PROFITEERING ON SUPPLY OF PRINTED BOOKS ?

[Dr. Sanjiv Agarwal]

In Rahul Sharma C/o Local Circles India Pvt. Ltd. & DGAP, New Delhi v. Gyan Books Pvt. Ltd.  2019 (11) TMI 468 - NATIONAL ANTI-PROFITEERING AUTHORITY;  the complainant  alleged that M/s Gyan Books Pvt. Ltd. (supplier / respondent) had resorted to profiteering in respect of supply of the book titled “Ragas in Hindustani Music: Conceptual Aspects (without cassette)” and that it had maintained the same selling price for the said book despite reduction in the GST rate from 12% to NIL vide Notification No. 25/2018-Central Tax (Rate) dated 31.12.2018, which took effect on 01.01.2019 and that the supplier had not passed on the benefit of reduction in the GST rate to the recipients by way of commensurate reduction in the price of the book.

The complaint was examined by Standing Committee on Anti-profiteering and investigated by DGAP to determine whether the benefit of  reduction in the rate of tax or ITC had been passed on by the supplier to its recipients.

According to DGAP, the main issue for determination was whether there was reduction in the rate of GST from 12% to Nil w.e.f. 01.01.2019, in respect of the above said books supplied by the supplier and if so, whether the Respondent/supplier had passed on the benefit of such reduction in the GST rate to the recipients, in terms of Section 171 of the CGST Act, 2017.

The supplier respondent submitted that it was dealing in trading of text books which fell under the HSN code 4901 and which had been exempted from GST vide Notification No. 02/2017-Central Tax (Rate) dated 28.06.2017 (3. No. 119) and that it had not been charging any GST from customers ever since coming into effect of GST i.e. even before the Notification 25/2018-Central Tax (Rate) dated 31.12.2018 came into force, i.e. on 01.01.2019.

DGAP noted that vide Notification No. 02/2017-Central Tax (Rate) dated 28.06.2017, the Central Government, on the recommendation of the GST Council, had exempted the GST on “Printed books, including Braille books”, whereas vide Notification No. 25/2018-Central Tax (Rate) dated 31.12.2018, the GST rate on “Music, printed or in manuscript, whether or not bound or illustrated”, falling under HSN code 4905, had been reduced from 12% to Nil. The product under consideration was a printed book and not a music book and the same was also apparent from the invoices wherein the books were classified under HSN code 4901. Thus, the allegation of profiteering was completely misplaced. The supplier had maintained the same base price during the entire period and had not charged GST on the base price and apparently there was no reduction in the GST rate on the subject book w.e.f. 01.01.2019.

However, NAA also observed that invoices issued did not contain the HSN code, which is a requirement under the provisions of Section 31 of the CGST Act, 2017. The aspect of correct classification in absence of HSN code was directed to be examined by the jurisdicational Commissioner for further action.

The NAA observed that in the instant case, the issues to be decided by the Authority are as under:-

1. Whether there was any violation of the provisions of Section 171 of the CGST Act, 2017 in this case?
2. If yes then what was the quantum of profiteering?

The supplier had not charged any GST from its buyers in case of both the supplies, one effected before the rate reduction and the other after that date. Since no GST was charged by the supplier before and after the relevant date i.e. 01.01.2019, question of profiteering did not arise in this case.

Therefore, the allegation that the supplier had not passed on the benefit of reduction in the tax rate is not sustainable. Accordingly, the application filed by the Applicant requesting action against the supplier for alleged violation of the provisions of the Section 171 of the CGST Act was held to be not maintainable and hence the same was dismissed.