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2018 (12) TMI 1601 - NAPA - GSTProfiteering - benefit of GST at the time of implementation of the GST not passed on - contravention of the provisions of 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. There is also no increase in the per unit base price (excluding tax) of the above product and therefore the allegation of profiteering is not established. Though the rate of tax has been reduced from 28% to 18% w.e.f. 14.11.2017 the Kerala Screening Committee has failed to produce any invoice and has not examined any documents to establish that the benefit of tax reduction has not been passed on by the Respondent to the recipient hence DGAP has rightly observed that no supporting documents or invoices of the product Mirror Series Tiles for the period post 15.11.2017 have been either examined or presented before the Standing Committee. Hence the allegation that the benefit of rate reduction has not been passed on is not sustained. Respondent has not contravened the provisions of Section 171 of the CGST Act, 2017 either on implementation of the GST w.e.f. 01.07.2017 or w.e.f. 14.11.2017 after the introduction of GST rate reduction - application dismissed.
Issues:
1. Whether there was a reduction in the tax rate on the product from 01.07.2017 or 14.11.2017? 2. Whether any benefit of the tax rate reduction was required to be passed on? 3. Whether the benefit of the tax rate reduction was actually passed on to the recipient through a reduction in prices? Analysis: Issue I: The case involved an allegation of profiteering by the Respondent related to the supply of "Mirror Series Tiles" due to not passing on the GST benefit upon its implementation from 01.07.2017 and a subsequent reduction in GST rate from 28% to 18% effective 14.11.2017. The investigation revealed that the applicable tax on the product pre-GST was CST @ 2% and Central Excise Duty @ 12.5% on 55% of the MRP. Post-GST implementation, the GST rate was initially set at 28% and later reduced to 18% from 15.11.2017. However, the absence of post-GST rate reduction invoices made it impossible to compare pre and post-rate revision actual selling prices accurately. Issue II: The report concluded that there was no contravention of Section 171 of the CGST Act, 2017, as the tax rate remained the same at 28% post-GST implementation, and the per unit price of the product excluding tax was not increased by the Respondent. Although the tax rate was reduced to 18% from 28% on 15.11.2017, no evidence was provided to show that this reduction was not passed on to the recipient, leading to the dismissal of the allegation of profiteering. Issue III: 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 on the product from 01.07.2017. Additionally, there was no evidence to support the claim that the benefit of the tax rate reduction from 28% to 18% was not passed on to the recipient by the Respondent. Consequently, it was determined that the Respondent did not contravene Section 171 of the CGST Act, 2017, and the application was dismissed. In conclusion, the judgment highlighted the importance of passing on tax benefits to consumers and emphasized the need for clear documentation and evidence to support allegations of profiteering under the CGST Act, 2017.
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