Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – 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 which does not form part of base price. In the instant case, p
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t-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. Total Tax Amount (Rs.) L=H+K 530.48 520.67 13. Total Tax incident (%) M=L/I 28.60% 28% 14. Increase in Base Price Diff in I Rs.4.50/- (
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n 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 before discount had been reduced from ₹ 2159/- to ₹ 1927/-. Also, the discount offered had been reduced from ₹ 75.57/- to ͅ
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