Principal Commissioner, Medchal, Hyderabad Vs Infinity Retail Ltd

Profiteering is alleged in respect of supply of “DSLR Cameras” and ‘Power Banks’ supplied by the respondent. The Respondent did not reduce the selling prices of the DSLR Cameras and Power Banks, when the GST rate was reduced from 28% to 18% w.e.f. 01.01.2019, vide Notification No. 24/2018-Central Tax (Rate) dated 31.12.2018 and thus, the benefit of reduction in the GST rate was not passed on to the recipients by way of commensurate reduction in the prices. 

Held by NAA

Respondent has claimed that he had sold the digital cameras on the prices which were slightly more than the average base prices but were less than their regular sale prices. As mentioned in para supra the Respondent has failed to produce any evidence to prove that his cost prices were more than the comparable sale prices. The cost prices shown by the Respondent in the above Annexures have been calculated arbitrarily without any supporting evidence. The screen shots of the SAP system also do not prove his claim of moving costs as the Respondent can make any entries in the system. All the purchase costs incurred by the Respondent on the products sold during the pre rate reduction period have already been taken in to account while computing the average base prices and hence there is no ground to claim that they have increased subsequently. The Respondent cannot claim increase in his costs to deny the benefit of tax reduction. There is also no evidence of giving discount on the sold goods as these sales have been admitted to be normal sales by the Respondent himself vide Annexure-C. Therefore, the above claim of the Respondent is not tenable and hence, an amount of Rs. 14,86,332/- cannot be reduced from the profiteered amount. The Respondent has denied benefit of rate reduction to the buyers of his products in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he has thus resorted to profiteering.