The National Anti-Profiteering Authority has stated that customers are entitled to benefit from tax rate reduction by way of reduced prices while it was announcing about the imposition of a penalty on a Company that was not reducing the base price despite the GST rate reduction from 28% to 18%.

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M/s D.S. Brothers filed a complaint against M/s Durga Marketing Pvt. Ltd. that even after the GST rate reduction in November 2017 when the rates were decreased to 18% from 28% the respondent to the complaint did not pass this benefit to its customer and also the base price charged on the product (Duracell Battery) remained the same.

This case was subject to be governed under Section 171 of the CGST Act, 2017 as the case dealt with the issue about the GST rate on the product supplied by the respondent was reduced from 28% to 18% with effect from November 15, 2017, and if it was so whether the benefit of such reduction should be passed on by the respondent to its customer.

Director-General of Anti-Profiteering (DGAP) has prepared a report which stated that with effect from November 15, 2017, when the GST rate on the product(Duracell Battery) was reduced from 28% to 18% still the respondent did not apply the new GST rate, and also he increased the base price despite the reduction in the GST rates.

Dr.B.N. Sharma headed the three-member bench of authority and found out that the respondent(M/s Durga Marketing Pvt. Ltd.) has acted in contravention of the provisions of Section 171 of CGST Act,2017 and hence, the benefit of reduction in GST rate was not passed on to the recipients by way of commensurate reduction in prices of the product.

Therefore the Authority ordered the respondent to deposit the profiteered amount of Rs. 1.57 Lakhs along with 18% of the interest in the Consumer Welfare Funds (CWFs) of the Central and State government in the ratio of 50:50, also directed the Commissioners of CGST/ SGST to monitor the order under the supervision of DGAP and ensure that the amount in full gets deposited in the Consumer Welfare Funds.

With Warm Regards,

CL Bureau.

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