2019 (3) TMI 429 - NAPA - GST

Profiteering - Caribbean Wood Tile - benefit of reduction in the rate of tax no passed on - contravention of Section 171 of the Central Goods & Service Tax (CGST) Act, 2017 - Held that - There was no reduction of tax with the introduction of GST. The DGAP on examining various facts has categorically mentioned that the invoices very clearly show that no VAT was levied and CST was also exempted prior to 01.07.2017. In fact the rate of tax has increased from Central Excise Duty 13.97% to GST 28% w.e.f. 01.07.2017. Therefore, the allegation of profiteering is not sustainable in terms of Section 171 of the CGST Act, 2017 as there has been no reduction in the rate of tax. There is no merit in the application - application dismissed.

Summary

Issues: Allegation of profiteering by Respondent on supply of 'Caribbean Wood Tile' post-GST implementation.

Analysis:
1. The case originated from the Kerala State Screening Committee on Anti-Profiteering alleging that the Respondent did not pass on the benefit of tax reduction on 'Caribbean Wood Tile' post-GST implementation. The Committee relied on pre-GST and post-GST invoices to support the claim under Section 171 of the CGST Act, 2017.
2. The Standing Committee on Anti-Profiteering referred the case to the Directorate General of Anti-Profiteering (DGAP) for detailed investigations under Rule 129(1) of the CGST Rules, 2017.
3. The DGAP conducted thorough investigations and submitted a report, highlighting the tax rate difference pre and post-GST implementation for the product in question.
4. The DGAP observed that the tax rate increased from 13.97% to 28% post-GST, indicating no reduction in tax rate as required by Section 171 of the CGST Act, 2017 for allegations of profiteering.
5. The Authority reviewed the DGAP report and noted that the MRP and base price were not fully considered in the initial investigation, leading to a request for re-investigation under Rule 133(4) of the CGST Rules, 2017.
6. The subsequent report by the DGAP clarified discrepancies in the pre-GST invoice details, emphasizing that no VAT/CST was levied, and the Central Excise duty was incorrectly calculated, further supporting the lack of tax reduction post-GST.
7. The Authority concluded that there was no reduction in the tax rate post-GST, as the tax rate increased from 13.97% to 28%, rendering the allegation of profiteering unsustainable under Section 171 of the CGST Act, 2017.
8. Based on the findings, the application filed by the Applicants was dismissed, and the order was communicated to all parties involved, concluding the case.