NAA confirms Anti-Profiteering Charges against supplier for not passing GST Rate Cut Benefits [Read Order]

Anit Profiteering Authority - CBEC - Taxscan

The National Anti-Profiteering Authority (NAA) last day confirmed the anti-profiteering charges against a supplier for not passing the benefits of GST rate reduction to the customer on sale of goods.

This is the first order in which the customer get a relief from the NAA. The last four orders passed by the authority was in favour of the industry.

In the instant case, the complaint filed by a departmental store alleged that the supplier had not reduced the price of ‘Vaseline’ in line with the reduction of GST rate and thus indulged in profiteering in contravention of Section 171 of CGST Act.

The application was examined by the Standing Committee on Anti-Profiteering and was referred to Directorate General of Anti Profiteering (DGAP) for detailed investigation. After the investigation, the DGAP concluded that the quantum of benefit was not passed to the departmental store by the supplier on November 15, 2017, following reduction of GST rate to 18% from 28%.

Sharma Trading Company, the distributor and stockist of Hindustan Unilever (HUL), had contended that it has purchased from HUL the product on which GST was levied at 28% and sold the same to the departmental store. It also contended that profit was made by HUL and not Sharma Trading.

After hearing both the sides, the authority noted that “It is clear from the facts of the present case that the Respondent was fully aware of the Notification dated 14.11.2017 whereby the rate of GST was reduced on the above product from 28% to 18%. He was also fully aware of the provisions of Section 171 of the above Act whereby he was bound to pass on the benefit of reduction in the rate of tax by the commensurate reduction in the price of the above product. However, the Respondent has deliberately acted in defiance of the above law and hence he is guilty of the conduct which is contumacious and dishonest. He has further acted in conscious disregard of the obligation which was cast upon him by the law, by issuing incorrect invoices in which the base price was deliberately enhanced exactly equal to the amount of reduced tax and thus he had denied the benefit of reduction in the rate of tax granted.”

While confirming the imposition of the penalty, the NAA directed to reduce the sale price of the product immediately commensurate to the reduction in the rate of tax as was notified on 14.11.2017 and pass on the benefit of reduction in the rate of the tax to his customers.

It was further held that the supplier is liable to pay “a penalty of Rs 10,000 or an amount equivalent to the tax evaded or the tax not reduced under section 31 or short-deducted or deducted but not paid to the government…, whichever is higher”.

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