Manufacturer profiteered by not passing benefit of reduction in tax rate in respect of “luggage trolley bag/suitcases”: NAA

Categories: Advance Ruling
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Facts:

Kerala State Screening Committee referred the instant matter to the Standing Committee on Anti-Profiteering alleging profiteering by M/s. VTWO Ventures (“the respondent”) on supply of “luggage trolley bag/suitcases”, namely “Tropic 45 Weekender Black” and “Neolite Strolly 53 360 (VIP) FIR” as the benefit of reduction in the rate of tax of GST w.e.f. November 15, 2017 had not been passed on by the respondent to the recipients.

Issue Involved:

Whether the benefit of reduction in the rate of tax had been passed on by the Respondent to his recipients as mandated by the provisions of Section 171 of the CGST Act, 2017?

Held:

The National Anti-Profiteering Authority vide Case No. 31/2019 dated May 10, 2019 held that despite the reduction in GST rate from 28% to 18%, the sale price of the products was not reduced by the manufacturer on the pretext that the distributors has been following the pricing structure of the manufacturing company and that his distributor’s margin had not increased and hence, the respondent had not derived any additional benefit on account of the reduction in tax rate from 28% to 18%. Further, by issuing incorrect invoices which is an offence the manufacturer was liable to penalty under Section 122 (1) (i) of the CGST Act, 2017 read with Rule 133 (3) (d) of the CGST Rules, 2017.

Citation: [2019] 105 taxmann.com 251 (NAA)