The National Anti-Profiteering Authority (NAA),in the case of D.S. Brothers Vs Durga Marketing Pvt. Ltd. (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.
Brief facts of the case:
Compliant was filed before the Standing Committee on Anti-profiteering, under Rule 128 of the CGST Rules, 2017 alleging profiteering by the Respondent in respect of the supply of “Duracell Battery AA/6” supplied by the Respondent.
the Complainant had alleged that the Respondent did not reduce the selling price of the product when the GST rate was reduced from 28% to 18% w.e.f. 15.11.2017, vide Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017 and the price of the product remained the same and thus the benefit of reduction in GST rate was not passed on to the recipients by way of commensurate reduction in the price, in terms of Section 171 of the CGST Act, 2017.
Ruling of NAA:
Central Government had reduced the GST rate on the “primary cells & primary Battery” (HSN-8506) from 28% to 18% w.e.f. 15.11.2017, vide Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017 and the benefit of the same was required to be passed on to the recipients by the Respondent as per the provisions of Section 171 of the CGST Act, 2017.
From the facts and discussion, it is evident that the Respondent did not reduce the selling price of the products mentioned above when the GST rate was reduced from 28% to 18% w.e.f. 15.11.2017 and hence. the benefit of reduction in GST rate was not passed on to the recipients by way of commensurate reduction in the prices, in terms of Section 171 of the CGST Act, 2017 and therefore, he has contravened the provisions of Section 171 of the CGST Act, 2017.
Accordingly, the profiteered amount is determined as Rs. 1,57,200/- as per the provisions of Rule 133(1) of the CGST Rules 2017. The Respondent is therefore directed to reduce the prices of his products as per the provisions of Rule 133(3)(a) of the CGST Rules, 2017, keeping in view the reduction in the rate of tax so that the benefit is passed on to the recipients. Accordingly, the Respondent is required to deposit the profiteered amount of ₹ 1,57,200/- along with the interest to be calculated @ 18%.
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.
READ / DOWNLOAD ORDER:
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