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2019 (2) TMI 296 - NAPA - GSTProfiteering - Little Star Dhoti 406 - benefit of reduction in the rate of ta not passed on - contravention of the provisions of Section 171 of Central Goods and Service Tax Act, 2017 - Held that - It is clear 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, hence the anti-profiteering provisions contained in Section 171 (1) of the CGST Act, 2017 are not attracted - there are no merit in the application filed by the Applicants - application dismissed.
Issues: Allegation of profiteering by the Respondent on the supply of "Little Star Dhoti 406" due to not passing on the benefit of tax reduction post-GST implementation. Examination of pre-GST and post-GST invoices to determine any contravention of Section 171 of CGST Act, 2017.
In the present case, the Kerala State Screening Committee alleged profiteering by the Respondent on the supply of "Little Star Dhoti 406" for not passing on the benefit of tax rate reduction post-GST implementation. The Committee referred the case to the Standing Committee on Anti-profiteering, which further forwarded it to the Directorate General of Anti-Profiteering (DGAP) for detailed investigation under Rule 129(6) of the CGST Rules, 2017. The DGAP's report highlighted that the product was exempted from Central Excise duty pre-GST and attracted only VAT at 5%. Post-GST implementation, the tax rate remained at 5%, with no change in base prices. The DGAP concluded that there was no contravention of Section 171 of the CGST Act, 2017, as the tax rate and base prices remained the same in both periods. Upon reviewing the DGAP's report and the documents, the Authority focused on determining whether there was a reduction in the tax rate post-GST implementation and if Section 171 of the CGST Act, 2017 applied to the case. Section 171 mandates that any reduction in the tax rate should be passed on to the recipient through a corresponding reduction in prices. The Authority found that there was no reduction in the tax rate on the product post-GST, thus the anti-profiteering provisions under Section 171(1) were not applicable. Consequently, the application filed by the Applicants, alleging profiteering, was dismissed. The order was to be shared with both the Applicants and the Respondent, and the case file was to be closed after due process. Overall, the judgment clarified that in cases where there is no reduction in the tax rate post-GST implementation, the anti-profiteering provisions of Section 171 of the CGST Act, 2017 do not apply, emphasizing the importance of passing on tax benefits to consumers in line with the statutory requirements.
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