Case Law Details
Kerala State Screening Committee Vs IFB Industries Ltd. (National Anti-Profiteering Authority)
The Respondent further objected that no methodology and procedure for determining the anti-profiteering amount had been prescribed by Legislature and the provisions of Section 171 of the CGST, Act and Rule 122 to 137, being part of a taxing Statute cannot be enforced in the absence of machinery provisions for computation of the profiteered amount. He also objected that no mechanism/ guideline had been prescribed as to whether the price alteration was required to be done at entity level, State level, product level, SKU level, category level and there was no guidance whether commensurate change in price would be assessed in absolute terms or as trend or in percentage terms. On these issues, it is stated that, Section 171 (1) of the CGST Act, 2017 clearly states that “Any reduction in the rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices”. Therefore, the intention of the legislature is amply clear from the above provision which requires that the benefit of tax reduction or ITC is required to be passed on to the customers by commensurate reduction in prices. This Authority has been duly constituted under Section 171 (2) of the above Act and in exercise of the powers conferred on it under Rule 126 of the CGST Rules, 2017 has notified the ‘Procedure & Methodology’ for determination of the profiteered amount vide its Notification dated 28.03.2018. However, the mathematical methodology for determination of the profiteered amount has to be applied on case to case basis depending on the facts of each case and no fixed formula can be set for calculating the same as the facts of each case are different. It would also be appropriate to mention here that this Authority has power to ‘determine’ the methodology and not to ‘prescribe’ it as per the provisions of the above Rule and therefore, no set prescription can be laid while computing profiteering. It would be further relevant to mention that the power under Rule 126 has been granted to this Authority by the Central Govt., as per the provisions of Section 164 of the above Act which has approval of the Parliament. Rule 126 has further been framed on the recommendation of the GST Council which is a constitutional body created under the Constitution (One Hundred and First Amendment) Act, 2016. Therefore, the above power has both legislative sanction as well as incorporation in the CGST Act, 2017 and the CGST Rules, 2017. The delegation provided to this Authority under the above Rule is clear, precise, unambiguous and necessary and is well within the provisions of the Constitution and therefore, it has been rightly conferred on this Authority. Hence, the objections raised by the Respondent in this regard are frivolous and without legal force.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING APPELLATE AUTHORITY
1. This report, dated 06.12.2018, has been received by this Authority from the Director General of Anti-Profiteering (DGAP) under Rule 129 (6) of the Central Goods and Service Tax (CGST) Rules, 2017. The brief facts of the present case are that an application was filed by the Applicant No. 1 before the Standing Committee on Anti-profiteering, alleging profiteering by the Respondent on the supply of the product, namely, “Washing Machine (Elena Aqua VX)” (here-in referred to as the product), by not passing on the benefit of reduction in the rate of tax on the impugned product, post introduction of GST w.e.f. 01.071017. In this regard, the Applicant No. 1 had relied on two invoices issued by the Respondent, one dated 31.05 2017 (pre-CST) and the other dated 04.08.2017 (post-GST), the details of which have been given in the Table below:-
Table –A
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