No profiteering as base price of Ceramic Vitrified tiles not increased after GST rate reduction

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Fact: M/s Velbon Vitrified Tiles Pvt. Ltd. (“hereafter called as the respondent”) was alleged for not passing the benefits of reduction in the GST rate w.e.f. November 15, 2017 on sale of “Ceramic Vitrified tiles” 600*600 Nano Series PRE-I (HSN Code 69072100) by the Kerala State Screening Committee. It was therefore alleged that the Respondent had indulged in profiteering in contravention of the provisions of Section 171 of Central Goods and Service tax Act, 2017.

Issue Involved: Whether the benefit of reduction in the rate of tax was passed on by the Respondent w.e.f November 15, 2017, when the GST rate was reduced from 28% to 18% vide Notification No. 41/2017-Central Tax (Rate) dated November 14, 2017.

Held: The Hon’ble Directorate General of Anti-Profiteering (“DGAP”) vide its Case No. 13/2019 dated March 01, 2019 stated by taking reference to Section 171 of the CGST Act, 2017 which states that “Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices.” It clarified that the base price of the product per box was Rs. 232.50 prior to November 15, 2017 and had remained the same even after GST rate reduction w.e.f. November 15, 2017. Therefore, the benefit of rate reduction appears to have been passed on. Accordingly, holds that the allegation of profiteering is not sustainable. Hence, we are of the opinion that the provisions of Section 171 of the CGST Act, 2017, have not been contravened and there is no merit in the application forwarded by the respondent and therefore the same is dismissed.

Citation: [TS-105-NAA-2019-NT]