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Anti-Profiteering Rules under GST Law

Anti-Profiteering Rules under GST Law

by Sanjeev Archak

The Anti-Profiteering rules under GST law have been released by the Government of India. For the purpose of the same, a notification has been issued for setting up of a National Anti-profiteering Authority. This Authority shall be empowered to levy a penalty if businesses do not pass on the benefit of price reduction to consumers under the goods and services tax regime.

The Authority shall consist of a Chairman and four technical members. A state level Screening Committee shall be constituted in each State by the State Government.

Anti-Profiteering Rules under GST- Power to Determine the Methodology and Procedure

The Authority may determine the methodology and procedure for the determination as to whether the reduction in the rate of tax on the supply of goods or services or the benefit of input tax credit has been passed on by the registered person to the recipient by way of commensurate reduction in prices.

Duties of the Authority

It shall be the duty of the Authority:-

1. To determine whether any reduction in the rate of tax on any supply of goods or services or the benefit of the input tax credit has been passed on to the recipient by way of commensurate reduction in prices;

2. To identify the registered person who has not passed on the benefit of reduction in the rate of tax on supply of goods or services or the benefit of input tax credit to the recipient by way of commensurate reduction in prices;

3. To order:-

i) Reduction in prices;

ii) Return to the recipient, an amount equivalent to the amount not passed on by way of commensurate reduction in prices along with interest at the rate of eighteen percent from the date of collection of higher amount till the date of return of such amount or recovery of the amount not returned in case the eligible person does not claim return of the amount or is not identifiable, and depositing the same in the consumer welfare fund

iii) Imposition of a penalty as prescribed under the Act

iv) Cancellation of registration under the Act.

Examination of the Application by the Standing Committee and Screening Committee

The Standing Committee shall within a period of two months from the date of receipt of a written application, from an interested party or from a Commissioner or any other person, examine the accuracy and adequacy of the evidence provided in the application to determine whether there is prima-facie evidence to support the claim of the applicant that the benefit of reduction in rate of tax on any supply of goods or services or the benefit of input tax credit has not been passed on to the recipient by way of commensurate reduction in prices.

All applications from interested parties on issues of local nature shall first be examined by the State level Screening Committee and the Screening Committee shall, upon being satisfied that the supplier has contravened the provisions of section 171, forward the application with its recommendations to the Standing Committee for further action.

Conduct of Proceedings

Where the Standing Committee is satisfied that there is a prima-facie evidence to show that the supplier has not passed on the benefit of reduction in rate of tax or the benefit of input tax credit to the recipient by way of commensurate reduction in prices, it shall refer the matter to Director General of Safeguards for a detailed investigation.

The Director General of Safeguards may also issue notices to such other persons as deemed fit for a fair inquiry into the matter. The Director General of Safeguards shall complete the investigation within a period of three months of receipt of reference from the Standing Committee or within such extended period not exceeding a further period of three months

Order of the Authority

The Authority shall, within a period of three months from the date of receipt of the report from the Director General of Safeguards determine whether a registered person has passed on the benefit of reduction in rate of tax on the supply of goods or services or the benefit of input tax credit to the recipient by way of commensurate reduction in prices.

Compliance by the Registered Person

Any order passed by the Authority under these rules shall be immediately complied with by the registered person failing which action shall be initiated to recover the amount in accordance with the provisions of the GST Law

The Authority may require any authority of central tax, State tax or Union territory tax to monitor implementation of the order passed by it.

Tenure of Authority

The Authority shall cease to exist after the expiry of two years from the date on which the Chairman enters upon his office unless the Council recommends otherwise.

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