Director General of Anti-Profiteering Vs Johnson & Johnson Private Limited (National Anti-Profiteering Authority)
Profiteered amount is determined as Rs. 2,30,40,74,132/- as per the provisions of Rule 133 (1) of the above Rules as has been computed vide Annexure-13 of the Report dated 24.06.2019. Accordingly, the Respondent is directed to reduce his prices commensurately in terms of Rule 133 (3) (a) of the above Rules. The Respondent is also directed to deposit an amount of Rs. 2,30,40,74,132/-in the CWF of the Central and the concerned State Government, as the recipients are not identifiable, as per the provisions of Rule 133 (3) (c ) of the above Rules along with 18% interest payable from the dates from which the above amount was realised by the Respondent from his recipients till the date of its deposit.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING AUTHORITY
1. This Report dated 24.06.2019 has been received from the Director General of Anti-Profiteering (DGAP) after detailed investigation under Rule 129 (6) of the Central Goods & Service Tax (CGST) Rules, 2017. The brief facts of the case are thata reference was received by the DGAP from the Standing Committee on Anti-Profiteering on 07.01.2019 for conducting investigation under Rule 129 (1) of the above Rules against the Respondent in which it was alleged that the Respondent had not passed on the benefit of reduction in the rate of GST on the products being supplied by him, when the rate of GST was reduced from 28% to 18% w.e.f. 15.11.2017.
2. The DGAP had issued Notice under Rule 129 (3) of the CGST Rules, 2017 on 15.01.2019 to the Respondent, to submit his reply as to whether he admitted that the benefit of reduction in the GST rate w.e.f. 15.11.2017, had not been passed on to the recipients by way of commensurate reduction in prices and if so, to suo moto determine the quantum thereof and indicate the same in his reply to the Notice as well as furnish all documents in support of his reply. The Respondent was also afforded an opportunity to inspect the non-confidential evidences/information which formed the basis of the said Notice, during the period 21.01.2019 to 23.01.2019, which the Respondent had availed and inspected the documents on 23.01.2019.
3. The DGAP has also mentioned that the time period of the present investigation was from 15.11.2017 to 31.12.2018.He has also sought extension of time to complete the investigation from this Authority, which was granted to him till 06.07.2019 in terms of Rule 129 (6) of the above Rules vide order dated 19.03.2019.
4. The DGAP has also stated that the Respondent replied to his Notice vide letters/e-mails dated 28.01.2019 (Annexure-4 of the DGAP’s Report), 04.02.2019 (Annexure-5),08.02.2019 (Annexure-6), 21.02.2019 (Annexure-7), 22.02.2019 (Annexure-8), 06.03.2019 (Annexure-9), 07.05.2019 (Annexure-10) and 31.05.2019 (Annexure-11 of the DGAP’s Report). The reply of the Respondent as informed by the DGAP in his report was as follows:-
a. Consequent to the GST rate reduction w.e.f. 15.11.2017, a communication regarding the reduction in prices to be charged from the distributors and reduction in MRPs was shared with the distributors/consumers. The method of reduction both in case of stock-in-hand as on 15.11.2017 and fresh purchases, was also communicated to the distributors/consumers. The Respondent further submitted that though he had issued guidelines to the downstream trade to ensure compliance with the anti-profiteering provisions, his distributors were independent assessees who were subjected to GST compliance independently.
b. The Respondent also submitted that in the absence of any guidelines to compute and pass on the benefit of GST rate reduction by way of commensurate reduction in prices, he had discharged his statutory obligation through various methods.
5. The DGAP has further stated that the Respondent submitted the following documents/information:-
a) GSTR-1 & GSTR-3B Returns for the period from July, 2017 to December, 2018 for all his registrations all over India.
b) Details of invoice-wise outward taxable supplies during the period from July, 2017 to December, 2018.
c) Price Lists (Pre and Post November, 2017) for all the products, specifically indicating the SKUs impacted by GST rate reduction w.e.f. 15.11.2017.
d) Sample copies of invoices issued to his dealers, pre and post 15.11.2017.
6.The DGAP has also observed that the Central Government, on the recommendation of the GST Council, had reduced the GST rate on the products supplied by the Respondent from 28% to 18% w.e.f. 15.11.2017, vide Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017 which has also not been contested by the Respondent.
7. The DGAP has also submitted that as regards the amount of profiteering made in the present case, perusal of the invoices made available by the Respondent indicated that he had increased the base prices of the impugned products when the rate of GST was reduced from 28% to 18% w.e.f. 15.011.2017. On the basis of aforesaid pre and post-reduction GST rates and the details of outward taxable supplies (other than zero rated, nil rated and exempted supplies) of the impugned products during the period from 15.11.2017 to 31.12.2018, as furnished by the Respondent to the DGAP, the DGAP has concluded that the amount of net higher sales realization due to increase in the base prices of the impacted products, despite the reduction in the GST rate from 28% to 18% or in other words, the profiteered amount came to Rs. 2,30,40,74,132/-. The DGAP has also claimed that the profiteered amount has been arrived at by comparing the average of the base prices of the impugned products sold during the period from 01.11.2017 to 14.11.2017, with the actual invoice-wise base prices of the products sold during the period from 15.11.2017 to 31.12.2018. The reference base prices of the products which were not sold during the period from 01.11.2017 to 14.11.2017, were taken from the sales data for the period from July, 2017 to October, 2017 and the price list submitted by the Respondent to the DGAP. The excess GST so collected from the recipients, was also included in the aforesaid profiteered amount by the DGAP as the excess price collected from the recipients also included the GST charged on the increased base prices.
8. The DGAP has computed the State or Union Territory wise details of the total profiteered amount of Rs. 230,40,74,132/- which are furnished in the Table below:-
