2018 (12) TMI 1602 - NAPA - GST

Profiteering - PA Ceiling Speaker BS- 6083T - benefit of reduction in the rate of tax not passed - contravention of the provisions of Section 171 of the CGST Act, 2017 - Held that - It is apparent from the perusal of the facts of the case that while there was reduction in the rate of tax on the above products from 28% to 18% w.e.f. 15.11.2017, vide Notification no. 41/2017-central Tax (Rate) dated 14.1 1.2017, but the base prices (excluding tax) of both the above products had remained the same and hence the allegation of profiteering is not established. The Respondent has not contravened the provisions of Section 171 of the CGST Act, 2017 and hence there is no merit in the application filed by the above Applicants - application dismissed

Summary

Issues involved:
I. Reduction in the rate of tax on products from 28% to 18% w.e.f. 15.11.2017.
II. Whether the benefit of the tax rate reduction was passed on to the consumers.

Analysis:

1. The case involved an allegation of profiteering against the Respondent for not passing on the benefit of a tax rate reduction on specific products. The Kerala State Screening Committee referred the case to the Standing Committee on Anti-profiteering, which further passed it on to the Director 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 applicable tax rate was reduced from 28% to 18% w.e.f. 15.11.2017. The investigation focused on two invoices issued by the Respondent, one before the tax rate revision and the other after. The base prices per unit excluding GST remained the same for both products, indicating no increase post-tax rate reduction.

3. The Authority considered the DGAP's report and the absence of a private applicant led to the Kerala Screening Committee appearing before it. The Additional Commissioner representing the Applicant No. 1 agreed with the DGAP's findings during the hearing.

4. The issues to be settled included verifying the tax rate reduction and determining if the benefit should have been passed on to consumers as per Section 171 of the CGST Act, 2017, which mandates a commensurate reduction in prices in case of a tax rate decrease or input tax credit benefit.

5. Despite the tax rate reduction, the base prices of the products remained constant, leading to the conclusion that the Respondent did not engage in profiteering by not passing on the benefit of the tax rate reduction to consumers. Consequently, the application was dismissed as the Respondent did not contravene Section 171 of the CGST Act, 2017.

6. The order directed the distribution of copies to all involved parties and the closure of the case file post-completion.