2019 (3) TMI 751 - NAPA - GST

Profiteering - supply of Paint (AP Woodtech Wood Stain Walnut 500ml) - reduction in he rate of tax or not - the benefit of reduction in the rate of tax not passed on - contravention of Section 171 of the CGST Act, 2017 - Held that - The Respondent had maintained the same base price post reduction in the rate of tax w.e.f. 15.11.2017, resulting in reduction in the cum-tax price from ₹ 175.40/- to ₹ 161.70/-. Since the benefit of tax reduction has been passed on by the Respondent by commensurate reduction in his price, therefore, the Respondent cannot be held guilty under Section 171 of the above Act. 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 Applicants and the same is accordingly dismissed - decided against petitioner.

Summary

Issues: Allegation of profiteering by not passing on the benefit of GST rate reduction.

Analysis:
1. The case involved an allegation of profiteering by the Respondent for not passing on the benefit of a GST rate reduction on a specific product. The Applicant referred the case to the Standing Committee on Anti-profiteering, which further directed the Director General of Anti-Profiteering (DGAP) to conduct detailed investigations under Rule 129 (1) of the CGST Rules, 2017.

2. The DGAP's report highlighted that the GST rate on the product was reduced from 28% to 18% w.e.f. 15.11.2017. The Respondent adjusted the selling price post-reduction, ensuring the benefit was passed on to consumers. The DGAP's detailed investigation included pre and post-rate revision invoice-wise details to support the findings.

3. The Authority reviewed the DGAP's report and observed discrepancies in the consideration of allegations made in Annexure-6 of the meeting held by the Applicant. Consequently, the DGAP was instructed to conduct a re-investigation on the specific issue under Rule 133 (4) of the CGST Rules, 2017.

4. In the subsequent report, the DGAP reiterated that no profiteering was evidenced as the transactions between manufacturers, wholesalers, and retailers occurred at prices lower than MRP, even after the tax rate reduction. The DGAP concluded that there was no contravention of Section 171 of the CGST Act, 2017, and the allegations against the Respondent were unsubstantiated.

5. Upon careful consideration of the reports and documents, the Authority confirmed that the Respondent had indeed passed on the benefit of tax reduction to consumers by maintaining the base price post-reduction. Consequently, the Respondent was found not guilty under Section 171 of the CGST Act, 2017.

6. The final order dismissed the application, stating that the Respondent did not contravene the provisions of Section 171 of the CGST Act, 2017. Both the Applicants and the Respondent were to receive a copy of the order, and the case file was to be closed upon completion.