the products, he had undertaken a massive exercise to determine the prices to be charged in light of the revised rate of tax and reflected the same on the packages by way of reduced MRPs. Further, in respect of the SKUs where it was feasible to increase the grammage instead of reducing the MRPs, the said exercise was carried out. This exercise was carried out in the months of November and December 2017 and the new MRPs / grammage and the prices were given effect from January 2018 onwards. it was also submitted that once the MRPs / grammage was revised/increased by the Respondent No. 1, considering the above factors and also taking into consideration the various other commercial factors affecting the pricing and MRPs of the products, it should be considered as a conscious effort on the part of Respondent No. 1 to pave the way for new prices to be charged for the products sold by the Respondent No. 1. Accordingly, it has been submitted by the Respondent No. 1 that the period of investigation should be restricted to a period up to January 2018 as by this time the effect of new prices I grammage had already come into picture. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... teering. he should have also adopted post rate reduction weighted average prices as comparable and not considered the actual transaction wise prices. In support of the above submissions, the Respondent has cited the order of the Hon ble High Court of Delhi passed in W. P. (C) 1780/2020 in the case of M/s Johnson Johnson Pvt. Ltd. v. Union of India Ors. = 2020 (2) TMI 1184 - DELHI HIGH COURT wherein the order passed by this Authority was challenged. 28. The Respondent No. 1 has also argued that the line items in respect of which 7.81% discount had been offered by him should be removed from the profiteering analysis. He has further argued that this was the first time ever when such a large scale reduction in tax had taken place and there was no precedent in terms of compliance of the Anti-Profiteering provisions and hence, there was complete tack of clarity as to how this reduction was to be passed on. The benefit of reduction in the rate of tax had to be passed on in respect of the goods which were held in stock by the Respondent No. 1 on 14.11.2017 as well as the goods which were to be manufactured by him on or after 15.11.2017. The Respondent No. 1 has also contended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that any reduction in the rate of tax on any supply of goods or services or the benefit of input tax credit had to be passed on to the recipients by way of commensurate reduction in prices and according to the provisions of Section 171 (2) of the CGST Act, this Authority was mandated to investigate through DGAP and determine the quantum of commensurate benefit arising out of reduction in the tax rate which had not been passed on by a supplier. Therefore, allegation of profiteering (if any) could only be to the extend of reduction in the GST rate. In the instant case, there had been a reduction in tax rates by 10% (From 28% to 18% w.e.f. 15.11.2017) which as per the DGAP s computation methodology could be given effect by keeping the pre tax price (base price) constant, which had resulted in a reduction of 7.81% in the cum tax price charged to the customers, therefore, the allegation of profiteering could only be to the extent of 7.81%, which reflected the reduction in the tax rate. Based on the methodology adopted by the DGAP, the Respondent No. 1 was required to maintain the same base prices which were prevalent during the pre rate reduction period and if the business profit was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uted as profiteering in respect of these SKUs should be reduced from the total alleged profiteering. 32. The Respondent No. 1 has also contended that he had launched certain products with 5Q% free quantity as an introductory offer in July 2017. It was planned to stop these promotional offers once the products achieved a certain market penetration. In the meanwhile, the GST rate reduction had taken place which was effective from 15.11.2017 from 28% to 18%. Accordingly, it was decided that he would discontinue with this introductory offer and accordingly, changes, were made by removal of the words introductory offer which were earlier printed on the product bottle itself. Since the product code was not changed. he had decided to continue giving discount @ 7.81% until April 2018, by which time the old stock had exhausted and he had started selling the new stock without introductory offer. He has further submitted that once sale of the products had commenced without introductory offer. the prices of the products charged during the pre-rate reduction period no longer remained as comparable prices as the pre-rate reduction prices were highly discounted. Hence, no profiteering should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the GST rate to the recipients under Section 171 of the CGST Act. He has also contended that the provisions of Section 171 of the CGST Act and the rules made thereunder were clear that such benefit was to be passed on at an entity level and not at the SKU level. While the Report of the DGAP had alleged profiteering at the SKU level, he had ensured passing of benefit using various means, which were submitted before the DGAP and also explained during the present proceedings. 35. The Respondent No. 1 has also alleged that the DGAP had selectively applied the anti-profiteering provisions in the present case as where he had passed on benefit to the customer in excess of the required amount, the DGAP had ignored such amount. On the other hand, the DGAP had insisted that where the benefit to the customers was less than what was required to be passed on, regardless of other measures, the differential amount was being sought to be alleged as the profiteered amount. The Respondent No. 1 has also argued that similar methodology of Zeroing was used by the Anti-dumping Authorities in the European Union (EU). According to the said methodology, while calculating the dumping margins only tho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k it is appropriate that the cost of the excisable product for the purposes of assessment of excise duty under Section 4(1)(b) of the Act read with Rule 6 of the Valuation Rules should be reckoned as it would be reckoned by a man of commerce . We think that such realism must inform the meaning that the Courts give to words of a commercial nature, like cost, which are not defined in the statutes which use them. A man of commerce would, in our view, look at the matter thus: I paid ₹ 100/- to the seller of the raw material as the price thereof. The seller of the raw material had paid ₹ 10/- as the excise duty thereon. Consequent upon purchasing the raw material and by virtue of the Modvat scheme, I have become entitled to the credit of ₹ 10/- with the excise authorities and can utilise this credit when I pay excise duty on my finished product. The real cost of the raw material (exclusive of freight, insurance and the like) to me is, therefore, ₹ 901-. In reckoning the cost of the final product I would include Rs, 90/- on this account. This, in real terms, is the cost of the raw material (exclusive of freight, insurance and the like) and it is this, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and adequacy. The law did not prescribe as to how to determine whether a particular amount was commensurate as the legislature was conscious of the fact that pricing of goods was a complex exercise involving numerous factors. There might be multiple prices for the same supply at different points of time viz. one before the supply and one after the supply when the price was finalized based on the terms of sale like discounts or price reductions based on schemes and turnover etc. To cover such situations, the word prices was used in Section 171. The law also used the word any before supply of goods and the same had been used to denote singular as against the plural for price. Therefore, for the same supply, existence of tentative and final prices had been recognized and consequently, all post-supply price reductions passed on should be factored in while examining whether commensurate reduction in prices had taken place or not. He has also submitted that commensurate reduction was not restricted to passing of the benefit of tax rate reduction in monetary terms which was normally the price. Section 171 did not use the words pass on the benefit by reduction in price . It should be s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stoms 2015 (320) E.L.T. 45 (SC) = 2015 (5) TMI 557 - SUPREME COURT in his support. 40. The Respondent No. 1 has also stated that as a manufacturer he was not under legal obligation to affix stickers notifying change in the MRPs on the goods lying in the distribution chain. He has further stated that at the time of import or manufacture. the importer or manufacturer was under obligation to comply with the various laws. He has also admitted that under the Legal Metrology Act, 2009, there was obligation on him which placed ban that the MRPs could not be altered. While revision of MRPs by affixing stickers was restricted in case of increase in such MRPs, in the case of reduction in MRPs. the law provided a window. The CGST Act and the Rules made thereunder did not deal with affixation of MRPs. Affixation of stickers with revised MRPs and allied compliances were provided under the Legal Metrology Act, 2009 and Legal Metrology (Packaged Commodities) Rules 2011. As per the provisions of the above Act, in respect of reduction in the MRPs, it was permissible to affix stickers with revised lower MRPs and ensure that the revised MRPs did not cover the MRPs declared earlier. The said rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... teering by the Respondent No. 1. The Respondent No. 1 has further submitted that the order required to be passed by this Authority under Section 171 read with Rule 133 would determine rights and liabilities of the registered persons with civil and penal consequences and therefore, the first principle of natural justice viz. audi alteram partem required that the person concerned should be heard. One of the essential elements of hearing was communication of the grounds based on which action was proposed to be taken and a Show Cause Notice served such essential purpose so that opportunity to preliminarily rebut the allegations was provided. He has further submitted that the Report consequent to the investigation conducted by DGAP was neither a Show Cause Notice nor could it be treated as substitute to a Show Cause Notice. However, from the notice received by the Respondent No. 1, it appeared that this Authority has considered the Report of the DGAP as a Show Cause Notice, which was not correct. He has also submitted that in the present case except for providing a copy of the Report of the DGAP, as on date the Respondent No. 1 was not served any notice/communication regarding the iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to the reference from the Standing Committee on Anti-Profiteering, required modification. He has referred to pars 54 and 55 of the above order and argued that the reminder dated 22.02.2019 issued by the Applicant No. 1 through his e-mail to the Standing Committee on Anti-Profiteering could not be treated as a fresh complaint by the above Committee and hence it had no right to re-look or re-examine the complaint made by the above Applicant. The Respondent has also relied on the judgement passed in the case of Aluminium Cables Conductors (U. P.) Pvt. Ltd. v. Collector of Central Excise 1993 (65) ELT 261 (Tribunal) = 1989 (1) TMI 286 - CEGAT, NEW DELHI to support his above claim. He has further argued that even if the reminder was assumed to be the removal of the defect it dated back to the original complaint and hence the fresh examination of the same was barred by limitation. He has also cited the following cases in his support:- (i) Roshan Lal Gupta Sons Pvt. Ltd. v. Union of India 2016 (331) ELT 239 (Guj.) = 2015 (12) TMI 931 - GUJARAT HIGH COURT . (ii) Vidyawati Gupta others v. Bhakti Hari Nayak others (2006) 2 SCC 777 = 2006 (2) TMI 670 - SUPREME CO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority vide its Interim Order No. 10/2020 dated 17.02.2020 and hence, they are not being discussed in the present order. 50. The Respondent No. 2 has also mentioned that he was one of the distributors of the Respondent No. 1, for supply of goods to the Modern Trade category i.e. the mega stores such as M/s Big Bazar and M/s Godfrey Phillips India Ltd. etc. and all the supplies made by him were negotiated and finalized between the manufacturer i.e. the Respondent No. 1 and the Modern Trade Stores such as M/s Big Bazar and he merely acted on the directions of the Respondent No. 1 and had no role to play in the fixation of the prices relating to the supplies of goods to his customers. 51. He has also stated that it was apparent from the impugned Report of the DGAP dated 24.09.2019 that the present complaint was never looked in to by the Delhi State Screening Committee on Anti-Profiteering, as mandated under rule 128 (2) of the CGST Rules, 2017. He has further stated that even examination of the application by the Standing Committee on Anti-Profiteering was not in accordance with Rule 128 (1) of the CGST Rules, 2017 which required it to dispose of the same within a period of 2 m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e supplies made during the period from 15th November, 2017 to 31 March, 2019. He has also contended that the DGAP has erred in facts and in law in adopting this methodology of calculating the profiteered amount in as much as the said methodology had not actually resulted in calculating the excess profits made by a supplier, especially in the context of Respondent No. 2. 54. The Respondent No. 2 has also argued that in the present case, the DGAP had not looked into the following:- Additional taxes collected and deposited with the Government which had been included in the alleged profiteered amount. Increase in the purchase prices post 15th November, 2017. Post sale discounts offered by the Respondent No. 2 after affecting sales (impact of Debit / Credit Notes). 55. He has further argued that the DGAP had included the additional tax collected in the profiteered amount which had been duly deposited with the Government and such additional tax deposited by the Respondent No. 2 could not be attributed as the profiteered amount. The calculation of the amount collected as tax and deposited by the Respondent No. 2 with the Government is reproduced hereunder:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .92 62,964.21 1.92 Dec-2017 1,69,488.72 4.39 1,43,634.51 4.39 Jan-2018 2,99,706.40 7.75 2,53,988.48 775 Feb-2018 2,41,015.06 6.24 2,04,250.05 6.24 Mar-2018 3,14,725.03 8.14 2,66,716.13 8.14 For 17-18 10,99,232.99 28.44 9,31,553.38 28.44 Apr-2018 2,01,580.40 5.22 1,70,830.85 5.22 May-2018 2,74,551.45 7.10 2,32,670.72 7.10 Jun-2018 2,76,109.35 7.14 2,33,990.97 7.14 Jul-2018 2,57,106.32 6.65 2,17,866.71 6.65 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issued to him only till March 31, 2018. Post that, the Respondent No. 2 had not received any discount and was naturally required to sell his products at higher base prices to offset the increase in the purchase prices and consequently, out of the total alleged profiteered amount of ₹ 38,64,891, the alleged profiteering of ₹ 27.65,658 which related to the F. Y. 2018-19 could not be held to be undue profiteering. 58. The Respondent No. 2 has also mentioned that the present Report was bad in law on account of mis-joinder and non-joinder of parties vis-a-vis him in as much as he was a middle man in the supply chain and had no control over the price fixation vis-a-vis the Modern Trade. The prices in case of Modern Trade were negotiated exclusively by the Respondent No. 1 and the Mega Store buyers. He had no role to play in the price fixation and had to follow the dictates of the Respondent No. 1 as he was duty bound to comply with the prices mentioned in the POs issued by the buyers and had no discretion / power to alter or even reduce the prices as were mentioned in the POs. He has further added that his profit margin was almost static and there was no extra profit ear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les, 2017. 61. The DGAP vide his Report dated 23.01.2020 has also replied to the submissions of the Respondent No. 2 dated 08.01.2020 and stated the following:- (a) That he had received the complaint on 27.03.2019 from the Standing Committee along with its minutes of meeting dated 11.03.2019 with a remark that the complaint was being forwarded to the DGAP for investigation. So, his action was totally in consonance with the contents of Rule 128 (1) of the CGST Rules, 2017. (b) That Section 171 of the CGST Act, 2017 and Chapter XV of the CGST Rules, 2017, required the supplier of goods and services to pass on the benefit of tax rate reduction to the recipients by way of commensurate reduction in price and price included both the base price and the tax paid on it. If any supplier has charged more tax from the recipients, the aforesaid statutory provisions would require that such amount be refunded to the eligible recipients or alternatively deposited in the CWF, regardless of the fact whether such extra tax collected from the recipients has been deposited in the Government account or not. Any extra tax returned to the recipients by the supplier by issuing credit notes coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Respondent No. 2 has admitted that he is a distributor of the Respondent No. 1 and is selling the above products. The Respondent No. 1 has also accepted that the Respondent No. 2 was his distributor. It is further revealed that the both the Respondents are registered under the CGST and the SGST Acts, 2017 respectively. 63. It is also clear from the record that the rate of GST was reduced from 28% to 18% w.e.f. 15.11.2017, vide Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017 on the products which were being supplied by the Respondents, the benefit of which was required to be passed on by them to their customers as per the provisions of Section 171 of the GST laws applicable to them. 64. It is also apparent from the record that an application dated 30.07.2018 was filed before the Standing Committee on Anti- profiteering, under Rule 128 (1) of the CGST Rules, 2017, by the Applicant No. 1 alleging profiteering by M/s Raymond Ltd. in respect of the supply of After shave Lotion Park Avenue Good Morning 56 ml to M/s Big Bazar, Inder Lok. The Applicant No. 1 had alleged that M/s Raymond Ltd. had not reduced the selling price of the above product when the GST rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or after 15.11.2017, through the above channel and accordingly, the DGAP has reported that the Respondent No. 1 has profiteered an amount of ₹ 6.04 on the above item. On the basis of above methodology profiteering in respect of all the impacted goods of both the above Respondents for the period from 15.11.2017 to 31.03.2019 has been calculated in the similar way for each channel of sale or the customer separately by the DGAP. The methodology adopted by the DGAP for computation of profiteered amount by comparing the average base prices of the products in respect of which the rate of GST was reduced from 28% to 18% w.e.f. 15.11.2017 with the actual post rate reduction base prices of these products appears to be correct, reasonable, justifiable and in consonance with the provisions of Section 171 of the CGST Act, 2017 as it was not possible to compare the actual base prices prevalent during the pre and the post GST period due to the reasons that the Respondents No. 1 was (i) selling his products at different rates to different customers in the same channel based on the various factors such as demand and supply, market outreach of the distributor, yearly volume of sales, length ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 18,48,43,084/- channel/customer wise, including the GST, the details which have been mentioned in Annexure-32 of the Report dated 24.09.2019 submitted by the DGAP. The above amount also includes an amount of ₹ 8,97,253/- including the GST which the Respondent No. 1 has profiteered from the Respondent No. 2, as has been detailed in Annexure-33. The State wise profiteered amount has been mentioned in Table-B of the Report. The profiteered amount has been calculated as ₹ 38,64,891/ - including the GST in respect of the Respondent No. 2, the State wise break up of which has been given in Table-C of the Report dated 24.09.2019, furnished by the DGAP. 66. The Respondent No. 1 has stated in his submissions that the procedure followed by the DGAP during the investigation was not in accordance with Rule 128 and 129 of the CGST Rules, 2017 as the complaint had been filed against M/s Raymond Ltd. and hence, the DGAP had no jurisdiction to expand the investigation and carry out the same against him. In this regard it would be appropriate to refer to the provisions of Section 171 (1) and (2) of the CGST Act, 2017 which provide as under:- (1). Any reduction in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of India (Allocation of Business) 34Th Amendment Rules, 2018 has assigned the following duties to the DGAP:- a) Conduct of investigation to collect evidence necessary to determine whether the benefit of reduction in the rate of tax on any supply of goods or services or the benefit of input tax credit has been passed on to the recipient by way of commensurate reduction in prices, in terms of Section 171 of the Central Goods and Services Tax Act, 2017 and the rules made thereunder. b) Responsibility for coordinating anti-profiteering work with the National Anti-profiteering Authority, the Standing Committee and the State level Screening Committees. 69. Therefore, it is also apparent from the above OM that the DGAP is responsible for investigating and collecting evidence necessary to determine whether both the above benefits have been passed on. No restrictions have been imposed either under the CGST Act, 2017 or Rule 129 of the CGST Rules, 2017, which stipulate that the DGAP shall investigate only those products or services in respect of which complaints have been received and he would not launch investigation in the cases in which violation of provisions of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r shave Lotion , it would have found that he had kept the base price same prior to and after the reduction in the rate of tax by offering discount of 7.81% on account of reduction in the rate of GST. On the basis of the invoices, the Respondent No. 1 has submitted the following information:- Pre-rate reduction Post-rate reduction Date Base Price Discount Net base price Date Base price Discount(@7.81% of base price) Net base price 10.08.17 64.90 - 64.90 24.01.18 70.40 5.50 64.90 21.08.17 64.90 64.90 24.10.17 64.90 - 64.90 30.01.18 70.40 5.50 64.90 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 - NATIONAL ANTI-PROFITEERING AUTHORITY . However, since there was prima facie accurate and adequate evidence available before the Standing Committee on Anti-Profiteering in terms of Rule 128 (1), as has been held vide Interim Order dated 17.02.2020, the above cases are not being followed. 73. The Respondent No. 1 has also contended that the period of 16 months and 16 days adopted by the DGAP for investigation, from 15.11.2017 to 31.03.2019, was arbitrary. In this regard it would be relevant to mention that the rate of tax on the products being supplied by the above Respondent was reduced w.e.f. 15.11.2017 and therefore, he was legally required to pass on the benefit of tax reduction from the above date as per the provisions of Section 171 (1) of the above Act. During the course of the investigation it has been found that the Respondent No. 1 instead of reducing his prices commensurately had infact increased them from the above date. Therefore, as per the provisions of Section 171 (1) he is liable to be investigated till the time he passes on the benefit of tax reduction as he cannot misappropriate the above benefit. The Respondent No. 1 has failed to produce any evidence whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch products. Copies of the advertisements or other means used to inform the consumers that the benefit of tax reduction was being passed by increase in the quantity. Evidence showing that the excess price charged from the customers w.e.f. 15.11.2017 till the date of increase in the quantity or the profiteered amount was deposited in the CWFs. Therefore. it is evident that the above claim of the Respondent is without any basis and the hence. the same cannot be relied upon. 76. The Respondent has further claimed that in the cases of M/s Sharma Trading Company = 2018 (9) TMI 625 - THE NATIONAL ANTI-PROFITEERING AUTHORITY , M/s Hardcastle Restaurants = 2018 (11) TMI 1073 - NATIONAL ANTI-PROFITEERING AUTHORITY , M/s Unicharm India Pvt. Ltd. = 2019 (7) TMI 36 - NATIONAL ANTI-PROFITEERING AUTHORITY , M/s Excel Rasayan Pvt. Ltd. = 2019 (1) TMI 807 - NATIONAL ANTI-PROFITEERING AUTHORITY and M/s Harish Bakers Confectionaries = 2018 (12) TMI 473 - NATIONAL ANTI-PROFITEERING AUTHORITY the period of investigation was restricted to 3 months by the DGAP which should also have been done in his case. In this respect it would be pertinent to note that the complaints ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reach of the distributor, yearly volume of sales, length of relationship and market aging etc.. therefore, it is apparent that he was charging different prices on account of dozens of variables from different customers. Therefore, it is impossible to take in to account the actual base prices for comparison and hence, the only alternative available is to compute the average base prices which has been done in the present case after considering a very short period of 14 days. It would also be pertinent to mention that as per the provisions of Section 171 (1) each customer is entitled to receive the benefit of tax reduction on each purchase and hence the amount of benefit has to be accordingly computed. In case the comparison is made after calculation of the average base price after the rate reduction, the benefit of tax reduction would not be passed on to those customers who have purchased a particular product below the average base price but above the commensurate base price. Therefore, comparison of average base prices pre and post rate reduction would be hit by the provisions of Section 171 as well as Article 14 of the Constitution and therefore, the above claim of the Respondent i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tead of 10%. It is also clear from perusal of para 25 of the Report dated 24.09.2019 furnished by the DGAP that the discount of 7.81% offered by the Respondent did not satisfy the conditions imposed vide Section 15 (3) of the CGST Act. 2017 as it did not form part of the taxable supply. Therefore, the products on which the above discount has been illegally and arbitrarily given by the Respondent cannot be excluded from computation of the profiteered amount. The Respondent has also placed reliance on the case of M/s Lipton India Ltd. v. State of Tamilnadu 1973 (32) STC 194 (Mad.) = 1973 (1) TMI 85 - MADRAS HIGH COURT in his support, however, the same is not relevant in the facts of the present case. 79. The Respondent No. 1 has also averred that the profiteering should not be computed in respect of the line items in respect of which credit notes were issued by him. However, the Respondent has not supplied details of the credit notes which he has claimed to have issued due to return of the goods supplied by him or due to corrections made in the invoices. Hence, the above contention of the Respondent cannot be admitted. 80. The Respondent No. 1 has also pleaded that in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnection it would be appropriate to note that the rate of tax was 28% w.e.f. 01.07.2017 on the products which were being manufactured by the above Respondent in the Excise Duty free areas which was reduced to 18% w.e.f. 15.11.2017 and hence, there was reduction of 10% in the rate of tax benefit of which was required to be passed on by the Respondent. Therefore, the above plea of the Respondent is not maintainable. Accordingly, an amount of ₹ 2.36 Crore computed as profiteering in respect of the SKUs manufactured in the above areas cannot be reduced from the profiteering. 82. The Respondent No. 1 has also contended that he had launched certain products with 50% free quantity as an introductory offer in July, 2017 which was withdrawn w.e.f. 15.11.2017. However. he had decided to continue giving discount @ 7.81% until April 2018, by which time the old stock had exhausted and he had started selling the new stock without introductory offer. He has also contended that once sale of the products had commenced without introductory offer, the prices of the products charged during the pre-rate reduction period no longer remained as comparable prices as the pre-rate reduction prices w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Respondent is hollow and hence, it cannot be accepted. 85. The Respondent No. 1 has also alleged that the DGAP had used methodology of Zeroing which was used by the Anti-dumping Authorities in the European Union (EU) to compute profiteering which was incorrect. In this regard, the Respondent No. 1 has referred to the Report No. WT/DSl41/AB/R dated 01.03.2001 of the Appellate Body of the WTO regarding Anti-Dumping Duties on imports of Cotton-Type Bed Linen from India vide which it was held that the methodology of Zeroing could not be applied and both the negative and positive margins were to be considered while applying the anti-dumping provisions. The above contention of the Respondent is not correct as no netting off can be applied in the cases of profiteering as the benefit has to be passed on to each customer which has to be computed on each SKU. Netting off implies that the amount of benefit not passed on certain SKUs will be subtracted from the amount of benefit passed on other SKUs and the resultant amount shall be determined as the profiteered amount. If this methodology is applied the Respondent would be entitled to subtract the amount of benefit which he has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit to another customer. Hence, the above case does not assist the cause of the Respondent. 87. The Respondent has also submitted that the alleged profiteered amount has been incorrectly inflated in the Report by adding GST which was not sustainable. In this connection it would be appropriate to mention that the Respondent has not only collected excess base prices from his customers which they were not required to pay due to the reduction in the rate of tax but he has also compelled them to pay additional GST on these excess base prices which they should not have paid. The Respondent has thus defeated the objective of both the Central and the State Governments to provide the benefit of rate reduction to the ordinary customers by sacrificing their tax revenue. The Respondent was legally not required to collect the excess GST and therefore, he has not only violated the provisions of the CGST Act, 2017 but has also acted in contravention of the provisions of Section 171 (1) of the above Act as he has denied the benefit of tax reduction to the ordinary buyers by charging excess GST. Had he not charged the excess GST the customers would have paid less price while purchasing good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther argued that the word commensurate reduction in Section 171 (1) denoted reduction in the price after taking into account all the factors which impacted pricing of goods. In this connection it would be relevant to mention that had the Respondent not increased his base prices w.e.f. 15.11.2017 and applied 18% GST post rate reduction it would have automatically resulted in commensurate reduction in the prices. No elaborate and complex exercise was involved in doing so as the Respondent is trying to make out. The intent of the above Section is to pass on the benefit of tax reduction which has no connection with fixing of the prices of the products as both are independent of each other. One product may have different prices at different levels but it cannot have different prices at the same level. However the benefit of tax reduction has to be passed on at every level so that it ultimately reaches the ordinary customer. Since, the benefit of tax reduction has not been passed on by the above Respondent there is no question of its being passed down the supply chain. As already discussed above the benefit has to be passed on by way of reduction in prices and hence, it cannot be passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to the amount of benefit which has been denied to the recipients by a registered person by not reducing the prices of his products commensurately on which the rate of tax has been reduced. Hence, the definitions quoted by the Respondent from various dictionaries are not applicable. Similarly, his contention that the above term refers to excessive, exorbitant and unjustifiable profits arising due to supply of essential goods is also not correct. 92. The Respondent No. 1 has also submitted that the amount held as profiteered, should be refunded to his recipients (distributors) and should not be deposited in the CWFs as they were identifiable. In this connection it would be appropriate to refer to the intention of passing on the benefit of tax reduction. It has been explained several times by the Hon ble Union Finance Minister as well as the GST Council which is a constitutional body constituted under 101st Amendment of the Constitution and has the Finance and Taxation Ministers of all the States as its members that the benefits of tax reduction and ITC should be passed on to the general consumers / buyers who bear the burden of tax and who are unorganized, voiceless and vulnerab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Consumer Affairs, Food and Public Distribution, Govt. of India, dated: 16.11.201 under Rule 6 (3) which states as under:- WM-10(31)/2017 Government of India Ministry of Consumer Affairs, Food and Public Distribution Department of Consumer Affairs Legal Metrology Division Krishi Bhawan, New Delhi Dated: 16.11.2017 To, The Controller of Legal Metrology, All States/ UTS Subject: Labelling of MRP of pre-packaged commodities due to reduction in GST-reg. Reference is invited to this office letter No. WM-10(31)/2017 dated 29.9.2017 regarding declaration of MRP on unsold stock of pre-packaged commodities manufactured/packed/ Imported prior to 1st July, 2017. Subsequent to that, Government has reduced the rates of GST on certain specified items. Consequent upon that, permission is hereby granted under sub-rule (3) of rule 6 of the Legal Metrology (Packaged Commodities) Rules, 2011, to affix an additional sticker or stamping or online printing for declaring the reduced MRP on the pre-packaged commodity. In this case also, the earlier Labelling/ Sticker of MRP will continue to be visible. (Emphasis supplied) 1. Further, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice to every buyer and in case they are not passed on, the quantum of denial of these benefit or the profiteered amount has to be computed for which investigation has to be conducted in respect of all such SKUs/units/services by the DGAP. What would be the profiteered amount has been clearly mentioned in the Sub-Section and the explanation attached to Section 171 which have been quoted above. These benefits can also not be passed on at the entity/organisation/branch level as they have to be passed on to each and every buyer at each SKU/unit/service level by treating them equally. The above provision also mentions any supply which connotes each taxable supply made to each recipient thereby making it evident that a supplier cannot claim that he has passed on more benefit to one customer on a particular product therefore he would pass less benefit or no benefit to another customer than what is actually due to that customer, on another product. Each customer is entitled to receive the benefit of tax reduction or ITC on each SKU or unit or service purchased by him subject to his eligibility. The term commensurate mentioned in the above Sub-Section provides the extent of benefit to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been empowered to determine Methodology Procedure and not to prescribe it. Similarly, the facts of the cases relating to the sectors of FMCGs, restaurant service, construction service and cinema service are completely different from each other and therefore, the mathematical methodology adopted in the case of one sector cannot be applied in the other sector. Moreover, both the above benefits have been given by the Central as well as the State Governments as a special concession out of their tax revenue in the public interest and hence the suppliers are not required to pay even a single penny from their own pocket and therefore, they are bound to pass on the above benefits as per the provisions of Section 171 (1) which are abundantly clear, unambiguous, mandatory and legally enforceable. The above provisions also reflect that the true intent behind the above provision, made by the Central and the State legislatures in their respective GST Acts is to pass on the above benefits to the common buyers who bear the burden of tax. The Respondent is trying to deliberately mislead by claiming that he was required to carry out highly complex and exhaustive mathematical computations for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esent his case and therefore, the allegations of violation of the principles of natural justice and non service of notice are frivolous and not tenable. 96. The Respondent has also claimed that a show cause notice formed the base of the principle of audi alteram partem as was settled in the cases of Canara Bank and others v. Debasis Das and Others (2003) 4 SCC 557 = 2003 (3) TMI 664 - SUPREME COURT , Uma Nath Pandey and Others v. State of UP (2009) 12 SCC 40 = 2009 (3) TMI 526 - SUPREME COURT , Collector of Central Excise v. ITC Ltd. 1994 (71) ELT 324 = 1994 (2) TMI 62 - SUPREME COURT , Vasta Bio-Tech Pvt. Ltd. v. Assistant Commr. 2018 (360) ELT 234 = 2018 (1) TMI 1437 - MADRAS HIGH COURT , Dharampal Satyapal Ltd. v. Dy. Commissioner of Central Excise 2015 (320) ELT 3 = 2015 (5) TMI 500 - SUPREME COURT , Anrak Aluminium Ltd. v. Commissioner 2017 (4) G.S.T.L. 248 = 2017 (5) TMI 1200 - CESTAT HYDERABAD and Union of India v. Hanil Era Textiles Ltd. 2017 (349) ELT 384 (SC) = 2013 (10) TMI 1467 - SUPREME COURT . In this connection it is mentioned that a notice was duly served on the Respondent and he was also given full opportunity to defend himself before this Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is provision under the Competition Act, 2002. Therefore, no special privilege has been conferred on this Authority. The provisions of Rule 127 outline the duties assigned to this Authority in the absence of which the objective of this Authority cannot be defined. Similarly Rule 133 prescribes the method to determine the benefit of tax reduction and ITC and the reliefs which this Authority can grant to a recipient who has been denied these benefits. Both these Rules are similar to the Rules which govern the duties and powers of other such Authorities and hence they do not confer any special jurisdiction to this Authority. All the above Rules have been framed under Section 164 of the CGST Act, 2017 which has approval of the Parliament. They have further been notified by the Central Government on the recommendation of the GST Council which is a body established under 101st Amendment of the Constitution and has representation of all the States, Union Territories and the Central Government. Hence. the above Rules have been framed after thorough scrutiny and consultation at several levels and hence to claim that the above Rules amount to excessive delegation would be completely incorrect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dure determined by this Authority under Rule 126 of the CGST Rules, 2017 and notified by it on 28.03.2018 only arithmetical, clerical and factual errors can be modified by it. The above Respondent has not brought any such error to the notice of this Authority in its order dated 17.02.2020 and hence. no modification is required in the above order. Therefore, the cases cited by the above Respondent in his support are not been relied upon. 101. The Respondent No. 1 has also claimed that the POs mentioned in the complaint pertained to the Respondent No. 2 and had the invoices issued by him to the Respondent No. 2 in respect of the complained product been examined by the Standing Committee on Anti-Profiteering it would have realized that he had passed on the benefit of tax reduction by giving discount of 7.81% and had maintained the pre rate reduction base prices. He has also claimed to have enclosed copies of invoices as Annexure-9 with Volume 3 of his written submissions dated 02.03.2020. Perusal of Volume 3 shows that no Annexure-9 has been attached with it. However, perusal of page 159 of the above Volume shows that the Respondent No. 1 has issued a tax invoice on 24.01.2018 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he products no discount has been shown in the tax invoices. Therefore, the above contentions of the above Respondent are not correct. 102. The Respondent No. 2 vide his submissions dated 08.01.2020 has stated that the constitution of the Standing Committee as well as of the Screening Committees on Anti-Profiteering as per Rule 123 of the CGST Rules, 2017 was illegal and without the authority of law as the CGST Act. 2017 nowhere envisaged constitution of these Committees. He has also stated that the constitution of the office of DGAP (earlier Director General of Safeguards) was purportedly done under Rule 129 of the CGST Rules, 2017, however, the said rule was ultra vires of the CGST Act, 2017 as it nowhere envisaged constitution of any such body and therefore, the investigation carried out by the DGAP was illegal. The Respondent No. 2 has also cited the law settled in the cases of Addl. District Magistrate (Rev.) Delhi Admin. v. Siri Ram (2000) 5 SCC 451 = 2000 (5) TMI 1069 - SUPREME COURT and State of Tamil Nadu Anr. v. P. Krishnamurthy Ors. (2006) SCC 517 = 2006 (3) TMI 741 - SUPREME COURT in his support. On the insistence of the Respondent No. 2 both the above con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are being recorded on them in this order. 105. The Respondent No. 2 has also pleaded that the DGAP had calculated the alleged profiteered amount by comparing the pre rate reduction base prices with the actual sale prices of the supplies made during the period from 15th November, 2017 to 315 March, 2019 which was incorrect. He has further pleaded that the DGAP had not looked into the following issues:- Additional taxes collected and deposited with the Government which had been included in the alleged profiteered amount. Increase in the purchase prices post 15th November, 2017 Post sale discounts offered by the Respondent No. 2 after affecting sales (impact of Debit / Credit Notes). In this connection it would be appropriate to mention that the issue of collection of GST and its deposit in the Government account has been discussed in detail above and hence, the same is not being discussed here. The Respondent No 2 has also stated that the Respondent No.1 had increased the prices of his products w.e.f. 15.11.2017 and therefore, he was forced to increase his own prices and hence, he was not liable for profiteering. In this connection it is mentioned that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in the supply chain and had no control over the price fixation. The above claim of the Respondent runs contrary to the provisions of Section 171 (1) as he is responsible for passing on the benefit of tax reduction and hence the same cannot be accepted. 110. The above Respondent has also argued that his profit margin was almost static and there was no extra profit earned by him on account of reduction in the rate of tax. However, passing on the benefit of tax reduction has no connection with the profit margin earned by the Respondent No. 2 as the same is required to be passed on due to the concession granted by the Central and the State Governments out of their own tax revenue and nothing is required to be paid out of his own account. Therefore, the above argument of the Respondent is not tenable. 111 The Respondent No. 2 has also stated that no profiteering could be attributed to him, since the Respondent No 1 had committed profiteering by selling the products at a higher price, hence further selling of the said products at a higher price could not be recomputed in the hands of the Respondent No. 2 which would result in double computing of the profiteered amount. In this co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Andaman Nicobar Islands 35 2,89,408 - 2,89,408 2. Andhra Pradesh (New) 37 28,81,350 22,75,744 51,57,094 3. Arunachal Pradesh 12 34,078 - 34,078 4. Assam 18 24,31,584 5,41,810 29,73,394 5. Bihar 10 30,19,659 6,47,652 36,67,311 6. Chandigarh 4 3,05,386 19,166 3,24,552 7. Chhattisgarh 22 19,11,865 3,50,075 22,61,939 8. Dadra and Nagar Haveli 26 11,657 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24. Nagaland 13 57,540 - 57,540 25. Odisha 21 30,59,079 8,01,378 38,60,457 26. Puducherry 34 2,89,577 4,49,656 7,39,233 27. Punjab 3 13,83,199 10,95,085 24,78,285 28. Rajasthan 8 33,14,776 16,04,101 49,18,877 29. Sikkim 11 17,711 - 17,711 30. Tamil Nadu 33 98,42,417 78,17,703 1,76,60,119 31. Telangana 36 34,05,733 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per the provisions of Rule 133 (3) (a) of the CGST Rules. 2017. keeping in view the reduction in the rate of tax so that the benefit of tax reduction is passed on to the recipients. The Respondents are also directed to deposit the profiteered amounts mentioned above along with the interest to be calculated @ 18% from the date when the above amounts were collected by them from the recipients till the above amounts are deposited, in terms of the Rule 133 (3) (b) of the CGST Rules, 2017. Since, the recipients in this case are not identifiable, the above Respondents are directed to deposit the above amounts of profiteering along with interest in the CWFs 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 along with interest @ 18% till the same are deposited as per the details mentioned in Annexures-32 and 34. 117. The above amounts shall further be deposited within a period of 3 months by the Respondents, from the date of receipt of this order. failing which the same shall be recovered by the concerned Commissioners of the Central and the State GST, as per the provisions of the CGST/SGST Acts, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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