2018 (12) TMI 1402 - NAPA - GST

Profiteering - supply of Peps Spring Koil Bornell Normal Maroon 75x60x6 Mattress - benefit of reduction in the rate of tax not passed - Section 171 of CGST Act, 2017 - whether there is a case of reduction in the rate of tax and whether the provision of section 171 of CGST Act, 2017 are attracted in the case? - Held that - It is clear from the perusal of the facts of the case that there was no reduction in the rate of tax on the above product w.e.f. 01-07-2017 and that the rate of tax on the said product has increased from 14.5% (2% CST 12.5% Excise) to 28% and therefore the allegation of profiteering is not sustainable in terms of Section 171 of the CGST Act, 2017. Application dismissed.

Summary

Issues: Allegation of profiteering by the Respondent on the supply of a specific mattress due to not passing on the benefit of tax reduction post-GST implementation.

Analysis:
1. The case involved an allegation of profiteering by the Respondent on the supply of a particular mattress due to not passing on the benefit of a tax rate reduction post-GST implementation. The Kerala State Screening Committee on Anti-Profiteering referred the case to the Standing Committee, which further directed the Directorate General of Anti-Profiteering (DGAP) for detailed investigation under Rule 129 (6) of the CGST Rules, 2017.

2. The DGAP's report highlighted that the rate of tax on the product in question increased from 14.5% in the pre-GST era to 28% in the post-GST era. As there was no reduction in the tax rate post-GST implementation, the DGAP concluded that the provisions of Section 171 of the CGST Act, 2017 were not contravened, and the allegation of profiteering was not established.

3. The Authority, after considering the report and hearing from the concerned parties, focused on the key issue of whether there was a reduction in the tax rate and if Section 171 of the CGST Act, 2017 was applicable. Section 171 mandates passing on any tax rate reduction benefits to consumers.

4. The examination of the facts revealed that there was no reduction in the tax rate on the product post-GST implementation. The tax rate had actually increased from 14.5% to 28%. Therefore, the Authority dismissed the application, stating that the allegation of profiteering was not sustainable under Section 171 of the CGST Act, 2017.

5. Ultimately, the Authority found no merit in the application and dismissed it. The order was to be sent to all concerned parties, and the case file was to be closed after completion.