2019 (4) TMI 381 - NAPA - GST

Profiteering - supply of Vitrified Tiles Super Nano Plus - benefit of reduction in the rate if tax not passed - contravention of the provisions of Section 171 of CGST Act, 2017 - Held that - The base price of the product per box was ₹ 294.50 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.

Summary

Issues: Alleged profiteering on supply of Vitrified Tiles Super Nano Plus by not passing on tax rate reduction benefit.

Detailed Analysis:
1. Allegation and Referral: The case involved an allegation of profiteering by the Respondent on the supply of "Vitrified Tiles Super Nano Plus" due to not passing on the benefit of tax rate reduction. The Applicant referred the case to the Standing Committee on Anti-profiteering based on invoices issued before and after the GST rate reduction.

2. Examination and Investigation: The Standing Committee referred the case to the Directorate General of Anti-Profiteering (DGAP) for detailed investigations under CGST Rules. The DGAP conducted a thorough investigation and submitted a report on 28.09.2018 after examining the pre and post-GST rate reduction sale invoice-wise details.

3. DGAP Report Findings: The DGAP's report highlighted that the GST rate on the product was reduced from 28% to 18% w.e.f. 15.11.2017. However, after examining the invoices, it was found that there was no change in the per unit taxable amount of the product post-GST rate reduction period, indicating that the benefit of rate reduction was passed on.

4. Authority's Decision: The Authority reviewed the DGAP's report and documents, focusing on whether the benefit of tax rate reduction was effectively passed on by the Respondent. Citing Section 171 of the CGST Act, which mandates passing on tax rate reductions to recipients, the Authority noted that the base price of the product remained the same before and after the GST rate reduction. Consequently, the Authority agreed with the DGAP's findings and dismissed the allegation of profiteering, concluding that there was no contravention of Section 171 of the CGST Act, 2017.

5. Subsequent Investigation: During the hearing, it was noted that the DGAP's initial report did not address the wholesaler's price, prompting the Authority to direct further investigation. The DGAP subsequently submitted a report focusing on the alleged profiteering by the manufacturer/wholesalers, which further supported the conclusion that the benefit of the tax rate reduction had been passed on.

6. Final Order: The Authority's final order, dated 11.12.2018, confirmed that the Respondent had not contravened the provisions of Section 171 of the CGST Act, 2017. The order directed the dismissal of the application and mandated the distribution of the order to all relevant parties, concluding the case and closing the file.