Sandeep Ahuja & Co.

Established in the year 1986, we are a leading chartered accountancy firm based in Delhi & NCR rendering comprehensive professional services which include statutory audit, internal audit, direct tax, transfer pricing, GST, bank audit, propriety audit, cost accounting, internal financial controls and risk advisory.

Friday, July 14, 2017

Anti Profiteering Rules Under GST

According to the Anti Profiteering Measure u/s 171 of the Central Goods and Services Tax Act, 2017-

(1) 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 by way of commensurate reduction in prices.
(2) The Central Government may, on recommendations of the Council, by notification, constitute an Authority, or empower an existing Authority constituted under any law for the time being in force, to examine whether input tax credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him.
(3) The Authority referred to in sub-section (2) shall exercise such powers and discharge such functions as may be prescribed.
In exercise of the powers of the Act, the Anti-profiteering Rules, 2017 were approved on the 17th GST Council Meeting held on 18th June, 2017 and shall come into force on the date of their publication in the Official gazette. Some of the key points of the said rules are given hereunder.

Extent: They extend to the whole of India except the State of Jammu & Kashmir.

Constitution of the Authority to be Nominated by the Council:

· 1 Chairman who holds/has held a post equivalent in rank to a Secretary to the Government of India; and
· 4 Technical Members who are/have been Commissioners of State/Central tax or have held an equivalent post under the existing law.

Constitution of the Standing Committee and Screening Committees:
The Council may constitute a Standing Committee on Anti-profiteering which shall consist of such officers of the State/Central Government as may be nominated by it.

A Screening Committee shall be constituted in each State by the State Governments. Constitution of the same shall be as follows:
· 1 officer of the State Government (nominated by the Commissioner)
· 1 officer of the Central Government (to be nominated by the Chief Commissioner)

Chairman and Members of the Authority:
Appointment: by the Central Government on the recommendations of a Selection Committee constituted by the Council.

Salary: · Chairman - Rs. 2,25,000 p.m. + allowances
· Retired Officer as Chairman - Rs. 2,25,000 p.m. - pension
· Technical Member - Rs. 2,05,400 p.m. + allowances
· Retired Officer as Technical Member - Rs. 2,05,400 p.m. - pension

Term of service: · Chairman - 2 years, or until he attains the age of 65 years, whichever is earlier.
· Technical Member - 2 years, or until he attains the age of 65 years, whichever is earlier.

They shall be eligible for reappointment, but cannot be appointed if attained the age of 62 years.

Secretary to the Authority: The Additional Director General of Safeguards under the Board shall hold this position.

Power of the Authority:
Determining the methodology and procedure determination as to whether the reduction in rate of tax on the supply of goods/services or the benefit of input tax credit has been passed on by the registered person to the recipient by way of commensurate reduction in prices.

Duties of the Authority:
i. to determine whether any reduction in rate of tax on any supply of goods/services or the benefit of the input tax credit has been passed on to the recipient by way of commensurate reduction in prices;
ii. to identify the registered person who has not passed on the benefit as mentioned above
iii. to order,
· reduction in prices
· to return the amount not passed on by way of commensurate reduction in prices to the recipient along with interest at 18% from the date of collection of higher amount till the date of such return or recovery of the amount not returned in case the eligible person does not claim return of the amount or is not identifiable, and depositing the same in the Consumer Welfare Fund
· imposition of penalty as prescribed
· cancellation of registration under the Act.

Examination of application by the Standing Committee and Screening Committee

The Standing Committee shall within 2 months from the date of receipt of a written application from an interested party/Commissioner/any other person, examine the accuracy and adequacy of the evidence provided in the application to determine whether there is prima-facie evidence to support the claim of the applicant that the benefit under this section has not been passed on to the recipient.

All applications from interested parties on issues of local nature shall first be examined by the State level Screening Committee which shall, upon satisfaction of contravention of the provisions of section 171, forward the application with its recommendations to the Standing Committee for further action.

Initiation and conduct of proceedings:
Where the Standing Committee is satisfied of the contravention of provisions u/s 171, it shall refer the matter to Director General of Safeguards for a detailed investigation.

Responsibilities of the Director General of Safeguards:
i. He shall conduct investigation and collect evidence necessary to determine whether the benefit of reduction in rate of tax or benefit of the input tax credit has been passed on to the recipient by way of commensurate reduction in prices.

ii. He shall, before initiation of investigation, issue a notice to the interested parties containing the following information:
· the description of the goods/services in respect of which the proceedings have been initiated;
· summary of statement of facts on which the allegations are based; and
· time limit allowed to the interested parties/other persons who may have information related to the proceedings for furnishing their reply.

iii. He may also issue notices to such other persons as deemed fit for fair enquiry into the matter.

iv. He shall make available the evidence presented to it by one interested party to the other interested parties, participating in the proceedings.

v. He shall complete the investigation within 3 months of receipt of reference from the Standing Committee or within such extended period not exceeding a further period of 3 months for reasons to be recorded in writing as allowed by the Standing Committee and, upon completion of the investigation, furnish to the Authority a report of its findings, along with the relevant records.

vi. He may seek opinion of any other agency or statutory authorities in discharge of his duties.

vii. He shall have the power to summon, either himself or through an officer authorized by him, any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing u/s 70 and shall have power in any inquiry in the same manner, as provided in the case of a civil court.

Order of the Authority:
The Authority shall, within a period of 3 months from the date of receipt of the report from the Director General of Safeguards pass an order.

Where it is determined that a registered person has not passed on the aforementioned benefit, order may be passed for-
· reduction in prices
· return of the amount not passed on by way of commensurate reduction in prices to the recipient along with interest at 18% from the date of collection of higher amount till the date of such return or recovery of the amount not returned in case the eligible person does not claim return of the amount or is not identifiable, and depositing the same in the Consumer Welfare Fund
· imposition of penalty as prescribed
· cancellation of registration under the Act.

On a written request from the interested parties, an opportunity of being heard shall be granted by the Authority.

The decision shall be taken by the majority where the Members of the Authority differ in opinion on any point.

- Compiled by Kashika Ahuja

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