M. Srinivas Vs Electronics Mart India Ltd. (NAA)
The brief facts of the case are that an application dated 29.03.2019 was filed by the Applicant No. 1, under Rule 128 (1) of the CGST Rules, 2017 before the Standing Committee on Anti-Profiteering alleging profiteering by the Respondent in respect of supply of Monitors and TVs of screen size up to 32 inches despite reduction in the rate of GST from 28% to 18% w.e.f. 01.01.2019. The Applicant No. 1 had also alleged that the product “LG LED TV” having value of Rs. 12,600/- was sold at a lower price after the reduction in the GST rate from 28% to 18% w.e.f. 01.01.2019 levied vide Notification No. 24/2018 Central Tax (Rate) dated 31.12.2018. but without commensurate reduction in the price. The Applicant No. 1 had further alleged that the Respondent had not passed on the benefit of reduction in the rate of tax in respect of the impugned product to the extent of 10% (28%-18%) by commensurate reduction in price.
Held by NAA
The Respondent has further pleaded that the DGAP has wrongly claimed that the LG LED TV 24LJ470 was impacted by the GST rate reduction w.e.f. 01.01.2019 vide Notification No. 24/2018 Central Tax (Rate) dated 31.12.2018. In this regard, the Respondent has submitted that the above model was 24 inches (60.96 cm) television which was subject to GST @28% till 27.07.2018 and thereafter it was reduced to 18% vide Para C (xii) of Notification No. 18/2018 Central Tax (Rate) dated 26.07.2018. The Respondent has also contended that the LG LED TV 24LJ470 was within 68 cm. and the same was evidenced from the model specifications on the vendor’s website. The Respondent has further submitted that the comparison of sample invoices issued in May, 2018 and January, 2019 pertaining to the above model has wrongly been formed as the basis for anti-profiteering investigation by the DGAP. In this regard, perusal of Annexure-1 attached by the DGAP with his clarifications dated 08.07.2020, which is screen shot of the website of the Respondent, shows that the LG LED 24LJ470 TV was a 24 inches model which was impacted by the GST rate reduction w.e.f. 01.01.2019. The Respondent vide Annexure-2 attached by the DGAP has himself furnished the price trend of the LG LED TV (HSN:8528 7218) to the Principal Commissioner of Central Tax, Medchal Commissionerate, in which the aforesaid model has been shown to have been impacted by the reduction in the rate of GST from 28% to 18% w.e.f. 01.01.2019. Therefore, the above claim of the Respondent is untenable as the Notification No. 24/2018-Central Tax (Rate) dated 31.12.2018 had reduced the rate of tax from 28% to 18% in respect of the “Monitors and TVs of up to screen size of 32 inches”. The product was mentioned in the complaint was TV of screen size of 24 inches which also comes under the same category. Therefore, it is established that the rate of tax during the month of May, 2018 was 28% on the above model which was reduced to 18% w.e.f. 01.01.2019 and hence, the complaint of not passing on the benefit of tax reduction made by the Applicant No. 1 is correct. However, the Respondent had not reduced the price of the complained product commensurately w.e.f. 01.01.2019. Therefore, the above claim of the Respondent cannot be accepted.
The Respondent has also pleaded that the DGAP has compared the invoice price of May, 2018 with that of January, 2019 to compute the profiteered amount. The above plea of the Respondent is wrong as the DGAP has computed the average base prices of the products sold by the Respondent in the month of December, 2018 and compared them with the actual base prices which were charged by the Respondent during the period of January, 2019 to June, 2019 to compute the profiteered amount. The above invoice has only been relied upon to initiate the anti-profiteering proceedings against the Respondent. Hence, the above plea of the Respondent is not tenable.
The Respondent has also argued that a sale transaction dated 30.06.2019 amounting to Rs. 2,20,600/- was erroneously posted in the books of account which was reversed on the succeeding day i.e. on 01.07.2019. In this regard, the Respondent has submitted a copy of entry posted in the books of account and credit note issued to reverse it as evidence vide Annexure-4 and requested that the transaction has been erroneously included in the computations and the same be deducted from the profiteered amount. The DGAP in his Supplementary Report dated 01.06.2020 has also verified that he has excluded all the transactions for which credit notes were issued for sales returned by mapping the credit notes with the original sale invoices. However, in respect of the above transaction he has inadvertently computed profiteering amounting to Rs. 1,98,751/- for which credit note was issued later on. On perusal of credit note No. 1210/19E/SR-164 dated 01.07.2019 submitted by the Respondent, the DGAP has observed that invoice No. 1210/19E/S-8562 dated 30.06.2019 (Telangana State) was cancelled and therefore, profiteering amounting to Rs. 1,98,751/- should be reduced from the total profiteered amount of Rs. 37,89,550/-. Accordingly, the above claim of the Respondent is accepted as the DGAP has inadvertently computed profiteering amounting to Rs. 1,98,751/- on a transaction for which credit note was issued later on and accordingly, an amount of Rs. 37,89,550/- is directed to be reduced from the profiteered amount.
The Respondent has also stated that he had inadvertently mapped the Sony Play Station accessories as non-impacted in the submissions made before the DGAP. However, he had charged GST @18% from 01.01.2019 giving effect to the GST rate reduction Notification No. 24/2018 dated 31.12.2018. However, the DGAP has claimed that with regard to the Sony Accessories PS4 Dual Shock BL, the Respondent has accepted inadvertent mapping of the product as non-impacted and profiteering of Rs. 7056/- has been computed on the same as per Annexure-20 as well as Table-C of the Report dated 23.12.2019. Hence, the above claim of the Respondent is untenable.
The Respondent has also argued that the products falling under HSN Code 85076000 viz. MI Power Banks; Sony Power Banks and Stuffcool Power Banks were classified as impacted vide Table-C of the DGAP’s Report dated 23.12.2019. However, the Respondent has claimed that there had been sale of two type of Power Banks falling under HSN Code 85076000 — Lithium Ion and Lithium Polymer. The GST rate Notification No. 24/2018 dated 31.12.2018 had reduced the rate of Power Banks of Lithium Ion from 28% to 18% with effect from 01.01.2019. All MI, Sony and Stuffcool Power Banks were Lithium Polymer Power Banks which did not form part of the GST rate reduction Notification No. 24/2018 dated 31.12.2018 which was the reason that the Respondent had classified the same under non impacted products and continued to charge the same GST rate as was prevalent earlier. The DGAP has stated in his clarifications dated 01.06.2020 that with regard to the Powers Banks (Ml, Sony and Stuffcool), the Respondent has submitted screenshots of Power Bank description as battery type “Lithium Polymer” which was not impacted by the GST rate reduction Notification No. 24/2018-Central Tax (Rate) dated 31.12.2018 w.e.f. 01.01,2019. The DGAP has also stated that this Authority may consider the same and profiteering amounting to Rs. 1,56,791/- may be reduced from the total profiteered amount of Rs. 37,89,550/- on the above Power Banks. On perusal of the record, we observe that after coming into force of Notification No. 24/2018-Central Tax (Rate) dated 31.12.2018 there had been no impact on the tax rate leviable on the above Power Banks having HSN Code 85076000, which were being supplied by the Respondent with the “Lithium Polymer” batteries. Hence, we agree with the DGAP’s observation and allow reduction of profiteered amount by Rs. 1,56,791/- in respect of the above Power Banks from the total profiteering amount of Rs. 37,89,550/-.
0n the basis of above clarifications, the profiteered amount reported in the Report dated 23.12.2019 is revised to Rs. 34,34,008/-,
Given our above findings the profiteered amount is determined as Rs. 34,34,008/-, details of the computation of which are given in Annexure-20 of the DGAP’s Report dated 23.12.2019 and the clarification Report of the DGAP dated 01.06.2020, in terms of Section 171 (1) read with Rule 133 (1). Accordingly, the Respondent is directed to reduce his prices commensurately, as indicated in the above mentioned Annexure, in terms of Rule 133 (3) (a) of the above Rules. The Respondent is also directed to deposit an amount of Rs. 34,34,008/- in two equal parts each in the Central Consumer Welfare Fund and the Consumer Welfare Funds (CWFs) of the States 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. 34,34,008/-, 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 AUTHORITY
The present Report dated 23.12.2019 has been furnished by the Director General of Anti-Profiteering (DGAP), under Rule 129 (6) of the Central Goods & Service Tax (CGST) Rules, 2017. The brief facts of the case are that an application dated 29.03.2019 was filed by the Applicant No. 1, under Rule 128 (1) of the CGST Rules, 2017 before the Standing Committee on Anti-Profiteering alleging profiteering by the Respondent in respect of supply of “Monitors and TVs of screen size up to 32 inches” despite reduction in the rate of GST from 28% to 18% w.e.f. 01.01.2019. The Applicant No. 1 had also alleged that the product “LG LED TV” having value of Rs. 12,600/- was sold at a lower price after the reduction in the GST rate from 28% to 18% w.e.f. 01.01.2019 levied vide Notification No. 24/2018-Central Tax (Rate) dated 31.12.2018 but without commensurate reduction in the price. The Applicant No. 1 had further alleged that the Respondent had not passed on the benefit of reduction in the rate of tax in respect of the impugned product to the extent of 10% (28%-18%) by commensurate reduction in price as has been furnished in Table- ‘A’ given below:-
Table -‘A’
(Amount in Rs.)
