GST ANTI-PROFITEERING LAW: TAKEAWAYS FROM NAA RULINGS
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 15-11-2018
Statutory Provisions
The provisions are contained in the GST law as per following provisions:
CGST Act, 2017
Section 171 on Anti-profiteering measures
IGST Act, 2017
Section 20 which stipulate that provisions of CGST Act, 2017 shall apply mutatis mutandis to IGST Act
UTGST Act, 2017
Section 21 which stipulate that provisions of CGST Act, 2017 shall apply mutatis mutandis to UTGST Act
SGST Act, 2017
Section 171 on Anti-profiteering measures
The Rules for Anti Profiteering are contained in Chapter XV (Rule Nos. 122 to 137) of the Central Goods and Services Tax Rules, 2017.
Section 171 provides that it is mandatory to pass on the benefit due to reduction in rate of tax or from input tax credit to the consumer by way of commensurate reduction in prices.
Scope and Objective
Anti-profiteering is a new concept being tried out for the fi
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rom the NAA orders passed so far.
Though the NAA concluded in more than half of these orders that profiteering could not be established or was absent, yet in the other cases / complaints, indulgence in Anti-profiteering was established and penal action taken. The NAA orders can be tabulated as follows:
NAA Orders: A Snapshot
Complaint Against
Issue
Anti-Profiteering
M/s Vrandavaneshwree Automotive Pvt. Ltd.
Price difference on sale of car in GST regime booked in pre-GST regime
Not established
M/s KRBL Ltd
Levy of GST @5% on branded rice in GST regime
Not established
M/s Schindler India Pvt. Ltd., Mumbai
Purchase of lift before and after GST, GST charged on excise duty
Not established
M/s Flipkart Internet Pvt. Ltd., Bangalore
Discount withdrawn on sale of Godrej almirah on Flipkart
Not established
M/s Sharma Trading Company
Rate of Vaseline reduced from 28% to 18%, but supplier charged 28%
Upheld
M/s Pyramid Infratech Pvt. Ltd.
ITC benefit on construction not p
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guidance.
Underlying Principles
Based on the Orders of NAA, following principles of anti-profiteering law can be established:
* A supplier cannot be allowed to resort to profiteering.
* GST benefit irrespective of the amount has to be passed on to the buyer.
* Cases of Anti-profiteering have to be determined on case to ease basis taking into account tax benefit, other costs etc.
* Benefit cannot be denied on the grounds of convenience to retailer or customer in terms of price, being in whole number (e.g. on ₹ 5 per pack benefit was 21 paisa only and hence not passed on).
* Rate change should result in commensurate reduction in price of product/ service.
* Anti-profiteering law is applicable to both, B2B and B2C transactions.
* Benefit on a particular product cannot be passed on or transferred to other products of the same company and benefit denied to a class of customers. It should be done product wise, not even an a basket of products.
* Benefit should be pas
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n / respective State.
* Penalty can be levied but after due adjudication, following principles of natural justice.
* Anti-profiteering cases are booked on pan India basis. In other words, NAA has jurisdiction all over India.
* Complaints / cases are processed either on complaint or on suo moto basis by DGAP.
* Complaints can be made against anti-profiteering irrespective of the amount involved (small or big).
* Over pricing / indulgence in profiteering would tantamount to issuance of incorrect invoices attracting penalty u/s 122 of the GST law.
* Implementation / monitoring of order can be directed to be done of DGAP.
The aforementioned principles or assertions have been drawn from decided orders of NAA based on factual matrix and legislative intention.
Reply By DR.MARIAPPAN GOVINDARAJAN as =
Very nice article.
Dated: 15-11-2018
Reply By Dr. Sanjiv Agarwal as =
Thanks so much, Dr. Govindrajan.
I am one of your silent admirers.
Dated: 15-11-2018
Reply By DR.MARIAP
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