Case Law Details
Sh. Kumar Gandhary Vs. KRBL Limited (National Anti-Profiteering Authority)
We have carefully heard the Respondent and also perused the material placed on the record and it is revealed that the “India Gate Basmati Rice” sold by the Respondent was not liable for tax before the implementation of the GST and after coming into force of the CGST Act, 2017 it was levied GST @ 5% w.e.f. 22.09.2017. The Respondent was also made eligible to avail ITC w.e.f. the above date. However, the ITC claimed by the Respondent was not sufficient to meet his output tax liability and he had to pay the balance amount of tax in cash as is evident from the perusal of the table prepared by the DGSG. It is also apparent from the returns filed by the respondent for the months of September, 2017, October, 2017 and November, 2017 that the ITC available to him as a percentage of the total value of taxable supplies was between 2.69% to 3% whereas the GST on the outward supply of his product was 5% which was not sufficient to discharge his tax liability. Moreover in this case the rate of tax has been increased from 0% to 5% instead of reduction in the same. Therefore, there appears to be no reason for treating the price fixed by the Respondent as violation of the provisions of the Anti-Profiteering clause.
7. It is also revealed from the perusal of the tax invoices submitted by the Respondent that there was an increase in the purchase price of paddy in the year 2017 as compared to its price during the year 2016 which constitutes major part of the cost of the above product. It is further revealed from the record that the Respondent had increased the MRP of his product from Rs. 540/- to Rs. 585/- which constituted increase of 8.33% keeping in view the increase in the purchase price. Therefore, due to the imposition of the GST on the above product as well as the increase in the purchase price of the paddy there does not appear to be denial of benefit of ITC as has been alleged by the Applicant as there has been no net benefit of ITC available to the Respondent which could be passed on to the consumers. Accordingly there is no substance in the application filed by the above Applicant as there is no violation of the provisions of Section 171 of the CGST Act, 2017 and hence the same is dismissed.
FULL TEXT OF THE ORDER IS AS FOLLOWS:-
1. The brief facts of this case are that the above Applicant vide his application dated 27.11.2017 (Annexure-l), sent through e-mail had intimated that the benefit of reduction in the rate of tax on “India Gate Basmati Rice” had not been passed on to the consumers as it’s Maximum Retail Price (MRP) had been increased, and hence margin of profit had also been increased by the above Respondent. He had also attached images of the details printed on the 10 Kg. package of “India Gate Basmati Rice” (Mini Mogra) packed in the months of August, 2017 and October, 2017 showing the printed price of Rs. 540/- & Rs. 585/-respectively.
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While the increase of MRP due to increase in the price of paddy is understandable, ITC credit of 2.89-3% should have enabled reduction of MRP. Output Tax at 5% being higher than ITC credit of 2.89-3% does not justify MRP increase. It is only a cash effect and at the most, the MRP could have been increased by the cost of capital for funding the GST Outflow of 2-2.11%. Am I missing something here?