9911796707
TMI Blog2022 (9) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... pplied in the present case as the customers have to be considered as individual beneficiaries and they cannot be compared with netted off. This Authority has also clarified in its various orders that the benefit cannot be computed at the product, service or the entity level as the benefit has to be passed on each supply of goods and services. This Authority determines that the amount profiteered by the Respondent No. 1 and No. 2 is Rs. 61,54,833/- and Rs. 28,50,72,358/- respectively. The amount profiteered by the Respondent No. 2 is inclusive of the amount profiteered by the Respondent No. 1. Hence, the Respondent No. 2 is liable to pass on the profiteered amount of Rs. 61,54,833/- to the Respondent No. 1 and thus, the Respondent No. 1 is liable to pass on this benefit of rate reduction due to the Applicant No. 1 and the remaining amount in the Central and concerned State Consumer Welfare Fund. Further, since the recipients (other than the Respondent No. 1) of the benefit of rate reduction are not identifiable, the Respondent No. 2 is directed to deposit the remaining profiteered amount of Rs. 27,89,17,525/- in two equal parts in the Central Consumer Welfare Fund and the concerned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spite of GST rate reduction from 28% to 18 % vide Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017 w.e.f. 15.11.2017, indicating that the benefit of reduction in the GST rate from 28% to 18% was not passed on to the recipients. 2. The above application was forwarded to the DGAP by the Standing Committee on 09.10.2019 along with the report of the preliminary enquiry conducted by the Screening Committee of Maharashtra. On scrutiny of the purchase invoices of the Respondent enclosed with the application, issued by the Respondent No. 2 it was observed by the Committee that the benefit of reduction in the GST rate was not passed on to the recipients by way of commensurate reduction in the price. 3. After receipt of the above reference from the Standing Committee, the DGAP initiated his investigation to collect evidence necessary to determine whether the benefit of GST rate reduction had been passed on by the Respondent No. 1 and No. 2 to the recipients in general and to the Applicant No.1 in respect of supply of subject goods in particular. The DGAP has carried out the investigation and submitted the report dated 28.01.2021 to the Authority, stating therein that:- a. on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Karnataka, only stock transfers and other supplies of the nature of scrap sales, sale of assets were effected to pay recoveries etc. Vide e-mail dated 15.10.2020, it has also been stated by the Respondent No. 2 that 02 goods namely "Juvederm Volbella and Juverderm Volift", were not sold in pre-rate reduction period as they were launched in the market in January, 2018. Thus, the said two goods did not form part of profiteering calculation. Vide the above submissions, the Respondent No. 2 has submitted the following documents:- i. GST registration confirmation for Maharashtra and Karnataka. ii. GSTR-1 and GSTR-3B for the period November-17 to September-19 for both GST registrations. iii. Price list of the subject goods. iv. Sample Invoices. v. Invoice wise details of outward taxable supplies for the period July, 2017 to September, 2019. f. The DGAP has further stated that he has carefully examined the subject application and various replies of the Respondent No. 1 & 2 and the documents/evidence on record along with the preliminary report of the Maharashtra Screening Committee. The findings were as follows:- i. Initially, the said complaint was forwarded to the Standing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1). The Standing Committee, however, maintained his stand and replied vide letter dated 23.11.2020 that as per the attached invoices and report of the State Screening Committee, it appeared to them that the manufacturer had indulged in the profiteering rather that the dealer, therefore, investigation needed to be conducted on part of the manufacturer i.e. M/s. Allergan Healthcare Pvt. Ltd. (Respondent No. 2). g. In terms of Rule129 (4) of the CGST Rules, 2017 the DGAP might also issue Notices to such other persons as deemed fit for a fair enquiry into the matter. Therefore, initially, the DGAP decided to proceed with the investigation against both the Respondent No. 1 & 2 and notice dated 21.10.2019 was issued to both. Thereafter, the contention of the DGAP was substantiated by the scrutiny of invoices issued by the Respondent No. 1 during the pre and post rate reduction periods, which indicated at profiteering by the Respondent No. 1. Accordingly, the documents/data furnished by the Respondent No. 1 was also investigated. h. The Central Government, on the recommendation of the GST Council, had reduced the GST rate on "the subject Goods" from 28% to 18% w.e.f. 15.11.2017, vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST rate was not passed on to the recipients by way of commensurate reduction in the price, in terms of Section 171 of the CGST Act, 2017. On the basis of aforesaid calculation as illustrated in table A above, the DGAP has determined profiteering in case of all goods impacted by the GST rate reduction vide Notification No. 41/2017 Central Tax (Rate) dated 14.11.2017, supplied by the Respondent during the period 15.11.2017 to 30.09.2019. j. On the basis of aforesaid pre and post-reduction GST rates and the details of outward taxable supplies (other than zero rated, nil rated and exempted supplies) of the impacted goods during the period 15.11.2017 to 30.09.2019, as furnished by the Respondent No. 1 for the state of Maharashtra, the 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% or in other words, the profiteered amount, came to Rs. 61,54,833/-. The amount of Rs. 61,54,833/- is inclusive of Rs. 38,267/- as profiteering amount collected by the Respondent No. 1 from the Applicant No. 1, vide invoice no. R/1782/18-19 dated 29.09.2018. The details of the computation have been provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n (From 15.11.2017 onwards) 1. Product Description A A JUVEDERM ULTRA PLUS XC 1 mL 2. Notification No. B 41/2017-Central Tax (Rate) dated 14.11.2017 3. Total quantity of item sold C 262 4. Total taxable value D 3643706.80 6. Average base price (without GST) E=D/C 13907.28 7. GST Rate F 28% 18% 8. Commensurate Selling price (post Rate reduction-with GST) G=E*1.18 16410.59 9. Invoice No. H MH0011000506 10. Invoice Date I 03.04.2018 11. Total Billed quantity (above invoice) J 10 12. Actual Base Price Charged in Invoice (per unit) K 22448 13. Actual Selling price per unit (post rate reduction-with GST) L=K*1.18 26488.64 12. Excess amount charged or profiteering M=L-G 10078.05 13. Total Profiteering N= M*J 100780.50 Upon perusal of the above Table-C, it is clear that the Respondent No. 2 did not reduce the selling price of the "JUVEDERM ULTRA PLUS XC 1 mL", 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 profiteered an amount of Rs. 100780/- on a particular Invoice No. MH0011000506 dated 03.04.2018 and thus the benefit of reduction in G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8880247.20 21 36 Telangana 20199944.37 22. 37 Andhra Pradesh (New) 235724.04 Grand Total 28,50,72,358 o. Thus, the DGAP has concluded that the allegation of the Applicant No. 1 that the base prices of the subject goods were increased while there was a reduction in the GST rate from 28% to 18% w.e.f. 15.11.2017 found to be correct and it was also observed that the benefit of such reduction in GST rate was not passed on to the recipients by way of commensurate reduction in prices by the Respondent No. 1 & 2. Thus, the total amount of profiteering covering the period 15.11.2017 to 30.09.2019 in respect of the Respondent No. 1 had been worked out as Rs.61,54,833/- which included Rs. 38,267/- as profiteering amount collected by him from the Applicant No. 1 and the profiteering amount in respect of the Respondent No. 2 for the period from 15.11.2017 to 30.09.2019 was Rs. 28,50,72,358/-. 4. The above report of the DGAP dated 28.01.2021 was considered by this Authority in its sitting held on 29.01.2021 and it was decided to allow the Respondent No. 1 & 2 and the Applicant No. 1 to file their consolidated written submissions in respect of the above report of the DGAP by 15. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AIR 1936 PC 253(2) in his support. v. Rule 129(4) of the CGST Rules only provided for issue of notice to other parties with reference to an investigation initiated against a particular person. In other words, Rule 129 (4) did not provide for a fresh enquiry against any person. Sub-rule (4) was only ancillary to sub-rule (1) and hence the DGAP was not empowered to make a fresh investigation against a person concerned. Therefore the notice issued to him was not maintainable and the report of the DGAP had to be disregarded in toto. vi. In the instant case, the complaint was lodged on 7th December 2018 and the same was scrutinized by Standing Committee on 7th December 2018. The application was examined by State level Screening Committee and forwarded the recommendation to the Standing Committee. The recommendation was forwarded by the Standing Committee to the DGAP for further investigation on 09.10.2019. The DGAP has submitted his report on 28.01.2021 which was not as per the time limit specified under the law. vii. The DGAP arbitrarily initiated investigation against him by referring to certain statutory provisions which have no relevance to the facts and circumstances of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... machinery provisions and specific methodology for determining whether there was commensurate reduction in price or not on account of ITC availed or reduction in tax rates, the entire provision fails. The powers under Rule 126 had not been exercised and no methodology had been notified or prescribed and hence the determination of profiteered amount as per the report was violative of Section 171 (2). xvi. There was no notification published in the official gazette specifying any methodology or procedure industry wise or category wise. The website had a document titled as "Procedure &Methodology" said to be in exercise of powers under Rule 126 and was to come into force from the date of its Notification. However, the same was not in the nature of gazette notification and only finds place in the web site. The website document did not have any specific procedure or methodology for determining as to whether the reduction in tax rate or ITC availed had actually resulted in commensurate reduction in price. xvii. He has also relied upon the decision of Hon'ble Supreme Court in the case of CIT Vs. B.C. Srinivasa Shetty (1981) 128 ITR 294, Seshadri Vs. District Magistrate (AIR 1954 SC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meeting held on 13.09.2019 decided to forward the complaint to the DGAP for detailed investigation as it had prima facie found evidence against the Respondent No. 1 i.e. M/s Rajkotia Medicare Pvt Ltd. Therefore, it was incorrect on part of the Respondent to state that the Standing Committee had not referred the matter to the DGAP for a detailed investigation under Rule 129 (1) of the CGST Rules, 2017. No fresh investigation was initiated by the DGAP against the Respondent. Further, as per the provisions of Rule 129(4) Notice for initiation of investigation dated 21.10.2019 was issued to the Respondent No. 1. Although, the Standing Committee later maintained that investigation be carried out against the manufacturer, the DGAP through scrutiny of invoices issued by the Respondent No. 1 had doubt that the Respondent No. 1 had also indulged in profiteering. Accordingly, investigation was carried out against the Respondent No. 1 along-with the Respondent No. 2. iv. The various notifications issued in view of prevalent pandemic of Covid-19 as detailed in para 4 of Report dated 28.01.2021 were very relevant to construe the last date to complete the investigation. In para 16-20 above, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chanism for determination of the benefits and hence, there was sufficient machinery to implement the anti-profiteering. 8. The Respondent No. 2 vide his submissions dated 16.03.2021 and 08.04.2021 has also filed his consolidated written submissions wherein he has stated that:- a) No hearing had been provided by the DGAP even though the Respondent had specifically asked for the same, resulting in breach of principle of natural justice. b) The statue prescribes no procedure and methodology, and thus, the complete exercise was left to the discretion of the DGAP, it was imperative that a personal hearing be granted at this stage in order to save the entire exercise getting vexed by arbitrariness. He has relied upon the decision of Hon'ble Supreme Court in Automotive Tyre Manufacturers Association (ATMA) vs Designated Authority and Ors. (2011) 2 SCC 258. c) Any adverse report impacts the reputation and business of the entity. In this regard reference was made to the decision of the Hon'ble Supreme Court in the case of Rohtas Industries vs S.D. Agarwal and Anr AIR 1969 SC 707(1) and the decision of Hon'ble Delhi High Court in the case of Juggilal Kamlapat Cotton Spinni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... termination but instead provides for a methodology to be given for determining whether reduction in the rate of tax or benefit of ITC had been passed on by the registered person to the recipients by way of commensurate reduction in price. Any exercise carried out without providing for a methodology/uniform guidelines inter alia with regard to meaning and scope of reduction in rate of tax", "benefit of ITC", "passed on", registered person "recipients" commensurate and 'price' would not only lead to the entire proceedings being at the absolute discretion of the concerned authorities making it arbitrary, unreasonable and unfair but also render the very purpose of Rule 126 as futile. Hence, in the absence of the same the entire exercise would be in contradiction to Articles 14, 19 (1) (g), 265 and 246A of the Constitution of India and the provisions of the Act and thereby liable to be quashed. h) Section 171 of the CGST Act was in nature of anti-abuse provision and could not be construed in a manner that restricts the right of citizen to carry on trade freely in terms of Article 19 (1) (g). It was well settled that the right to reasonable profit was a part of right to trade a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for the period 15 November to 30 September. Without prejudice, we further submit that, if the DGAP wished to embark on an average ideal sale price approach, they ought to have compared the notional average price arrived at by them with the overall average sale price during the period of investigation as opposed to the present which defines logic, rationale or statutory backing. The entire approach of the DGAP in seeking to derive an "average" or "notional" sale price at a product category level for the period 1 November 2017 to 14 November 2017 and in seeking to apply the same to sales made during the period 15 November 2017 to 30 September 2019 was patently incorrect and liable to be quashed in toto. k) The Impugned Order seeks to apply price reduction to stocks not covered by the rate reduction (i.e. pre GST stock and stock procured post GST rate change both of which should not be considered for any price change). I) That assuming without accepting the allegation on profiteering, the Impugned Order ought to have considered only those goods that were imported at higher rate of tax as on the date of rate change and were sold by him subsequent to the event of change in GST rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mers at a price lesser than the alleged ideal selling price (approved of by this Authority) should be considered while computing the total amount of the alleged profiteering. Accordingly it was submitted that insofar as the DGAP had not considered such instances, the Report was clearly erroneous and liable to be rejected. p) The DGAP had issued a notice to him basis a specific compliant filed by an applicant with the product named "Juvederm Ultra Plus Xc" and "Juvederm Voluma". However, the DGAP had arrived at the profiteering amount by including an additional product i.e. Juvederm Ultra XC in addition to the aforementioned two products. q) As per Section 171 and Rule 128, there was no mention of any power which allows the DGAP to take suo-moto cognizance of any alleged contravention of Section 171 in the absence of a compliant and to this extent and therefore expanded the scope of the investigation of the products to include such other products that did not form part of any complaint. The Respondent has relied upon the decision of Hon'ble Delhi High Court in the case of Reckitt Benckiser India Private Limited Vs Union of India. Computation of Profiteering to exclude transa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which had to be computed in respect of each product based on the tax reduction as well as the existing base price of the product. The computation of commensurate reduction in the prices was purely a mathematical exercise based on certain parameters which would vary from product to product. Hence, no fix methodology can be prescribed to determine the amount of benefit required to be passed on to the recipients. Hence, a single formula, which fits all, could not be set. iv. Profiteering was not a tax but it was a benefit which had accrued to the Respondent on account of reduction in tax rate which he needed to pass on to the eligible customers. The CGST Rules have provided an elaborate mechanism for determination of the benefits and hence, there was sufficient machinery to implement the anti-profiteering. v. Further, nowhere under the Anti-profiteering provisions has provided that the DGAP will provide any opportunity of hearing to the company investigated upon. vi. The amount of profiteering had been arrived at by comparing the average base price during pre-rate reduction period with the actual base price during post-rate reduction period because the method of comparison of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le calculating profiteering. vii. Section 171 of the CGST Act, 2017 simply mandates that the price had to be commensurately reduced by the supplier where there was reduction in rate of tax so that the actual benefit of reduction in rate of tax was passed on to the recipients. Therefore, there was no violation of the right of the Respondent enshrined under Article 14, 19 (1) (9), 265 and Article 300A of the Constitution of India. Even in situations of loss, the Respondent had to pass on the benefit of reduction in rate of tax to the recipient Gain or loss accruing to the Respondent out of business was immaterial and could not absolve the Notices of passing on the due benefit to the recipient as no such exception had been provided under Section 171 of the CGST Act, 2017. viii. Under the provisions of Section 171 of the CGST Act, 2017, no tax was being levied or collected from the Respondent. However, Section 171 of the CGST Act, 2017, mandates that any benefit of reduction in the rate of tax or the benefit of ITC which accrues to a supplier must be passed on to the consumers as both were concessions given by the Government and the suppliers were not entitled to appropriate such b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llected more amount wherever there are negative values Secondly, if the negative values are also taken, it would result in passing of incommensurate benefit of reduction in rate of tax to the recipients. xiii. In terms of Rule 129(2) of the CGST Rule, 2017 the DGAP was obliged to conduct investigation and collect evidence necessary to determine whether the benefit of reduction in the rate of tax on any supply of goods or services/goods or the benefit of ITC had been passed on to the recipient by way of commensurate reduction in prices. It was evident that the law provides for conducting investigation in respect of any supply of goods or services. Therefore, the Respondents contention that DGAP had exceeded its power by investigating products beyond contours of the complaint was incorrect and unacceptable. xiv. The reduced selling price had been considered while calculating profiteering. In Annexure 25 of the Report, it could be seen that during January, 2019 and afterwards, in a number of cases where the actual selling price was below the average selling price, the profiteered amount was indicated as zero. However, during this period wherever the actual selling price was more t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prices of products. It is submitted that the use of the term, `commensurate' makes it clear that the intent is to take overall facts and circumstances into consideration. 12. Since, the quorum of the Authority of minimum three Members, as provided under Rule 134 was not available till 23.02.2022, the matter was not decided. With the joining of two new Technical Members in February 2022, the quorum of the Authority was restored from 23.2.2022. The proceedings in the present case have been re-initiated. The Respondent No. 1 & 2 and the Applicant No. 1 were also granted hearing through video conferencing on 02.05.2022 and 06.06.2022. Ms. Meenakshi Agrawal, Applicant No. 1 appeared in person, Sh. Karan Rajkotia & Sh. Raghavendra CR (Advocate) appeared on behalf of the Respondent No. 1, Sh. Prashant Acharya, Sh. Anand Kamath, Sh. Ashish Maloo and Ms. Jayashree appeared on behalf of the Respondent No. 2 and Sh. Manoj Kumar, Assistant Commissioner appeared on behalf of the DGAP. 13. The Applicant No. 1 has filed her written submissions vide e-mail dated 26.03.2022 and has stated that she agreed with the Report of the DGAP and the Respondent No. 1 has not passed on the due benefit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ample copies of the import invoices and Bill of Entries for the impugned products. l. The credit notes issued by him to the distributors were accounted as net of sales i.e. the same were reduced from sales in the financial statements. Sample copies of credit notes were also submitted by him. 16. This Authority has carefully considered the Reports furnished by the DGAP, the submissions made by Respondent No. 1 & No. 2 and the Applicant No. 1 and the other material placed on record. On examining this various submissions, the Authority also finds that the following issues need to be addressed:- a. Whether there was any violation of the provisions of Section 171 of the CGST Act, 2017 committed by Respondents? b. Whether Respondents have passed on the commensurate benefit of reduction in the rate of tax to their customers and whether various issued raised by the Respondents like breach of principle of natural justice, absence of methodology etc. are tenable in the proceedings? 17. It is revealed from the records that the Respondent No. 1 is a distributor of the products manufactured by the Respondent No. 2. A complaint was filed by the Applicant No. 1 alleging profiteering by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce both the above benefits are being given by the above Governments out of their tax revenue. In the present case, the Respondent No. 1, being a registered person under GST, is dealing with the products on which the tax rate has been reduced from 28% to 18% w.e.f. 15.11.2017 and thus, he is liable to pass on such benefit to his recipients/customers. Hence, the above contention made by him is incorrect and cannot be accepted. 20. The Respondent No. 1 has also argued that in the present case, the DGAP has not completed the investigation as per the provisions of CGST Act and CGST Rules. In this regard, we find that due to prevalent pandemic of COVID-19 in the country, vide Notification 35/2020-Central Tax dated 03.04.2020 issued by the Central Board of Indirect Taxes and Customs under Section 168 (A) of the CGST Act, 2017, it was notified that where any time limit for completion/furnishing of any report, has been specified in, or prescribed or notified under the CGST Act, 2017 which falls during the period from the 20th day of March, 2020 to the 29th day of June, 2020, and where completion or compliance of such action has not been made within such time, then, the time limit for comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention, we find that Maximum Retail Price ("MRP") is the maximum price at which goods can be sold in retail. The value of transaction between the manufacturer and the whole seller or the whole seller and the retailer is invariably less than the MRP. Therefore, regardless of whether MRP is required to be marked on the product or not, the pre and post-tax rate reduction transaction values are compared to determine profiteering. In case of closing stock carrying higher MRP, while the manufacturer is under statutory obligation to reaffix the revised MRP, everybody in the supply chain is also legally required to pass on the benefit of tax rate reduction by maintaining the base price and charging GST at the reduced rate on such base price. Further, the question of alteration of MRP did not arise here. The Respondent No. 1 was only required to charge the reduced rate of GST on the base price which he was charging earlier in the pre-GST rate reduction regime. Instead, the Respondent No. 1 has charged the reduced rate of GST on the increased base price of the impugned products which in turn resulted in non-passing on of the benefit of reduction in the rate of tax to his customers. Henc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eered amount' has been clearly defined in the explanation attached to Section 171. These benefits can also not be passed on at the entity/ organisation /branch/ invoice/ business vertical level as they have to be passed on to each and every buyer at each product/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 product or unit or service purchased by him subject to his eligibility. 25. The term "commensurate" mentioned in the above Sub-Section provides the extent of benefit to be passed on by way of reduction in the price which has to be computed in respect of each product or unit or service based on the price and the rate of tax reduction or the additional ITC which has become available to a registered person. The legislature has delibera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to pass on the above benefits to the common buyers who bear the burden of tax and who are unorganised, voiceless and vulnerable. It is abundantly clear from the above narration of the facts and the law that no elaborate mathematical calculations are required to be prescribed separately for passing on the benefit of tax reduction and computation of the profiteered amount. This Authority was under no obligation to provide the same to the Respondents. The Respondents cannot deny the benefit of tax reduction to his customers on the above ground and enrich himself at the expense of his buyers as Section 171 provides clear cut methodology and procedure to compute the benefit of tax reduction and the profiteered amount. Therefore, the Authority finds that the above plea of the Respondent cannot be accepted. Further, with respect to the cases relied upon by the Respondents, it is mentioned that under Section 171 (1) no tax has been imposed and hence no computation provisions mentioned in the above case are required to be made. The Respondent cannot claim protection under Articles 14, 19(1)(g), 265 and 246A of the Constitution when he has violated the above Article himself by denying ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 rate reduction periods due to the reasons that the Respondent was (i) selling his products at different rates to different customers based on the various factors (ii) the same customer may not have purchased the same product during the pre and the post rate reduction periods and (iii) the average base prices computed for a period of 14 days w.e.f. 01.11.2017 to 14.11.2017 or for the previous months provide highly representative and justifiable comparable average base prices. On the basis of the average pre rate reduction base prices the commensurate base prices have been computed and compared with the invoice wise actual base prices of the products as is evident from Table-A & C supra. However, the average pre rate reduction base prices were required to be compared with the actual post rate reduction base prices as the benefit is required to be passed on each product to each customer. In case average to average base prices are compared for both the periods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot legally tenable. 30. The Respondent No. 2 has also argued that Section 171 violates the right to trade guaranteed under Article 19 (1) (g) of the Constitution of India and the right to trade included the right to reasonable profits which could not be taken away without any explicit authority under the law. Therefore, this form of price control was a violation of Article 19 (1) (g) of the Constitution of India. In this connection it would be relevant to mention that the Respondent has full right to fix his prices under Article 19 (1) (g) of the Constitution but he has no right to appropriate the benefit of tax reduction under the garb of the above right. Neither this Authority not the DGAP has acted in any way as a price controlling authority as he does not have the mandate to do so. Under Section 171 read with Rule 129 of the above Rules the DGAP has only been mandated to investigate whether both the benefits of tax reduction and ITC which are the sacrifices of precious tax revenue made from the kitty of the Central and the State Governments have been passed on to the end consumers who bear the burden of the tax. The intent of this provision is the welfare of the consumers who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in the rate of tax to his recipients. Therefore, any benefit of tax rate reduction passed on to a particular recipient or customer cannot be appropriated or adjusted against the benefit of tax rate reduction due to another recipient or customer. Hence, this methodology of 'netting off' cannot be applied in the present case as the customers have to be considered as individual beneficiaries and they cannot be compared with netted off. This Authority has also clarified in its various orders that the benefit cannot be computed at the product, service or the entity level as the benefit has to be passed on each supply of goods and services. Hence, the above contentions of the Respondent are not correct as the Respondent cannot apply the above methodology of netting off as it would result in denial of benefit to the customers which would resulted in violation of the provisions of Section 171 of the above Act as well as Article 14 of the Constitution. Accordingly, the profiteered amount cannot be reduced by Rs. 12,80,368/-. 33. The Respondent has also argued that the complaint filed by the Applicant No. 1 was with respect to the products namely "Juvederm Ultra Plus Xc" and "Juv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1 and thus, the Respondent No. 1 is liable to pass on this benefit of rate reduction due to the Applicant No. 1 and the remaining amount in the Central and concerned State Consumer Welfare Fund. 36. Based on the above facts the profiteered amount in the case of the Respondent No. 1 is determined as Rs. 61,54,833/- which includes Rs. 38,267/- as profiteered amount collected by him from the Applicant No. 1 for the period from 15.11.2017 to 30.09.2019. The Applicant No. 1 is resident of State of Maharashtra, as such the said amount of Rs. 38,267/- would be subtracted from allocation of State of Maharashtra. The place (State or Union Territory) of supply-wise break-up of the total profiteered amount of Rs. 61,16,566/- is mentioned in the below Table:- S. No. State Code State Profiteered Amount (Rs.) 1. 04 Chandigarh 5355 2. 08 Rajasthan 58903 3. 27 Maharashtra 6090575 (-) 38267=6052308 Grand Total 61,16,566/- 37. Accordingly, the Respondent No. 1 is directed to pass on Rs. 38,267/- to the Applicant No. 1 as the benefit of rate reduction alongwith applicable interest to be calculated from the dates on which the above amount was realized by the Respondent from the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d amount of Rs. 27,89,17,525/- in two equal parts in the Central Consumer Welfare Fund and the concerned State 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 above amount was realized by the Respondent No. 2 from his recipients till the date of its deposit as prescribed and in accordance with the provisions of Rule 133 (3)(b) of the CGST Rules, 2017. The above amount of Rs. 27,89,17,525/- shall be deposited, as specified above, within a period of 3 months from the date of passing of this order failing which it shall be recovered by the concerned CGST/SGST Commissioners. 41. The place (State or Union Territory) of supply-wise break-up of the total profiteered amount of Rs. 27,89,17,525/- in respect of the Respondent No. 2 is mentioned in the below Table:- S. No. State Code State Profiteered Amount (Rs.) 1. 01 Jammu & Kashmir 25809 2. 03 Punjab 2343331 3. 04 Chandigarh 8272319 (-)5355= 8266964* 4. 06 Haryana 3995037 5. 07 Delhi 88044015 6. 08 Rajasthan 3293020 (-) 58903=3234117** 7. 09 Uttar Pradesh 1273733 8. 10 Bihar 314180 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll the products inclusive of the impugned products manufactured/sold by the Respondent No. 1 & No. 2 where the rate of GST has been reduced till the period when the prices of the products have been reduced by both the Respondents. 45. Further, the Hon'ble Supreme Court, vide its Order dated 23.03.2020 in Suo Moto Writ Petition (C) no. 3/2020, while taking suo-moto cognizance of the situation arising on account of Covid-19 pandemic, has extended the period of limitation prescribed under general law of limitation or any other special laws (both Central and State) including those prescribed under Rule 133 (1) of the CGST Rules, 2017, as is clear from the said Order which states as follows:- "A period of limitation in all such proceedings, irrespective of the limitation prescribed under the general law or Special Laws whether condonable or not shall stand extended w.e.f. 15th March 2020 till further order/s to be passed by this Court in present proceedings." Further, the Hon'ble Supreme Court, vide its subsequent Order dated 10.01.2022 has extended the period(s) of limitation till 28.02.2022 and the relevant portion of the said Order is as follows:- "The Order dated 23.03 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
