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TMI Blog2022 (7) TMI 1274X X X X Extracts X X X X X X X X Extracts X X X X ..... the DGAP has carried out the present investigation w.e.f. 01.01.2019 to 31.03.2019. It has been established that the Respondent has increased the base price of the product i.e. Power Bank, despite the reduction in the GST rate from 28% to 18% during the period 01.01.2019 to 31.03.2019. Thus, the benefit of reduction in the GST rate has not been passed on to the recipients by way of commensurate reduction in the prices by the Respondent, in terms of Section 171 (1) of the CGST Act, 2017 during the above period. It is also clear that the Respondent has not passed on the benefit amounting to Rs. 96,354/- (inclusive of GST) to his customers/ recipients. Thus the profiteering is determined as Rs. 96,354/- as per the provisions of Section 171 read with Rule 133 (1) of the CGST Rules 2017 and accordingly the Respondent is directed to commensurately reduce the prices of his product i.e. Power Bank in line with the provisions of Section 171 (1) read with Rule 133 (3) (a) of the CGST Rules 2017. Penalty - HELD THAT:- Section 112 of the Finance Act, 2019 specific penalty provisions have been added for violation of the provisions of Section 171 (1) which have come in to force w.e.f. 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen the rate of GST was reduced from 28% to 18% w.e.f. 01.01.2019. The details of the impacted product sold before and after GST rate reduction has also been illustrated in the Table-A below: TABLE- A Period Pre 01.012019 Post 01.01.2019 Notification No. A 24/2018-Central Tax (Rate) dated 31.12.2019 Product Description B Por 694 (Power Bank) Invoice No. C D1-0010SH21 DL0010SH21 Invoice Date D 06.12.2018 04.01.2019 Declared Price E 995.43 1101.70 Discount Offered F 0 0 Base price excluding GST G=E-F 995.43 1101.70 GST rate charged H 28 18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08 Rajasthan 8503.73 9. 09 Uttar Pradesh 69988.00 10. 10 Bihar 8167.07 11. 11 Sikkim 907.85 12. 12 Arunachal Pradesh 161.71 13 13 Nagaland 454.67 14 14 Manipur 855.80 15 15 Mizoram 1515.23 16 16 Tripura 321.56 17 18 Assam 2159.96 18 19 West Bengal 14841.95 19 20 Jharkhand 3615.25 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he DGAP should not be accepted and his liability for profiteering in violation of the provisions of Section 171 should not be fixed. After carefully considered all the Reports filed by the DGAP, submissions of the Respondent and other material placed on record and after hearing the matter, the Authority vide it's Interim Order No. 12/2020 dated 27.02.2020 directed the DGAP to further investigate the following issues as per the provisions of Rule 133 (4) of the CGST Rule. 2017 and submit his Report accordingly :- a. To investigate the Respondent's contention that that the negative figures in his sales data actually relate to the credit notes raised by him on account of sales return and the effect thereof on the amount of profiteering, if any, after due verification. b. To investigate the mismatch between the Respondent's GST return for the month of January, 2019 as compared to the sales data figure for the same period and ramification thereof on the computation of the amount of profiteering, c. To investigate the Respondent's submissions dated 19.11.2019 vide which he has submitted his own calculation of the amount of profiteering based on his own u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Respondent. The main issues to be looked into were:- i. Whether the rate of GST in respect of Power Bank Portronics Power Slice 10 was reduced from 28% to 18% w.e.f. 01.01.2019, if so, whether the benefit of such reduction in the rate of GST was passed on by the Respondent to the recipients, in terms of Section 171 of the CGST Act, 2017 and ii. Investigate the points raised in I.O. dated 27.02.2020. e. As regards the issue of reduction in the rate of GST, it was observed that the Central Government, on the recommendation of the GST Council vide Notification No. 24/2018-Central Tax (Rate) dated 31.12.2018 had reduced GST rate on Power Bank from 28% to 18% w.e.f. 01,01.2019. This was a matter of fact which had not been contested by the Respondent. f. As regards the points to be investigated in terms of NAA's I.O.. the point wise reply was as under:- Point-(i) To investigate the Respondent's contention that the negative figures in his sales data actually relate to the credit notes raised by him on account of sales return and the effect thereof on the amount of profiteering, if any, after due verification:- Reply - In response to the DGAP que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... products for the month of November, 2018 and December, 2018 instead of only one month of December, 2018 had been examined and it was observed that he had not put forward any logical reason behind this suggestion. The only reason given was that it should reduce the average base price of the product and lead to lesser amount of profiteering. In this context it was submitted that the average base price of the product. for a month sold just before the rate reduction was taken so that such price was the best representative of the price on which the goods were sold to the recipients immediately after rate reduction. It is, therefore the nearest average base price. if the contention of the Respondent was accepted, then the Respondent might also suggest to take the average base price of the last 6 months or a year which would suit him the best. The contention of the Respondent was not based on any proper reasoning as to why the average price for last two months only should be taken and hence the computation of the Respondent might not be accepted. Point-(iv) To investigate the data submitted by the Respondent in pen drive on 06.12.2019 which the DGAP had itself claimed to be in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gment wise during the period 01.01.2019 to 31.03.2019 with the commensurate price based on the average of the base price of Power Bank sold channel/segment wise during the period 01.11.2018 to 3112.2018. 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 profiteering table for particular power bank was illustrated at para-16 of Investigation Report dated 30.08.2019. However, after the submission of Channel/Segment wise details an example of profiteering for the product was once again shown in Table-C below for ready reference:- Table-C (Amount in Rs.) Sr.No. Description Factors Pre Rate Reduction (Before 31.12.2018) Post Rate Reduction (From 01.01.2019) 1. SKU Name Cade A Power Bank POR491 2. Category B RETAIL 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Punjab 3 3436 4 Chandigarh 4 3134 5 Uttarakhand 5 1617 6 Haryana 6 2989 7 Delhi 7 20358 8 Rajasthan 8 562 9 Uttar Pradesh 9 13253 10 Bihar 10 536 11 Nagaland 13 60 12 Manipur 14 261 13 Mizoram 15 420 14 Tripura 16 3 15 Assam 18 451 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt No. 1 and the Respondent to file consolidated reply/written submissions and any specific request for hearing, if required. Accordingly, a notice dated 24.11.2020 was issued to the Respondent to explain why the Report dated 09.11.2020 furnished by the DGAP should not be accepted and his liability for profiteering in violation of the provisions of Section 171 should not be fixed and the Respondent was directed to file written submissions by 07.12.2020. The Authority has granted enough opportunities side Order dated 05.01.2021, 09.03,2021 and 31.03.2021 to the Respondent to file his written submissions. In response, the Respondent vide letter dated 16.012021 has submitted that he had already made his submissions before the DGAP and based on that the DGAP has submitted the Report. Alter that he has nothing more for submission. 11. The proceedings in the matter could not be completed by the Authority due to lack of required quorum of Members in the Authority during the period 29.04.2021 till 23.02.2022 and the minimum quorum was restored only w.e.f. 23.02.2022. The Respondent vide letter dated 23.03.2022 reiterated his earlier submissions dated 16.01.2021 i.e. he has already made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is apparent from the record that the Central Government, on the recommendation of the GST Council vide Notification No. 24/2018-Central Tax (Rate) dated 31.12.2018 had reduced the GST rate on Power Bank from 28% to 18% w.e.f. 01.01.2019. Therefore, the Respondent is liable to pass on the benefit of the above tax rate reduction to his customers in terms of Section 171 (1) of the above Act. It is also apparent that the DGAP has carried out the present investigation w.e.f. 01.01.2019 to 31.03.2019. 15. It is also evident that the Respondent has used various channels/segment viz. Retail. Corporate, Distributor, Retail Wazirpur HO, Online, Online Distributor. Online Snapdeal, Online Paytm, Online Flipkart, Online Amazon, Online Shopclues, Online Udaan, Online P.O, LFR, Outlet RT and Online PAR to sell his products. The DGAP has calculated profiteering by comparing the actual invoice-wise base price of particular model of Power Bank sold through channel/segment wise during the period 01.01.2019 to 31.03.2019 with the commensurate price based on the average of the base price of particular Power Bank sold through channel/segment wise during the period 01.12.2018 to 31.12.2018. To arri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther. since the customers/recipients, in this case. are not identifiable, the Authority under the provisions of Section 171(1) read with Rule 133 (3) (c) of the CGST Rules, 2017 directs that fifty percent of the amount of Rs. 96,354/- i.e. Rs. 48,177/- along with interest at the rate of 18% (from the date of collection of such amount until the dates on amount is deposited) be deposited in the Central Consumer Welfare Fund and the balance amount is to be deposited in the CWF of the concerned State and as per the amount indicated here under.- Sr. No. State State Code Amount (in Rs.) 1 Jammu and Kashmir 1 263.00 2 Himachal Pradesh 2 355.00 3 Punjab 3 1718.00 4 Chandigarh 4 1567.00 5 Uttarakhand 5 808.50 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amounts shall be deposited into the concerned CWF along with interest @18% (from the date such amount was profiteered by them until the date such amount is deposited in the respective CWF) by the Respondent within a period of 3 months from the date of this Order failing which the same shall be recovered by the concerned Commissioner CGST/SGST/UTGST as per the provisions or the relevant GST Act, 2017. 20. It is further revealed that vide Section 112 of the Finance Act, 2019 specific penalty provisions have been added for violation of the provisions of Section 171 (1) which have come in to force w.e.f. 01.01.2020. by inserting Section 171 (3A). Since, no penalty provisions were in existence between the period from 01.01.2019 to 31.03.2019 when the Respondent had violated the provisions of Section 171 (1), the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively, 21. Further, this Authority as per Rule 136 of the CGST Rules 2017 directs the concerned Commissioners of CGST/SGST/UTGST to monitor this Order under the supervision of the DGAP by ensuring that the amount profiteered by the Respondent as ordered by this Authority is deposite ..... X X X X Extracts X X X X X X X X Extracts X X X X
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