Shri Rahul Sharma Vs Portonics Digital Pvt Ltd. (National Anti-Profiteering Authority)
Facts of the Case:
The brief facts of the case are that an application dated 26.02.2019 was filed before the Standing Committee on Anti-profiteering, under Rule 128 of the CGST Rules, 2017 by the Applicant No. 1 which alleged that the Respondent had profiteered in respect of Power Bank “Portronics Power Slice 10” supplied by the Respondent. The above Applicant also alleged that the Respondent did not reduce the selling price of the Power Bank “Portronics Power Slice 10”, when the GST rate was reduced from 28% to 18% w.e.f. 01.01.2019, vide Notification No. 24/2018-Central Tax (Rate) dated 31.12.2018 and the price of the product remained the same at Rs. 1349/- and thus, the benefit of reduction in the GST rate was not passed on to the recipients by way of commensurate reduction in the price. The above reference was examined by the Standing Committee on Anti-profiteering and vide minutes of the meeting it had forwarded the same to the DGAP for detailed investigation in terms of Rule 129 of the above Rules.
Held by NAA:
After considering all the Reports filed by the DGAP, submissions of the Respondent and other material placed on record and it is revealed that the Respondent did not submit the supply chain wise data to the DGAP during the period of investigation. He has also accepted it during the hearings before this Authority and stated that he had not supplied supply chain wise data. However, the Respondent vide his submissions dated 06.12.2019 has furnished the invoices of sale from different locations/segments along with detailed segment wise invoice details in excel sheets before this Authority. The DGAP, after examining the same has reported vide his supplementary Report that the fresh set of segment/location wise (or in other words supply channel wise) sales data submitted by the Respondent during the hearings before this Authority has been analysed, and that the profiteered amount may vary if the same was determined segment-wise. In such circumstances, NAA are of the opinion that justice cannot be done if the aforementioned supply chain wise data is not reexamined and the profiteered amount is not recomputed. Therefore, without going into merits of the case and without considering the other submissions of the Respondent and the Applicant No.1 at this stage, NAA find it imperative that there is need of recomputation of the profiteered amount. All other submissions of the Applicants and the Respondent will be duly considered after the final computation of the profiteered amount is done. Hence, NAA direct the DGAP to re-compute the profiteered amount keeping in view our above observations and to furnish his report within a period of three months.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING AUTHORITY
1. The present Report dated 30.08.2019 has been received from the Applicant No. 2 i.e. the Director General of Anti-Profiteering (DGAP) after a detailed investigation under Rule. 129 (6) of the Central Goods & Service Tax (CGST) Rules, 2017. The brief facts of the case are that an application dated 26.02.2019 was filed before the Standing Committee on Anti-profiteering, under Rule 128 of the CGST Rules, 2017 by the Applicant No. 1 which alleged that the Respondent had profiteered in respect of Power Bank “Portronics Power Slice 10” supplied by the Respondent. The above Applicant also alleged that the Respondent did not reduce the selling price of the Power Bank “Portronics Power Slice 10”, when the GST rate was reduced from 28% to 18% w.e.f. 01.01.2019, vide Notification No. 24/2018-Central Tax (Rate) dated 31.12.2018 and the price of the product remained the same at Rs. 1349/- and thus, the benefit of reduction in the GST rate was not passed on to the recipients by way of commensurate reduction in the price. The Applicant No. 1 along with his complaint also submitted copies of screen shots captured on the website “www. portronics.com”.
2. The above reference was examined by the Standing Committee on Anti-profiteering and vide minutes of the meeting dated 22.03.2019 it had forwarded the same to the DGAP for detailed investigation in terms of Rule 129 of the above Rules.
3. The DGAP on receipt of the application on 27.03.2019 issued a Notice dated 09.04.2019 under Rule 129 of the Rules calling upon the Respondent to submit his reply as to whether he admitted that the benefit of reduction in the GST rate w.e.f. 01.01.2019, had not been passed on to his recipients by way of commensurate reduction in price 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 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 15.04.2019 to 17.04.2019 which the Respondent availed and inspected the documents on 16.04.2019.
4. However, the Respondent did not submit the requisite documents on the due date. Hence reminders were issued to him by the DGAP. The Respondent also did not respond to the reminders, therefore, Summons under Section 70 of the CGST Act, 2017 were issued to Sh. Jasmeet Singh, Director of the Respondent to appear before the DGAP on 07.06.2019 and to submit the requisite details/documents. Accordingly, Sh. Jasmeet Singh, along with authorised signatory appeared before the DGAP on 07.06.2019 and submitted few requisite documents and the remaining documents were submitted subsequently.
5. The DGAP had sought extension of time for completing the investigation which was extended by this Authority vide its order dated 19.06.2019 in terms of Rule 129 (6) of the CGST Rules, 2017. The period of the investigation is from 01.01.2019 to 31.03.2019.
6. The DGAP also offered an opportunity to the Applicant No. 1 for inspection of non-confidential documents submitted by the Respondent on any working day between 19.08.2019 and 20.08.2019 vide e-mail dated 13.08.2019. However, Applicant No. 1 did not avail of the said opportunity.
7. The Respondent submitted his replies to the DGAP vide letters/e-mails dated 19.04.2019, 03.05.2019, 13.05.2019, 07.06.2019, 11.06.2019, 05.08.2019, 08.08.2019 and 13.08.2019.
8. Vide his above mentioned replies, the Respondent contended that the negative figures in his sales data relate to the credit notes raised by him on account of sale returns. He also admitted that the reconciliation of his sales data with the GST returns showed a minor difference between the two. In other words, he stated that in case of his GST return for the month of January, there was a difference of Rs.2,76,349/- with the sales data which needed rectification.
9. Vide the aforementioned letters/e-mails, the Respondent also submitted the following documents/information:-
a) GSTR-1 & GSTR-3B Returns for the period from November, 2018 to March, 2019 for all the GST registrations in India.
b) Details of invoice-wise outward taxable supplies during the period November, 2018 to March, 2019.
c) Price Lists (Pre and Post 01.01.2019) for all the products, specifically indicating the SKUs impacted by GST rate reduction w.e.f. 01.01.2019.
d) Sample copies of invoices, pre and post .01.01.2019.
10. The Respondent, vide e-mail dated 08.08.2019 submitted that all the data submitted by him was to be treated as confidential in terms of Rule 130 of the Rules.
11. In his Report, the DGAP has stated that the main issues to be examined were whether the rate of GST on the products supplied by the Respondent was reduced w.e.f. 01.01.2019 and if so, whether the Respondent passed on the benefit of such reduction in GST rate to the recipients, in terms of Section 171 of the CGST Act, 2017.
12. The DGAP has observed that the Central Government, on the recommendation of the GST Council, had reduced the GST rate on the “Power Bank” from 28% to 18% w.e.f. 01.01.2019, vide Notification No. 24/2018-Central Tax (Rate) dated 31.12.2018 and before enquiring into the allegation of profiteering, it was important to examine Section 171 of the CGST Act, 2017 which governed the anti-profiteering provisions under the GST. Section 171(1) of the CGST Act, 2017 states that “any reduction in rate of tax on any supply of goods or services or the benefit of ITC shall be passed on to the recipient by way of commensurate reduction in prices.” Thus, the legal requirement was abundantly clear that the benefit of ITC or reduction in rate of tax has to be passed on to the recipients by way of commensurate reduction in the price. The DGAP has observed that such a reduction could only be in terms of money, so that the final price payable by a recipient got reduced commensurate with the reduction in the tax rate or benefit of ITC. This was the legally prescribed mechanism to pass on the benefit of ITC or reduction in rate of tax to the recipients under the GST regime.
13. The DGAP has also reported that perusal of the invoices made available by the Respondent indicated that the Respondent had increased the base prices of the impugned goods when 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 was also illustrated in the Table-A below:-
Table-‘A’
