Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 4-10-2017 Last Replied Date:- 7-10-2017 – Anti-Profiteering Rules The GST Council in its meeting on 18th June, 2017 approved and the Government has notified the Anti-Profiteering related Rules vide Chapter XV of the Central GST Rules, 2017 (Rules 122 to 137) which extend to whole of India except to State of Jammu and Kashmir. These rules contain rules inter alia, in relation to- Definitions of Committee, Authority, Interested party and Screening Committee Constitution of the Authority (Rule 122) Constitution of the Standing Committee and Screening Committees (Rule 123) Appointment, salary, allowances and other terms and conditions of service of the Chairman and Members of the Authority (Rule 124) Secretary to the Authority (Rule 125) Power to determine the methodology and procedure (Rule 126) Duties of the Authority (Rule 127) Examination of application by the Standing Committee and Screening Committee (Rule 128) Initia
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enefit of input tax credit has been passed on by the registered person to the recipient by way of commensurate reduction in prices. Within two months of receiving an application, the Standing Committee would examine it and send it to the State Level Screening Committee. Based on its recommendations, the Director General of Safeguards (DGS) would investigate the complaint with in a period of three months. Thereafter, DGS, which has the power to issue summons, will conduct investigation and give its findings to the authority. ADG, Safeguards will act as Secretary to the National Anti-Profiteering Authority and will coordinate between the authority and the DG Safeguards office. According to the anti-profiteering rules, the authority will suggest return of the undue profit earned from not passing on the reduction in incidence of tax to consumers along with an 18 per cent interest, as also impose penalty. The authority will have a chairman of the rank of a secretary and four nominated membe
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ations to the standing committee. State level panels will watch out for instances of businesses not passing on the benefits of tax reduction to consumers in the GST regime. The orders passed by the APA shall follow the principles of natural justice and as such, opportunity of being heard shall be provided. The rules are silent on further appeal against orders of APA. Nor does it stipulate that such orders shall be final. It provides that orders passed by APA have to be complied with immediately by the registered person. Orders issued by APA Within 3 months of report of DGS Opportunity of being heard By majority in case of difference of opinion Compliance by registered person immediately No clarity on whether order appealable or not Order may be for any of the following : Reduction in prices Returning money to the customer along with interest Depositing money in customer welfare fund in case the customer does not claim it or is not identifiable Imposition of penalty equivalent to the am
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business may be too harsh and even unconstitutional. There could also be disputes on undue profiteering may not actually be so as there would be other costs / overheads which may set off the profit, if any, accruing from GST efficiency. It will also add to disputes and litigation. Time period of Provision Rule 138 on anti-profiteering measures shall have a sunset clause. The rules framed for anti-profiteering indicate that it would operate for a period of only two years. Thus, it would cease to exist after two years of being in force. Caution Note APA is expected to take up cases or complaints of mass consumption or importance and may not look into small cases. However, no monetary threshold has been fixed for taking up cases for scrutiny. It may be noted that the anti-profiteering measure in GST law is meant to be a deterrent and is an enabling clause so that reduction in tax incidence due to the GST is passed on to the consumers. This is a contentious provision which should be trigge
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nce on goods and services. GST rates have been fixed with the objective of maintaining revenue neutrality in the post GST regime. Many business entities have reduced the prices of their goods and services in view of lower GST rates and also announced this publicity. To conclude, it can be said that the anti profiteering provision should be enforced in rare case as a exception, rather than rule and should not become a hindrance in free business environment and as a tool to invite corruption. (Concluded…….) – Reply By RAMESH SINGLA – The Reply = Sir, any rules have been made to determine as to whether benefit of tax reduction has been passed on? Further, do you have some instances where credit was not admissible in pre GST but is admissible now? – Reply By Dr. Sanjiv Agarwal – The Reply = Dear Mr. Singla, Yes, Rules 122 to137 of CGST Rules, 2017 deal with implementation of anti profiteering clause (section 171). The definition of input services, input and capital goods in GST are muc
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