Anti Profiteering Rules Under GST: Breaking Off The Malign Chain

Anti-Profiteering Rules under GST

Serving consumers the advantages of price reduction is one of the ultimate goals of GST because if consumers would not be able to avail the benefits of the new tax regime, then who else should be?

Well, to ensure the tax rate reduction is smoothly passed to the commoners and their interests are protected, a 5-member anti profiteering authority shall be set up to decide the levying of penalty in case the rules are not abided by. And for this, specific provisions of GST are made by way of Acts and Rules. Read on:

Section 171 (1) of CGST Act, 2017:

  • If there is reduction in the rate of tax on supply of goods or services or there is a benefit of input tax credit, it shall be passed on to the recipient by way of reduction in prices.

To ensure this, Section 171 (2) is inserted which says:

On recommendations of the Council, the Central Government by notification constitute an authority under the law to examine that the input tax credit availed by the dealer or the reduction in the tax rate have actually been passed on and resulted in the reduction of goods and services supplied by him.

Where the consumer is not identified, the amount would be credited to the Consumer Welfare Fund.

With the power of Section 171 (2), Anti Profiteering Rules, 2017 have been introduced that deals with the following:

  1. Constitution of Authority
  2. Constitution of the standing committee and screening committee.
  3. Duties of the authority.
  4. Power to determine the methodology and procedure.
  5. Intimation and conduct of proceedings.
  6. Power to summon.
  7. Order of the authority
  8. Decision by authority

The complaints of the profiteering would first come to the Standing Committee that would comprise of tax officials from states and the Centre. The Standing Committee would forward the complaint to Directorate of Safeguards (DGS) for investigation, that would take 2 to 3 months to complete the enquiry. One the enquiry is done, the reports shall be submitted to the anti-profiteering authority that will decide the penalty.

Also Read: Offences & Penalty Provisions Under GST

Duties of The Standing Committee

  1. Determining whether the reduction of prices or rate of tax has been passed to the recipient.
  2. Determining the methodology and procedure to pass the reduction of prices or rate of tax to the recipient.
  3. Identifying the registered person who has not passed the benefit of the reduction of prices or rate of tax to the recipient.
  4. Making the following order:
  • Imposition of penalty
  • Cancellation of registration
  • Reduction in prices
  • Return the amount equal to the benefit to the recipient

With the stringent efforts being made to identify malign practices under Goods & Service Tax regime, the undue profiteering is sure to be curbed.

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