Updated on: September 16th, 2024 4:49 PM

Anti-Profiteering under GST

The Government has actively started considering a reduction of GST rates for goods and services to keep the economy on the growth path. In this context, its important for all Entrepreneurs to under anti-profiteering regulations under GST. The basis of anti-profiteering provisions in the GST rules is to ensure that any reduction in GST rate and associated input tax credit benefit is passed on to the end consumer by way of reduction in prices. In this article, we look at anti-profiteering provisions under GST in detail.

What is the meaning of anti-profiteering under GST?

Any reduction in GST rate or benefit of input tax credit should be passed on to the end consumer and not retained by the business. This is the basis of anti-profiteering provisions under GST. Under anti-profiteering provisions, its illegal for a business to not pass on benefits of GST rate benefits to the end consumer and thereby indulging in illegal profiteering.

Who regulates anti-profiteering under GST?

The Government has created the National Anti-Profiteering Authority to find and take action against taxable registered persons indulging in illegal profiteering. The National Anti-Profiteering Authority has the powers to determine the methodology and procedure for determining as to whether a taxable person is indulging in illegal profiteering.

Reporting to Anti-Profiteering Authority

Any interested party who has information to believe a taxable person in engaging in illegal profiteering from GST can refer the matter to the local screening committee. The State level Screening Committee shall examine the matter constituted by the State Governments consisting of officers of the State Government. If the screening committee determines that the information contains merit, the committee shall forward it with recommendations to the Standing Committee on Anti-Profiteering, which consists of Officers of both the State Government and Central Government. If the Standing Committee contains enough proof to show that the taxable person engaged in illegal profiteering, then the committee shall refer to the Director General of Safeguards for a detailed investigation.

Investigation by Director General of Safeguards

All matters referred by the Standing Committee will be investigated by the Director General of Safeguards. The Director General of Safeguards will collect evidence, conduct investigation and issue notices to the interested parties. The notice must contain the following details:

1. The description of the goods or services in respect of which the proceedings have been initiated.
2. Summary of the statement of facts on which the allegations are based.
3. The time limit allowed to the interested parties and other persons who may have information related to the proceedings for furnishing their reply.

Once all the information and hearings are complete, the Director General of Safeguards will provide a report of findings. Report of findings must be submitted by the Director General of Safeguards normally within 3 months or within 6 months if an extension is provided.

Order under Anti-Profiteering Provisions

Once all the proceedings are completed and a report is obtained from the Director General of Safeguards, the Members of Committee will pass an order. An order from the Authority could mandate

1. Reduction in prices.
2. Return to the recipient, an amount equivalent to the amount not passed on by way of commensurate reduction in prices along with interest.
3. Imposition of penalty as specified under the Act.
4. Cancellation of GST registration.