2022-TIOL-30-NAA-GST
Cloudtail India Pvt Ltd
GST - Anti Profiteering - The applicant had filed complaint alleging that the Respondent had not passed on the benefit of reduction in tax rate from 12% to Nil in the light of Notification No. 19/2018 -CTR dated 26.07.2018 w.e.f. 27.07.2018 on the purchase of Stayfree Sanitary Napkins - The said complaint was examined by the Standing Committee on Anti-Profiteering in its meeting held on 27.03.2019 and forwarded to the DGAP for detailed investigation in the matter - On receipt of said reference from the Standing Committee on Anti-Profiteering, the DGAP had investigated the aforesaid matter and submitted his Report dated 24.09.2019 concluding that the Respondent had increased the base price of product "Stayfree Sanitary Napkin" when the tax rate was reduced from 12% to 0% (Nil) w.e.f. 27.07.2018 by the Central Government therefore he was additionally benefitted to amount of Rs. 19,61,033/-during the period from 27.07.2018 to 31.03.2019 and this amount was to be passed on by the Respondent to the buyers of this product under the provisions of section 171 of the CGST Act 2017 - This Authority after careful consideration of the DGAP's Report dated 24.09.2019, submissions of the Respondent and other documents placed on record, had sent the matter back vide Interim Order (I.O.) No. 15/2020 dated 20.04.2020 under Rule 133(4) of the CGST Rules 2017.
Held - Benefit of reduction in the tax rate has not been passed on to the recipients by way of commensurate reduction in the prices by the Respondent in terms of Section 171 (1) of the CGST Act, 2017 during the relevant period - Provisions of Section 171 have been contravened: NAA
+ This Authority had given specific direction to DGAP vide Interim Order No. 15/2020 dated 20.04.2020 to carry out investigation on the specific points that are discussed in paragraph 1 above. Based on the said direction and subsequent investigation, the DGAP has calculated that the Respondent has increased the base price of the impugned goods during the period from 27.07.2018 to 31.03.2019. Thus, the benefit of reduction in the tax rate has not been passed on to the recipients by way of commensurate reduction in the prices by the Respondent in terms of Section 171 (1) of the CGST Act, 2017 during the above period. Therefore, the DGAP had calculated the profiteered amount on the impugned item i.e. "Sanitary Napkins" by comparing the average pre-rate reduction base price of the impugned item with the actual selling price during the post-reduction period i.e. after 27.07.2018 by the Respondent during the period from 27.07.2018 to 31.03.2019. The mathematical methodology employed by the DGAP to compute the profiteered amount is correct, appropriate, reasonable and in consonance with the provisions of Section 171 (1) of the CGST Act, 2017 ; (Para 11)
+ As per the above discussion and findings, this Authority as per the provisions of Section 171 of the CGST Act, 2017 , determines the profiteered amount as Rs. 9,84,354/- for period from 27.07.2018 to 30.03.2019 by the Respondent. The Authority finds that such amount needs to be passed on by the Respondent alongwith interest @ 18% as prescribed to the recipients of supply/customers other than the Applicant No. 1 as the profiteering in respect of the Applicant No. 1 has been found to be Nil as per the DGAP Report dated 24.09.2019. As the recipients other than the Applicant No. 1, of such supply are not identifiable, the Authority directs that, the Respondent shall deposit the said amount with interest in the Consumer Welfare Funds (CWP) of the Central and State Governments as prescribed under Rule 133 (3)(c) of the CGST Rules 2017, within three months of the date of this order, failing which such amount will be recovered under the provisions of CGST Act 2017; (Para 13)
+ The Respondent shall deposit an amount of Rs. 4.92.177/- alongwith Interest @ 18% as prescribed under Rule 133 (3)(b) of CGST Rules 2017 in the CWF of the Central Government and the amount tabulated below alongwith interest @18% prescribed in the CWF of the State/UTs; (Para 14)
+ The Authority finds that the Respondent has contravened the provisions of Section 171 (1) of the CGST Act, 2017 . Therefore he is liable for imposition of penalty under the provisions of Section 171 (3A) of the said Act. However, since, the provisions of Section 171 (3A) have come in to force w.e.f. 01.01.2020 and the offence pertains to the period from 27.07.2018 to 31.03.2019, hence penalty under the above section cannot be imposed retrospectively on the Respondent; (Para 14)
- Application disposed of: NAPA
2022-TIOL-27-NAA-GST
Lifeways Infrastate Pvt Ltd
GST - Anti-Profiteering - The applicant had filed a complaint against the respondent herein, alleging that the respondent had profiteered from the sale of flats in a project being developed by the respondent - The applicant claimed that the respondent had not reduced the price of the flats despite a fall in the rate of GST applicable - Hence it was alleged that the respondent had not passed on benefit of GST rate reduction by reducing the price of the flats - The matter was forwarded by the Standing Committee to the DGAP, which upon investigation, held that the respondent had profiteered from the sale of flats.
Held - The Respondent has profiteered by an amount of Rs. 1,54,269/- during the relevant period - It is evident from the above narration of facts that Respondent has denied the benefit of Input Tax Credit (ITC) to the customers/Home buyers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he has thus committed an offence under Section 171 (3A) of the above Act and therefore, he is liable for imposition of penalty under the provisions of the above Section: NAA
+ It is clear from the plain reading of Section 171 (1) mentioned above that it deals with two situations :- One relating to the passing on the benefit of reduction in the rate of tax and the second pertaining to the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the DGAP's Report that there has been no reduction in the rate of tax in the post GST period. Hence, the only issue to be examined is as to whether there was any net benefit of ITC with the introduction of GST. The Authority finds that, the ITC, as a percentage of the turnover, that was available to the Respondent during the pre-GST period (April-2016 to June-2017) was 0.31%, whereas, during the post-GST period (July-2017 to September, 2019), it was 0.48%. This confirms that in the post-GST period, the Respondent has been benefited from additional ITC to the tune of 0.17% (0.48%-0.31%) of his turnover and the same is required to be passed on by him to the recipients of supply, including the Applicant No. 1. The Authority finds that the computation of the amount of ITC benefit to be passed on by the Respondent to the eligible recipients works out to Rs.1,54,269/-. The DGAP has calculated the amount of ITC benefit to be passed on to all the eligible recipients as Rs.1,54,269/- on the basis of the information supplied by the Respondent. The Respondent has not disputed the methodology adopted by the DGAP or the amount of profiteering worked out by the DGAP. The Respondent vide E-mail dated 13.07.2020 has given a statement of anti-profiteering amount paid to customers and interest separately and enclosed the list of such recipient sent vide E-mail dated 29.05.2020. (Para 8);
+ In view of the above discussions, the Authority finds and determines that the Respondent has profiteered by an amount of Rs. 1,54,269/- for the project 'Celebrity Garden Block K' during the period of investigation i.e. 01.07.2017 to 30.09.2019. The above amount that has been profiteered by the Respondent from his Home buyers in the above mentioned project. The claim of their refund along with the interest @18% thereon, from the date when the above amount was profiteered by him till the date of such payment, in line with the provisions of Rule 133 (3) (b) of the CGST Rules 2017 , need to be verified by the concerned CGST/SGST Commissionerate. (Para 9);
+ This Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the flats commensurate with the benefit of ITC received by him as has been detailed above. (Para 10);
+ It is evident from the above narration of facts that Respondent has denied the benefit of Input Tax Credit (ITC) to the customers/Home buyers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he has thus committed an offence under Section 171 (3A) of the above Act and therefore, he is liable for imposition of penalty under the provisions of the above Section. However, since the provisions of Section 171 (3A) have come into force w.e.f. 01.01.2020 whereas the period during which violation has occurred is w.e.f. 01.07.2017 to 30.09.2019, hence the penalty prescribed under the above Section cannot be imposed on Respondent retrospectively.
- Application dismissed: NAPA
