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2018 (12) TMI 1404 - NAPA - GSTProfiteering - supply of Readymade Garments - benefit of reduction in the rate of tax not passed on - Section 171 of Central Goods and Service Tax Act, 2017 - Held that - here was no reduction in the rate of tax on the above products w.e.f. 01.07.2017, hence the anti-profiteering provisions contained in Section 171 (1) of the CGST Act, 2017 are not attracted. Also, there is no increase in the per unit base price (excluding tax) of the above products and 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.
Issues: Allegation of profiteering by the Respondent on the supply of Readymade Garments by not passing on the benefit of reduction in the rate of tax at the time of GST implementation.
Detailed Analysis: 1. Background and Allegations: The case involved an allegation of profiteering by the Respondent in contravention of Section 171 of the Central Goods and Service Tax Act, 2017. The Kerala State Screening Committee alleged that the Respondent did not pass on the benefit of tax rate reduction on specific Readymade Garments post-GST implementation. 2. Investigation and Reports: The Directorate General of Anti-Profiteering (DGAP) conducted a detailed investigation based on the referral from the Standing Committee on Anti-Profiteering. The DGAP's report highlighted the tax rate changes from the pre-GST era to post-GST era for the mentioned garments, showing an increase from 2% to 5% post-GST. 3. Analysis of Tax Rate and Prices: The DGAP's report revealed that while the tax rate increased post-GST, the base prices of the garments remained the same. The report concluded that there was no contravention of Section 171 of the CGST Act, 2017 as the tax rate increase was not accompanied by an increase in base prices. 4. Authority's Consideration and Decision: The Authority considered the DGAP's report and the absence of any complainant or additional applicant in the case. During the hearing, the Applicant No. 1 representative agreed with the DGAP's findings. The Authority deliberated on whether there was a case of tax rate reduction and if Section 171 of the CGST Act applied. 5. Legal Analysis and Decision: Upon reviewing Section 171 of the CGST Act, the Authority determined that as there was no reduction in the tax rate post-GST implementation, the anti-profiteering provisions were not applicable. Since the base prices did not increase, the allegation of profiteering was deemed unsustainable. Consequently, the application was dismissed for lack of merit. 6. Order and Conclusion: The Authority decided to dismiss the application, and copies of the order were to be provided to both the Applicants and the Respondent. The case file was to be closed after the necessary formalities. This detailed analysis of the legal judgment concerning the allegation of profiteering by the Respondent on Readymade Garments provides a comprehensive overview of the investigation, findings, legal considerations, and final decision by the Authority.
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