2018 (12) TMI 1600 - NAPA - GST

Profiteering - supply of Handloom Design-King Supreme Lungi - benefit of reduction in the rate of tax at the time of implementation of GST w.e.f 01.07.2017 not passed on - contravention of the provisions of Section 171 of Central Goods and Service Tax Act, 2017 - Held that - It is apparent 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 Central Goods and Services Tax Act, 2017 are not attracted. 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 Applicant - application dismissed.

Summary

Issues:
1. Allegation of profiteering by the Respondent on the supply of "Handloom Design-King Supreme Lungi" by not passing on the benefit of tax reduction post-GST implementation.
2. Examination of whether there was a reduction in the tax rate on the product in question post-GST implementation and whether any benefit of the tax reduction was required to be passed on.

Analysis:
1. The case involved an allegation of profiteering by the Respondent regarding the supply of "Handloom Design-King Supreme Lungi," where it was claimed that the Respondent did not pass on the benefit of the tax rate reduction post-GST implementation. The Kerala State Screening Committee referred the case to the Standing Committee on Anti-profiteering, which further forwarded it to the DGAP for detailed investigation under Rule 129 (6) of the CGST Rules, 2017. The DGAP's report highlighted that there was no reduction in the tax rate on the product post-GST implementation, as the tax rate changed from nil in the pre-GST era to 5% in the post-GST era. The DGAP concluded that there was no contravention of Section 171 of the CGST Act, 2017, as no reduction in the tax rate occurred.

2. The Authority examined the DGAP's report and the documents on record to address the key issues in the proceedings. It was crucial to determine whether there was a reduction in the tax rate on the product post-GST implementation and whether any benefit from the tax reduction should have been passed on to the consumers. Section 171 of the CGST Act mandates that any reduction in the tax rate should be passed on to the recipient through a commensurate reduction in prices. In this case, since there was no reduction in the tax rate on the product in question post-GST implementation, the anti-profiteering provisions under Section 171(1) of the CGST Act were not applicable.

3. The conclusion drawn from the analysis was that the Respondent did not contravene the provisions of Section 171 of the CGST Act, 2017. Therefore, the application filed by the Applicant was dismissed as there was no merit in the allegation of profiteering. The order was communicated to both the Applicants and the Respondent, and the case file was to be closed after completion of the necessary actions.