Section 171 of CGST Act, 2017 — Anti-profiteering — In the instant case, the applicant alleges that although the GST rate applicable on the Chocolates had been reduced from 28% to 18% w.e.f. 15.11.2017, the Respondent had not reduced the prices of 2 products viz. the Nestle Munch Nuts 32 Gm. Chocolate and the Cadbury Dairy Milk Chocolate and had thus not passed on the benefit of such rate reduction to him.
It had been alleged by the above Applicant that the Respondent had indulged in profiteering and action should be taken against him.
Held that—It is established that the Respondent had in fact increased the base prices of these Chocolates and sold them at the same MRPs which he was charging before the reduction in the rate of tax instead of reducing the same and had hence not passed on the benefit of such reduction to the above Applicant.
The Respondent is directed to reduce the sale prices of the above products immediately commensurate to the reduction in the rate of tax as was notified on 14.11.2017 and pass on the benefit of reduction in the rate of the tax to his customers. Since the Applicant No. 1 has paid a higher price of ₹ 4.69 (1.56 + 3.13) for 02 items Viz. Nestle Munch Nuts 32 Gms. and Cadbury Dairy Milk Chocolate, the Respondent is directed to refund the same to the Applicant No. 1 along with interest @ 18% w.e.f. 16.11.2017 till the same is paid to the Applicant No. 1. The Respondent has also voluntarily deposited an amount of 1295/- in the CWF. Therefore, the balance profiteered amount of 14,658.31 (15,958 - {1295 + 4.69}) will be deposited into the CWF by the Respondent as per the provisions of Rule 133 (3) (c) of the CGST Rules, 2017 along with the interest at the rate of 18% to be calculated from the date of collection of the higher amount till the date of the deposit of such amount. The above amounts shall be refunded or deposited by the Respondent within a period of 3 months from the date of receipt of this order failing which the same shall be recovered by the DGAP and refunded or deposited as has been directed above. Since the present investigation has been carried out for the period between 15.11.2017 to 31.03.2018 the DGAP is directed to conduct further investigation in respect of the sales made by the Respondent after the above period to assess the amount of profiteering made by the Respondent and submit report accordingly.
It is also established from the above facts that the Respondent had issued incorrect invoices while selling the above products to his customers as he had not correctly shown the basic prices which he should have legally charged from them. The Respondent had also forced them to pay additional GST on the increased prices and had also earned additional profit through the incorrect tax invoices which would have otherwise resulted in further benefit to the customers in the shape of reduced prices. It is also established from the record that the Respondent has knowingly and consciously acted in contravention of the provisions of the CGST Act, 2017 by issuing incorrect invoices which is an offence under Section 122 (1) (i) of the above Act and hence he is liable for imposition of penalty under the above Section read with Rule 133 (3) (d) of the CGST Rules, 2017. Although notice for imposition of penalty has already been issued to the Respondent on 16.08.2018 however, no formal oral or written pleadings have been filed by the Respondent on the same.
Therefore, as per the provisions of the principles of natural justice it would be appropriate to issue fresh show cause notice asking him to explain why penalty should not be imposed on him for the above offence.— Pushpak Chauhan And Director General Anti-Profiteering, Central Board of Indirect Taxes & Customs Vs. Harish Bakers & Confectioners Pvt. Ltd. [2018] 7 TAXLOK.COM 016 (NAPA)