2019 (3) TMI 752 - NAPA - GST

Profiteering - supply of Ceramics Glazed Wal Tiles, Printex Crema, PRM MM HSN Code 69072300 - benefit of reduction in the rate of tax not passed on - contravention of the provisions of Section 171 of the CGST Act, 2017 - Held that - It is apparent from the perusal of the facts of the case that there has been reduction in the rate of tax on the above product from 28% to 18% w.e.f. 15.11.2017 as per the Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017. It is also revealed from the record that the Respondent had not increased the discounted per M2 price of the above product which had remained ₹ 374.74/- before and after the tax reduction, as was evident from both the invoices issued by him before and after the tax reduction and therefore, the benefit of tax reduction has duly been passed on to the customers by the Respondent. The allegation of profiteering is not established against the Respondent in terms of Section 171 of the CGST Act, 2017 as there has been no change in the base price of the product after reduction in the GST rate w.e.f. 15.11.2017 - application dismissed - decided against petitioner.

Summary

Issues: Allegation of profiteering by Respondent on supply of specific product by not passing on tax rate reduction benefits. Examination of invoices, investigation by DGAP, consideration of Section 171 of CGST Act, 2017.

In this case, the Applicant alleged profiteering by the Respondent on the supply of a specific product by not passing on the benefits of tax rate reduction as per Section 171 of the CGST Act, 2017. The Applicant referred the case to the Standing Committee on Anti-profiteering, which further directed the Director General of Anti-Profiteering (DGAP) to investigate the matter. The DGAP's report highlighted that the GST rate on the product was reduced from 28% to 18% w.e.f. 15.11.2017, but the per unit taxable amount remained the same before and after the tax reduction. The DGAP clarified that Section 171 of the CGST Act, 2017 comes into play when there is a reduction in the tax rate or increased benefit of Input Tax Credit (ITC), which was not applicable in this case as there was no change in the per unit taxable amount post-GST rate reduction period. Therefore, the allegation of profiteering against the Respondent was deemed unsustainable.

Upon review, the Authority noted discrepancies in the data presented by the DGAP and the Applicant, leading to the decision to send the report back for re-investigation. The DGAP's subsequent report confirmed consistency in the details of the invoices examined by both parties. The Authority then analyzed whether there was a reduction in the tax rate and if Section 171 of the CGST Act, 2017 was applicable. It was observed that the tax rate on the product had indeed reduced from 28% to 18% as per the relevant notification. The per unit price of the product remained unchanged before and after the tax reduction, indicating that the benefit of the tax reduction had been passed on to the customers by the Respondent. Consequently, the allegation of profiteering was not substantiated, and the application was dismissed.

The final order directed the distribution of the judgment to all concerned parties and the closure of the case file. The detailed analysis of the invoices, investigation reports, and the application of Section 171 of the CGST Act, 2017 formed the basis of the decision to dismiss the allegation of profiteering against the Respondent in this case.