Page 32 - GSTL_21st May 2020_Vol 36_Part 3

J58 GST LAW TIMES [ Vol. 36
It was further held that since the supplier had denied benefit of rate re-
duction to the buyers of the product “Sanitary Napkin” in contravention of the
provisions of Section 171(1) of the CGST Act, 2017 and has thus resorted to profi-
teering, which is an offence under Section 171(3A) of the CGST Act, 2017, there-
fore, it will be apparently liable for imposition of penalty under the provisions of
the Section 171.
Sandeep Puri, Commissioner CGST, Mumbai, C.P. Rao Principal Chief
Commissioner, CGST Tamil Nadu & Puducherry and DGAP, New Delhi v. Johnson &
Johnson, Mumbai and Apollo Hospitals Enterprise Ltd., Chennai - (2019) 11 TMI 1084;
(2019) 111 taxmann.com 396 (NAA) - Order dated 21-11-2019.
In the instant case, complaint was filed by Revenue Officers (CGST) after
detailed study conducted by them to analyse the impact of reduction in the GST
rate on “Sanitary Napkin” from 12% to Nil w.e.f. 27-7-2018, vide Notification No.
19/2018-C.T. (Rate), dated 26-7-2018 against both respondents alleging that both
the respondents have not passed on the benefit of reduction in the GST rate from
12% to Nil w.e.f. 27-7-2018, levied vide Notification No. 19/2018-C.T. (Rate), dat-
ed 26-7-2018, on supply of “Sanitary Napkins” by way of commensurate reduc-
tion in prices in terms of Section 171 of the Central Goods and Services Tax Act,
2017.
The complaint was examined by the Standing Committee on Anti-
profiteering and further investigated by DGAP under Rule 129(6) of CGST Rules,
2017 on 18-3-2019 pertaining to the period w.e.f. 27-7-2018 to 30-9-2018.
Johnson & Johnson (JJ) submitted that it had immediately given effect to
the reduction in GST rate from 12% to Nil on sanitary napkins and accordingly,
had reduced the Maximum Retail Price (MRP) of the said goods, to pass on the
net benefit of GST rate reduction to the end consumers. Post 26-7-2018, it was not
eligible to claim/avail Input Tax Credit (ITC) on inputs and input services relat-
ed to sanitary napkins and therefore, input taxes had become part of the cost of
such goods and hence it increased his base price for the distributors in respect of
the supplies post 26-7-2018, but the price to the ultimate consumer (MRP) of the
said goods, was reduced after considering the net benefit of reduction in GST
rate. The total ITC of 193 crores availed by him during the period from 1-7-2017
to 26-7-2018 for sanitary protection business, did not include ITC claimed in
Form TRAN-I including the ITC on the closing stock of sanitary napkin as on
30-6-2017.
M/s. Apollo Hospitals was only a dealer of sanitary napkins which it
purchased from the manufacturer (JJ). The products were subject to affixation of
MRP under the Legal Metrology Act and the Rules made thereunder. When the
said goods was subject to GST at the rate of 12%, JJ had specified the MRP of
“Stayfree Secure Cotton Wings’ sanitary napkins in Invoice No. 15674CS0075875,
dated 19-7-2018 as ` 35/- which was reduced to ` 34/- by JJ. when the GST rate
was reduced to ‘Nil’ with effect from 27-7-2018. For the stocks purchased prior to
27-7-2018, a dealer could not alter the MRP but the fact of MRP being reduced
from ` 35/- to ` 34/- was communicated to him by the JJ and he had sold the
goods within the revised MRP of ` 34/-, in compliance with the relevant rules
and regulations.
The DGAP observed that JJ has not passed on commensurate benefit to

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