NAA held No Profiteering if base price remains same pre & post rate reduction

Anti-Profiteering has issued Order No. 19/2019 dated March 13, 2019 in case of Kerala State Level Screening Committee on Anti-Profiteering (Applicant) Vs. M/s. Somany Ceramics Ltd. (Respondent). The National Anti-Profiteering Authority(NAA) held that if the post discount rate remains the same pre and post-reduction, it does not amount to profiteering.

Facts of the case

  • The applicant had stated in their complaint that the respondent had resorted to profiteering in respect of supply of “Ceramics Glazed Wall Tiles, Printex Crema, PRM 300×600 MM HSN Code 69072300” on the ground that the respondent had not passing on the benefit of reduction in the rate of tax w.e.f. 15.11.2017, granted vide Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017. Thus, Respondent had done contravention of the provisions of Section 171 of the CGST Act, 2017.

NAA observed that

  • DGAP has stated in his Report that on scrutiny of the two invoices it was found that the GST rate on the product was reduced to 18% from the existing rate of 28% w.e.f. 15.11.2017 vide Notification No. 41/2017-Central Tax (Rate) dated 4.11.2017. DGAP observed that the respondent did not increase the per unit taxable amount (excluding  GST) of the product after GST rate reduction w.e.f. 15.11.2017, which was INR. 374.74/- in both the periods. Hence, the allegation of profiteering against the respondent was not sustainable. Thus, the provisions of Section 171 (1) of the CGST Act, 2017 relating to profiteering, were not contravened in the present case.
Description of the ProductPre – RevisionPost RevisionDifference
Invoice no./dateTax RateBase price box (excluding GST)Invoice no./dateTax RateBase price box (excluding GST)_
Ceramics Glazed Wall Tiles, Printex Crema2917207180
03-08-2017
28%374.74/-2917222617
30-11-2017
18%374.74_

NAA Held

  • From the above fact, it is evident that respondent had not increased the base price of the above product which had remained INR. 374.74/- therefore, the benefit of tax reduction has duly been passed on to the customers by the Respondent. Hence, the allegation of profiteering is not established against the respondent in terms of Section 171 of the Central Goods and Service Tax (CGST) Act, 2017 as there has been no change in the base price of the product after reduction in the Goods and Service Tax (GST) rate with effect from 15.11.2017. As such, we do not find any merit in the application filed by the above Applicants, and the same is accordingly dismissed,” the authority observed.

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