M. Srinivas Vs Infinity Retail Ltd. (NAA)
The present Report dated 23.12.2019, has been furnished by the Applicant No. 2 i.e. the Director-General of Anti-Profiteering (DGAP), under Rule 129 (6) of the Central Goods & Services Tax (CGST) Rules, 2017. The brief facts of the present case are that an application dated 29.03.2019 was filed before the Standing Committee on Anti-profiteering, under Rule 128 (1) of the CGST Rules. 2017, by the Applicant No. 1, alleging profiteering by the Respondent in respect of “DSLR Cameras” and ‘Power Banks’ supplied by him. In the application, it was also alleged by the Applicant No. 1 that the Respondent did not reduce the selling prices of the DSLR Cameras and Power Banks, when the GST rate was reduced from 28% to 18% w.e.f. 01.01.2019, vide Notification No. 24/2018-Central Tax (Rate) dated 31.12.2018 and thus, the benefit of reduction in the GST rate was not passed on to the recipients by way of commensurate reduction in the prices. Along with the application, the Applicant No. 1 had also submitted copies of the invoices, report of the jurisdictional Deputy Commissioner (GST) and signed worksheet of the Respondent.
Held by NAA
Given our above findings the profiteered amount is determined as Rs. 1,91,21,441/-, details of the computation of which are given in Annexure-21 of the DGAP’s Report dated 23.12.2019. Accordingly, the Respondent is directed to reduce his prices commensurately, as indicated in the above mentioned Annex in terms of Rule 133 (3) (a) of the above Rules. The Respondent is also directed to deposit an amount of Rs. 1,91,21,441/- in two equal parts each in the Central Consumer Welfare Fund and the Consumer Welfare Funds of the States/UTs mentioned supra as per the provisions of Rule 133 (3) (c) of the above Rules, since the recipients are not identifiable. The above amounts shall be deposited along with 18% interest payable from the dates from which the above amount was realized by the Respondent from his recipients till the date of deposit in the Consumer Welfare Funds. The above amount of Rs. 1,91,21,441/-, along with applicable interest thereon, shall be deposited within a period of 3 months from the date of passing of this order failing which it shall be recovered by the concerned CGST/SGST Commissioners as per the provisions of the CGST/SGST Acts.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING APPELLATE AUTHORITY
The present Report dated 23.12.2019, has been furnished by the Applicant No. 2 i.e. the Director-General of Anti-Profiteering (DGAP), under Rule 129 (6) of the Central Goods & Services Tax (CGST) Rules, 2017. The brief facts of the present case are that an application dated 29.03.2019 was filed before the Standing Committee on Anti-profiteering, under Rule 128 (1) of the CGST Rules. 2017, by the Applicant No. 1, alleging profiteering by the Respondent in respect of “DSLR Cameras” and ‘Power Banks’ supplied by him. In the application, it was also alleged by the Applicant No. 1 that the Respondent did not reduce the selling prices of the DSLR Cameras and Power Banks, when the GST rate was reduced from 28% to 18% w.e.f. 01.01.2019, vide Notification No. 24/2018-Central Tax (Rate) dated 31.12.2018 and thus, the benefit of reduction in the GST rate was not passed on to the recipients by way of commensurate reduction in the prices. Along with the application, the Applicant No. 1 had also submitted copies of the invoices, report of the jurisdictional Deputy Commissioner (GST) and signed worksheet of the Respondent.
2. The DGAP has also stated that the Standing Committee on Anti-profiteering had examined the aforesaid application and upon being prima facie satisfied, had decided to refer the same to the DGAP to conduct a detailed investigation in the matter in terms of Rule 129 (1) of the CGST Rules, 2017.
3. The DGAP in his Report has further stated that on receipt of the said reference from the Standing Committee on Anti-profiteering on 26.06.2019, a notice under Rule 129 (3) was issued on 12.07.2019, calling upon the Respondent to reply as to whether he admitted that the benefit of reduction in GST rate w.e.f. 01.01.2019. had not been passed on to the recipients by way of commensurate reduction in prices and if so, to suo-moto determine the quantum thereof and indicate the same in his reply to the notice as well as furnish all the supporting documents. The Respondent was also given opportunity to inspect the non-confidential evidence/information which formed the basis of the investigation from 18.07.2019 to 22.07.2019, which the Respondent had availed of and inspected the documents.
4. The DGAP has also submitted that in response to the above notice, the Respondent did not submit the requisite documents on due date and hence, reminders were issued to him. The Respondent did not submit complete documents even after several reminders, therefore. Summons under Section 70 of CGST Act, 2017 read with Rule 132 of the above Rules were issued to Sh. Pramod Dangaich, Chief Financial Officer to appear in the office of the DGAP on 11.11.2019 and submit the requisite details/documents. In compliance to the Summons, Shri Pramod Dangaich did not appear in the office of the DGAP on 11.11.2019 but submitted certain details vide e-mail dated 12.11.2019. He was again issued 2nd Summons to appear in the office of the DGAP on 18.11.2019 and to submit the pending documents. Sh. Pramod Dangaich had appeared in the office of the DGAP on 22.11.2019 and submitted the details sought vide Summons dated 13.11.2019. Certain other details/clarifications were also sought from the Respondent vide letters dated 28.11.2019 and 03.12.2019 the reply of which had been submitted by the Respondent vide e-mail dated 03.12.2019.
5. The DGAP has also intimated that the period covered by the current investigation was from 01.01.2019 to 30.06.2019.
6. Vide e-mail dated 04.12.2019, the DGAP had also afforded opportunity to the Applicant No. 1 to inspect the non-confidential documents submitted by the Respondent between 09.12.2019 and 10.12.2019, which the Applicant No. 1 did not avail of.
7. The DGAP has further submitted that in response to the notice dated 12.07.2019 and various letters and summons. the Respondent had replied vide letters/e-mails dated 23.08.2019, 19.09.2019, 26.09.2019, 27.09.2019, 07.10.2019, 17.10.2019, 11.11.2019, 12.11.2019, 15.11.2019, 18.11.2019, 21.11.2019, 22.11.2019, 03.12.2019, 05.12.2019 and 06.12.2019.
8. Vide the aforementioned e-mails/letters, the Respondent had submitted the following documents/information:-
(a) List of all GSTIN registrations.
(b) Copies of GSTR-1 and GSTR-3B Returns for the period from December 2018 to June 2019.
(c) Details of invoice-wise outward taxable supplies for the impacted products during the period from September. 2018 to June, 2019.
(d) Sample copies of invoices, pre and post 01.01.2019.
(e) Total outward sales for the period from December, 2018 to June, 2019.
9. The DGAP has also informed that the reference from the Standing Committee on Anti-Profiteering, the various replies of the Respondent and the documents/evidence on record has been carefully examined. The main issues for determination were whether the rate of GST on the products being supplied by the Respondent was reduced from 28% to 18% w.e.f. 01.01.2019 and if so, whether the commensurate benefit of such reduction in the rate of GST had been passed on by the Respondent to his recipients, in terms of Section 171 of the CGST Act, 2017.
10. The DGAP has further informed that the Central Government. on the recommendation of the GST Council, had reduced the GST rate on the Digital Cameras and Power Banks from 28% to 18% w.e.f. 01.01.2019, vide Notification No. 24/2018-Central Tax (Rate) dated 31.12.2018. Since it was a case of reduction in the rate of tax, it was important to examine the provisions of Section 171 of the CGST Act, 2017 to ascertain whether the present case was a case of profiteering or not. Section 171(1) reads as “Any reduction in rate of tax on any supply of goods or services or the benefit of ITC shall be passed on to the recipient by way of commensurate reduction in prices.” Thus, the legal requirement of the above provision was abundantly clear that in the event of benefit of ITC or reduction in the rate of tax, there must follow a commensurate reduction in the prices of the goods or services being supplied by a registered person and that the final price being changed for each supply had to be reduced commensurately with the extent of benefit and that there was no other legally tenable mode of passing on such benefits of rate reduction or ITC to the recipients/consumers.
11. The DGAP in his report has also mentioned that on the issue of determination and quantification of profiteering by the Respondent, it appeared that the Respondent had increased the base prices of the DSLR Cameras and Power Banks when the rate of GST was reduced from 28% to 18% w.e.f. 01.01.2019, so that the commensurate benefit of GST rate reduction was not passed on to the recipients by way of commensurate reduction in prices. The methodology adopted for determining the amount of profiteering has been explained by the DGAP by illustrating the calculation of profiteered amount in respect of one specific item i.e. “Canon DSLR 200D Dual Kit (18-55/55-250) Camera” sold during the month of December, 2018 (pre GST rate reduction) vide which an average base price (after discount) was obtained by dividing the total taxable value by total quantity of this item sold during the period from 01.12.2018 to 31.12.2018. The average base price of this item was compared with the actual selling price of same item sold during the post-GST rate reduction period i.e. on or after 01.01.2019 and the same has been illustrated by the DGAP in the Table-A below:-
Table-A
(Amount in Rupees)
