DGAP incorrectly computed Profiteered Amount by Comparing Average to Average Base Price: NAA directs to Revise Mathematical Methodology

The National Anti-Profiteering (NAA) directed the Director-General of Anti-Profiteering(DGAP) to revise the mathematical method for computing the profiteered amount by the respondent.

The Applicant, Ajay Jagga alleged that the Respondent had not passed on the benefit of reduction in the GST rate on “Kiwi Shoe Polish” from 28% to 18% and had instead increased the base price of the impugned product supplied by him so that there was no reduction in the final price of the item despite the reduction in the rate of tax.

Based on the case records and the submissions made by Respondent, the DGAP investigated the issues of whether the GST rate applicable to the item “Shoe Polish” was reduced and if so, whether the benefit of such reduction in the rate of tax had been passed on by the Respondent to his customers in terms of Section 171 of the Central Goods and Services Tax Act, 2017Section 171 of the Central Goods and Services Tax Act, 2017.

In this context, the DGAP has reported that the Central Government, on the recommendation of the GST Council, had reduced the GST rate applicable to Shoe Polish from 28% to 18% and the respondent denied the benefit of the same to the customers.

The respondent contended that the DGAP has incorrectly computed the profiteered amount by comparing the average pre rate reduction base price of the impacted product with the average post rate reduction base price as it is not in consonance with the methodology generally adopted by the NAA.

The Authority consisting of the Technical Members J.C. Chauhan and Amand Shah while upholding the contention of the respondent held that the DGAP has incorrectly computed the profiteered amount by comparing average to the average base price of the impacted product and directed the DGAP to revise the computation by using the correct mathematical methodology.