2019 (2) TMI 297 - NAPA - GST

Profiteering - Shorts - benefit of reduction in the rate of tax at the time of implementation of the GST 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 is no merit in the application filed by the Applicants - application dismissed.

Summary

Issues: Allegation of profiteering by not passing on tax rate reduction benefits under Section 171 of CGST Act, 2017.

Detailed Analysis:

1. Background of the Case: The Kerala State Screening Committee alleged profiteering by the Respondent on the supply of "Shorts" by not passing on the benefit of tax rate reduction at the implementation of GST from 01.07.2017. The case was referred to the Standing Committee on Anti-profiteering, relying on pre-GST and post-GST invoices issued by the Respondent.

2. Investigation and Referral: The Standing Committee referred the case to the Directorate General of Anti-Profiteering (DGAP) for detailed investigations under Rule 129 (1) of the CGST Rules, 2017.

3. DGAP Report: The DGAP report stated that the tax rate on the product remained the same pre-GST and post-GST, with no change in base prices. Therefore, it concluded that there was no contravention of Section 171 of the CGST Act, 2017, and the allegation of profiteering was not established.

4. Authority's Decision: The Authority considered the DGAP report and observed that the key issue was whether there was a reduction in the tax rate and if Section 171 of the CGST Act was applicable. Section 171 mandates passing on tax rate reductions to recipients.

5. Legal Analysis: Section 171 (1) of the CGST Act requires any reduction in the rate of tax to be passed on to the recipient through a commensurate reduction in prices. In this case, as there was no reduction in the tax rate on the product post-GST, the anti-profiteering provisions of Section 171 (1) were not applicable.

6. Dismissal of Application: The Authority found no merit in the application filed by the Applicants, dismissing it accordingly. The order was to be sent to both the Applicants and the Respondent, with the case file to be closed after completion.

This detailed analysis of the judgment highlights the key legal issues, investigative process, findings, and the application of relevant provisions of the CGST Act in the context of the allegation of profiteering.