NAA finds Company Guilty for Profiteering for not reducing base price when GST was reduced from 28% to 18%

NAA -GST - Company - Taxscan

The National Anti-Profiteering Authority (NAA), while imposing a penalty on a Company for not reducing the base price despite the GST rate reduction from 28% to 18%, held that customers are entitled to benefit from tax rate reduction by way of reduced prices.

The complaint against the respondent, M/s D.S. Brothers, was that after the GST rate reduction in November 2017 where the rates were decreased to 18% from 28%, they did not pass the benefit to the consumers and the price of the product remained the same.

The issue, in this case, was whether the rate of GST on the product supplied by the respondent was reduced from 28% to18% with effect from November 15, 2017, and if so whether the benefit of such reduction had been passed on by the respondent to his recipient in terms of Section 171 of CGST Act, 2017.

The report prepared by DGAP stated that with effect from November 15, 2017, when the GST rate on the product was reduced from 28% to18%. Also, the respondent has increased the base price despite the reduction in the GST rates. For instance, on a Duracell Battery, the reduced rate of GST was not applied.

The three-member bench of the Authority headed by Chairman B.N Sharma observed that M/s D.S. Brothers guilty for not passing the GST rate reduction benefit to the consumers and contravened the provisions of Section 171(1) of CGST Act, 2017.

The Authority also directed the Commissioners of CGST/ SGST to monitor the order under the supervision of DGAP and ensure that the profiteered amount of  Rs. 1.57 Lakhs along with 18% of interest must be deposited in Consumer Welfare Funds (CWFs) of the Central and State government.

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