The New Anti-Profiteering Rules Lacks Clarity!

India Inc is jittery over the new anti-profiteering rules, which, it says, lacks clarity

- Soumik Dey

On June 18, after the 17th Goods and Services Tax Council meeting, Finance Minister Arun Jaitley introduced the anti-profiteering clause saying, “This is a clause which I hope would never have to be used. We want to use it mostly as a deterrent.”

As per the clause—a last-minute addition to the draft rules of GST—a three-tier structure will be set up to check overpricing in the new GST regime. So, if a producer does not pass on the benefits of the reduction in tax rates or the benefits of input tax credit to consumers, he is deemed to be ‘profiteering’ under GST.

“Though one may argue that there was no need for such a clause and that market forces would ensure competitive pricing, cartelisation could still take place. And, we hope the anti-profiteering clause would nip in the bud all such efforts,” said Jaitley.

The Anti-profiteering Rules, 2017, prescribe the creation of a national authority, comprising a chairperson of the rank of a Union secretary and four members from state or Central excise departments. A standing committee would be formed to look into complaints, which would be first examined by state-level screening committees. The appointment of committee members is yet to be finalised. So, the GST implementation committee, headed by Union revenue secretary Hasmukh Adhia, would act as the standing committee for now.

Within two months of receiving a written application from the screening committee, the standing committee has to “examine the accuracy and adequacy of the evidence provided”. Once satisfied with the evidence, the case would be referred to the director general of safeguards for further investigation. The director general would be given two to three months to investigate the charges. The final investigation report would be submitted to the anti-profiteering authority, which would determine the penalties for the business.