2018 (12) TMI 1001 - NAPA - GST

Profiteering - supply of Eastern Meat Masala - benefit of reduction in the rate of tax not passed - Section 171 of the CGST Act - Held 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 Central Goods and Services Tax Act, 2017 are not attracted. There is also no increase in the per unit base price (excluding tax) of the above product and therefore the allegation of profiteering is not sustainable. The Respondent has not contravened the provisions of Section 171 of the CGST Act, 2017 and hence there is no merit in the application filed by the above Applicant and the same is accordingly dismissed - application dismissed.

Summary

Issues:
- Whether there was a reduction in the rate of tax on the product in question w.e.f. 01.07.2017?
- Whether any benefit of reduction in the rate of tax was to be passed on?

Analysis:
1. The case involved an allegation of profiteering against the Respondent regarding the supply of "Eastern Meat Masala" due to not passing on the benefit of tax reduction post-GST implementation.
2. The Kerala State Screening Committee referred the case to the Standing Committee on Anti-profiteering, which further directed the Directorate General of Anti-Profiteering (DGAP) for detailed investigation under Rule 129 (1) of the CGST Rules, 2017.
3. The DGAP's report confirmed that the tax rate on the product remained 5% both pre-GST and post-GST, with no increase in the per unit base price, concluding that Section 171 of the CGST Act, 2017 was not violated by the Respondent.
4. The Authority reviewed the report and decided that as there was no private applicant, the Kerala Screening Committee should appear before them. The Additional Commissioner representing the Applicant agreed with the DGAP's report during the hearing.
5. The Authority identified the key issues to be settled, focusing on whether there was a tax rate reduction post-GST and if the benefit was required to be passed on as per Section 171 of the CGST Act.
6. Section 171 of the CGST Act mandates passing on any tax rate reduction to the recipient through price reduction. In this case, as there was no tax rate reduction and no increase in the base price, the anti-profiteering provisions were not applicable, leading to the dismissal of the application against the Respondent.
7. The judgment concluded that the Respondent did not contravene Section 171 of the CGST Act, and therefore, the application was dismissed. The order was to be shared with all parties involved, and the case file was to be closed after due process.