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Respondent has denied benefit of ITC to the buyers of the flats being constructed by him in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has thus resorted to profiteering.

Anti-Profiteering — Section 171 of the CGST Act, 2017— This report has been received from the DGAP. It has been alleged that profiteering by the Respondent in respect of the product “Frozen Green Peas” supplied by him. The Applicant alleged that the Respondent had not reduced the selling price of the product when the GST rate was reduced from 5% to Nil w.e.f. 01.01.2019 with denial of ITC vide Notification No. 25/2018-CT (Rate) dated 31.12.2018. The DGAP submitted that the base prices of the goods were increased when there was a reduction in the GST rate from 5% to Nil, so that the benefit of such reduction in the GST rate was not passed on by way of commensurate reduction in prices. The DGAP concluded that Section 171 (1) of the Act, requiring that “any reduction in rate of tax on any supply of goods or services or the benefit of ITC shall be passed on to the recipient by way of commensurate reduction in prices”, had been contravened by the Respondent.
Held that:- The Hon’ble Anti-Profiteering Authority directed the Respondent to reduce the prices of the products and also directed the Respondent to deposit the profiteered amount along with the interest. The authority further held that the Respondent has denied the benefit of reduction in the tax rate in contravention of the provisions of Section 171 (1) of the Act, and has resorted to profiteering. Hence, he has committed an offence under Section 171 (3A) of the Act, therefore, liable for imposition of penalty.—M. Srinivas, Director General of Anti-Profiteering, Central Board of Indirect Taxes & Customs Vs Vijetha Supermarkets Pvt. Ltd. [2020] 25 TAXLOK.COM 063 (NAPA)