2019 (5) TMI 358 - NAPA - GST

Profiteering - Courier Service - benefit of reduction in the rate of tax not passed on - violation of the provisions of Section 171 of the CGST Act, 2017 or not - quantum of profiteering. HELD THAT - There was no reduction in the rate of tax on supply of Courier Service after the implementation of GST, instead there was increase in the rate of tax from 15% in pre-GST regime to 18% in post-GST regime. The fact that the Respondent had increased his base price for providing courier service from ₹ 69.5/- to ₹ 80/- has no relevance in view of the fact that there has been no reduction in the rate of tax nor increased benefit on account of Input Tax Credit was available and hence the provisions of Section 171 of CGST Act, 2017 can not be invoked in this case. it is clear that there is no case of contravention of the provisions of Section 171 of the CGST Act, 2017 and hence we find no merit in the application filed by the above Applicant . Application dismissed.

Summary

Issues:
1) Allegation of profiteering in courier service charges post-GST implementation.

Analysis:
The case involved an allegation of profiteering by the Respondent in the context of courier services post-GST implementation. The Applicant No. 1 filed a complaint stating that the Respondent had increased courier charges from ?69.50 to ?80 after GST implementation, citing an increase in taxes from 15% to 18%. The Directorate General of Anti-Profiteering (DGAP) investigated the matter and found that there was no reduction in the tax rate for courier services post-GST. The Respondent argued that operational costs and other factors led to the price increase, not tax benefits. The DGAP confirmed that there was no additional benefit of input tax credit available to the Respondent after GST implementation.

The Authority re-examined the issue following doubts about the benefit of input tax credit post-GST. The DGAP's subsequent report reiterated that the Respondent had been availing input tax credit both pre and post-GST, with no additional benefit post-GST. The Authority noted that the rate of tax on courier services had actually increased from 15% to 18% post-GST, contrary to the Applicant's claims of a reduction. As per Section 171 of the CGST Act, any reduction in tax rate or benefit of input tax credit should be passed on to customers. However, since there was no reduction in tax rate and no additional input tax credit benefit, the provisions of Section 171 were not applicable in this case.

The Authority concluded that there was no contravention of Section 171 of the CGST Act, 2017 in the case of the Respondent's courier service charges post-GST implementation. The application filed by Applicant No. 1 was dismissed, and a copy of the order was to be provided to both parties.