Anti-profiteering provisions not apply in absence of reduction in tax rate

By editor3 Goods and Services Tax Judiciary March 1, 2019 1 comment

TaxGuru Citation: 2019 taxguru.in 475
Case Name: Kerala State Screening Committee on Anti-Profiteering Vs Director General Anti-Profiteering (National Anti-Profiteering Authority)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Courts: National Anti-Profiteering Authority

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Kerala State Screening Committee on Anti-Profiteering Vs Director General Anti-Profiteering (NAA)

On perusal of the facts of the case and the details provided in the table given above in para 4 it is apparent that there was no reduction of tax with the introduction of GST. The DGAP on examining various facts has categorically mentioned that the invoices very clearly show that no VAT was levied and CST was also exempted prior to 01.07.2017. In fact the rate of tax has increased from Central Excise Duty 13.97 % to GST 28% w.e.f. 01.07.2017. Therefore, the allegation of profiteering is not sustainable in terms of Section 171 of the CGST Act, 2017 as there has been no reduction in the rate of tax. As such, we do not find any merit in the application filed by the above Applicants and the same is therefore dismissed.

FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING APPELLATE AUTHORITY (NAA)

1. The brief facts of the case are that The Kerala State Screening Committee on Anti-Profiteering vide the minutes of its meeting held on 08.05.2018 had referred the present case to the Standing Committee on Anti-profiteering, alleging profiteering by the Respondent on the supply of `Caribbean Wood Tile’ (here-in referred to as the product) by not passing on the benefit of reduction in the rate of tax at the time of implementation of the Goods and Services Tax (GST) w.e.f. 01.07.2017. Thus, it was alleged that the Respondent had indulged in profiteering in contravention of the provisions of Section 171 of the Central Goods & Service Tax (CGST) Act, 2017. In this regard, Kerala State Screening Committee had relied on two invoices issued by the Respondent, one was dated 27.04.2017 (Pre-GST) and the other was dated 25.08.2017 (Post-GST).

2. The above reference was examined by the Standing Committee on Anti-Profiteering and was further referred to the DGAP vide minutes of its meeting dated 02.07.2018 for detailed investigations under Rule 129 (1) of the CGST Rules, 2017.

3. The Directorate General of Anti-Profiteering (DGAP), after detailed investigation submitted its present report dated 03.10.2018 under Rule 129 (6) of the CGST Rules, 2017.

4. The DGAP has observed that in the pre-GST era, the rate of tax applicable on the product was Central Excise Duty @ 12.5% of the 60% of the MRP and there was no VAT or CST charged in the invoice whereas after implementation of the GST w.e.f. 01.07.2017, the tax rate of GST on the said product was fixed at 28%. The DGAP has further furnished the pre-GST & the post-GST sale invoice-wise details of the applicable tax rate and base price (excluding CST or GST) of the said product supplied by the Respondent in the table given below:-