2019 (7) TMI 313 - NAPA - GST

Profiteering - HP V202b 19.5 inch Computer Monitor - benefit of reduction in the GST rate not passed on - contravention of provisions of section 171 of CGST Act - HELD THAT - The Central Government, on the recommendation of the GST Council, had levied 28% GST on Computer Monitors exceeding 17 inches (S. No. 154 of Schedule-IV and Sl. No. 384 of Schedule-III), vide Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017. The GST rate on Computer Monitors exceeding 17 inches but not exceeding 20 inches (Sl. No. 154 of Schedule-IV and Sl. No. 384 of Schedule-III) was reduced from 28% to 18%, vide Notification No. 27/2017-Central Tax (Rate) dated 22.07.2017. Further the Central Government, on the recommendation of the GST council had reduced the GST rate on Computer Monitors of size ranging between 20 inches to 32 inches from 28% to 18%, vide Notification No. 24/2018 Central Tax (Rate) dated 31.12.2018, w.e.f. 01.01.2019. We find that there was no rate reduction in tax on the product Computer Monitor of 19.5 inch as has been alleged by the Applicant. We also find that the rate reduction from 28% to 18% vide Notification No. 24/2018 w.e.f. 01.01.2019 was only effective in the case of Computer Monitors of size ranging between 20 inches to 32 inches which is entirely different from the product in respect of which the above Applicant has alleged profiteering. However as per the facts mentioned above the allegation made by the Applicant is not correct since there was no reduction in the rate of tax during the relevant period (between December 2018 to March 2019) on the Computer Monitor of 19.5 inch . The Applicant has alleged profiteering by the Respondent during the period of January 2019 whereas no such rate reduction has been affected on the said product after 22.07.2017 - the allegation of the Applicant No. 1 is not sustainable - Application dismissed.

Summary

Issues:
Alleged profiteering due to failure to pass on GST rate reduction benefit on a specific computer monitor.

Analysis:
1. Facts and Allegations: An application was filed alleging profiteering by the respondent for not passing on the benefit of GST rate reduction from 28% to 18% on a specific computer monitor. The applicant claimed that despite the rate reduction, the selling price remained the same.

2. Investigation Initiation: The Standing Committee forwarded the matter to the DGAP for detailed investigation. The DGAP issued a notice to the respondent under Rule 129 of the CGST Rules, 2017, seeking clarification on the alleged non-passing of benefits to customers.

3. Respondent's Submissions: The respondent argued that the applicant was not the actual buyer of the product and therefore ineligible to claim the benefit. Additionally, the respondent contended that the alleged product did not fall under the category that received the GST rate reduction.

4. DGAP Report: The DGAP's investigation revealed that the product in question was already subject to an 18% GST rate since July 2017, and there was no further reduction in the GST rate from January 2019. The base price of the product remained consistent, and the allegation of non-passing of benefit was deemed baseless.

5. Authority's Decision: After careful consideration, the Authority found that the applicant's allegation was unfounded. The GST rate reduction was applicable to computer monitors of different sizes than the specific product in question. As there was no actual reduction in the tax rate for the concerned product, the allegation of profiteering was dismissed.

6. Conclusion: The Authority dismissed the applicant's claim as there was no basis for alleging profiteering due to the failure to pass on the benefit of a GST rate reduction that did not apply to the specific product. The order was communicated to the parties involved, and the case file was closed.