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Anti-Profiteering Measures Under GST

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India was introduced to the Goods and Service Tax on 1st July 2017.It is an indirect tax that has now replaced a bevy of taxes that were thrust upon the people of India by the Central and the State governments.
  At that time, the concept of GST was relatively new and people were yet to be familiarised with certain terms that formed a part of this tax regime. One such term was Anti-profiteering.

What is profiteering? 
Profiteering refers to making an excessive or unfair profit illegally.
You go to a restaurant, have a lavish meal and wait for your bill. Previously, the bill would have  comprised of all the taxes that were to be paid by you, but now it should only include GST.Some restaurants add other taxes along with GST, in that case, caveat emptor. The consumer should be aware that no other taxes should be added along with GST, since unification of taxes is one of the main objectives of GST.If done, then that would constitute to profiteering.
         Similarly, according to certain provisions in the GST act, the onus to transfer any reduction in the rate of tax or any benefits arising out of input tax credit by way of the amount of reduction in prices that should  go to the receiving party falls on businesses. The business should not be able to profit through this tax reduction in any way.Doing that would amount to profiteering.Hence, setting up of Anti-profiteering Rules is an important aspect of the Goods and Service Tax in order to protect the consumers.

Anti-Profiteering
Australia, Canada, New Zealand and Malaysia are countries where anti-profiteering or provisions that are similar have been ratified. Among these, Australia was the first one to enact it in 2000 and Malaysia in 2015.India has since then, joined then bandwagon.

While GST was implemented with a view to reduce prices of goods and services, there are entities who make excessive profits by hiking prices, citing GST as the reason.
A National Anti-Profiteering Authority, an apex body was set up by the Union Cabinet headed by the Prime Minister Narendra Modi to ensure that the benefits of the reduction in GST rates on goods and services are passed on to the  consumer by reducing  prices.

An Economic Times report, added that India may adopt a product-specific approach similar to that of Australia to ensure that the full benefit of price reductions due to the goods and services tax (GST) is passed on to consumers”

The “anti-profiteering” measures incorporated  in the GST law provides a bureaucratic framework, which consists of the National Anti-Profiteering Authority, a Standing Committee, Screening Committees in every State and the Directorate General of Safeguards in the Central Board of Excise and Customs.

The Authority will be chaired by a current or retired Secretary level officer,  with four technical members that are or were Commissioners of State or Central Tax (or its equivalent). The Authority will be assisted by a Standing Committee which would consist of officials from the Centre and State, State level Screening Committees in every state which would include one official of the State in the particular case and one from the Centre. 

In exercise of the powers conferred by Section 164 read with Section 171 of the Central Goods and Services Tax Act, 2017 the Central Government has laid down a set of rules called the Anti-Profiteering Rules,2017.It extends to the whole of India not including the States of Jammu and Kashmir.

The Authority would have the following duties: 

to ascertain whether or not transfer of any reduction in the rate of tax or any benefits arising out of input tax credit by way of the amount of reduction in prices have been passed on to the recipient;
  to discern 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 the amount of prices reduced
to order the following:                                                                                                               

       (a) reduction in prices;
       (b) return to the recipient, an amount equivalent to the amount not passed on by the amount of price reduced along with interest at the rate of 18%, from the date of collection of the higher amount till the date of the return of such amount or recovery of the amount not returned
If  an eligible person doesn’t claim return of the amount or is not distinctive, the amounts would be deposited in the Consumer Welfare Fund.
      (c) imposition of penalty, and 
      (d) cancellation of registration

If the registered person fails to follow any orders that were asked to by the Authorities, an action shall be brought about to retrieve the amount in the manner conforming with the provisions of the Integrated Goods and Services Tax Act or the Central Goods and Services Tax Act or the Union territory Goods and Services Tax Act or the State Goods and Services Tax Act of the particular States, as per the case. The Authority will direct any authority of Central tax, State tax or Union territory tax to watch over the implementation of the order passed by it.

How will the process work? 
The process will work in three stages. First of all, the State level Screening Committees will be eyes and ears on the ground in each state, liable for reviewing cases of alleged anti-profiteering. The Screening Committees make recommendations to the Standing Committee, which will in turn (or together with a Screening Committee) “examine accuracy and adequacy of the evidence” to determine whether a case goes further. 

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