Director General of Anti-Profiteering Vs Raj & Company (National Anti-Profiteering Authority)
The Respondent has vehemently argued that he had no control on the fixing of base prices as well as the MRPs as both of them were fixed by the manufacturer M/s L’oreal India Pvt. Ltd. through it’s software. The Respondent has also claimed that the MRP of the above product was not increased from Rs. 35 to Rs. 40 but discount of Rs. 5 was given on it in the months of September and October 2017. However the documents filed by the Respondent show that the discount was to the extent of 12.5% on the MRP of Rs. 40 as is apparent from the invoice No. LCBL039761704221 dated 30.11.2017 and 5% on the other products. In this invoice nowhere it has been mentioned that this discount was on account of the reduction in the GST rate from 28% to 18%. Moreover the Respondent has himself claimed that during the months of September and October regular promotional discounts were given on most of the products. Therefore the discounts provided to the customers after GST rate reduction are required to be considered as the on going existing promotional schemes during the pre-GST rate reduction period. The argument of the Respondent that the prices were controlled by the manufacturer does not hold good in as much as he is registered supplier under the CGST/SGST Act, 2017 and is bound to follow the notification dated 14.11.2017 to pass on the benefit of GST rate reduction. The legal obligation imposed upon him cannot be ignored only because he is not the manufacturer who controls the prices, as he is accountable as a supplier to pass on the benefit of GST rate reduction. There is no evidence to show that he had corresponded with the manufacturer for decrease in the base prices on account of the GST rate reduction. Hence it is apparent that the Respondent inspite of his legal obligation has enhanced the prices of all the 293 products and resorted to profiteering.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING AUTHORITY
1. This report dated 08.08.2018, has been received from the Directorate 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 on the receipt of a reference dated 27.02.2018, where a complaint was filed with the Secretary National Anti-Profiteering Authority (NAA), alleging that certain major manufacturers of Fast Moving Goods Consumer Goods (FMCGs) including M/s Garnier Laboratories Ltd., had not passed on the benefit of reduction in the rate of tax from 28% to 18% w.e.f. 15.11.2017, was forwarded to the DGAP for necessary action and the DGAP had forwarded it to the Standing Committee to prima facie verify the veracity of the complaint. The Standing Committee vide the minutes of it’s meeting dated 13.04.2018 requested the DGAP to initiate investigation under Rule 129 (1) of the CGST Rules, 2017 stating that the Respondent had not fully passed on the benefit of the tax reduction from 28% to 18% granted vide Notification No 41/2017-Central Tax (Rate) dated 14.11.2017, instead he had increased the base price to keep the MRP of his product Garnier Nat Shade 3 to maintain the same price which he was charging before the rate of tax was reduced on 15.11.2917 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. In this connection the following invoices issued by the Respondent were also submitted to the DGAP for further investigation:-
