Director General of Anti-Profiteering Vs Procter & Gamble Home Products (PGHP) Private Limited (NAA)
The brief facts of the case were that the Applicant had alleged that the Respondents had not passed on the benefit of reduction in the rate of GST from 28% to 18% w.e.f. 15.11.2017 to the recipients by way of commensurate reduction in the prices of the products being sold by them in terms of Section 171 of the CGST Act, 2017. The DGAP had also stated that the base prices of 1383 goods had been increased by the Respondents after the rate of tax was reduced on them and hence, the Respondents had contravened the provisions of Section 171(1) of the CGST Act, 2017. The DGAP had further reported that the Respondents had profiteered an amount of Rs. 2,43,93,90,580/- by denying benefit of tax reduction to their customers.
Held by NAA
It is abundantly clear that the Respondents are liable to pass on the benefit of GST rate reduction from 28% to 18% as was notified by the Central and the State Governments vide Notification No. 41/2017-Central tax (Rate) dated 14.11.2017 w.e.f. 15.11.2017. It is also established that the Respondents have not passed on the benefit of above tax reduction to the ultimate customers in terms of Section 171(1) w.e.f. 15.11.2017 to 39.09.2018. On the basis of the pre rate reduction GST rate of 28% and the post rate reduction GST rate of 18% and the details of outward taxable supplies other than zero rated, nil rated and exempted supplies of the SKUs sold during the period from 15.11.2017 to 30.09.2018, as have been supplied by the Respondents themselves, the amount of net higher sales realization due to increase in the base prices of the impacted SKUs, despite the reduction in the GST rate from 28% to 18% or the profiteered amount is determined as Rs. 2,41,51,14,485/- as per the provisions of Section 171(1) & (2) of the CGST Act, 2017 read with Rule 133(1) of the CGST Rules, 2017. The profiteered amount in respect of all the 3 Respondents is further determined as (i) Rs. 181,51,46,262/- in respect of the Respondent No. 1 i.e. M/s Proctor & Gamble Home Products (PGHP) Pvt. Ltd. (ii) Rs. 2,00,30,807/- in respect of the Respondent No. 2 i.e. M/s Proctor & Gamble Hygiene & Health Care (PGHH) Ltd. and (iii) Rs. 57,99,37,416/- in respect of the Respondent No. 3 i.e. M/s Gillette India Ltd. (GIL), on the sale transactions made by the above Respondents w.e.f. 14.11.2017 to 30.09.2018, which has been individually and collectively computed in respect of all the 33 States and Union Territories as per Annexure-6 attached to the Report of the DGAP dated 31.01.2020.
