ANTI PROFITEERING (Syllabus: GS Paper 3 – Economy)

Context: Recently, the Delhi High Court upheld the constitutional validity of anti-profiteering provisions in the Goods and Services Tax (GST), despite more than 100 companies, including Hindustan Unilever, Patanjali, Jubilant Foodworks, and Phillips, filing petitions against them.

Anti-Profiteering under GST

• About: Any reduction in rate of GST tax on any supply of goods or services or the benefit of input tax credit should have been passed on to the recipient by way of commensurate reduction in prices.
• Illegal Profiteering Prohibition: Businesses are prohibited from withholding GST benefits, and engaging in illegal profiteering is against the law under anti-profiteering provisions.
• Regulation by Anti-Profiteering Rules: The Anti-Profiteering Rules, 2017, specified in Section 171 of the Central Goods and Services Tax Act, prevent entities from excessively profiting due to GST reductions.

National Anti-Profiteering Authority (NAA)

• About: NAA, established by the Government, identifies and takes action against taxable persons involved in illegal profiteering, determining methodologies for evaluation.
• Methodology Determination Power: NAA holds the authority to decide the methodology and procedure for assessing if a taxable person is engaging in illegal profiteering.
• Reporting to NAA: Interested parties can report suspected illegal profiteering to the local screening committee, which consists of state government officers.
• State Level Screening Committee: Formed by State Governments, examine reported matters and determine their merit regarding illegal profiteering.
• Recommendations to Standing Committee: If the screening committee finds merit, it forwards the matter with recommendations to the Standing Committee on Anti-Profiteering, comprising both state and central government officers.
• Referral for Investigation: If the Standing Committee gathers sufficient evidence of illegal profiteering, it refers the case to the Director General of Safeguards for a detailed investigation.