Source : www.incometaxindia.gov.in
Goods and Services Tax
(hereinafter referred to as “GST”) is a single tax on the supply of goods and
services. The dual system of taxation levied on the consumption of goods/
services at the Central as well as State levels is applicable only on value
addition at each stage. With the objective of avoidance of multiple taxation
and enhancement of clearer administration of the system to prevent tax evasion,
GST comes forward as a pragmatic tax regime.
Liability
for not passing on GST benefits
The "anti-profiteering"
measures enshrined in the GST law provide an institutional mechanism to ensure
that the full benefits of input tax credits and reduced GST rates on supply of
goods or services flow to the consumers.
The National Anti-Profiteering
Authority (hereinafter referred to as “NAA”) has been established by the
Government, with the objective to ensure that the benefits of implementation of
GST in terms of lower prices of the goods and services reach the consumers. In
the event the NAA confirms there is a necessity to apply anti-profiteering
measures, it has the authority to order the supplier / business concerned to
reduce its prices or return the undue benefit availed by it along with interest
to the recipient of the goods or services. Further, it may impose a penalty on
the defaulting business entity and even order the cancellation of its
registration under extreme circumstances.[1]
In a forward-looking judgement[2]
dated September 7, 2018, the NAA ruled that the suppliers would be held liable
for not passing on the benefits of GST rate reduction on the sale of goods.
In the aforesaid matter it was
alleged that a supplier/ business entity- M/s Sharma Trading Company had not
passed on the benefit of reduction in the rate of tax (from 28% to 18%) by
lowering the price of a product - Vaseline when the same was purchased on
November 15, 2017.
It was observed that despite the
reduction in the rate of GST, there was no reduction in the sale price rather
the base price was increased thus amounting to illegal profiteering and
contravening the provisions of CGST Act, 2017 (Section 171). The supplier in
the recent case was held to be bound by the GST registration norms requiring
him not to charge the enhanced base price resulting in negation of tax
lowering. Also, it was mandatory for the supplier displayed the revised MRP as
per the provisions of the Legal Metrology (Packaged Commodity) Rules, 2011.
The NAA ordered the supplier to
reduce the prices and return to the consumer the amount of profiteering in
terms of tax @ 18% interest.
[1]
http://pib.nic.in/newsite/PrintRelease.aspx?relid=173564
[2]
http://www.naa.gov.in/docs/1536558206sharma_tt.pdf
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