NAA dismisses profiteering charge against Xiaomi

Taking up a complaint filed against the company for allegedly not passing on the benefit of lower GST rate, the anti-profiteering watchdog has found the charge was untenable and therefore dismissed the case.

The complainant had claimed that Xiaomi Technology India Pvt Ltd had resorted to profiteering in respect of supply of Xiaomi-Mi Power Bank 2i Red (10,000 mAh).

It was also alleged that Xiaomi had maintained same selling price for the power bank despite reduction in the GST rate from 28 per cent to 18 per cent which came into effect from January 1, 2019 and that Xiaomi had not passed the benefit of this reduction in the GST rate to the recipients by way of commensurate reduction in the price of power bank.

The application was examined by the Standing Committee on Anti-profiteering in its meeting held on March 11, 2019. Subsequently, it was referred to the Director General of Anti-Profiteering (DGAP) to conduct a detailed investigation to determine whether the benefit of reduction in the rate of tax or input tax credit (ITC) had been passed on by Xiaomi to its recipients.

In its response during investigation, Xiaomi said that the company was charging GST at 18 per cent before January 1, 2019 and continued to charge GST at 18 per cent. It also submitted that amendments effected vide notification dated December 31, 2018 did not lead to any reduction in the rate of tax applicable to the said power bank and accordingly the price of the power bank remained unchanged.

"The DGAP has reported that it was evident from the documentary evidence received from the Standing Committee on Anti-Profiteering that the price of the said power bank as shown in the screenshots had remained the same both before and after January 1, 2019," the NAA order said.

Further, Xiaomi contended that anti-profiteering provisions could not be applied to the case as there was no reduction in the rate of tax for the power bank in this case.

During its investigation, the DGAP concluded that the price of power bank had remained the same before and after January 1, 2019 and there was no reduction in the rate of GST being charged by the firm.

"In view of the above discussion, we take the view that the allegation of the Applicant No. 1 is not tenable and therefore the application alleging violation of provision of Section 171 of the CGST Act, 2017 is hereby dismissed," the NAA order said.