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TMI Blog2022 (5) TMI 782X X X X Extracts X X X X X X X X Extracts X X X X ..... rt dated 27.10.2020, a copy of which was provided to them - there are no reason to differ from the Report of the DGAP and we therefore agree with the findings of the DGAP that the provisions of Section 171 of the CGST Act 2017 have been contravened in this case and the Authority determine the profiteered amount at Rs. 4,19,069/- under the provision of Rule 133 (1) of the CGST Rules. The profiteered amount is determined as Rs 4,19,069/- as has been computed in Annexure-8 of the DGAP's Report dated 27.10.2020. Accordingly, the Respondent is directed to reduce his prices commensurately in terms of Rule 133 (3) (a) of the CGST Rules, 2017. Further, since the recipients of the benefit, as determined, are not identifiable, the Respondent is directed to deposit an amount of Rs. 4,19,069/- in two equal parts of Rs. 2,09,534.50/- each in the Central Consumer Welfare Fund and the Karnataka Consumer Welfare Fund as per the provisions of Rule 133 (3) (c) of the CGST Rules 2017, along with interest payable @ 18% to be calculated from the dates on which the amount was realized by the Respondent from his recipients till the date of its deposit in the said fund. The above amount of Rs. 4,19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uted by DGAP would not be correct. Hence the above mathematical methodology adopted by the DGAP is not correct, logical, appropriate and in consonance with the provisions of Section 171 of the CGST Act, 2017. Therefore, the Reports dated 23.3.2019 and 10.10.2019 furnished by the DGAP cannot be accepted. Accordingly, the DGAP is directed to reinvestigate the above case under Rule 133 (4) of the CGST Rules, 2017. The DGAP directed to compare the average pre-rate reduction base prices of the products which were impacted by the tax rate reduction w.e.f 27.7.2018 with the actual rate reduction base price of the impacted products. The above said order of the NAA was not challenged by any party on the direction of methodology for working out the profiteered amount in the instant matter; hence, the said direction of methodology in the instant case becomes final. 2. The brief facts of the case has been mentioned in the NAA Internal Order No. 20/2020 dated 26.06.2020 and the same is reproduced below: i. A reference was received on 04.10.2018 from the Standing Committee on Anti-profiteering under Rule 129 of the Central Goods and Services Tax Rules, 2017 (hereinafter referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng variations in the prices on account of addition of colour to his products cannot be substantiated as it is nowhere available in the details of outward taxable supplies of the Respondent. It was also observed from Annex-15 of the report dated 29.03.2019 that the Respondent have profiteered on the supply of Wall Putty (HSN 3214) and on supply of Primer, which did not involve any colour cost. iv. However. the Authority after considering the various submissions made by the Respondent the DGAP report, vide its Internal Order No. 20/2020 dated 26.06.2020, referred the matter back to the DGAP and directed to compare the average pre rate reduction base prices of the products which were impacted by the tax rate reduction w.e.f 27.07.2018 with the actual post rate reduction base prices of the impacted products. 3. Accordingly, the DGAP has carried out necessary re-investigation and on conclusion of the same, a report dated 27.10.2020 was sent to the NAA under Rule 133 (4) of the CGST Rules, 2017. The mandate to the DGAP in the case was very limited to the extent of 'comparing the average pre-rate reduction base price of the products which were impacted by the tax rate redu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the period 01.06.2018 to 26.07.2018 with the actual invoice-wise base prices (after discount) of such goods sold during the period 27.07.2018 to 30.09.2018. The excess GST so collected from the Recipients, was also included in the aforesaid profiteered amount as the excess price collected from the Recipients also included the GST charged on the increased base price. The revised amount of net higher sales realization due to increase in the base prices of the impacted goods, despite the reduction in the GST rate from 28% to 18% i.e. the profiteered amount comes to Rs. 4,19,069/-. The details of the computation were given in Annex-8 of the said Report. The DGAP has explained the said methodology with the help of one illustration viz. of a particular item White Wood Primer 1 Ltr , sold during the period 01.06.2018 to 26.07.2018 (pre-GST rate reduction). An average base price (after discount) was obtained on dividing the total taxable value by total quantity of this item sold during the period. The average base price of this item was then compared with the actual selling price of this item sold during post-GST rate reduction i.e. on or after 27.07.2018 as illustrated in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced from 28% to 18% w.e.f. 27.07.2018 vide Notification No. 18/2018-Central Tax (Rate) dated 26.07.2018 and hence profiteered an amount of Rs. 29.68/- on a particular invoice and thus the benefit of reduction in 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 table 'A' above, profiteering in case of all impacted goods of the Respondent supplied in 1415 transactions has also been arrived in similar way. 6. Based upon the above said methodology, the DGAP has worked out profiteering amount to be Rs. 4,19,069/-. 7. A copy of the investigation report dated 29.10.2020 was provided to the Respondent as per the Minutes of the meeting of Authority held on 03.11.2020 and as conveyed vide letter dated 05.11.2020. The Respondent vide E-mail dated 08.04.2021 informed that complete submissions were made during the early hearing along with the paperwork. No new document or submission was to be filed as whatever documents were placed, are on the record. Personal Hearings in the matter were scheduled on 15.03.2022 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 20/2020 dated 26.06.2020 has looked into the facts of the case and the Report of the DGAP and also the submissions of the Respondent. The Authority, in the given facts and circumstances as detailed in the Order dated 26.06.2020, has directed the DGAP to work out the amount of profiteering by comparing the pre- GST rate reduction average sale price with the actual post-GST rate reduction sale price of impacted goods. The above said direction relating to methodology to be adopted for determining the profiteering amount has not been challenged either by Respondent or Applicant No.1. As such, in the said circumstances, the Authority has to decide the matter accordingly. 12. The Authority notes that after receipt of the Order dated 26.06.2020, DGAP has written a letter dated 10.07.2020 enclosing a pro-forma seeking details in respect of the goods sold by them. It was followed by reminder dated 24.07.2020. The Respondent had sought extension of time due to prevailing Corona situation claiming that their Office was falling under the containment zone. DGAP issued reminders on 20.8.2020 and 11.09.2020 to the Respondent and a summon dated 25.09.2020 was also issued seeking the releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. GST Rate F 28% 18% 7. Commensurate Selling price (post Rate reduction) (including GST) G=118% of E 181.31 8. Invoice No. H 573/2018-19 7. Invoice Date I 25.08.2018 8. Total quantity (as per invoice indicated in H) J 1 9. Total Invoice Value (including GST) K 190 10. Actual Selling price (post rate reduction) (including GST) L=K/J 190 11. Excess amount charged of Profiteering M=L-G 8.69/- 12. Total Profiteering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the direction contained in its order dated 27.06.2020, The Authority finds that the calculation carried out by DGAP is correct. As stated in the earlier paragraphs, the Respondent was provided with adequate opportunity to provide relevant documents and records and also to extend necessary assistance to DGAP in the matter, but, they chose to remain inactive and did not extend necessary assistance. The Respondent has not raised any objection to quantification of profiteered amount of Rs. 4.19,069/- calculated in the DGAP Report dated 27.10.2020, a copy of which was provided to them. For the reasons mentioned hereinabove and in the given facts and circumstances and also stated position of law, we find no reason to differ from the Report of the DGAP and we therefore agree with the findings of the DGAP that the provisions of Section 171 of the CGST Act 2017 have been contravened in this case and the Authority determine the profiteered amount at Rs. 4,19,069/- under the provision of Rule 133 (1) of the CGST Rules. 14. Based on the above facts, the profiteered amount is determined as Rs 4,19,069/- as has been computed in Annexure-8 of the DGAP's Report dated 27.10.2020. Accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above Rules. Since, the present Report has been received by this Authority on 05.03.2020 the order was to be passed on or before 04.09.2020. However, due to prevalent pandemic of COV1D-19 in the Country this order could not be passed on or before the above date. In this regard it would be relevant to mention that the Hon'ble Supreme Court in Miscellaneous Application no 21 of 2022 in MA 665 of 2021 Suo moto Writ Petition (C) No. 3/2020 vide its Order dated 10.01.2022 has directed that:- I. The order dated 23.03.2020 is restored and in continuation of the subsequent orders dated 08.03.2021, 27.04.2021 and 23.09.2021, it is directed that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings. II. Consequently, the balance period of limitation remaining as on 03.10.2021, if any, shall become available with effect from 01.03.2022. III. In cases where the limitation would have expired during the period between 15.03.2020 till 28.02.2022, notwithstanding the actual balance period of limitation remaining, all pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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