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TMI BlogWHEN BASE PRICE NOT INCREASED, PROFITEERING NOT ESTABLISHEDX X X X Extracts X X X X X X X X Extracts X X X X ..... WHEN BASE PRICE NOT INCREASED, PROFITEERING NOT ESTABLISHED X X X X Extracts X X X X X X X X Extracts X X X X ..... is difficult to establish the profiteering allegation. In the instant case, where supply of steam iron press was involved, the price was not increased when GST rate was reduced in July, 2018 but was hiked as a general practice in October which was being done every year. As such, profiteering allegation was examined in legal of factual matrix. SHRI RAHUL SHARMA, M/S. LOCAL CIRCLE INDIA PVT. LTD., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DIRECTOR GENERAL OF ANTI-PROFITEERING, CENTRAL BOARD OF INDIRECT TAXES & CUSTOMS VERSUS M/S. BAJAJ ELECTRICALS LIMITED [2020 (3) TMI 557 - NATIONAL ANTI-PROFITEERING AUTHORITY] dated 04.03.2020, complainant filed a complaint against respondent company alleging profiteering in respect of supply of "Bajaj Majesty MX 20 Steam Iron". It was alleged that the Respondent increased the MRP of the product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from ₹ 1099/- to ₹ 1405/- or ₹ 1520/-, when the GST rate was reduced from 28% to 18% w.e.f. 27.07.2018, vide Notification No. 18/2018-Central Tax (Rate) dated 26.07.2018. It was submitted that the Respondent did not pass on the benefit of reduction in the GST rate from 28% to 18% w.e.f. 27.07.2018 and instead, increased the MRP of the product. The matter was referred to DGAP for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investigation. He covered the period from 27.07.2018 to 31.03.2019 and submitted the report dated 06.09.2019. DGAP observed that Government had reduced the GST rate on the "electro-thermic appliances of a kind used for domestic purposes" from 28% to 18% w.e.f. 27.07.2018, vide Notification No. 18/2018-Central Tax (Rate) dated 26.07.2018. The legal requirement was abundantly clear that in the even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the benefit of ITC or reduction in the rate of tax, there must be a commensurate reduction in the prices of the goods or services. Such reduction could only be in terms of money, so that the final price payable by a recipient got reduced commensurate with the reduction in the tax rate or benefit of ITC. The DGAP also reported that this was the legally prescribed mechanism to pass on the benef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it of ITC or reduction in the rate of tax to the recipients under the GST regime. It observed that the Respondent had not increased the base prices of the product when the rate of GST was reduced from 28% to 18% w.e.f. 27.07.2018. On the basis of aforesaid pre and post-reduction GST rates and the details of outward taxable supplies (other than zero rated, nil rated and exempted supplies) of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roduct during the period 01.04.2018 to 31.03.2019, as furnished by the Respondent, DGAP observed that the Respondent had not increased the base price of the product "Bajaj Majesty MX 20 Steam Iron" when the GST rate was reduced from 28% to 18% w.e.f. 27.07.2018. However, the Respondent had increased the base price of the product from ₹ 676/- to ₹ 696/- in the month of October, 2018 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Respondent's business practice was that of revising the base price of the product twice a year- once at the start of the year and second generally near October-November based on festival season. Thus, since there was no profiteering in the specific complained product, the scope of investigation was limited to the product mentioned in the complaint only. The DGAP thus stated that the allega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of profiteering by complainant by way of increasing the base prices of the products w.e.f. 27.07.2018 was not sustainable against the Respondent and that Section 171(1) of the CGST Act, 2017 has not been contravened. The NAA perused the report of DGAP alongwith the invoices of the product dated 06.07.2018 and 03.08.2018, and observed that the base price of the product was kept unchanged same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Respondent despite the reduction in the rate of tax and that he did not increase the base price after coming into force of Notification No. 18/2018-Central Tax (Rate) dated 26.07.2018. Further, the MRP of ₹ 1099/- shown on the screenshot, pertained to the stock of the goods carrying an MRP of ₹ 1099/-, which was lying with the Respondent and that the Respondent has himself stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that once the old stock was liquidated, the MRP of ₹ 1520/- was updated on the website. But since the new stock carrying the MPR of ₹ 1520/- had already circulated in the market, the website of the Respondent showed MRP of ₹ 1099/- till July, 2018. The NAA therefore, did not find the present case to be a case of profiteering as had been alleged. The allegation being not tenab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le, the application alleging violation of provisions of Section 171 of the CGST Act, 2017 was dismissed. X X X X Extracts X X X X X X X X Extracts X X X X
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