In a recent order, the National Anti-profiteering Authority ( NAA ) has confirmed the anti-profiteering charges against a seller for not reducing GST on chocolates.
A complaint was filed against the respondent-dealer alleging that although the GST rate applicable on the Chocolates had been reduced from 28% to 18% w.e.f. 15.11.2017, the dealer had not reduced the prices of 2 products viz. Nestle Munch Nuts 32 Gm. Chocolate and Cadbury Dairy Milk Chocolate and had thus not passed on the benefit of such rate reduction to him.
Before the authority, the dealer admitted that he had sold the above products to the applicant vide invoices dated 10.11.2017 and 16.11.2017 after charging the tax at the prevalent rates of 28% and 18% on the base prices and he had not made any additional profit after the reduction in the GST rate; that since their base prices had been increased by their Distributors, he had increased the base prices keeping his profit margin same @ 11.5% and 12% respectively and sold the above products at the original Maximum Retail Prices (MRPs) as there was no change in the MRPs.
The National Anti-Profiteering Authority rejected the arguments of the dealer and held that the amount of profiteering has to include the amount of additional profit margin and the additional tax charged by the Respondent as both of them had been illegally charged by him.
The Authority, further held that there was absolutely no doubt that the Respondent had resorted to profiteering and had not passed on the benefit of tax reduction to his customers.
Finding the dealer guilty, the authority directed the Respondent to reduce the sale prices of the above products immediately commensurate to the reduction in the rate of tax and pass on the benefit of reduction in the rate of the tax to his customers.
Further, since the amount of Rs.1295/- was already deposited, the balance amount of Rs. 14,658.31 (15,958 – {1295 + 4.69}) was directed to the deposited into the CWF along with the interest within a period of 3 months and the DGAP was directed to conduct further investigation in respect of the sales made by the Respondent after the period 31.03.2018 to assess the amount of profiteering made by the Respondent and submit report accordingly.
It was also observed that since the Respondent had knowingly and consciously acted in contravention of the provisions of the CGST Act, 2017 by issuing incorrect invoices which is an offense under Section 122(1)(i), he was liable for imposition of penalty under the said Section r/w Rule 133(3)(d) of the CGST Rules, 2017 and for which a show-cause notice was required to be issued.
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