GST anti-profiteering rules released: Firms face cancellation of registration if found guilty

Sunset clause of two years inserted; 8-11 months provided for the process

By: ENS Economic Bureau | New Delhi | Published:June 21, 2017 1:50 am
GST, GST rollout, GST anti-profiteering rules, Company registration license The National Anti-Profiteering Authority can order reduction in price commensurate with the lowering of incidence of taxation under GST. (File Photo)

The government on Tuesday released anti-profiteering rules under the Goods and Services Tax (GST) regime that provide for cancellation of registration of any entity or business if it fails to pass on the benefit of lower taxes or input tax credit to consumers in a commensurate manner.

While a sunset clause of two years has been inserted, a period of 8-11 months has been provided for the whole process involving screening of the complaint and subsequent investigation and action, if any, by the anti-profiteering authority.

A five-member National Anti-Profiteering Authority, headed by a secretary-level officer, has been proposed in the rules. The authority can order reduction in price commensurate with the lowering of incidence of taxation under GST. It also seeks 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, according to the anti-profiteering rules issued by the CBEC on Tuesday.

The authority shall have powers to order recovery of the amount including interest not returned in case the eligible person does not claim return of the amount or is not identifiable that shall be deposited in the Consumer Welfare Fund as provided under Section 57 of CGST) and SGST) Acts.

The Authority has been provisioned to be in existence for two years unless the GST Council extends the tenure and will not be able to take any of these steps suo motu or on its own. A multi-step approach has been detailed starting with each state constituting a screening committee that will examine written complaints made about any entity or business earning undue profit.

Such panels would have to necessarily dispose of the complaints within two months. Once they are satisfied of the prima facie nature of the complaint, the same would be referred to the Director General of Safeguards for a proper investigation. The Director General of Safeguards will carry out the investigation and shall have powers to summon any person for production of evidence.

“Every such inquiry shall be deemed to be a ‘judicial proceedings’,” the rules said.

“The Authority shall, within a period of three months from the date of receipt of the report from the Director General of Safeguards determine whether a registered person has passed on the benefit of reduction in rate of tax on the supply of goods or services or the benefit of input tax credit to the recipient by way of commensurate reduction in prices,” the rules said.

The Authority would decide on matters through majority. The chairman and members of the authority would be appointed by the Centre on recommendations of a panel constituted by the GST Council.

The anti-profiteering rules are in relation to Section 171 of the CGST Act, which provides that any reduction in rate of tax on any supply of goods or services, or the benefit of input tax credit shall be passed on to the recipient (consumer) by way of a commensurate reduction in prices. With only ten days left for the rollout of GST, the government has started notifying sections of the GST-related laws dealing with mandatory registration of current indirect tax payers in the new regime.

As many as 18 sections relating to registration of current central excise, service tax and VAT payers with the GST-Network (GSTN) as well as transitional provisions were notified on Tuesday. As a precursor to GST, the CBEC has also notified two rules related to registration and composition levy. All the notifications would be effective from June 22.

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