Case Law Details
Director General of Anti-Profiteering Vs J. P. and Sons (National Anti-Profiteering Authority)
The brief facts of the present case are that the Standing Committee vide the minutes of it’s meeting dated 13.04.2018 had requested the DGAP to initiate investigation under Rule 129 (1) of the CGST Rules, 2017 on the allegation that the Respondent had not passed on the benefit of tax reduction from 28% to 18%, granted by the Central and the State Governments w.e.f. 15.11.2017 by maintaining the same Maximum Retail Prices (MRPs) which he was charging before the above date. in case of the two products namely (i) Johnson & Johnson Baby Shampoo 100 ml. and (ii) Johnson & Johnson Baby Powder 200 Gms. (here-in-after referred to as the products). It was also alleged that instead of reduction, the base prices of the above two products were increased on 15.11.2017 and thus the Respondent 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 him.
The Respondent has vehemently argued that he had no control on the fixing of the base prices as well as the MRPs as both of them were fixed by J & J through the software which he was bound to follow as per the terms of the agreement executed by him with the above Company. However, it is apparent from the record that the Respondent is duly registered under the CGST/SGST Act, 2017 and he was hence bound to follow the Notification dated 14 11.2017 mentioned above vide which the rate of GST was reduced from 28% to 18% on 130 products which he was selling. He cannot escape the legal obligation which was imposed upon him by the above Notification by shifting his accountability on this ground. The Respondent has himself admitted during the course of the hearing that he was aware that he was required to pass on the benefit of the reduced rate of tax to his customers and therefore also he cannot deny his legal liability. The Respondent has also not produced any evidence to show that he had made any correspondence with J & J to inform rt that he was bound to reduce the prices due to reduction in the rate of tax and J & J should either not increase the base prices or compensate him for the benefit he was bound to pass on to his customers, therefore. it is quite apparent that he had deliberately charged the enhanced prices with an intention to pocket the amount which he was bound to pass on to the recipients. Therefore, the above contention of the appellant cannot be accepted.
It is also apparent from the perusal of Annexure-8 that the DGAP has correctly calculated the amount of profiteering by taking in to account all the supplies made by the Respondent w.e.f. 15.11.2017 to 31.03.2018. Inspite of the claim made by the Respondent that he had purchased the goods on the increased prices from J & J after 14.11.2017 there is no denying the fact that he had charged the prices which he could not have charged in view of the reduction in the rate of tax. Mere charging of the tax @ 18% after 15.11.2017 cannot be construed to have resulted in passing on of the benefit when the base prices had been deliberately increased. Hence. this contention of the Respondent is not tenable and cannot be accepted.
Accordingly, the Respondent is directed to reduce the prices of all the above products as per the provisions of Rule 133 (3) (a) of the CGST Rules, 2017 by making commensurate reduction in their prices keeping in view the reduction in the rate of tax so that the benefit is passed on to the recipients. The Respondent is also directed to deposit the profiteered amount of Rs. 5,01,646/- along with the interest to be calculated @ 18% from the date when the above amount was collected by him from his customers till the above amount is deposited
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