NAA imposes Penalty on McNROE for denying benefit of Tax Reduction to Consumer [Read Order]

The National Non-Profiteering Authority (NAA) imposed the penalty on McNROE for denying the benefit of tax reduction to the consumers.

In the case of Rahul Sharma vs. M/s. McNROE Consumer Products Private Limited, the respondent company was held liable for denying the benefit of tax reduction to its consumers under Section 171 of the Central Goods and Service Tax (CGST) Act, 2017.

The petitioner namely Rahul Sharma claimed that the prices of the products affected by the rate reduction were not decreased commensurately, which ultimately violated Section 171(1) of the Central Goods and Service Tax (CGST) Act 2017. Further investigation conducted by the Director-General of Anti-Profiteering (DGAP) submitted a report affirming the malice of the respondent company.

As per the anti-profiteering rules under Goods and Service Tax (GST), “benefits of input tax credit should have been passed on to the recipient by way of commensurate reduction in prices.” However, in the report it is stated that  M/s. McNROE Consumer Products Private Limited did not comply with the norms.

The issue raised in this case was whether the company is liable to pass on the benefits pertaining to the tax reduction to the consumers or not?

The National Non-Profiteering Authority (NAA) comprising a Chairman, B.N. Sharma; Technical Members, J.C. Chauhan, and Amand Shah held that the respondent company was liable for denying the benefit of tax reduction to its consumers under Section 171 of the Central Goods and Service Tax (CGST) Act, 2017.

The Authority directed Commissioners of CGST/ SGST to monitor this order under the supervision of  Director General of Anti-Profiteering (DGAP) by ensuring that the amount profiteered by the Respondent as ordered by this Authority is deposited in the consumer welfare funds of the central and state governments.