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April 3, 2021

NAA finds Whirlpool guilty of profiteering by denying GST rate cut benefits to customers

by CA Jessica Nagaonkar in GST

NAA finds Whirlpool guilty of profiteering by denying GST rate cut benefits to customers

The National Anti-Profiteering Authority (NAA) has found consumer durable firm Whirlpool of India guilty of not passing on GST rate cut benefit worth over Rs 4.07 lakh to its refrigerator buyers. The National Anti-Profiteering Authority (NAA) is the statutory mechanism under GST law to check the unfair profiteering activities by the registered suppliers under GST law. The Authority’s core function is to ensure that the commensurate benefits of the reduction in GST rates on goods and services done by the GST Council and of the Input tax credit are passed on to the recipients by way of commensurate reduction in the prices by the suppliers.

Facts of the Case:

  • The Respondent was engaged in the manufacture and marketing of the consumer electronic goods which he was supplying through the network of his dealers as well as on E-commerce platforms.
  • The Applicant had lodged a complaint under Rule 128 (2) with the Standing Committee on Anti-profiteering against the Respondent alleging profiteering on the supply of “Refrigerator Whirlpool FP313D PROTTON ROY MIRROR” (HSN code 84182100) that he had not passed on the benefit of reduction in the rate of tax w.e.f. 01.07,2017, by way of commensurate reduction in the price of the above product as per the provisions of Section 171 of the CGST Act, 2017
  • The Standing Committee had referred the above complaint to the DGAP for detailed investigation as per Rule 129 (1).

Order of DGAP

  • The DGAP after investigation had reported that the Respondent had not passed on the benefit of tax reduction w.e.f. 01.07.2017 to 31.08.2018 and had thus violated the provisions of Section 171 (1).
  • Accordingly, the DGAP had computed the profiteered amount as Rs. 5.06,921
  • The Respondent had raised a number of objections. against the above Report of the DGAP and this Authority after taking in to account the issues raised by the Respondent and directed the DGAP to re-investigate the case
  • Accordingly, the DGAP furnished his fresh Report after re-investigation whereby he has computed the profiteered amount as Rs, 4,07,4511

Order of NAA

  • The Respondent was directed to reduce the price of the above product as per the provisions of Rule 133 (3) (a) of the CGST Rules, 2017, keeping in view the reduction in the rate, so that the benefit of tax reduction is passed on to the recipients.
  • The Respondent was also directed to deposit the profiteered amount mentioned above along with the interest to be calculated @ 18% from the date from which the above amount was collected by him from the recipients till the above amount is deposited in terms of the Rule 133 (3) (b) of the CGST Rules, 2017.
  • Since, the recipients in this case were not identifiable, the Respondent was directed to deposit the above amount of profiteering along with interest in the CWFs of the Central and the concerned State Governments as per the provisions of Rule 133 (3) (c) of the CGST Rules, 2017 in the ratio of 50:50 along with interest © 18%, till the same is deposited.
  • The above amount shall further be deposited within 3 months by the Respondent, from the date of receipt of this order, failing which the same shall be recovered by the concerned Commissioners of the Central and the State GST, as per the provisions of the CGST/SGST Acts, 2017 under the supervision of the DAP and shall be deposited as has been directed.
  • It was also evident from the above that the Respondent has denied the benefit of rate reduction of the GST to the consumers in contravention of the provisions of Section 171(1) of the CGST Act, 2017 and he has thus resorted to profiteering.
  • Hence, he had committed an offence under Section 171(3A) of the CGST Act. 2017 and therefore, he was apparently liable for imposition of penalty under the provisions of the above Section

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