Allegation of profiteering dismissed: No violation found under Section 171 of CGST Act

The case involved an allegation of profiteering by the Respondent on the supply of "Socks" post-GST implementation. The Directorate General of Anti-Profiteering's report found no change in tax rates or base prices pre and post-GST, concluding that the Respondent did not violate Section 171 of the CGST Act, which requires passing on tax rate reductions to consumers. The Kerala Screening Committee failed to support its claim of profiteering, leading to the dismissal of the application alleging profiteering.

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Issues: Allegation of profiteering by the Respondent on the supply of "Socks" by not passing on the benefit of reduction in the rate of tax post-GST implementation.

In this case, the Kerala State Screening Committee alleged profiteering by the Respondent on the supply of "Socks" by not passing on the benefit of reduced tax rates post-GST implementation. The Committee referred the case to the Standing Committee on Anti-profiteering, which further directed detailed investigations by the Directorate General of Anti-Profiteering (DGAP) under Rule 129 (6) of the Central Goods & Services Tax (CGST) Rules, 2017. The DGAP's report highlighted that the product, "Socks," was exempted from Central Excise Duty pre-GST and attracted a 5% tax post-GST. The investigation compared pre-GST and post-GST sale invoice details to assess any profiteering by the Respondent.

The DGAP's report concluded that there was no change in the tax rate or base prices of the product between the pre-GST and post-GST era. Therefore, the provisions of Section 171 of the CGST Act, 2017, which mandate passing on tax rate reductions to consumers, were not violated. The Authority, after considering the report and absence of any complainant, summoned the Kerala Screening Committee to present its case. However, the Committee failed to appear on multiple occasions. Subsequently, the Committee alleged an increase in sales value post-GST, claiming it as an instance of profiteering.

Upon careful review, the Authority focused on determining if there was a tax rate reduction and if Section 171 of the CGST Act was applicable. Section 171 mandates passing on tax rate reductions to consumers. However, as there was no reduction in the tax rate on the product post-GST implementation, the anti-profiteering provisions under Section 171 were deemed inapplicable. Consequently, the application alleging profiteering was dismissed, and the order was to be shared with all concerned parties.

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