Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 5-5-2018 – The provisions on anti-profiteering are contained in the GST law as per following provisions: CGST Act, 2017 Section 171 on Anti-profiteering measures. IGST Act, 2017 Section 20 which stipulate that provisions of the GST Act, 2017 shall apply mutatis mutandis to IGST Act. UTGST Act, 2017 Section 21 which stipulate that provisions of GST Act, 2017 shall apply mutatis mutandis to UTGST Act. SGST Act, 2017 Section 171 on Anti-profiteering measures. The Rules for Anti Profiteering are contained in Chapter XV (Rule Nos. 122 to 137) of the Central Goods and Services Tax Rules, 2017. The GST law contains a provision on anti-profiteering measure as a deterrent for trade and industry to enjoy unjust enrichment in terms of profit arising out of implementation of Goods and Services Tax in India, i.e., anti-profiteering measure would obligate the businesses to pass on the cost benefit arising out of GST implementation to
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in case it finds that the price being charged has not been reduced consequent to reduction in rate of tax or allowance of input tax credit. During the two years of initial transition into GST regime, Anti-Profiteering Authority (APA) will step in and may ask businesses that have not passed on full benefits of reduced tax burden to consumers to make up for such benefit, with interest. Judicial Pronouncement There provisions have been subjected to judicial scrutiny by the National Anti-Profiteering Authority (NAA) set up under the CGST Act, 2017 recently in Dinesh Mohan Bharadwaj v. M/s Vrandavaneshwree Automotive Pvt. Ltd [ 2018 (4) TMI 1377 – THE NATIONAL ANTI-PROFITEERING AUTHORITY ] vide Order dated 27.03.2018 [Case No. 1/2018 instituted on 27.02.2018] Important Dates 01.11.2017 Application filed before Standing Committee [Rule 123 (1)] 28.04.2017 Vehicle booked 11.07.2017 Vehicle delivered & invoice issued with GST 29.11.2017 Referred / received by Director General of Safeguard
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. We find that the respondent (Honda car dealer) has given details of all the basic components of the price of the car purchased by the applicant … and benefit of ₹ 10,550 on account of reduction of tax by about 2 per cent viz. from 31.254 percent (pre GST) to 29 percent (post GST) has already been passed on to the applicant and the amount of ₹ 10,550 is inclusive of the ITC (input tax credit) … therefore, no additional benefit on account of ITC is required to be paid by the respondent . It was thus held that the respondent (Honda car dealer) has not contravened the provisions of Section 171 of the CGST Act, 2017, and accordingly, there was no merit in the application of Dinesh Mohan Bhardwaj (complainant or applicant), which was filed under Rule 128 of the CGST Tax Rules, 2017 and the same was dismissed. Details of Complaint The complainant had alleged that he was not given benefit of reduced rate of tax which amounted to profiteering by the respondent and hence action
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.e.f. 1.7.2017, ex-showroom price was subsequently changed which was charged from the customer. The car dealer also submitted the following documents to substantiate its stand: Audited Balance Sheet & Profit & Loss account for the FY 2016-17, Copies of purchase invoices from April to September, 2017, Copies of retail invoices from April to September, 2017, Copies of returns filed with the Commercial Taxes Department from April to June, 2017, Price Lists (pre-GST & post-GST), and Copies of Service Tax returns from April to September, 2017. DGSG Stand Director General of Safeguards (DGSG) investigated the complaint on the following two grounds: Whether there was substantial reduction in the rate of tax, and Whether the benefit of reduction in tax rate had been passed on to the applicant. DGSG found that the dealer s margin was taken wrongly by applicant as ₹ 25826 instead of ₹ 33619 and that the contention of the applicant that the total incidence of tax on the ca
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st -GST ex-showroom prices of the car purchased by the applicant were also worked out by the DGSG as per Table B below: Table B – Comparative Prices Particulars Factor Pre-GST (in Rs) Post-GST (in Rs) Basic price of Honda Car Model : WR WR-V.1.2VX MT (i-VTEC) A 6,59,175 6,58,718 Excise Duty @ 12.5% B=A*12.5% 82,397 – NCCD @ 1% C=A*1% 6,592 – Auto Cess @ 0.125% D=A*0.125% 824 – Infra Cess @1% E=A*1% 6,592 – Ex-factory Price F= Add A to E 7,55,579 6,58,718 CST @ 0.05% G=F*05% 378 – Freight H 4,452 4,260 Transit Insurance I 121 108 Dealer Landed Price J=Add F to I 7,60,530 6,63,086 Dealer Margin K 33,619 33,619 Dealer Price L=J+K 7,94,149 6,96,705 VAT @ 14.5% M=L*14.5% 1,15,152 GST+Cess @ 29% N=L*29% 2,02,044 Ex-showroom price of Alabaster Silver colour car O=L+M/N 9,09,300 8,98,750 Additional cost of Orchid White colour car P 4,000 Ex-showroom price of Orchid white colour car Q=O+P 9,13,300 Price charged from the applicant 8,98,750 Benefit passed on to the applicant (excluding ₹ 4,
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of base colour by an amount of ₹ 10,550/-. The Authority, on benefit of input tax credit, observed that the applicant has not understood the provisions of Section 171 of the CGST Act, 2017 and the DGSG's report in its true spirit and context. The entire scheme of GST is ITC based i.e. the recipient of the goods and services takes credit of GST paid by him on purchase of goods and services and uses such ITC while discharging GST output tax liability on supply of goods and services. The benefit of ₹ 10,550/- on account of reduction of tax by about 2% viz. from 31.254% (pre-GST) to 29% (post-GST), as discussed above, had already been passed on to the applicant and the amount of ₹ 10,550/- is inclusive of the ITC as has been calculated in Table 'B' Therefore, no additional benefit on account of ITC is required to be paid by the respondent. Thus, the contention of the applicant is not valid and deserves to be rejected. The authority thus concluded that the prov
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