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TMI Blog2020 (6) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... ogg Deo Fougere BX 150 ml" which was supplied to M/s. Big Bazaar, Inderlok on 09.11.2017 under Purchase Order (PO) No. 81149976814 with MRP of Rs. 299/- and on 19.12.2017 under PO No. 8115259654 with the same MRP of Rs. 299/- 2. The DGAP had issued Notice under Rule 129 (3) of the CGST Rules, 2017 on 10.04.2019 to M/s. Vini Cosmetics Pvt. Ltd., to submit his reply as to whether he admitted that the benefit of reduction in the GST rate w.e.f. 15.11.2017, had not been passed on by him to his recipients by way of commensurate reduction in price and if so, to suo moto determine the quantum thereof and indicate the same in his reply to the Notice as well as furnish all the documents in support of his reply. He was also afforded an opportunity to inspect the non-confidential evidence [information which formed the basis of the said Notice, during the period from 15.04.2019 to 17.04.2019 which M/s. Vini Cosmetics Pvt. Ltd. did not avail. 3. The DGAP has mentioned that M/s. Vini Cosmetics Pvt. Ltd. vide email dated 06.05.2019 referred to the PO's mentioned in the Application and submitted that he had not supplied the above good directly to M/s. Big Bazaar, Inderlok. The DGAP then asked M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. b) That as per Section 2 (93) of the CGST Act, 2017, the person who was liable to pay consideration was a recipient. M/s. Vini Cosmetics Pvt. Ltd. had not supplied the goods to M/s. Big bazaar and therefore the question of passing on of benefit of rate reduction to M/S Big bazaar being recipient did not arise. Moreover, the PO was a document which was being issued by the purchaser of the goods (M/S Big Bazaar in this case) and not by the supplier of goods and therefore there was no corroborative evidence that the supply of goods was made at the same MRP during pre and post rate change period. c) That, in line with the provisions of Section 171 of the CGST Act, 2017, he had passed on the benefit of rate reduction on the impugned product, 'Fogg Deo Fougere BX 150 ml" by reducing the base price of the product and that the same could be verified from the price list issued by him for the supply of 'Fogg Deo Fougere BX 150 ml" from different super stockist in pre and post rate change regimes. d) Over and above the reduction of even base price during the post rate change, he had simultaneously reduced the MRPs of all the impacted products. In case of the impugned product i.e. Fog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BX 150 ml" supplied by M/s. Vini Cosmetics Pvt. Ltd. and the Respondent was reduced w.e.f. 15.11.2017 and if so, whether M/s. Vini Cosmetics Pvt. Ltd. and the Respondent had passed on the benefit of such reduction in GST rate to their recipients, in terms of Section 171 of the Central Goods and Services Tax Act, 2017. The DGAP has also observed that the Central Government, on the recommendation of the GST Council, had reduced the GST rate on the product "Fogg Deo Fougere BX 150ml" from 28% to 18% w.e.f. 15.11.2017, vide Notification No. 41/2017 - Central Tax (Rate) dated 14.11.2017, was a matter of fact which had not been contested by M/s. Vini Cosmetics Pvt. Ltd. and the Respondent. 10. The DGAP has also stated that M/s. Vini Cosmetics Pvt. Ltd. had submitted that the impugned good was being supplied only to the super stockists who were further selling the product only to the Modern Trade (Malls like M/S Big Bazaar) through distributors. The pricing of such products varied from party to party which meant that the same product was being sold at different price to the different parties. However, the price for specific product for a specific party was fixed. The DGAP has further sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15.11.2017, in support of which M/s. Vini Cosmetics Pvt. Ltd. had furnished the copy of the invoice of the vendor who had supplied the new/revised MRP stickers to him. The purpose of these new MRP stickers was that they had to be affixed by the super stockists/distributors etc. on the impacted products. The DGAP has further stated that since these goods had already been supplied by M/s. Vini Cosmetics Pvt. Ltd. to his super stockists, over whom M/s. Vini Cosmetics Pvt. Ltd. did not have any control. The DGAP further stated that the question of whether all the super-stockists had further passed on the benefit to the end users/final consumers was outside the scope of the present investigation and thus had not been examined. 13. In respect of the Respondent, the DGAP has reported that perusal of the outward sales data made available by the Respondent indicated that the Respondent had increased the base prices of the impugned product "Fogg Deo Fougere BX 150 ml" while the rate of GST was reduced from 28% to 18% w.e.f. 15.11.2017, for some time. The Respondent contended that he had to supply the goods based on the PO issued by the buyers, and MRPs for the products as well as purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 75.19/- Post-rate reduction base selling price during (B) 190.04/-(00003169 dated 16.11.2017) Commensurate Price (C=A x 1.18) 206.73/- Post-rate reduction selling price (Invoice No. and Date) (D=B x 1.18) 224.25/- (00003169 dated 16.11.2017) Profiteering (E=D-C) 17.52/- 16. The DGAP has thus concluded that the amount of net higher sales realization on account of the increase in the base price of the product, despite the reduction in the GST rate from 28% to 18%, came to Rs. 8,50,442/- inclusive of the excess GST so collected by the Respondent from Recipient. 17. After perusal of the DGAP's Report, this Authority in its meeting held on 25.09.2019 decided to hear the Applicants and the Respondent on 22.10.2019 and accordingly notice was issued to all the interested parties. A Notice was also issued to the Respondent on 26.09.2019 asking him to reply why the Report dated 24.09.2019 furnished by the DGAP should not be accepted and why his liability for profiteering under Section 171 of the CGST Act, 2017 should not be fixed. On the request of the Respondent, the hearing was adjourned to 11.11.2019. None appeared for the Applicants whereas the Respondent was represented by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tics Pvt. Ltd. had indeed commensurately reduced the MRPs of the products supplied by him consequent upon the tax rate reduction w.e.f. 15.11.2017. But the Respondent as is evident from his invoices provided by the DGAP had not passed on the benefit of rate reduction to his recipients and this fact has also been accepted by the Respondent. 22. Based on the above facts the profiteered amount is determined as Rs. 8,50,442/- (inclusive of the GST) as per the provisions of Rule 133 (1) of the above Rules as has been computed vide Annexure-25 of the Report dated 24.09.2019. Accordingly, the Respondent is directed to reduce his prices commensurately in terms of Rule 133 (3) (a) of the above Rules. The Respondent is also directed to deposit an amount of Rs. 8,50,442/- in the Consumer Welfare Fund of the Central and the Delhi State Governments, where the Respondent has made his supplies, as the recipients are not identifiable, as per the provisions of Rule 133 (3) (c ) of the above Rules alongwith 18% interest payable from the dates from which the above amount was realised by the Respondent from his recipients till the date of its deposit. The above amount shall be deposited within a peri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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