Case Law Details
Director General of Anti-Profiteering Vs. Patanjali Ayurveda Ltd. (NAA)
The Respondent has also claimed that the pricing of products depended on a number of commercial factors. In this connection it would be pertinent to mention that the provisions of Section 171 (1) of the above Act required the Respondent to pass on the benefit of tax reduction to the consumers only and have no mandate to look in to fixing of prices of the products which the Respondent was free to fix. If there was any increase in his costs the Respondent should have increased his prices before 15.11.2017, however, it cannot be accepted that his costs had increased on the intervening night of 14.11.2017/15.11.2017 when the rate reduction had happened which had forced him to increase his prices exactly equal to the reduction in the rate of such tax. Such an uncanny coincidence is unheard off and hence there is no doubt that the Respondent has increased his prices for appropriating the benefit of tax reduction with the intention of denying the above benefit to the consumers. The Respondent has referred to case of Kumar Gandhary vs. KRBL Ltd. 2018-VIL-02-NAA, wherein he has claimed that inflation has been accepted as a reason for price increase by this Authority however, the same is not correct as the rate of tax was increased in this case and not reduced. Further, he has relied on the case of Hardcastle Restaurants Pvt. Ltd. 2018-VIL-11-NAA and NP Foods 2018-VIL-08-NAA and it has been stated that the loss of input tax credit has been factored-in for determination of net profiteering. In this context, it is pertinent to mention that in the above cases the benefit of ITC was denied by the Government with reduction in the rate of tax, therefore to calculate the commensurate benefit, the benefit of ITC loss was taken into consideration. However, in the instant case, no such benefit of ITC has been denied to the Respondent as it is only a case of reduction of tax rates, and hence the Respondent is liable to reduce the prices of his products by way of commensurate reduction in prices as per the provisions of Section 171(1) of the CGST Act, 2017. Therefore, the facts of the cases referred by the Respondent are different from his case and hence, they cannot help him.
The Respondent has also argued that he had to bear loss with the introduction of GST, as rates were increased and he did not increase his prices. In this regard, it is mentioned that Section 171(1) of the CGST Act, 2017 is very clear which requires to reduce the prices with the reduction in rate of tax commensurately. The Respondent had no restriction on increasing his prices when the rates of tax were increased and it was solely his business call not to increase them. However, he cannot deny the benefit of tax reduction on this ground.
The respondent has contended that the investigation is violative of Article 19(1)(g) of the constitution of India. The contention of the Respondent made in this regard is not correct as this Aurhority or the DGAP has not acted in any way as price controller or regulator as they do not have the mandate to regulate the same. The Respondent, is absolutely free to exercise his right to practise any profession, or to carry on any occupation, trade or business, as per the provisions of Article 19 (1) (g) of the Constitution. He can also fix his prices and profit margins in respect of the supplies made by him. Under Section 171 this Authority has only been mandated to ensure that both the benefits of tax reduction and ITC which are the sacrifices of precious tax revenue made from the kitty of the Central and the State Governments are passed on to the end consumers who bear the burden of tax. The intent of this provision is the welfare of the consumers who are voiceless, unorganised and vulnerable. This Authority is charged with the responsibility of ensuring that the both the above benefits are passed on to the general public as per the provisions of Section 171 read with Rule 127 and 133 of the CGST Rules. 2017. This Authority or the DGAP has nowhere interfered with the business decisions of the Respondent and therefore, there is no violation of Article 19 (1) (g) of the Constitution.
Based on the above facts the profiteered amount is determined as Rs. 75,08,64,019/- as per the provisions of Rule 133 (1) of the above Rules as has been computed vide Revised Annexure-8 of the Report dated 06.01.2020. 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. 75,08,64,019/- in the C\NF 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 alongwith 18% interest payable from the dates from which the above amount was realised by the Respondent from his recipients till the date of it deposit. The above amount shall be deposited within a period of 3 months from the date of passing of this order failing which it shall be recovered by the concerned Commissioners CGST/SCST. The State/Union Territory wise amount of benefit to be deposited in the concerned CWF
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