Section 171 of CGST Act, 2017—Anti-Profiteering—benefit of Reduction in GST rate not passed—Increase in the base price of product (Maggi)—In the instant case, according to applicant, Respondent had not passed on the benefit of the reduction of GST rate to him .
And on the other hand respondent submitted that the benefit of GST rate reduction had been passed on in respect of Maggie Noodles as a whole.

Held that— The base price of the product was  3.96/- per pack before 15.11.2017 which was increased to 4.17/- per pack by the Respondent after the rate of tax on the product was reduced from 18% to 12% vide Notification dated 14.11.2017 and the product was sold to the recipients @ 4.67/- per pack. The Respondent was required to sell the product @ 4.43/- per pack due to reduction in the tax rate and hence he has resorted to profiteering of 0.24/- per pack. Therefore, there is no doubt that the benefit of reduction in the GST rate was not passed on to the recipients by way of commensurate reduction in the price charged by the Respondent which amounts to violation of the provisions of Section 171 of the above Act.

It is also apparent from the facts of the case that the Respondent had no legal sanction to increase the base price of the product on his own and what was required of him was that he should have only reduced the MRP of the product by taking in to account the effect of the reduction in the rate of tax. The Respondent was further required to fix the MRP keeping in view the provisions of the Legal Metrology (Packaged Commodities) Rules, 2011 which prescribe the methodology of fixing the MRP keeping in view the rounding off the price.

Respondent has contended that he had passed on the benefit in respect of the product by way of reducing the MRP of the 70 Gms. products - Held that:- The Respondent has no such liberty to arbitrarily decide in respect of which products he would pass on the benefit and in respect of which products he would not pass such benefit. As per the provisions of Section 171 of the Act the benefit has to be passed on to each recipient and the same cannot be selectively granted or denied. It is also clear that the Maggi Noodle pack of 35 Gms. is distinct from a 70 Gms. pack and both the packs may be bought by the different recipients/customers and hence the benefit accruing to one customer cannot be given or denied to another nor can the benefit given to one set of customers arbitrarily enhanced and set off against the another. No such adjustments are permissible under the Act.

Quantum of profiteering — Held that— The quantum of profiteering is determined as 90,778/- including the profiteering of 2,253/- made by the Respondent from the Applicant No. 1. Accordingly, the Respondent is directed to reduce the price of the product commensurate to the reduction in the rate of tax. He is also directed to refund an amount of 2,253/- to the Applicant No. 1 along with interest @ 18% P. A. from the date from which the above amount was collected by the Respondent from him.

Contravention of the provisions of Section 171 (1) of the CGST Act, 2017 —Held that— The Respondent had denied benefit of the reduction in GST rate to the consumers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has thus realized more price from them than he was entitled to collect and had also compelled them to pay more GST than that they were required to pay by issuing incorrect tax invoices and hence he has committed offence under section 122 (1) (i) of the CGST Act, 2017 and therefore, he is liable for imposition of penalty.

Application disposed off.[NATIONAL ANTI-PROFITEERING AUTHORITY] [SHRI ANKUR JAIN.] [2018] 5 TAXLOK.COM 35 (NAPA)