The second order delivered by the National Anti-profiteering Authority (NAA) for the Goods and Services Tax (GST) went in favour of the firm — and not the consumer — as the first one did.
The second order delivered by the National Anti-profiteering Authority (NAA) for the Goods and Services Tax (GST) went in favour of the firm — and not the consumer — as the first one did. The authority found no evidence of profiteering by Delhi-based KRBL which sells ‘India Gate Basmati Rice’, as alleged by a consumer.
The first order over a complaint against Honda car dealer in Uttar Pradesh had also found no evidence of profiteering.
In the KRBL case, the complainant, a consumer, had petitioned the standing committee on anti-profiteering alleging that the maximum retail price of ‘India Gate Basmati Rice’ had been increased by the firm between August and October last year. According to the applicant, the price of 10-kg pack of the said brand of rice in August, 2017 was Rs 540, which was raised subsequently to `585 in October.
The order, delivered by three members of the authority, including the chairman B N Sharma, said that examination of the company’s summary return (GSTR-3B) for three months last year showed that the input tax credit (ITC) available to the firm as a percentage of total taxable supplies during these months varied between 2.69% to 3%.
“However, as the GST rate on taxable outward supply was 5%, the ITC available was insufficient to discharge the GST liability and thus, the balance amount of GST had been paid in cash during the above period and since the ITC available was less than GST liability on the outward supplies, there was no net benefit of ITC which could have been passed on to the consumers, and therefore, there was no violation of provisions of Section 171 of the GST Act,” the order said.
However, tax experts don’t concur with the NAA view. “The argument of the authority seems flawed as most taxpayers, apart from those having inverted duty structure, would always have a higher output liability compared to ITC available as is the case in this matter. This can’t be a ground for exempting the firm from passing on the benefit to the consumers. Also, if the same logic is applied to all cases, the NAA will struggle to find any firm guilty of profiteering,” Rajat Mohan, partner, AMRG & Associates said.
The NAA order further noted that that the tax on packaged rice had increased from 0% in pre-GST regime to 5% under GST. “Therefore there appears to be no reason for treating the price fixed by respondent as violation of the provisions of the anti-profiteering clause,” the order said.
Additionally, the authority found merit in the firm’s submission that the purchase price of rice had increased in 2017 by 30% compared with 2016. However, the firm had increased the price by just over 8%. The authority dismissed the charge of profiteering against KRBL.