GST ANTI-PROFITEERING LAW: TAKEAWAYS FROM NAA RULINGS
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 15-11-2018<\/p>\n
Statutory Provisions
\nThe provisions are contained in the GST law as per following provisions:
\nCGST Act, 2017
\nSection 171 on Anti-profiteering measures
\nIGST Act, 2017
\nSection 20 which stipulate that provisions of CGST Act, 2017 shall apply mutatis mutandis to IGST Act
\nUTGST Act, 2017
\nSection 21 which stipulate that provisions of CGST Act, 2017 shall apply mutatis mutandis to UTGST Act
\nSGST Act, 2017
\nSection 171 on Anti-profiteering measures
\nThe Rules for Anti Profiteering are contained in Chapter XV (Rule Nos. 122 to 137) of the Central Goods and Services Tax Rules, 2017.
\nSection 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.
\nScope and Objective
\nAnti-profiteering is a new concept being tried out for the fi<\/p>\n
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\nThough 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:
\nNAA Orders: A Snapshot
\nComplaint Against
\nIssue
\nAnti-Profiteering
\nM\/s Vrandavaneshwree Automotive Pvt. Ltd.
\nPrice difference on sale of car in GST regime booked in pre-GST regime
\nNot established
\nM\/s KRBL Ltd
\nLevy of GST @5% on branded rice in GST regime
\nNot established
\nM\/s Schindler India Pvt. Ltd., Mumbai
\nPurchase of lift before and after GST, GST charged on excise duty
\nNot established
\nM\/s Flipkart Internet Pvt. Ltd., Bangalore
\nDiscount withdrawn on sale of Godrej almirah on Flipkart
\nNot established
\nM\/s Sharma Trading Company
\nRate of Vaseline reduced from 28% to 18%, but supplier charged 28%
\nUpheld
\nM\/s Pyramid Infratech Pvt. Ltd.
\nITC benefit on construction not p<\/p>\n
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\nUnderlying Principles
\nBased on the Orders of NAA, following principles of anti-profiteering law can be established:
\n * A supplier cannot be allowed to resort to profiteering.
\n * GST benefit irrespective of the amount has to be passed on to the buyer.
\n * Cases of Anti-profiteering have to be determined on case to ease basis taking into account tax benefit, other costs etc.
\n * 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).
\n * Rate change should result in commensurate reduction in price of product\/ service.
\n * Anti-profiteering law is applicable to both, B2B and B2C transactions.
\n * 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.
\n * Benefit should be pas<\/p>\n
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\n * Penalty can be levied but after due adjudication, following principles of natural justice.
\n * Anti-profiteering cases are booked on pan India basis. In other words, NAA has jurisdiction all over India.
\n * Complaints \/ cases are processed either on complaint or on suo moto basis by DGAP.
\n * Complaints can be made against anti-profiteering irrespective of the amount involved (small or big).
\n * Over pricing \/ indulgence in profiteering would tantamount to issuance of incorrect invoices attracting penalty u\/s 122 of the GST law.
\n * Implementation \/ monitoring of order can be directed to be done of DGAP.
\n The aforementioned principles or assertions have been drawn from decided orders of NAA based on factual matrix and legislative intention.
\n Reply By DR.MARIAPPAN GOVINDARAJAN as =
\nVery nice article.
\n Dated: 15-11-2018
\n Reply By Dr. Sanjiv Agarwal as =
\nThanks so much, Dr. Govindrajan.
\nI am one of your silent admirers.
\n Dated: 15-11-2018
\n Reply By DR.MARIAP<\/p>\n
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