Case Dismissed: No Profiteering Found in GST Rate Reduction for Bajaj Steam Iron

The case involved determining whether the reduction in the GST rate on the product "Bajaj Majesty MX 20 Steam Iron" from 28% to 18% was passed on to consumers as required by law. The Directorate General of Anti-Profiteering (DGAP) found no evidence of profiteering as the base price remained unchanged post the rate reduction, and price increases were in line with the Respondent's business practices. The application alleging violation of Section 171 of the CGST Act, 2017 was dismissed, and the parties were informed accordingly.

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Issues Involved:
1. Whether there was a reduction in the rate of tax on the product in question after the implementation of GST w.e.f. 01.07.2017Rs.
2. Whether any benefit of reduction in the rate of tax was to be passed onRs.

Issue-Wise Analysis:

I. Reduction in the Rate of Tax:
The primary issue was to determine if the GST rate on the product "Bajaj Majesty MX 20 Steam Iron" was reduced from 28% to 18% w.e.f. 27.07.2018 as per Notification No. 18/2018-Central Tax (Rate) dated 26.07.2018. The DGAP confirmed that the Central Government, on the recommendation of the GST Council, indeed reduced the GST rate on "electro-thermic appliances of a kind used for domestic purposes" from 28% to 18% effective from 27.07.2018. The legal requirement under Section 171(1) of the CGST Act, 2017 mandates that any reduction in the rate of tax must be passed on to the recipient by way of a commensurate reduction in prices.

II. Benefit of Reduction in the Rate of Tax:
The investigation focused on whether the Respondent passed on the benefit of the reduced GST rate to the recipients. The DGAP examined the invoices provided by the Respondent and observed that the base price of the product remained unchanged at Rs. 676 both before and after the GST rate reduction. The DGAP's detailed analysis (Table-A) showed no increase in the base price post the tax rate reduction, indicating no profiteering. The Respondent's business practice of revising the base price twice a year, once at the start of the year and again around the festival season, was also considered. The base price increased from Rs. 676 to Rs. 696 in October 2018, consistent with this practice.

The DGAP's report concluded that the Respondent had not contravened Section 171(1) of the CGST Act, 2017, as there was no profiteering in the complained product. The Respondent provided substantial documentation, including GSTR-1 and GSTR-3B returns, invoice-wise details, price lists, and sample invoices, to support their claim. The Respondent also cited the Delhi High Court's order in the case of M/s Reckitt Benckiser India Pvt. Ltd., which limited the scope of investigation to the complained product only.

Conclusion:
The Authority examined the DGAP's report and the documents on record, finding no evidence of profiteering. The base price of the product remained unchanged despite the GST rate reduction, and the increase in the base price in October 2018 was consistent with the Respondent's business practice. The screenshots provided by Applicant No. 1 showing an MRP of Rs. 1099 pertained to old stock, and the MRP was updated to Rs. 1520 once the old stock was liquidated. Applicant No. 1 agreed with the DGAP's conclusions, and the Authority found no violation of Section 171 of the CGST Act, 2017. Consequently, the application alleging profiteering was dismissed.

Order:
The application alleging violation of provisions of Section 171 of the CGST Act, 2017, was dismissed. A copy of the order was to be sent to both Applicants and the Respondent free of cost. The case file was to be consigned after completion.

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