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2019 (2) TMI 739 - NAPA - GSTProfiteering - supply of Socks - benefit of reduction in the rate of tax not passed on - contravention of the provisions of Section 171 of Central Goods and Service Tax Act, 2017 - Held that - There was no reduction in the rate of tax on the above product w.e.f. 01.07.2017 and hence the anti-profiteering provisions contained in Section 171 (1) of the CGST Act, 2017 are not attracted - application dismissed.
Issues: Allegation of profiteering by the Respondent on the supply of "Socks" by not passing on the benefit of reduction in the rate of tax post-GST implementation.
In this case, the Kerala State Screening Committee alleged profiteering by the Respondent on the supply of "Socks" by not passing on the benefit of reduced tax rates post-GST implementation. The Committee referred the case to the Standing Committee on Anti-profiteering, which further directed detailed investigations by the Directorate General of Anti-Profiteering (DGAP) under Rule 129 (6) of the Central Goods & Services Tax (CGST) Rules, 2017. The DGAP's report highlighted that the product, "Socks," was exempted from Central Excise Duty pre-GST and attracted a 5% tax post-GST. The investigation compared pre-GST and post-GST sale invoice details to assess any profiteering by the Respondent. The DGAP's report concluded that there was no change in the tax rate or base prices of the product between the pre-GST and post-GST era. Therefore, the provisions of Section 171 of the CGST Act, 2017, which mandate passing on tax rate reductions to consumers, were not violated. The Authority, after considering the report and absence of any complainant, summoned the Kerala Screening Committee to present its case. However, the Committee failed to appear on multiple occasions. Subsequently, the Committee alleged an increase in sales value post-GST, claiming it as an instance of profiteering. Upon careful review, the Authority focused on determining if there was a tax rate reduction and if Section 171 of the CGST Act was applicable. Section 171 mandates passing on tax rate reductions to consumers. However, as there was no reduction in the tax rate on the product post-GST implementation, the anti-profiteering provisions under Section 171 were deemed inapplicable. Consequently, the application alleging profiteering was dismissed, and the order was to be shared with all concerned parties.
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