ANTI – PROFITEERING

under GST

Section (171)
read with
RULES 122 to 137
 Table of contents

1) What is Antiprofiteering ?
2) Definition as per CGST Act, 2017.
3) Hierarchy of Anti-Profiteering Authority.
4) Rules pertaining to Anti- profiteering (122-137)
5) Anti-profiteering committees in other countries.
6) Method of Appeal in case if the recipient finds substance of
Profiteering.
7) Case-laws on Anti-profiteering.
What is Anti- Profiteering ?

• Profiteering : To make/seek an excessive amount of unfair profits,

especially through illegal means.

• Anti- profiteering : Opposing/ Preventing / Punishing the act of

profiteering.
 Sec 171 of CGST Act, 2017 states that-
• Any reduction in the rate of tax on supply of goods/ services/both (or) the
benefit of ITC shall be passed to the recipient by way of commensurate
reduction in prices.

• Central Govt. has the power to make/ empower any authority constituted under
any law for time being in force to examine whether the ITC availed by the
registered person on the reduction in the tax rates is actually resulted in the
reduction in the prices of goods/services/both supplied to him.

• The authority has to perform (or) discharge the functions as prescribed to it by

the Central Govt.
 Hierarchy of Anti-profiteering authority

 NATIONAL ANTI-PROFITEERING AUTHORITY (NAA)

 DIRECTORATE GENERAL OF ANTI-PROFITEERING

(DGAP)

 STANDING COMMITTEE
(Central authority)

 SCREENING COMMITTEE
(State authority)
 RULES on Anti-Profiteering ( 122 to 137)

RULE 122- Constitution of National Anti- Profiteering Authority.

The said Authority shall consist of –

(a) Chairperson [Eligible to be appointed if he held/holds a

post > secretary of Govt. of India ].

(b)‘4’ Technical members [Eligible to be appointed if he have/has

been a CIT for State/Central tax for >1year].
RULE 123- Constitution of Standing and Screening
Committee.
A part from the said Authority , the council may also constitute
a Standing Committee (Central level) and a Screening Committee
(State level) with the officers from both Central and State Govt.
A Standing and Screening Committee consists of –

(a) A State level officer [ Nominated by Commissioner ]

(b) A Central level officer [Nominated by chief Commissioner].

RULE 124 – Appointment, Salary, Allowances and other
Terms & Conditions of NAA.
The Central Govt. will form a Selection committee , which will appoint all
the requisite members of NAA.
(a) The Chairperson shall be paid a salary of
Rs. 2,25,000 pm along with the allowances and
perquisites same as par with any Central official.

(b) Technical members will be paid a salary equal to

‘Group-A’ Officer of Govt. of India . However, if he is a retired official
then his salary will be equal to ‘ Last drawn salary – Pension which he
is receiving’.
RULE 125
The Authority shall consist of a secretary who holds a power
greater than Additional Commissioner in DGAP ( Directorate General
of Anti – Profiteering ).

RULE 126
The NAA holds the procedure to
carryout the investigation on whether the
benefit of reduction in the rates of tax on
supply of goods and/or services has
actually passed to the recipient by the
proportionate reduction in the prices.
RULE 137- Tenure of the Authority

The Chairperson and the Technical members will hold the office for
(a) Term of ‘2’ years. Whichever is
(b) Until the member attains the earlier.
age of ‘65’ years.

However, The Technical members are also eligible for re-

appointment if they have not crossed the age of ‘62’ years.
NOTE- The Central Govt. holds the power to appoint (or) terminate
these officials at any time.
RULE 128
The Standing committee shall receive the applications from
the parties and examine the accuracy & validity and collect the
necessary evidences which will help DGAP to carryout the
investigation process.

Such information should be provided to the DGAP by the

standing committee within ‘2’ months from the date on which the
application is received.
The Screening Committee at the state level carries out the
same functions at the state level and forwards it to the Standing
committee if it deems to fit.
RULE 127 – Duties of the National Anti-profiteering
Authority.
The NAA has to perform the following duties-
(a)It has a duty to determine whether any reduction in rate of Tax on supply
of goods and/or services (or) the benefit of ITC has been passed to the
recipient by the way of commensurate reduction in the prices.

(b)To identify the person who has not been availed the benefit of reduction
as a proportionate reduction in the prices.

(c) To furnish a report on the performance of Authority to the council by the

10th day of closure of each quarter to the Union council.
(d) The Authority has to pass the order after hearing the pleadings of
both the parties.

(e) It has the duty to pass the judgement within ‘3’ months based on
the report submitted by DGAP [Directorate General of Anti-
Profiteering].

RULE 136
The authority may also require any state/ Central tax
authority to make sure whether the order has been complied .
RULE 129 – Initiations/Conduct of proceedings by DGAP

 Directorate General Of Anti- Profiteering, shall carryout the investigation on

the case & submit a report to NAA within 3 months from the date of receipt of
reference from the Standing committee.

 The DGAP holds the power to carryout investigation process on whether there
is any breach of Sec 171.

 Before starting the investigation process , the DGAP shall issue notices to the
parties concerned containing –
(a) Description of Goods/services on which the proceeding have been made.
(b) Summary of facts and Allegations made.
(c) Time limit for replying the notice.
RULE 130
The information which the DGAP requires the parties
concerned should be kept confidential and the summary of such
information should be kept non-confidential .
If the information can’t be summarised, then reasons for
such should also be disclosed.

RULE 131
The DGAP also reserves
its right to seek the Co-Operation
with other Regulatory bodies so as to discharge its duties.
RULE 132 – Power to summon any person to
carryout investigation

 The DGAP may authorise any person to carryout inquiry

process and that person may summon any party concerned ,
whose attendance /reply is considered
essential for carrying out
proceedings.
 Every inquiry made shall
comply with Sec 193 to 228
of Indian Penal Code 1973.
RULE 133
The NAA holds the power to pass an order based on the
Inquiries made by DGAP. It may pass the following orders-
i. Order for reduction in the prices.
ii. Return the Recipient an amount he paid including interest @18%
pa. on the unfair amount from the date of collection of amount to till
the date of actual payments.
iii. May impose the penalties and cancel
the registration.
iv. Pass the judgement based on the report given
by DGAP. Before passing of any order, the
party at default must be provided with
opportunity of being heard.
RULE 134 – How NAA will take decision ?

 A Quorum of minimum ‘3’ members is required for forming any

decision .
 The decision is taken on majority basis with equality of voting.
 However, the chairperson holds casting vote i.e. if votes casted
in favour = Votes casted against , then the chairperson can cast
an extra vote.
RULE 135
After the order, the party under breach has to comply with the
order made by NAA and the amount will be recovered as per the
provisions of CGST Act, 2017 and relevant SGST/UTGST Acts.
Anti-Profiteering Committees in Other Countries

 As we know that many countries like Australia, Malaysia,

Singapore, Austria, New-Zealand, Russia, Canada have
already introduced GST.

 Australia stands first to

hold provisions on
Anti-Profiteering in the
year 2000.
 Method of Appeal for Screening Committee

 Any person who presumes that he has been deceived on the

grounds of Anti-profiteering may appeal to the relevant State
level Screening committee in the form ‘APAF-1’.
 The form can be downloaded from the website , “aptct.gov.in”.
 The form has to be duly filled stating the facts of the case.
 The portal contains the details of the members of Screening
committee specifying details of the member who acts as in-
charge for the concerned state.
 The Officer (member of Screening committee) will ensure the
validity of the form and may proceed further.
 Some Case-laws on Anti-Profiteering
Pawan Sharma Dept. stores (Plaintiff) V/S M/s. Sharma Trading
co. (Defendant)

Facts of the case: The Plaintiff had a Vaseline VTM 400ml on 26th sept. 2017 ,
the price of which was 213.63 Rs. Similar purchase was made by him on 15th
Nov 2017 Vaseline VTM 400mls 20(units) @ a price of 213.63 Rs. each. The
tax rate applicable earlier was 28%. However, the rate of tax was reduced to
18% 14th Nov 2017 via wide notification no. 41/2017.

Issues in the case: The Plaintiff had alleged that he had been defeated by the
provisions of sec 171 as the reduction in the rate of tax had
not passed to him by the way of reduction in prices
Pleadings made by the defendant
The Defendant argued that he has not contravened the provisions of sec
171 and explained to the parties that he has charged the GST @ 18% .

He explained that he has charged the GST @ 18% , which amounts to

31.1(172.77*18%) and fixed the MRP as such.
Proceedings by DGAP-
The DGAP held that though the GST charged by the defendant is 18% .
However , there was an increase in the base price of RS. 14.11 (172.77-
158.66) by which the defendant had an unfair gain . Which amounted to
contravention of sec 171.

Order of NAA-
The NAA ordered for the immediate
reduction in the prices and pass the benefit
of reduction in prices to his customers.
 M/s. Abel Space solutions LLP (Plaintiff) V/s M/s. Schindler India
Pvt. Ltd. (Defendant)

Facts of the case: The Plaintiff had purchased had purchased 2 lifts in
Dec’2016. The payment in case of 1st lift was fully made and it was installed in
Pre-GST regime but the 2nd lift was not ready to be installed. However, the
Plaintiff had paid an amount for 2nd lift as an advance on 28th June 2017.

 The installation of the lift was made on 27th July 2017 (Post GST regime).
Hence, two Tax invoices were issued for Pre & Post GST periods for advance
received and for installation made. As the installation was made in post GST
period , GST is also leviable on such supply of service excluding the amount
of tax already levied.
Issues in the case: The Plaintiff had alleged that he had been defeated by the
provisions of sec 171 as two Tax invoices were been issued . He felt that he has
been taxed twice and which was profiteered by the Defendant.

Pleadings made by the defendant -The Defendant argued that he has not
contravened the provisions of sec 171 and explained to the parties that the two
tax invoices were issued in compliance of both the laws.

Proceedings by DGAP-
Advances received are Taxable as per Rule 2A of Service Tax Rules
2006. Hence applicable rate of tax was charged earlier in Pre-GST period.
However, as the installation made (works contract) in post-GST period , GST is
also leviable excluding the amounts taxed earlier.
Order of NAA
Based on the reports given by the DGAP, the NAA held that the
defendant was not at default and not contravened the provisions of Sec
171. Hence, no action was reported against him.
Prepared and Presented By-
Pranay_S 