Maggi noodles dealer is liable to pay penalty for not passing GST rate cut benefits: NAA
National Anti-Profiteering Authority (NAA) finds a case of profiteering u/s 171 of CGST Act, 2017 by a dealer observing that benefit of reduction in rate of duty has not been passed on to applicants in respect of “Maggi Noodles pack of 35 gms."
As pointed by the purchasers, a Maggi noodles merchant has gone under the scanner for not passing on the advantages of goods and services tax (GST). A complaint was upheld in the same regard by National Anti-Profiteering Authority, saying that the merchant cannot have the freedom to discretionarily choose which item ought to get the GST rate cut advantage.
The benefit of tax depletion must include every unit as the merchant cannot select the lower price of one pack size to cover other pack sizes said the authority. A 35-gm pack of Maggi is different from the 70-gm pack as both may be brought by different purchasers and henceforth, the advantage to one customer cannot be given to another.
At the rate of 18%, the NAA asked the merchant to submit the undue increase of Rs. 90,778, to the Consumer Welfare Fund in the wake of discounting the profiteered money of Rs. 2,253 (alongside interest) to the candidate. After the GST rate was lessened from 18% to 12% on November 15, 2017, base cost of the item was expanded to expedite it as a standard cost before the change, as it was alleged by the retailer of Maggi Noodles.
Rs. 1 was reduced on the pack of Rs. 12 instead of the pack of Rs. 5, which contradicts the total benefit more than 92 paise on both the packs. The merchant likewise said such a decrease was made in light of lawful delicate issues because of fractional evaluating.
The retailer was ready to withdraw the complaint, but it was rejected as the investigation was already undertaken.
“This is another ruling which mandates that benefit arising as a result of a reduction in GST rate has to be passed on at each stock keeping unit (SKU) level and cannot be passed on at a product or entity level,” said a national indirect taxes leader.