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2019 (3) TMI 370 - NAPA - GSTProfiteering - Ceramic Vitrified Tiles - benefit in the reduction of rate of tax not passed on - contravention of Section 171 (1) of the CGST Act, 2017 - N/N. 41/2017-Central Tax (Rate) dated 14.11.2017 - Held that - It is clear that the base price of the product per box was ₹ 232.50 prior to 15.11.2017 and had remained the same even after GST rate reduction w.e.f. 15.11.2017. Therefore, the benefit of rate reduction appears to have been passed on. This Authority agrees with the DGAP s Report dated 28.09.2018 and accordingly, holds that the allegation of profiteering is not sustainable. The provisions of Section 171 of the CGST Act, 2017, have not been contravened and there is no merit in the application forwarded by the Applicant No. 1 - application dismissed.
Issues: Allegation of profiteering by a company due to not passing on tax rate reduction benefits.
Detailed Analysis: 1. The case involved an allegation of profiteering by a company, M/S Velbon Vitrified Tiles Pvt. Ltd., for not passing on the benefit of tax rate reduction as per Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017. 2. The Applicant No. 1 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 conducted a thorough investigation and submitted a report on 28.09.2018, stating that there was no increase in the taxable amount of the product post-GST rate reduction period compared to the pre-GST rate reduction period. 4. During the hearing, the Authority noted that the initial report did not address the wholesaler's pricing, which led to a direction under Rule 133 (4) of the CGST Rules, 2017, for further investigation by the DGAP. 5. The subsequent report by the DGAP highlighted the case of alleged profiteering by the manufacturer/wholesalers in supplying tiles to another entity post-GST rate reduction. 6. The central issue was whether the benefit of tax rate reduction was passed on by the company to its customers as required by Section 171 of the CGST Act, 2017. 7. Section 171 mandates that any reduction in tax rate must be passed on to the recipient through a commensurate reduction in prices. 8. Upon examination of the invoices, it was found that the base price per box of the product remained the same before and after the GST rate reduction, indicating that the benefit of rate reduction was indeed passed on. 9. The Authority concurred with the DGAP's findings, concluding that there was no contravention of Section 171 of the CGST Act, 2017, and dismissed the application alleging profiteering. 10. The order was to be communicated to all relevant parties, and the case file was to be closed after due process. By analyzing the case thoroughly, the Authority determined that the company had not engaged in profiteering as it had passed on the benefit of the tax rate reduction to its customers, as required by law.
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