Case Law Details
Dr. Meenakshi Agrawal Vs S. R. Lifesciences (NAA)
Respondent is engaged in selling of medicines from his retail stores having GSTIN 27BDVPM0061N1ZZ. It is also revealed from the plain reading of Section 171 (1) supra that it deals with two situations one relating to the passing on the benefit of reduction in the rate of tax and the second about the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the record that there has been a reduction in the rate of tax from 28% to 18% w.e.f. 15.11.2017, on “the subject goods” being supplied by the Respondent, vide Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017. Therefore, the Respondent is liable to pass on the benefit of tax reduction to his customers in terms of Section 171 (1) of the above Act. It is also apparent that the DGAP has carried out the present investigation w.e.f. 15.11.2017 to 30.09.2019.
It is also evident that the Respondent has been selling “the subject goods” etc. during the period from 15.11.2017 to 30.09.2019 to his customers. Upon comparing the average base prices as per the details of sale transactions submitted by the Respondent for the pre rate reduction period from 01.11.2017 to 14.11.2017 and the actual base prices post rate reduction w.e.f. 15.11.2017 to 30.09.2019 it has been found that the GST rate of 18% has been charged by the Respondent w.e.f. 01.01.2019, however, the base prices of the products have been increased more than their pre rate reduction base prices, w.e.f. 15.11.2017 which shows that because of the increase in the base prices the cum-tax prices paid by the consumers were not reduced commensurately, inspite of the reduction in the GST rate. On the basis of the aforesaid pre and post reduction GST rates and the details of the outward supplies (other than zero rated, nil rated and exempted supplies) made during the period from 15.11.2017 to 30.09.2019, the amount of net higher sale realization due to increase in the base prices of the products, despite the reduction in the GST rate from 28% to 18% or the profiteered amount has come to Rs. 1,54,138/- (inclusive of Rs. 1000/- of the Applicant No. 1) including the GST on the base profiteered amount. The details of the computation have been given by the DGAP in Annexure-12 of his Report dated 23.03.2020.
From the above facts and discussion, it is evident that, the Respondent did not reduce the selling price of the products mentioned above when the GST rate was reduced from 28% to 18% w.e.f. 15.11.2017 and hence, the benefit of reduction in GST rate was not passed on to the recipients by way of commensurate reduction in the prices, in terms of Section 171 of the CGST Act, 2017 and therefore, he has contravened the provisions of Section 171 of the CGST Act, 2017.
Based on the above facts, it is established that the Respondent has acted in contravention of the provisions of Section 171 of the CGST Act, 2017, and has not passed on the benefit of reduction in the rate of tax to his recipients by commensurate reduction in the prices. Accordingly, the profiteered amount is determined as Rs. 1,54,138/- as per the provisions of Rule 133 (1) of the CGST Rules 2017. The Respondent is therefore directed to reduce the prices of his products as per the provisions of Rule 133 (3) (a) of the CGST Rules, 2017, keeping in view the reduction in the rate of tax so that the benefit is passed on to the recipients. Accordingly, the Respondent is required to deposit the profiteered amount of Rs. 1,54,138/- along with the interest to be calculated @ 18% from the date when the above amount was collected by him from the recipients till the above amount is deposited in terms of Rule 133 (3) (b) of the CGST Rules, 2017. Since the other recipients (other than the Applicant No. 1), in this case, are not identifiable, the Respondent is directed to deposit the amount of profiteering of Rs. 1,53,138/- along with interest in the CWFs of the Central and Maharashtra State Government as per the provisions of Rule 133 (3) (c) of the CGST Rules, 2017 in the ratio of 50:50 along with interest @ 18% till the same is deposited.
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