REDUCTION IN DISCOUNT IS NOT PROFITEERING: GST
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 1-3-2019
Can reduction in discount offered by supplier of goods resulting in increase in price amounts to profiteering in contravention of section 171 of CGST Act, 2017 ? The answer is NO, as affirmed by National Anti-Profiteering Authority (NAA).
In Kerala State Screening Committee on Anti-profiteering and DGAP, CBIC, New Delhi v. Asian Paints Ltd., Kerala 2019 (1) TMI 21 – NATIONAL ANTI-PROFITEERING AUTHORITY ; , the NAA, vide its Order dated 27.12.2018, has ordered that where base price is increased due to reduction in discount, it does not amount to profiteering as discount is offered from the profit margin whic
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
, taxes etc:
Particulars
Period
Details
Reference
Pre-GST
Post-GST
1.
Product Description
A
Paint (AP Apex Classic WT 10 LT (HSN Code 3209)
2.
Invoice No.
B
13006429
KR1701110400
3.
Invoice Date
C
20.06.2017
09.11.2017
4.
MRP as per Annexure-7 (Rs.)
D
2.610
2,660
5.
Price before discount per unit (Rs.)
E
2,159
1,927
6.
Discount per unit (Rs.)
F
75.57
67.45
7.
Price after discount per unit (Rs.)
G=E-F
2,083.43
1,859.55
8.
Central Excise Duty @12.5% on 70% of MRP (Rs.)
H=(D*70%)*12.5%
228.38
–
9.
Base Price (Excluding duties & taxes) (Rs.)
I=G-H
1,855.05
1,859.55
10.
Tax Rate Charged (%)
J
14.50% VAT
28% GST
11.
Tax Amount (VAT or GST) (Rs.)
K=G*J
302.10
520.67
12.
Tota
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
.24% which was primarily on account of the reduction in the discount and such an increase couldn't qualify as profiteering due to reduction in the tax rate, thus, the provisions of Section 171 (1) of the CGST Act, 2017 relating to profiteering were not contravened in the instant case.
The NAA based on DGAP report, invoices etc, examined whether there was any reduction in the GST rate and whether the benefit of reduction in the rate of tax was passed on or not to the recipient as provided under Section 171 of the CGST Act, 2017. It observed that supplier had increased the base price of the product from ₹ 1855.05/- to ₹ 1859.55/- resulting in an increase of ₹ 4.50/-. In this context, it was clear that the post-GST price
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =