Distributor of Johnson & Johnson Products held guilty of Profiteering by NAA

Distributor of Johnson & Johnson Products held guilty of Profiteering by NAA Complaint was made against a Delhi-based distributor JP and Sons that had not passed on the benefit of GST rate reduction from 28 to 18 per cent with effect from November 15, 2017, by maintaining the same Maximum Retail Price (MRP), which he was charging before the said date in case of the two products Johnson & Johnson Baby Shampoo 100 ml and Johnson & Johnson Baby Powder 200 gm. It was also alleged that instead of reduction, the base prices of these products were increased on November 15, 2017, and thus the said distributor had indulged in profiteering. The distributor, in his defence said billing was provided and fully controlled by Johnson & Johnson and he couldn't make any modifications in the billing software and sold these products on the MRPs which were uploaded in the software. Johnson & Johnson was also issued notice to clarify upon the claims made by the distributor in respect of the control on the software and increase in the base prices made by it after November 14, 2017. The company, in its submission, said that it had in fact lowered the base prices after reduction in the rate of tax from 28 to 18 per cent. After screening by the Standing Committee and investigation by Director-General of Anti-Profiteering (DG-AP), the authority considered the materials placed before it and held that there is no doubt that the distributor had increased the base prices of the above products from November 15, 2017, whereas he was required not to increase them and after charging GST 18 per cent which meant he has indulged in profiteering. Below if the extract of Order ofNational Authority of Anti profiteering 24. It is also established from the above facts that the Respondent had issued incorrect invoices while selling all 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 compelled them to pay additional GST on the Increased prices through the incorrect tax invoices which would have otherwise resulted in further benefit to the customers which he had failed to pass on. It is also established from the record that the Respondent has deliberately 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 29.08.2018 however, no formal oral or written submissions have been filed by the Respondent on the quantum of penalty. Therefore, keeping in view the principles of natural justice it would be appropriate to issue fresh notice asking him to explain why penalty should not be imposed on him for the above offence. 25. A copy of this order be sent to the Applicant and the Respondent free of cost. File of the case be consigned after completion.