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TMI Blog2020 (4) TMI 903X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.07.2018, in respect of the supply of "Stayfree Sanitary Napkins" w.e.f. 27.07.2018. 2. The DGAP has stated in his above Repon that he had issued Notice under Rule 129 (3) of the CGST Rules, 2017 on 10.04.2019 to the Respondent, to submit his reply as to whether he admitted that the benefit of reduction in the GST rate w.e.f. 27.07.2018, had not been passed on by him to his recipients by way of commensurate reduction in prices 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. The Respondent 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 the Respondent had availed on 22.04.2019. 3. The DGAP has also mentioned that the time period of the present investigation was from 01.07.2018 to 31.03.2019 and he had also sought extension of the time limit to complete the investigation from this Authority under Rule 129 (6) which was granted to him. 4. The DGAP has further stated that the Respondent has replied to the above Notice vide his letters ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent had willingly cut into his profit margins to offer appropriate discounts time and again. Section 15 (3) (a) of the CGST Act, 2017 provided that the value of the supply should 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. Thus, the GST was chargeable on actual transaction value after excluding any discount and therefore, for the purpose of computation of profiteering MRP could not be considered. The actual transaction value was the correct amount which was to be considered to determine whether any reduction in the rate of tax on any supply of goods or services has been passed on to the recipients by way of commensurate reduction in prices. He has further contended that the MRP was the maximum price at which an item might be sold but it was not the actual sale price. Therefore, for the purpose of determination of profiteering in the instant case, actual selling price or discounted price instead of MRP has been considered in accordance with the provisions of the Central Goods and Services Tax Act, 2017 and the Rules made thereunder. 9. The DGAP has also claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stablish any profiteering, transaction value before and after the rate reduction was compared and there was no significance of MRP in establishing profiteering. Thus, GST was chargeable on actual transaction value after excluding any discount and therefore, for the purpose of computation of profiteering, MRP could not be considered. The actual transaction value was the correct value which was required to be considered while determining whether any reduction in the rate of tax on any supply of goods or services has been passed on to the recipients by way of commensurate reduction in prices or not. The DGAP has further argued that in the case of M/S Flipkart Internet Pvt. Ltd., the Applicant was seeking refund of excess payment made by him to M/S Flipkart Internet Pvt. Ltd. as the invoiced value was lower than that of the payment made to M/S Flipkart Internet Pvt. Ltd. Therefore, the facts of the case of M/S Flipkart Internet Pvt. Ltd. were completely different from the instant case. 11. The DGAP has also stated that the Respondent was asked to provide purchase data for the pre and post rate reduction periods vide e-mail dated 17.09.2019 but the same was not provided by the Responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld 75 units of the above-mentioned goods at a price above this commensurate price. The total profiteering on account of the sale of "Whisper Ultra Overnight Sanitary Pads XL Plus wings (7 Count)", out of the stock purchased after reduction of the GST rate w.e.f. 27.07.2018, appeared to be Rs. 361.19/-. 13. The DGAP has also submitted that he has analysed the outward supply of all the Sanitary Napkins (including "Whisper Ultra Overnight Sanitary Pads XL Plus wings (7 Count)") made by the Respondent and it was found by him that during the period from 27.07.2018 to 31.03.2019 i.e. after the reduction of the GST rate from 12% to Nil w.e.f. 27.07.2018, the amount of profiteering on account of the sales made from the closing stock as on 26.07.2018, was Rs. 1,43,868/-. The amount of profiteering on account of the sales made from the fresh stock was Rs. 18, 17, 165/-. Thus, the total profiteered amount in respect of all the units supplied by the Respondent during the period from 27.07.2018 to 31.03.2019, at a price above the commensurate price, came to Rs. 19,61 ,033/-. However, the profiteering in the case of the Applicant No. 1 was found to be nil by the DGAP. The place (State or Union ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was also issued to the Respondent on 27.09.2019 asking him to reply why the Report dated 24.09.2019 furnished by the DGAP should not be accepted and his liability for profiteering under Section 171 of the CGST Act, 2017 should not be fixed. On the request of the Respondent hearing was adjourned to 07.11.2019. On behalf of the Applicants none appeared whereas the Respondent was represented by Sh. V. Lakshmikumaran, Sh. Anshul Mathur, Smt. Arushi Jain and Smt. Nitum Jain, Advocates. Further hearing was held on 13.01.2020. 16. The Respondent has filed written submissions dated 11.11.2019 and has also filed additional written submissions dated 13.01.2020 and raised a number of objections against the Report of the DGAP dated 24.09.2019. However, the Respondent had requested that the objections raised by him through his additional written submissions dated 13.01.2020 should be decided first before proceeding further in the matter. The Respondent vide his submissions dated 13.01.202 had contended that application dated 26.12.2018 filed by the Applicant No. 1 alleging profiteering against him was not considered by the Standing Committee on Anti-Profiteering within the time limit of two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 of his Report dated 14.09.2019, however, for calculation of profiteering on the new stock, the total outward supplies data has been taken by the DGAP instead of the supplies of new stock and hence, the profiteering has been calculated twice on the supplies of the closing stock treating the same as the supply of new stock. (H) That in the absence of show cause notice by this Authority the present proceedings were not maintainable as they had been launched in violation of the principles of natural justice. (I) That present investigation and the Report filed by the DGAP was beyond the allegation levelled by the Applicant No. 1 and hence, the same was not maintainable. (J) That the investigation should be restricted to the supplies made by the Respondent from the registration taken by him in the State of West Bengal only. (K) That in the absence of prescribed methodology of calculation of the profiteered amount in the CGST Act or the Rules made thereunder or the procedure prescribed by this Authority, the present proceedings were arbitrary and liable to be dropped. 19. A copy of the written submissions dated 11.11.2019 filed by the Respondent was supplied to the DGAP for fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 17 (2) of the CGST Act, 2017 read wit Rule 42 of CGST Rules, 2017 and his findings shall be recorded in the Report. (iii) The issue of benefit of discounts shall be examined by the DGAP in terms of Section 15 (3) of the CGST Act, 2017 as per the details submitted by the Respondent and a detailed Report shall be filed by him in this regard. (iv) The profiteered amount shall be again computed by the DGAP on the closing and the fresh stocks separately and mentioned in his Report. 23. Investigation on the above issues shall be completed by the DGAP within a period of 3 months from the date of passing of this order and Report submitted under Rule 129 (6) of the CGST Rules, 2017. The Respondent is also directed to extend full co-operation to the DGAP during the course of the investigation. 24. As per the provisions of Rule 133 (1) of the CGST Rules, 2017 this order was required to be passed within a period of 6 months from the date of receipt of the Report from the DGAP under Rule 129 (6) of the above Rules. Since, the present Report has been received by this Authority on 25.09.2019 the order was to be passed on or before 24.03.2020. However, due to prevalent pandemic of COVID- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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