Shri Rahul Sharma Vs M/s. Cloudtail India Pvt. Ltd. (NAA)
(i) Firstly, the Respondent, as discussed in para 12 to 14 above, has submitted that the proceedings initiated should be deemed infructuous as the complaint under Section 171 of the CGST Act, 2017;was not against him but against HP India who was the brand owner and who controlled the MRP and he being a retailer had no say in fixing the MRP. Though the complaint is against HP. the fact remains that the invoice quoted by the above Applicant, was issued by the Respondent on the e-commerce platform. Since, the product was sold by the Respondent and he being registered under GST, his obligation to pass on the benefit of rate reduction still remained and holds good. Section 127 (ii) of the CGST Rules, 2017, clearly states the Authority has to identify the registered person who has not passed on the benefit to the recipient and in this case, the Respondent was clearly that registered person. Therefore, the contention that the complaint is infructuous on this ground is untenable.
(ii) Secondly, the Respondent has further stated that the complaint filed by the Applicant was incomplete, inadequate and was not accurate and admittedly, he was not the actual purchaser and the claim of the Applicant stands invalidated as crucial details were missing and the MRP was also written manually. Rule 128 (2) of the CGST Rules, 2017, reads All applications from interested parties on issues of local nature shall first be examined by the State level Screening Committee and the Screening Committee shall, upon being satisfied that the supplier has contravened the provisions of Section 171, forward the application with its recommendations to the Standing Committee for further action”. Further Rule 137 (c) of the CGST Rules reads that “interested party” includes-
a. suppliers of goods or services under the proceedings; and
b. recipients of goods or services under the proceedings;
c. any other person alleging, under sub-rule (1) of rule 128. that a registered person has not passed on the benefit of reduction in the rate of tax on any supply of goods or services or the benefit of input tax credit to the recipient by way of commensurate reduction in prices.
As seen from the relevant rules , it is clear that anyone alleging profiteering can file a complaint. So it is not necessary that the complainant has to purchase the products. Moreover, all the details, such as manufacturer, seller, invoice, price and the product name are available so the question of not considering the complaint does not arise at all. Even the MRP that is written manually happens to be the correct MRP. as has been admitted by the Respondent. Therefore, the Standing Committee has rightly forwarded the same to the DGAP and the DGAP has accordingly completed its investigation and filed his Report.
Now coming to the issue on merits, the Respondent, referring to the invoices filed by the Applicant No.1, has claimed that he had nothing to do with the MRP as it had been fixed by HP India, the brand owner. This argument of the Respondent is vitiated by the fact that the GST envisages that every supplier is to be registered and every registered Supplier is bound by Section 171 of the CGST Act, 2017, to pass on the benefit of reduction in tax. In the present case, we are concerned with the supplier and the supplier here is the Respondent who has increased the price even after reduction in the GST rate of tax. The passing of the benefit by the distributor or retailer does not rest on the fact that the manufacturer or his supplier should have passed on the same benefit to him first.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING APPELLATE AUTHORITY
1. The brief facts of the case are that under Rule 128 of the CGST Rules, 2017, a complaint dated 17.05.2018 was filed by the Applicant No. 1 against the Respondent before this Authority alleging that the Respondent had not passed on the benefit of reduction in the GST rate applicable to the printing cartridges (HSN 8443) from 28% to 18% w.e.f. 15.11.2017 and had increased their base price, therefore there was no reduction in the price (inclusive of GST @ 18%) charged from the recipients. In support of his allegation, the Applicant No.1 had submitted copies of the two sale invoices of “HP 678 LOS24AA Combo Pack Ink Advantage Cartridges (Black & Tri Color) BOOUHG8BFI” (hereinafter referred to as the product) dated 04.10.2017 and 09.12.2017, issued by the Respondent. This complaint was forwarded to the Standing Committee for necessary action.
2. The complaint was examined by the Standing Committee on Anti-profiteering in its meeting held on 25.05.2018, wherein it was decided, as per the minutes of the meeting dated 08.06.2018, to refer the matter to the Directorate General of Anti-Profiteering (DGAP) to initiate an investigation and collect evidence necessary to determine whether the benefit of reduction in the rate of tax on the said product had been passed on by the Respondent to his customers or not.
3. The DGAP after completing the investigation has submitted his report under Rule 129 (6) of the CGST Rules, 2017 on 19.09.2018. The Report states that a notice under Rule 129 of the CGST Rules, 2017 was issued on 10.07.2018, calling upon the Respondent to submit his reply as to whether he admitted that the benefit of reduction in the rate of tax had not been passed on to the recipients by way of commensurate reduction in the price. The Respondent was also asked to suo-moto determine the quantum of benefit not passed on, if any, and indicate the same in his reply to the notice. The DGAP sought extension to complete the investigation, which was extended upto 07.10.2018 by this Authority vide order dated 07.09.2018 in terms of Rule 129 (6) of the CGST Rules, 2017.
4. The DGAP has also stated that, in response to the notice the Respondent vide letter dated 06.08.2018 submitted that he was a retailer and sold the products manufactured by other vendors; that he had no control over the MRP affixed by the manufacturer/ importer; that the manufacturer/ brand-owner (HP) had changed the MRP during the period between July 2017 to December 2017, that HP had first increased the MRP on account of increase in the tax rate from 5% (VAT) to 28% (GST) and also on account of imposition of Customs duty @ 10% on cartridges w.e.f. 01.07 2017, that subsequently. HP had decreased the MRP to pass on the benefit of reduction in GST rate w.e.f. 15.11.2017 (the Respondent had enclosed a certificate issued by HP regarding change in MRP), that he had not sold any product above the MRP fixed by the manufacturer/ importer. that probably the sale made on 04.10 2017 was from pre-GST stock and the sale made on 09.12.2017 was from the stock imported/ manufactured after 15.11.2017, that the invoice issued on 04.10.2017 had been raised during the “Great Indian Festival Sale”, a promotional event run by Amazon. whereas the invoice dated 09.12.2017 was raised during the course of routine business, when there was no promotion and no exceptional discounts were offered, that the margin earned by him on the sale effected on 09.12.2017 was reasonable and within the entitled and negotiated margins agreed with HP, and that the Authority had observed in the case of M/s Flipkart, that the withdrawal of discount would not amount to profiteering.
5. The DGAP has also informed that the Respondent had submitted the following documents:
