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TMI BlogAnti Profiteering Part IX X X X Extracts X X X X X X X X Extracts X X X X ..... Anti Profiteering Part I - By: - CA Akash Phophalia - Goods and Services Tax - GST - Dated:- 15-3-2019 - - Introduction Anti-profiteering is a measure introduced in GST laws as a tool to avoid profit making by the suppliers at the cost of the sacrifice made by the government by way of reduction in tax rate. To put it simply, if there is any reduction in rate of tax then the consequential ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit must be passed upon the assessee by way of reduction in prices of the said supply. Facts In one case the assessee the customer purchased goods from the assessee at one price say X. Thereafter the tax rate on the said goods was reduced. The assessee returned goods and credit note was issued for the same. Now the customer purchased goods from the assessee and price paid was same as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... X price paid before reduction in rate of tax. The customer filed an application before Anti-profiteering authorities stating that the assessee had not reduced price of goods after reduction in rate of tax. He presented the two invoices, one issued before reduction in rate of tax and the other one issued after reduction in rate of tax evidencing no change in the price of the product consequent to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... change in rate of tax. Arguments by the assessee The assessee argued that the customer had returned goods purchased before reduction in rate of tax and therefore the customer had not suffered any loss. He further argued that the term supply was defined in Section 7(1)(a) of the CGST Act 2017 and under section 34(1) of the CGST Act 2017 , where the goods were returned, the supplier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was required to issue a credit note and mention the details of the credit note in the GST return filed for the respective month and hence it was evident that there was a provision in the act itself to negate the supply transaction and since it was not in dispute that the transactions stood annulled by the customer itself, therefore, no profiteering could be alleged by him. He has also relied u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon the law settled by the Hon ble high court of Kerala in the case of Grasim industries Ltd v/s State of Kerala 1994 (5) TMI 256 - KERALA HIGH COURT in which it was ruled that a sales return meant a return of the very goods purchased by the buyer in whole or in part and it was a reversal of the sale, as if the sale had not taken place in respect of the returned goods and therefore contemplate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d a return before the goods were appropriated and used by the buyer. The assessee took the similar contention and applied the same principle in this case. As the transaction of supply did not exist and hence the entire proceedings were contrary to the provisions of the law and the proceedings were required to be set aside on this ground itself. Contention by DGAP DGAP (Director General o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Anti Profiteering) contended that the transaction of sale took place between the assessee and the customer and subsequently credit note was issued with respect to the said transaction. Since these transactions were not rebutted by any of the parties and the said transaction was reflected in the GSTR-1 (Details of outward supplies) filed by the assessee for the respective month, therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question of negation of the transaction cannot be raised. Hence, the argument places by the assessee couldn t sustain. Conclusion In view of the facts argued by the assessee and contention of the DGAP it is quite clear that once the sale is reflected in the return filed for the respective month subsequent issue of credit note shall not negate the transaction. Meaning thereby, although th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e impact of the said transaction is nullified but the said transaction can be used in the GST laws for the comparative analysis where the said transaction itself is not doubted. Before Parting The concept of anti-profiteering is a new concept and the same needs a detailed understanding. In some recent rulings the matter is dealt in depth by the court of laws. In the coming articles we wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll further discuss the other arguments taken by the two parties. ------- CA Akash Phophalia 9799569294 [email protected] - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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