Director General Anti-Profiteering Vs M/s Satya Enterprises (National Anti-Profiteering Authority)
1. The brief facts of the present case are that a reference was made by this Authority to the Director General Anti-Profiteering (DGAP), erstwhile Director General Safeguards, under rule 128 of the Central Goods and Services Tax (CGST) Rules, 2017 intimating that certain major manufacturers of Fast Moving Consumer Goods (FMCG) have not passed on the benefit of reduction in the GST rate from 28% to 18% w.e.f. 15.11.2017, by maintaining the prices of their products at the pre-GST rate reduction levels. In this connection, the invoices issued by the Respondent, bearing No. 1429 dated 12.11.2017 and 427 dated 29.11.2017 for supply of ‘Beauty Cream 50 GM’, a product manufactured by M/s Patanjali Ayurveda Ltd. were sent to the DGAP for further action.
2. This reference was sent by the DGAP to the Standing Committee on Anti-profiteering on 12.03.2018 under Rule 128 of the CGST Rules, 2017 for examination, which in it’s meeting held on 13.04.2018 had decided to forward this case to the DGAP for investigation.
3. The DGAP after completing the investigation for the period between 15.11.2017 to 31.05.2018 has submitted his Report under Rule 129 (6) of CGST Rules, 2017 on 16.10.2018 to this Authority.
4. The DGAP has stated in his Report that the notice under Rule 129 of the CGST Rules, 2017 was issued to the Respondent on 31.05.2018, calling upon him to intimate 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 prices and to also suo moto determine the quantum of benefit not passed on and mention the same in his reply. The Respondent was also provided opportunity by the DGAP to inspect the non-confidential record, however, he didn’t avail of this opportunity.
5. The DGAP had sought extension of time to complete the investigation, which was granted upto 08.11.2018 by this Authority on 06.08.2018 in terms of Rule 129 (6) of the CGST Rules, 2017.
6. The DGAP has mentioned in his Report that the Respondent vide his reply dated 15.06.2018 had stated that he was getting commission on the purchases he made from the manufacturer and was also getting a discount of approx. 33% when the rate of tax was 28%, which was reduced to approx. 22% when the rate of tax had come down to 18%. He has also stated that the Respondent was charging a fixed commission of 5% on the basis of the purchases made by him. The Respondent had also submitted copies of the purchase and the sale invoices for the pre-rate reduction and post-rate reduction periods to the DGAP.
7. The Respondent vide his letter dated 04.07.2018 addressed to the DGAP had also submitted the copies of the GSTR- 1 Returns for the months of December, 2017 and March, 2018 to May, 2018 and GSTR- 3B Returns for the months of November, 2017 to May, 2018. The Respondent vide his e-mails dated 15.07.2018, 31.07.2018 and 30.09.2018 had also submitted the sales register for the months of November, 2017 to May, 2018, price lists applicable as on 31.10.2017 and 15.11.2017, the details of invoice-wise outward taxable supplies (other than zero rated, nil rated and exempted) and the price list applicable for the period prior to 15.11.2017.
8. It has been observed by the DGAP in his Report that the Central Government, on the recommendation of the GST Council had reduced the GST rate on a number of FMCGs from 28% to 18% w.e.f. 15.11.2017, including the ‘Beauty Cream 50 GM’ vide Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017, which had been also admitted by the Respondent.
9. The DGAP has also stated that the issue of passing on the benefit of reduction in the rate of GST to the recipients of various goods sold by the Respondent had been examined by him after determining the base prices of the products, pre 15.11.2017 and post 15.11.2017.
10. The DGAP has further stated that from the invoices made available as detailed in the Table below it was clear that the Respondent had increased the base price of the ‘Beauty Cream 50 GM’ when the rate of tax was reduced from 28% to 18%, so as to keep the cum-tax selling price the same as it was prior to the rate reduction on 15.11.2017:-
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