The National Anti-Profiteering Authority (NAA) has dismissed charges against Basmati rice-exporting firm KRBL of not passing on price reduction benefits under Goods and Services Tax (GST) to consumers.
This is the second time in a row that the NAA has ruled in favour of the company against whom a complaint was filed for indulging in profiteering. Last month, the authority had exonerated a dealer of Honda cars of the charges of not passing on the benefit of reduced tax incidence to a consumer.
According to the complaint lodged with a standing committee under GST in November last year, KRBL Ltd had not passed on to the consumers the benefit of reduction in the rate of tax on 'India Gate Basmati rice'.
The applicant had attached the image of price of 'India gate Basmati Rice (Mini Mogra)' printed on 10-kg packet showing the price at Rs 540 in August 2017 and Rs 585 in October 2017 in its complaint.
The Director General of Safeguards (DGS), which investigated the complaint, found that the tax rate on packed Basmati rice has been increased from 'Nil' to '5' per cent after the implementation of GST. The company has started paying 5 per cent GST with effect from September 22, 2017, pursuant to a government notification.
The input tax credit (ITC) claimed by the company worked out to be between 2.69-3 per cent and the balance of GST had been paid by the company in cash since the ITC available was less than the GST liability on outward supplies, the DGS noted.
"It is also apparent from the returns filed by the respondent (KRBL) for the months of September, October and November, 2017, that the ITC available to him as a percentage of the total value of taxable supplies was between 2.69 per cent to 3 per cent whereas the GST on the outward supply of his product was 5 per cent which was not sufficient to discharge his tax liability.
"Moreover in this case the rate of tax has been increased from 0 per cent to 5 per cent instead of a reduction in the same. Therefore, there appears to be no reason for treating the price fixed by the respondent as violation of the provisions of the anti-profiteering clause," the NAA said while dismissing the plea against KRBL.
The NAA, in its order, also said that the tax invoices submitted by KRBL show there was an increase in the purchase price of paddy in year 2017 as compared to 2016. The price increase from Rs 540 to Rs 585 for 10kg rice constituted an increase of 8.33 per cent keeping in view of the increase in the purchase price.
"Therefore, due to the imposition of the GST on the above product as well as the increase in the purchase price of the paddy there does not appear to be denial of benefit of ITC as has been alleged by the Applicant as there has been no net benefit of ITC available to the Respondent which could be passed on to the consumers. Accordingly, there is no substance in the application filed," the order issued by NAA chairman B N Sharma and other members stated.
As per the structure of the anti-profiteering mechanism in the GST regime, complaints of local nature will be first sent to the state-level screening committee, while those of national level will be marked for the Standing Committee.
If the complaints have merit, the respective committees will refer the cases for further investigation to the DGS. The DGS then sends its report to the NAA, which passes final order on the case after hearing both parties.