Shri Navneet Gupta Vs M/s Bharti Telemedia Pvt Ltd. (NAA)
It was submitted that the tax incidence on DTH services prior to GST implementation was subjected to Entertainment Tax which ranged between 10% to 25% in various States, in addition to 15% Service Tax, whereas on introduction of GST, the tax rate came down to 18%. However, the Applicant No. 1 stated that the benefit of this reduction in the rate of tax was not passed on to the consumers by the DTH operators when the GST was introduced w.e.f. 01.07.2017. Thus, it was alleged that the Respondent had indulged in profiteering in contravention of the provisions of Section 171 of CGST Act. 2017.
Held by NAA
It is further found from the record that the Entertainment Tax was neither allowed as ITC in pre GST era nor has been allowed in the GST era. and that the cost of the entertainment tax was borne by the Respondent himself as is clear from the invoices produced by him Accordingly. there is no ground to believe the contention of the above Applicant as no benefit of ITC has accrued to the Respondent which was required to be passed on.
It is also apparent that the plans and packages post GST had been changed and thus, there were no comparable prices for the old packages with that of the new ones and the prices of the packages charged by the Respondent in the pre GST era from all his customers across the country were the same and were inclusive of only Service Tax @15% (14% service tax + 0.5% SBC + 0.5% KKC), and hence the allegation made by the above Applicant is not established. that he had charged more price post implementation of GST.
It is also clear from the above that due to non-availability of cogent and reliable evidence, the provisions of Section 171 of the CGST Act, 2017 are not attracted and hence there is no merit in the application filed by the above Applicant. Accordingly the same is dismissed as being not maintainable.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING APPELLATE AUTHORITY
1. The present Report dated 13.03.2019. has been received from the Applicant No. 2 i.e. the Director General of Anti-Profiteering (DGAP) after detailed investigation under Rule 129 (6) of the Central Goods & Service Tax (CGST) Rules. 2017. The facts of the case are that an application dated 27.11.2017 was filed before the Standing Committee on Anti-profiteering under Rule 128 of the CGST Rules, 2017;by the Applicant No. 1. against the Direct To Home (DTH) industry in general stating that the tax incidence on DTH services prior to GST implementation was subjected to Entertainment Tax which ranged between 10% to 25% in various States, in addition to 15% Service Tax, whereas on introduction of GST, the tax rate came down to 18%. However, the Applicant No. 1 stated that the benefit of this reduction in the rate of tax was not passed on to the consumers by the DTH operators when the GST was introduced w.e.f. 01.07.2017. Thus, it was alleged that the Respondent had indulged in profiteering in contravention of the provisions of Section 171 of CGST Act. 2017.
2. The above reference was examined by the Standing Committee on Anti-Profiteering and was further referred to the DGAP vide minutes of its meeting dated 20.12.2017 for detailed investigations under Rule 129 (1) of the CGST Rules. 2017.
3. The DGAP vide his report dated 13 03 2019 has stated that after scrutiny of complaint made by the above Applicant. it was observed that the complaint did not contain any evidence of profiteering and the allegation was too general in nature which was directed against all the DTH operators and no meaningful investigation could be conducted in the matter. Thus. the DGAP vide its letter dated 29.01.2018, requested the Standing Committee to reconsider its decision to refer the said application to the DGAP for detailed investigation. as no investigation could be conducted in the absence of documentary evidence.
4. The Standing Committee on Anti-profiteering, in its meeting held on 09.02 2018. decided to return the complaint to DGAP for investigation, with the following observation:-
“The committee has been cognizant of the fact that the invoices evidencing details of an actual transaction were not available before the Committee. But the Committee still approved the complaint for the investigation because the Committee was of the opinion that the complaints pertain to sectors in which goods are sold on printed prices. hence. the Standing Committee felt that the printed price is sufficient evidence to conduct an investigation of profiteering by these suppliers.
5. The DGAP re-examined the complaint and sent a report to this Authority under Rule 129(6) of the Rules dated 14 03.2018 stating that the complaint was too general in nature without any documentary evidence and it was directed against the DTH industry as a whole and no specific supplier was mentioned by the Applicant No. 1 against whom investigation could be initiated.
6. The Authority. vide its letter dated 25.03.2018. conveyed that the DGAP’s investigation was not exhaustive and needed to be conducted in a more comprehensive manner. The DGAP vide his letter dated 11.04.2018 conveyed the reasons to the Authority, as to why no investigation could be carried out and also the limitations inherent in the complaint. The DGAP further added that as per Rule 128 and Rule 129 of the CGST Rules. 2017, Anti-profiteering investigation could only be initiated if it was based on a written application supported by the evidence. In the absence of a specific complaint and necessary evidence, it could not have been possible for the Standing committee to form a “prima facie satisfaction” regarding the existence of profiteering, which was the legal pre-requisite for referring a complaint/application to DGAP for conducting a detailed investigation. The DGAP also requested the Authority to give “reasons to be recorded in writing”, in terms of Rule 133(4) of the Rules. so that he could initiate fresh/further investigation.
7. The Authority, after considering the DGAP’s report dated 14.03.2018 returned the complaint back to the DGAP, vide order No. 2/2018 dated 24.04.2018 under Rule 133(4) of the Rules, after recording that since the complaint had been received through an e-mail, the DGAP should have made efforts to contact the above Applicant and ask him to submit evidence in support of his allegation and the opportunity of personal hearing should have been given to the Applicant No. 1, in accordance with the principles of natural justice. The Authority further observed that as the DTH operators were known and identifiable, they could have been summoned during the investigation to ascertain the veracity of the allegations made against them, as it involved larger public interest.
8. The DGAP vide emails dated 08.05.2018. 21.05.2018 and 18.07.2018 requested the above Applicant to submit specific details regarding his allegations.
9. The above Applicant. vide his e-mail dated 21.07.2018 submitted that his complaint pertained to all the leading DTH operators in the country. The above Applicant also added that he had no pre-GST invoice to substantiate the claim of reduction in the rate of tax in the post-GST era, as evidence of profiteering. However, he mentioned that in the pre-GST period. he was a customer of Airtel Digital TV and he had subscribed to a plan of X299 per month and post-GST, he had switched to another DTH operator.
10. The DGAP vide his e-mails dated 25.07.2018 and 02.08.2018 further requested the above Applicant to provide some basic information such as the subscriber ID. package details, break-up of the package into base price and taxes, pre and post-GST.
11. The Applicant No. 1. vide his e-mail dated 04.08.2018 submitted the details of an Airtel Digital TV subscription, in the name of Sh. Vijendar Kumar. Samman Bazar. Bhogal. New Delhi. The Applicant also submitted that the package namely “Value Prime” subscribed by Sh. Vijendar Kumar was priced at 299/- (inclusive of taxes) before implementation of GST which remained the same post-GST as well. The above Applicant didn’t provide any break-up of the base price and the taxes in the pre and post-GST periods or any invoice. L
12. The DGAP has further stated that in the pre-GST era, the burden of taxation was 15% Service Tax plus Entertainment Tax levied by the States. The DGAP. vide his notice dated 16.08.2018, called upon the Respondent to reply as to whether he admitted that he had contravened the provisions of Section 171 of the CGST Act, 2017 by keeping the price of the DTH packs unchanged after implementation of GST w.e.f. 01.07.2017. He was also asked to suo moto determine the quantum of profiteering, if any and indicate the same in his reply to the Notice. He was also given an opportunity to inspect the evidences/information submitted by the above Applicant on 22.08.2018 or 24.08.2018.
13. The period covered by the DGAP during the current investigation is from 01.07.2017 to 30.06.2018.
14. The Respondent. vide his letter dated 29.08.2019 intimated that though the notice was addressed to M/s Bharti Airtel Ltd. which was the parent company, the DTH services were provided by the Respondent and not the parent company. The Respondent vide his letters and e-mails dated 06.09.2018, 14.09.2018, 19.09.2018, 14.11.2018, and 21.12.2018 submitted the ST-3 returns for the period April, 2016 to June. 2017 and CENVAT Credit Register for F.Y.2016-17. Copy of Annual Financial Statement for F.Y. 2016.17, sample sale invoices raised on distributors for the period prior to GST implementation and post-GST implementation along with details of applicable tax rates, pre-GST and post-GST. GSTR-1 and GSTR-3B returns and Electronic Credit Ledger for the period July, 2017 to June. 2018. Tran-1 for the period July. 2017 and Entertainment Tax returns for the period April. 2016 to June. 2017 were also supplied.
15. The Respondent further submitted the requisite documents but categorically denied the allegation of profiteering and objected that initiation and conduct of proceedings in his case was not in accordance with the prescribed Rules and requested to drop the proceedings. The Respondent also contested the procedure followed by the Standing Committee in recommending investigation in the present case on the following grounds:-
