Case Law Details
Shri R. K. Gupta Vs. Ms Abbott Healthcare Pvt. Ltd. (NAA)
The brief facts of the present case are that an application dated 22.01.2018 was filed by the Applicant No. 1 before the Standing Committee constituted under Rule 128 of the above Rules alleging that the Respondent No. 1 had not passed on the benefit of reduction in the rate of tax as he had increased the MRP of “‘Melaglow Rich (Niacinamide) Depigmentation & Glow Restoration Cream (here-in-after referred to as the product) from Rs. 365/- to Rs. 415/- per unit post implementation of the GST. He had also submitted an image of the label of the product, which showed that the MRP of the product was mentioned as Rs. 365/- per unit however, another pasted sticker on the label indicated that the “MRP post GST” was Rs. 415/- per unit, which amounted to an increase of Rs. 50/- per unit post implementation of the GST. The label also disclosed that the product was marketed by the Respondent No. 1 and manufactured by the Respondent No. 2. The Applicant No. 1 had further informed vide his email dated 10.07.2018 that the above product was purchased by him from the Respondent No. 3. The Applicant No. 1 had also claimed that since the Respondents had increased the MRP of the product after the rate of tax was reduced on it, they had indulged in profiteering in contravention of the provisions of Section 171 of the CGST Act, 2017 and hence appropriate action should be taken against them.
Held by NAA
it is revealed that the rate of tax was 30.06% in the pre-GST era which was reduced to 28% in the post-GST era vide Notification No. 1/2017 Central Tax (Rate) dated 28.06,2017, and the rate of GST was further reduced from 28% to 18% vide Notification No. 41/2017– Central Tax (Rate) dated 14 11.2017 However, during these periods, the base price of the product was increased from Rs. 202.06 to Rs, 230.90 per unit which resulted in increasing of the selling price amounting to denial of not passing the benefit of tax reduction to the customer.
It is also established from the above facts that the above Respondent has issued incorrect invoices while selling the above product to his customers as he had not correctly shown the basic price which he should have legally charged from them. The Respondent has also compelled them to pay additional GST on the increased price through the incorrect tax invoices which would have otherwise resulted in further benefit to the customers which he has failed to pass on. It is also established from the record that the Respondent has deliberately and 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, the Respondent 1 is required to be heard as to why shouldn’t he be penalised, for the violation of the above-mentioned provisions of the CGST Act, 2017 and accordingly a notice be issued to him to explain why such a penalty should not be imposed on him.
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