DGAP Vs Sai Kripa Marketing (GSTAT)
The proceedings arose under Section 171 of the Central Goods and Services Tax Act, 2017, concerning allegations of profiteering due to non-passing of the benefit of reduction in GST rate on After-Shave Lotion “Park Avenue Good Morning 50 ml,” whose tax rate was reduced from 28% to 18% with effect from 15.11.2017. It was undisputed that despite the tax reduction, the unit sale prices of the product remained unchanged.
A complaint dated 30.07.2018 was filed before the Standing Committee on Anti-Profiteering, alleging that the benefit of tax reduction had not been passed on. Acting on the Committee’s reference dated 27.03.2019, the Director General of Anti-Profiteering (DGAP) initiated an investigation covering the period from 15.11.2017 to 31.03.2019. The DGAP compared the average base price of the product during the pre-rate reduction period with the actual selling prices post-reduction and concluded that the benefit of tax reduction had not been passed on.
Based on invoice-wise analysis, the DGAP initially computed large profiteered amounts at different stages of the supply chain and submitted a report to the erstwhile National Anti-Profiteering Authority (NAA). The NAA, by Final Order dated 11.05.2020, determined profiteering amounts against both the distributor and the principal supplier and directed deposit of amounts in Consumer Welfare Funds.
