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2019 (1) TMI 21 - NAPA - GSTProfiteering - supply of the product Paint (AP Apex Classic WT 10 LT (HSN Code 3209)) - benefit of reduction in the rate of tax of GST at the time of implementation of the GST - contravention of provisions of Section 171 of the CGST Act, 2017 - Held that - It is evident that the Respondent has increased the base price of the product from ₹ 1855.05/- to ₹ 1859.55/- resulting in an increase of ₹ 4.50/-. In this context, it is apparent that the post-GST price before discount has been reduced from ₹ 2159/- to ₹ 1927/-. Also, the discount offered has been reduced from ₹ 75.57/- to ₹ 67.45/- i.e. by ₹ 8.12/- and hence post-GST, there is increase in the base price of ₹ 4.50/-. The increase in the base price is on account of the reduction in the discount. It is also revealed that the reduction in discount doesn t amount to profiteering as the same was offered from his profit margin by the Respondent and doesn t not form part of the base price and therefore, the Respondent cannot be held guilty under Section 171 of the Act. Respondent has not contravened the provisions of Section 171 of the CGST Act, 2017 - application dismissed.
Issues:
1. Allegation of profiteering by not passing on the benefit of GST rate reduction on the supply of a specific product. 2. Examination of the DGAP report and determination of whether the benefit of tax rate reduction was passed on to the recipient as per Section 171 of the CGST Act, 2017. Analysis: 1. The case involved an allegation of profiteering against the Respondent for not passing on the benefit of GST rate reduction on the supply of a specific paint product. The Kerala State Screening Committee on Anti-Profiteering referred the case to the Standing Committee on Anti-profiteering based on two invoices issued by the Respondent before and after the GST rate reduction. 2. The Standing Committee further referred the case to the DGAP for detailed investigation under Rule 129(1) of the CGST Rules, 2017. The DGAP's report highlighted the tax implications pre and post-GST implementation, showing a negligible increase in the base price post-GST due to a reduction in discounts offered by the Respondent. 3. The DGAP's analysis revealed that the Respondent's increase in the base price post-GST was primarily due to a reduction in discounts, resulting in a minimal increase of Rs. 4.50, which was only 0.24%. The DGAP argued that this increase did not qualify as profiteering as it was not linked to the tax rate reduction, thus not contravening Section 171(1) of the CGST Act, 2017. 4. During the Authority's meeting, the Applicant No. 1 representative agreed with the DGAP's report. Upon careful consideration of the report and documents, the Authority examined whether the GST rate reduction benefit was passed on to the recipient as mandated by Section 171 of the CGST Act, 2017. 5. The Authority found that the Respondent's post-GST base price increase was due to a reduction in discounts, not linked to the tax rate reduction. As the reduction in discounts was offered from the profit margin and did not form part of the base price, the Respondent could not be held guilty under Section 171 of the Act. 6. Based on the analysis and facts presented, the Authority concluded that the Respondent did not contravene Section 171 of the CGST Act, 2017. Therefore, the application filed by the Applicants was dismissed, and the order was to be sent to both parties with no cost implications.
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