Input tax credit: Anti-profiteering authority holds that Tata Play profiteered over Rs 450 crore – The Hindu BusinessLine

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Directs company to deposit the amount with interest in consumer welfare funds within 3 months

The National Anti-Profiteering Authority (NAA) has upheld that DTH (Direct to Home) service-provider, Tata Play (earlier known as Tata Sky), profiteered over Rs 450 crore by not passing input tax credit (ITC) benefit to subscribers.

It has directed the company to deposit half each of the total profiteered amount in the Central Consumer Welfare Fund and the State Consumer Welfare Fund, along with interest at the rate of 18 per cent from the date the said amount profiteered till the amount is deposited. The company did not respond to a request for response from BusinessLine.

Section 171 of CGST Act deals with anti-profiteering measures and prescribes any reduction in the rate of tax on any supply of goods or services or the benefit of input tax credit, should be passed on to the recipient by way of commensurate reduction in prices. Complaints in this regard can be filed with NAA, which is a statutory mechanism under the GST Act. It  is assigned to ensure that the commensurate benefits of the reduction in GST rates on goods and services done by the GST Council and of the Input tax credit are passed on to the recipients by way of commensurate reduction in the prices by the suppliers. 

In the present case, the Directorate-General of Anti-Profiteering (DGAP), by making comparison of ITC available during the pre and post-GST regime, computed additional ITC to the tune of 4.19 per cent, which was required to be passed on by the company to applicants/ other eligible recipients. It found that the company profiteered an amount of Rs 450 crore approximately (which includes GST) in respect of all the recipients who made payments for the period July 2017 to January 2019.

It also found that the facility of seamless credit allowed in the post-GST period has been computed by comparing ITC to the turnover ratio in the pre and post-GST periods and amply clarified that, while the company is free to decide the pricing of subscription packages, however, benefit of additional ITC accrued post-GST has to be passed on by way of commensurate reduction in prices of subscription packages monthly/ quarterly/ annually.

After going through DGAP reports and hearing all the arguments, NAA emphasised that neither it nor the DGAP “have acted in any way as price controller or regulator as they do not have the mandate to regulate the same”. It clarified that this Authority has only been mandated to ensure that both the benefits of tax reduction and ITC, which are the sacrifice of previous indirect tax revenue made from kitty of the Central and the State Governments, are passed on to the end-consumers

According to NAA, the company’s contention that in the pre-GST regime, service tax was discharged on MRP “is not tenable”. It also found that, no concept of MRP (Maximum Retail Price) based assessment existed under Finance Tax, 1994. Further, it discarded the company’s contention that “profiteering” is not defined under Section 171(1) of GST law, it explained that, said term has been clearly defined under explanation to Section 171(3A) as inserted by the Finance Act, 2019, effective from January 1, 2020. The authority concluded that there is no reason to differ from “detailed computation of profiteered amount in the DGAP’s Report or the methodology adopted”.

Published on September 09, 2022

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