Fact– Director General of Anti-Profiteering (“the applicant”) alleged that the M/s J.P. & Sons (“the respondent) had not passed the benefit of tax reduction from 28% to 18% w.e.f. November 15, 2017 vide Notification No. 41/2017-Central Tax (Rate), by maintaining the same MRP which he was charging before the reduction on two products. Instead of reduction, the base price of the two products were increased on November 15, 2017 and claimed that the Respondent is indulged in profiteering in contravention of Sec 171 of the CGST Act, 2017.
Respondent’s Contention of Law: The Respondent had contended that the GST rate was reduced w.e.f. 15.11.2017 but Johnson & Johnson Pvt Ltd, had taken 3 to 4 days to make necessary changes in the billing software. The Respondent had also claimed that he had not charged more than the MRPS mentioned on the products, invoices dated 12.10.2017 and 16.11.2017 were issued prior to the updation of software by J & J and hence he could not charge the reduced prices.
Held–The Hon’ble NAA in the case of Director General of Anti-Profiteering vs. M/s. J.P. & Sons vide Order No. 16/2018 dated December 06, 2018 upholds a case of profiteering u/s 171 of CGST Act, 2017 against Johnson & Johnson’s (J&J’s) distributor of Baby Shampoo and Baby Powder noting that M.R.P. remained same despite reduction in duty rate from 28% to 18% w.e.f. November 15, 2017 vide Notification No. 41/2017-Central Tax (Rate,) stating that Respondent was not required to increase base price w.e.f. said date whereas after charging GST at 18%, was legally bound to charge reduced prices so as to pass on benefit of reduced tax rate to his customers.
Further, the authority rejected the Respondents’ contention that he was appointed as Retail Distribution Stockists and was bound to follow base price as well as MRPs fixed by J&J through software and that amount of profiteering should be calculated on stock lying as on November 14, 2017 instead of sales made between November 15, 2017 and March 31, 2018.
NAA claimed that the respondent was registered under CGST/SGST Act, 2017 and was legally bound by Notification and cannot shift his accountability on this ground. Consequently, holds that Respondent had deliberately charged enhanced prices with an intention to pocket the amount which he was bound to pass on to recipients and directed DGAP to further investigate the quantum of profiteering made after March 31, 2018.
Citation: TS-725-NAA-2018-NT