2019 (3) TMI 1566 - NAPA - GST

Alleged profiteering case dismissed under CGST Act Section 171 - Respondent reduced base price post-GST.

The case involved allegations of profiteering by the Respondent on the supply of a mattress following a GST rate reduction. The DGAP's investigation ... Profiteering - supply of Peps Spring Koil Bornell Normal Maroon 75x60x6” Mattress - benefit of reduction of GST rate not passed on - N/N. 41/2017-Central Tax (Rate) dated 14.11.2017 - contravention of the provisions of Section 171 of CGST Act, 2017 - Held that:- It is apparent from the perusal of the facts of the case that admittedly there was a decrease in the rate of tax on the said product from 28% to 18% w.e.f. 15.11.2017 but it is also established that the base price (excluding GST) of the product was also reduced from ₹ 7986/- to ₹ 7,034/- after offering a discount of ₹ 1,006/- which is more than the commensurate rate reduction. As the Net Base Price (excluding tax) of the above product has been reduced by the Respondent, the allegation of profiteering is not sustainable. The Respondent has not contravened the provisions of Section 171 of the CGST Act, 2017 - there is no merit in the application forwarded by the Applicant No. 1 and the impugned application is accordingly dismissed. Issues:Alleged profiteering by the Respondent on the supply of a specific mattress due to not passing on the benefit of reduced GST rate.Analysis:1. The case was referred to the Standing Committee on Anti-profiteering based on allegations of profiteering by the Respondent on the supply of a mattress post a GST rate reduction.2. The Standing Committee further referred the case to the DGAP for detailed investigations under Rule 129(1) of the CGST Rules, 2017.3. The DGAP's report highlighted a reduction in the GST rate on the product from 28% to 18% w.e.f. 15.11.2017, resulting in a decrease in the base price of the mattress.4. Upon scrutiny of the invoices, the DGAP concluded that the base price of the product was reduced after offering a discount, complying with Section 171 of the CGST Act, 2017, thus dismissing the profiteering allegation.5. The Authority considered the report and decided to have the Kerala Screening Committee appear before it, with the Additional Commissioner agreeing to the DGAP's findings during the hearing.6. Subsequently, the Authority sent the report back to the DGAP under Rule 133(4) of the CGST Rules, 2017 for further examination.7. The DGAP's subsequent report reiterated the allegation of profiteering by the Respondent post the GST rate reduction, based on transactions with another entity, M/S SRT and Co.8. The main issue examined was whether the benefit of the tax rate reduction was passed on to consumers as required by Section 171 of the CGST Act.9. Section 171 mandates the passing on of tax rate reductions to consumers by reducing prices accordingly.10. The investigation revealed that the base price of the mattress was indeed reduced after the GST rate revision, with a discount offered, exceeding the commensurate rate reduction.11. Consequently, the allegation of profiteering was deemed unsustainable as the Respondent had effectively reduced the net base price of the product, complying with the provisions of Section 171.12. The application was dismissed, and the order was to be shared with all concerned parties, marking the conclusion of the case.