2018 (12) TMI 1403 - NAPA - GST

Profiteering - supply of Panasonic LED TH43E200DX#45580 - benefit of reduction in the rate of tax not passed - Section 171 of CGST Act, 2017 - Held that - It is apparent 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 in the Post-GST era has also been increased from 26.79% to 28%, therefore, the allegation of profiteering is not sustainable in terms of Section 171 of the CGST Act, 2017. There is no merit in the application - application dismissed.

Summary

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

Detailed Analysis:
1. The case was referred by the Kerala State Screening Committee on Anti-Profiteering to the Standing Committee, alleging profiteering by the Respondent for not passing on the benefit of tax rate reduction post-GST implementation. The Respondent was accused of contravening Section 171 of the CGST Act, 2017 based on two invoices issued before and after GST implementation.

2. The Standing Committee further referred the case to the Directorate General of Anti-Profiteering (DGAP) for detailed investigation under Rule 129 (1) of the CGST Rules, 2017. The DGAP's report highlighted that the tax rate on the product increased from 26.79% to 28% post-GST implementation, with no reduction in the tax rate, leading to the conclusion that the Respondent did not contravene Section 171 of the CGST Act, 2017.

3. The Authority, after considering the DGAP's report and hearing from the Kerala Screening Committee, found that there was no reduction in the tax rate of the product post-GST implementation. The only issue for consideration was whether there was a case of tax rate reduction and if Section 171 of the CGST Act, 2017 was applicable.

4. Section 171 of the CGST Act mandates that any reduction in the rate of tax should be passed on to the recipient by reducing prices. Since there was no reduction in the tax rate post-GST implementation and the rate had actually increased, the allegation of profiteering was deemed unsustainable under Section 171 of the CGST Act, 2017.

5. The application filed by the Applicant was dismissed as it lacked merit, and the order was directed to be sent to all parties involved. The case file was to be closed after necessary actions were completed.