Anti-Profiteering Clause May Fail to Serve Objective of GST India

The anti-profiteering clause of new indirect taxation structure seems like ineffective with no powers. The government has not framed restrict rules or regulations under this, in fact, suo moto will do more research on the anti-profiteering provision of GST Regime.

A senior government official discloses to media sources that the GST Council members are mutually agreed on the rules of anti- profiteering clause. As per the anti-profiteering rules, When the company or trader has asked or raised any query related to the undue profit by not providing the benefit of lower tax incidence because of GST than the query or complaint would be further passed to the standing committee which is appointed by the Council.

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The committee will be decided whether the enquiry or complaint should further proceed or not. The new profiteering authority will do more research on complaint or enquiry, once when the committee approves. The complaint or inquiry report along with answers or advice will revert to the standing committee. The official further added that any penalty or action will be borne either by the Committee or the Council.

Currently, excluding Trai, all regulators and the Competition Commission of India (CCI) have the authority to impose punishment if in the case of any violation of a rule or a law. The GST anti-profiteering authority can be treated as the institution and it will not hold the same powers.

A senior government official said that “A notification on the anti-profiteering authority will be issued shortly with details of rules and procedures to be followed.” He further added that the Anti- profiteering cases who are above the threshold will be considered for the investigation and below threshold cases will be ignored.

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A senior official government also said that “After completion of the investigation, the authority would give its report to the GST Council which would decide on the quantum of penalty.”

In 15th GST Council Meeting which was held on 3rd June, Union Finance Minister Arun Jaitley said that the Centre and the State representatives or officials would be responsible for looking out the complaints or queries related to the anti-profiteering provision which restricts companies from making undue gains after the implementation of GST Regime.

Section 171 of the Central GST disclose that reduction in taxation rates while supplying any kind of goods or services will offer consumers or recipient to avail the benefit of input tax credit by way of commensurate reduction in prices.