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Domino’s indulged in profiteering on supply of Pizza & Garlic Bread, as base price increased in excess of ITC denial

February 6, 2019[2019] 102 taxmann.com 87 (NAA)
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CGST : Where applicant filed application before Anti-Profiteering Authority alleging that though Goods & Services Tax (GST) rate on restaurant services was reduced from 18 per cent to 5 per cent w.e.f. 15-11-2017, respondent restaurant had increased base prices of food items, i.e., 1 SGB Stuffed GB (Garlic Bread) and 1 Med NHT Veg Extrava (Medium Veg Pizza) and charged same base prices which it was charging before rate of tax was reduced, it was held that respondent during period between 15-11-2017 to 31-5-2018, had increased base prices by more than 5.59 per cent, i.e., by more than what was required to offset impact of denial of ITC in respect of 170 items, from 5.75 per cent to as high as 84.55 per cent, out of total 393 items sold during same period and, therefore, in respect of these items commensurate benefit of reduction in rate of tax from 18 per cent to 5 per cent had not been passed on to customers by respondent Thus, respondent had profiteered an amount in contravention of section 171. Respondent was directed to reduce its prices by way of commensurate reduction keeping in view reduced rate of tax and benefit of ITC denied. Respondent had resorted to profiteering by charging more price than what it could have charged by issuing wrong tax invoices. It had further acted in conscious disregard of obligation which was cast upon him by law, by issuing incorrect invoices in which base prices were deliberately enhanced more than what it was entitled to increase due to denial of ITC and, thus, it had denied benefit of reduction in rate of tax granted vide Notification dated 14-11-2017 to its customers. Accordingly, it had committed an offence under section 122(1)(i)

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