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2019 (2) TMI 738 - NAPA - GSTProfiteering - supply of Shirts - 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 - The product was exempted from the Central Excise Duty, vide Notification No. 30/2004- CE dated 09.07.2004 and only attracted VAT @ 5%. After implementation of the GST w.e.f. 01.07.2017, the tax rate of the above product was fixed @ 5%. Therefore, there was no reduction in the rate of tax and hence provisions of provisions of section 171 are not attracted in this case. As far as the submission of the Applicant No. I regarding deduction of an amount of ₹ 9.5 on account of CST from the pre-GST price is concerned the same does not appear to be correct as the Kerala State Screening Committee has failed to explain under which provisions of the Kerala CST Act, 2017 it can be deducted. Moreover, there has been increase in the rate of inter-state tax as the CST was increased from 2% to 5% of IGST in respect of such sales. Therefore, the claim made by the Applicant No. I is misplaced and hence it cannot be accepted. 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 CGST Act, 2017 are not attracted - application dismissed.
Issues: Allegation of profiteering by respondent on supply of shirts; Examination of pre-GST and post-GST invoices; Application of Section 171 of CGST Act, 2017.
In a case where the Kerala State Screening Committee alleged profiteering by a respondent on the supply of shirts, the Directorate General of Anti-Profiteering (DGAP) conducted a detailed investigation under Rule 129 (6) of the Central Goods & Services Tax (CGST) Rules, 2017. The case revolved around the respondent's failure to pass on the benefit of a tax rate reduction at the implementation of the CST w.e.f. 01.07.2017. The DGAP's report highlighted that the tax rate on the product remained the same in both the pre-GST and post-GST era, and the base prices also remained unchanged. Consequently, the provisions of Section 171 of the CGST Act, 2017 were deemed to not have been contravened, and the allegation of profiteering was not substantiated. Upon consideration of the DGAP's report and relevant documents, the National Anti-Profiteering Authority deliberated on whether there was indeed a reduction in the tax rate and if Section 171 of the CGST Act, 2017 applied to the case. It was established that the product had been exempted from Central Excise Duty and only attracted VAT at 5%, which remained consistent post-GST implementation. As there was no reduction in the tax rate, the provisions of Section 171 were deemed inapplicable. The Kerala State Screening Committee, as the Applicant No. I, contended that an amount of CST should have been deducted from the pre-GST price, resulting in an increase in the post-CST sale. However, this argument was refuted as the Committee failed to provide a legal basis for the deduction under the Kerala CST Act, 2017. Additionally, the increase in the inter-state tax rate from 2% to 5% of IGST further invalidated the claim. Consequently, the application was dismissed as there was no reduction in the tax rate post-GST implementation, rendering Section 171 (1) of the CGST Act, 2017 inapplicable. The order was to be shared with all concerned parties, and the case file was to be closed upon completion.
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