Case Law Details
Sh. Saurabh Gahoi Vs M/s Pinky Sales (National Anti-Profiteering Authority)
The Respondent had submitted that he was running an exclusive showroom of M/s Liberty Shoe Ltd.. which had given him the software which was being used for billing and he could not make any modification to this software since it was fully controlled by M/s Liberty Shoe Ltd. The Respondent had also submitted his agreement with M/s Liberty Shoe Ltd. and his purchase invoices from M/s Liberty Shoe Ltd. during the pre and post rate reduction periods. Based on these invoices the DGAP has observed that M/s Liberty Shoe Ltd. had increased the base price in respect of footwear priced between Rs. 500/- to Rs. 1000/-, to maintain the same selling prices (inclusive of GST) on or after 27.07.2018 when the GST rate was reduced from 18% to 5%. The Respondent has also submitted the GSTR-1 and GSTR-3B returns for the period June, 2018 to November, 2018, the details of invoice-wise outward taxable supplies during the period June, 2018 to November, 2018, the Price Lists (pre and post 27.07.2018) and the sample invoices issued during the periods, pre and post 27.07.2018.
Respondent had increased the base price of the product from Rs. 592.37/- to Rs. 665.71/-, when the rate of tax was reduced from 18% to 5% with effect from 27.07.2018. Thus, by increasing the base price of the product the benefit of reduction in tax rate was not passed on to the recipients and hence he has contravened the provisions of Section 171 of the CGST Act, 2017. The records clearly show that the Respondent has supplied a total number of 6380 footwears out of which 1451 were impacted by the reduction in the rate of GST from 18% to 5% w.e.f. 27 07.2017. Out of these 1451 products 620 were not sold prior to 27.07.2018 hence the question of profiteering on these products does not arise. Out of the remaining 831 products 439 were sold prior to 27.07.2018, hence the base price has been arrived at by taking into account the price at which these products were sold. For remaining 392 products the prices have been taken from the price lists provided by the Respondent. Accordingly the DGAP vide Annexure-15 of his Report has correctly arrived at the profiteered amount Rs. 6,55,307/- for these 831 products which includes the profiteered amount of Rs. 77/- in respect of the Applicant No. 1. The Respondent has also agreed to deposit this alleged amount along with interest, vide his submission dated 28.05.2019 filed before this Authority.
It is also established from the above facts that the Respondent has issued incorrect invoices while selling the above products to his recipients as he had not correctly shown the basic prices which he should have legally charged from them. The Respondent has also collected additional GST on the increased prices through the incorrect tax invoices which would have otherwise resulted in further benefit to the customers which he had failed to pass on. It is also established from the record that the Respondent has consciously acted in contravention of the provisions of the CGST Act, 2017 by issuing incorrect invoices which is an offence under Section 122 (1) (i) of the above Act. Hence, he is liable for imposition of penalty under the above Section read with Rule 133 (3) (d) of the CGST Rules, 2017. In the interest of natural justice, notice may be issued to the Respondent to show cause as to why penalty should not be imposed on him as per the provisions of Section 122 of the CGST Act, 2017 read with Rule 133 (3) (d) of the CGST Rules, 2017.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING APPELLATE AUTHORITY
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