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2019 (4) TMI 1715 - NAPA - GSTProfiteering - BWP Trozan Platinum Ply 19 mm 2.44x1.22 - benefit of reduction in the rate of GST - contravention of the provisions of Section 171 of CGST Act, 2017 - HELD THAT - It is apparent from the perusal of the facts of the case that there was a decrease in the per unit base price (excluding GST) of the product in the post-GST era as compared to the pre-GST era when the applicable tax was reduced from 28.81% to 28%, when GST was implemented w.e.f. 01.07.2017. Further, the base price of the product was ₹ 1028.07 per square meter in the invoice dated 24.05.2017 and the price of the product was reduced to ₹ 1021.73 in the invoice dated 09.08.2017 after giving a discount of 17.05% on the base price of ₹ 1231/- per square meter (discount of ₹ 90,572/- was given on the total invoice value of ₹ 5,31,125.41 @ 17.05%). Further, the price of the product also remained at ₹ 1021.73 in the invoice dated 02.12.2017 after giving a discount of 17.05% on the base price of ₹ 1231/- per square meter (discount of ₹ 6249/- was given on the total invoice value of ₹ 36,646.87 @ 17.05%). It is apparent that the Respondent did not increase the per unit base price (excluding GST) of the product, which was ₹ 1028.07 in the pre-GST era. Further, it was reduced to ₹ 1021.73 in the post-GST era w.e.f. 01.07.2017 and it also remained at ₹ 1021.73 when the GST rate was reduced from 28% to 18% w.e.f. 15.11.2017 and hence, there was no increase in the per unit base price. Therefore, the allegation of profiteering is not sustainable in terms of Section 171 of the CGST Act, 2017. Application dismissed.
Issues:
Alleged profiteering by Respondent on supply of a specific product by not passing on tax rate reduction benefits upon GST implementation and subsequent rate reduction. Analysis: 1. The Applicant No. 1 referred the case to the Standing Committee on Anti-profiteering, alleging profiteering by the Respondent on a specific product due to failure in passing on tax rate reduction benefits during GST implementation and subsequent rate reduction from 28% to 18%. The Applicant relied on three invoices to support the claim. 2. The Standing Committee further referred the case to the Directorate General of Anti-Profiteering (DGAP) for detailed investigations under Rule 129 (1) of the CGST Rules, 2017, based on the Applicant's allegations. 3. The DGAP's report highlighted that the Respondent reduced the per unit base price of the product post-GST implementation, despite a reduction in the tax rate from 28.81% to 28%. The report also detailed the sale invoice-wise tax rates and base prices, showing the Respondent's actions in response to tax rate changes. 4. Upon further scrutiny, the DGAP found that even after the GST rate reduction from 28% to 18%, the Respondent did not increase the per unit base price of the product, maintaining it at the same level. This led to the conclusion that there was no contravention of Section 171 of the CGST Act, 2017. 5. The DGAP clarified that the Act requires passing on the benefit of tax rate reduction to recipients, which was found to be in compliance as the per unit base price remained the same post-GST rate reductions. The Respondent's actions did not indicate profiteering as alleged by the Applicant. 6. The Authority's meeting reviewed the report and scheduled a hearing for the Applicant No. 1, who later appeared before the Authority. Subsequently, discrepancies in invoice values led to a re-investigation by the DGAP under Rule 133 (4) of the CGST Rules, 2017. 7. The DGAP's re-investigation reaffirmed that there was no increase in the base price of the product post-GST rate reductions, maintaining the price at the same level. This finding supported the dismissal of the profiteering allegations under Section 171 of the CGST Act, 2017. 8. The Authority's final decision was based on the clear evidence that the Respondent did not increase the per unit base price of the product despite tax rate reductions, thereby complying with the Act's requirement of passing on tax benefits to recipients. The allegation of profiteering was deemed unsustainable, leading to the dismissal of the application filed by the Applicants. 9. The order directed the distribution of the decision to all relevant parties and concluded the case, closing the file after completion of proceedings.
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