Director General of Anti-Profiteering Vs Nirma Limited (NAA)
Brief facts of the case:
The present Report dated 15.12.2021 has been received from the Director General of Anti-Profiteering (DGAP) after detailed investigation under Rule 129 of the Central Goods and Services Tax (CGST) Rules, 2017. The brief facts of the case are that a reference was received by the DGAP on 24.01.2020 from the Standing Committee on Anti-profiteering, on the basis of the letter dated 18,04.2019 of this Authority sent to the Standing Committee, to investigate whether the benefit of GST rate reduction in respect of supply of goods, made vide Notification No. 41/2017 (Central Rate) dated 14.11.2017 by the Respondent had been passed on to the recipients by way of commensurate reduction in the prices of the subject goods. It was alleged that the Respondent had not reduced the prices and thus the benefit of GST rate reduction was not passed on to the recipients. Accordingly, an investigation was initiated by the DGAP to collect evidence necessary to determine whether the benefit of GST rate reduction had been passed on by the Respondent to the recipients in respect of supply of subject goods.
2. Thereafter, the DGAP had issued a notice to the Respondent on 07.02.2020, under Rule 129 of the CGST Rules, 2017, asking the Respondent’s reply as to whether he admitted that the benefit of GST rate reduction had not been passed on to the recipients by way of commensurate reduction in prices and if so, to suo moto determine and indicate the same in his reply to the Notice as well as to furnish all supporting documents. Vide the said Notice the Respondent was given an opportunity to inspect the non-confidential evidences/information furnished to him on 13.02.2020 or 14.02.2020., which the Respondent didn’t avail.
3. The DGAP has submitted that in response to the Notice, the Respondent did not submit all the requisite documents by the due date, hence, reminders were issued to the Respondent on 16.03.2020, 30.04.2020, 13.05.2020 & 02.06.2020. The DGAP also stated that the Respondent did not submit requisite documents even after several reminders, therefore, summons under Section 70 of the CGST Act, 2017 read with Rule 132 of the CGST Rules, 2017 were issued on 02.07.2020 to Sh. Vikram Jhala, AGM, Indirect Taxation of the Respondent to submit the relevant documents. The DGAP has further submitted in his report that in compliance of the said summons, the Respondent replied vide e-mail dated 20.07.2020, but did not submit the relevant details/ documents. Hence 2nd summons under Section 70 of the CGST Tax Act, 2017 read with Rule 132 of the above Rules were issued on 27.07.2020 to Sh. Vikram Jhala to submit the required documents.
4. It was further submitted by the DGAP that in compliance of the 2nd summons, the Respondent submitted certain details, which were incomplete. Therefore, again letters dated 13.08.2020 & 08.09.2020 were sent to the Respondent to submit the complete details/documents. However, the Respondent filed a Writ Petition (Civil) No. 6758/2020 before the Hon’ble High Court of Delhi at New Delhi on the ground that the Notice dated 07.02.2020 issued by DGAP was not in compliance with Rule 129 (3) (a) & (b) of the CGST Rules, 2017 due to the reason that as per sub-rule (3) of Rule 129, every investigation was to be preceded by a notice to the interested parties containing inter-alia the information on the following matters:
(a) the description of the goods or services in respect of which the proceedings have been initiated;
(b) summary of the statement of facts on which the allegations were based.
The DGAP has also intimated the Hon’ble Delhi High Court in its Order dated 30.09.2020 disposed the petition by ordering that (a) the Notice dated 07.02.2020 impugned in this petition stood withdrawn (b) with liberty to the DGAP to issue a fresh notice in accordance with law; and (c) granting liberty to the Respondent to challenge the fresh notice, if any issued, on all grounds as may be available in law but subject to what has already been held in the Order dated 22.09.2020 and with further liberty to the Respondent to raise other challenges which, in Order dated 22.09.2020, had been held to be not maintainable at the stage of issuance of the notice in accordance with the liberty granted in terms of para 8 of the Order dated 22.09.2020.
5. Further, the DGAP has stated that in compliance of the Hon’ble Delhi High Court’s Orders dated 22.09.2020 and 30.09.2020, a fresh Notice was issued to the Respondent on 17.11.2020 with directions to furnish his reply on or before 01.12.2020 along with the requisite documents. Through the said Notice the Respondent was given an opportunity to inspect the relied upon documents on 26.11.2020 or 27.11.2020. Due to sudden surge in the Covid-19 cases, the Respondent vide letter dated 03.12.2020, requested the DGAP to supply the copies of relied upon documents. The DGAP had considered the request of the Respondent and supplied the copies of relied upon documents to the Respondent vide letter dated 24.12.2020.
6. The DGAP has also submitted that in response to the Notice, the Respondent did not submit complete requisite documents by due date. Hence reminder were issued to the Respondent on 03.12.2020 and 24.12.2020. The Respondent did not submit requisite documents even after several reminders, therefore, summons under Section 70 of the CGST Act, 2017 read with Rule 132 of the CGST Rules, 2017 were issued on 12.01.2021 to Sh. Vikram Jhala, AGM, Indirect Taxation of the Respondent to submit the requisite documents. In compliance of the said summons, the Respondent replied vide letter dated 25.01.2021, but did not submit relevant details/ documents. Hence 2nd summons under Section 70 of the above Act read with Rule 132 of the above Rules were issued on 05.02.2021 to Sh. Vikram Jhala to submit the relevant details.
7. The DGAP has further submitted that despite repetitive efforts made to obtain the requisite documents, the Respondent did not submit the documents. A letter dated 05.02.2021 was sent to the Commissioner CGST, Ahmedabad (North) to depute an officer to collect the requisite documents from the Respondent and forward the same to the DGAP. In compliance to summons dated 05.02.2021, the Respondent submitted several documents vide letters dated 19.02.2021, 19.03.2021 and 17.07.2021.
8. The DGAP has also mentioned that the time limit to complete the investigation was 23.07.2020. However, in terms of Notification No. 55/2020-Central Tax dated 27.06.2020, which was further amended vide Notification No. 65/2020-Central Tax dated 01.09.2020 and Notification No. 91/2020-Central Tax dated 14.12.2020, the time limit for compliance was extended up to 31.03.2021. Further, the Hon’ble Supreme Court of India vide its Order dated 08.03.2021 passed in Suo-Moto Writ Petition (Civil) No. 3/2020, has ordered that in cases where the limitation would have expired during the period between 15.03.2020 till 15.03.2021, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 15.03.2021. In the event the actual balance period of limitation remaining, with effect from 15.03.2021, is greater than 90 days, that longer period shall apply. The above relief has been extended and the period from 14.03.2021 till further orders also stands excluded in computing the limitation period as per the Hon’ble Supreme Court’s Order dated 27.04.2021 passed in Miscellaneous Application No. 665/2021 in SMW(C) No. 3/2020. The period covered by the current investigation is from 15.11.2017 to 31.01.2020.
9. It was further submitted by the DGAP that in response to the Notices dated 07.02.2020 & 17.11.2020 and subsequent reminders, the Respondent submitted his reply vide e-mails/letters dated 20.02.2020, 19.03.2020, 21.05.2020, 18.07.2020, 08.08.2020, 09.08.2020, 29.08.2020, 05.09.2020, 03.12.2020, 31.12.2020, 25.01.2021, 19.02.2021, 20.02.2021, 19.03.2021, 17.07.2021 and 11.11.2021. The replies of Respondent have been summed up by the DGAP as follows:-
(i) That the rate reduction had happened only in respect of 28 products by virtue of Notification No. 41/2017 dated. 14.11.2017. The GST rate was reduced from 28% to 18% in respect of two product categories i.e. Detergent Powder and Scouring Bar w.e.f. 15.11.2017.
(ii) That as on the cut off date i.e. 15.11.2017, the Respondent was having unsold stocks at his factory and Depots which were sold after rate reduction. However, the Respondent had passed on the benefits of rate reduction by charging applicable rate without increase in its basic selling price which could be understood with the below given example:
