“Anti- Profiteering Mechanism Under GST - Issues & Challenges”

FACULTY OF LAW
Tax Law- II

“Anti- Profiteering Mechanism Under GST -

Issues & Challenges”

SUBMITTED BY: - SUBMITTED TO: -

PRIYAM (s/f) 48 Rafique Khan

B.A. LL.B (HONS) PROF. (Tax Law II)

PAGE | 1 [ Tax Law - ii ]

 “Anti- Profiteering Mechanism Under GST - Issues & Challenges”

TABLE OF CONTENT

INTRODUCTION ...................................................................................................... 3

ANTI-PROFITEERING MECHANISM IN INDIA ...................................................... 4

HISTORY OF ANTI-PROFITEERING MECHANISM .............................................. 5

LEGISLATIVE ASPECT OF THE ANTI-PROFITEERING MEASURE ................... 6

ISSUES AND CHALLENGES .................................................................................. 7

I. CONSTITUTIONAL CHALLENGES ................................................................. 7

II. THE AMBIGUITY OVER „COMMENSURATE REDUCTION ........................... 9

III. DETERMINING MODALITIES TO PASS THE TAX RATE REDUCTION

BENEFITS.............................................................................................................. 10

IV. FACTORS INFLUENCING THE PRICE OF A PRODUCT ........................... 11

V. THE ISSUE OF DISCOUNTING ..................................................................... 12

CONCLUSION & SUGGESTIONS ........................................................................ 13

BIBLIOGRAPHY .................................................................................................... 14

PAGE | 2 [ Tax Law - ii ]

 “Anti- Profiteering Mechanism Under GST - Issues & Challenges”

INTRODUCTION

In the era 0f a gl0bal ec0n0my, cust0mer satisfacti0n is the f0cal p0int 0f every business.
This c0mes up with vari0us business strategies t0 pr0vide stimulating benefits t0 the
cust0mer, in 0rder t0 endure the stiff c0mpetiti0n in the market. 0ne such benefit pr0vided
t0 the cust0mer is mandated by the G0vernment under Secti0n 171 0f the Central
G00ds and Service Tax Act,2017, kn0wn as the anti -pr0fiteering measure which reads as
f0ll0ws: “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.” In 2017, Anti-profiteering was tried out as a new concept and was introduced
along with the Goods and Service Tax. The intention of the legislature was to make sure
that the benefit on account of effective reduction of GST rates and benefit of increased
availability of Input Tax Credit reaches the recipients and benefits are not pocketed by
manufactures.

At the time of inception of the GST regime in India, there was a significant increase in the
prices of the products and commodities because the suppliers were not passing the benefits
to the recipients during the time when VAT was implemented in the country, thereby
indulging in illegal profiteering. Anti-Profiteering provisions were incorporated under the
GST law to put a check on such illegal profiteering. GST saw a c0ntr0versial transiti0n
peri0d wherein new challenges and queries in the pr0visi0ns kn0cked the d00r 0f
auth0rities every single day. 0ne must n0t f0rget that there are still questi0ns which need t0
be answered with respect t0 the scheme and implementati0n 0f GST. At this juncture, the
pr0visi0n 0f anti-pr0fiteering c0mes int0 the picture.

Anti-pr0fiteering measure pr0vided under Secti0n 171 0f Central G00ds and Service Tax
Act, 2017 is the epit0me 0f the expressi0n- „C0nsumer is the King‟, as als0 referred during
the discussi0n 0n The G00ds and Services Tax Bill, 2014 in the L0wer H0use. The
pr0visi0n c0difies the d0ctrine 0f „unjust enrichment‟ by c0mpelling the traders and
suppliers t0 pass 0n the benefit accrued fr0m the reducti0n in rate 0f GST 0r fr0m the
Input Tax Credit availed. H0wever, the measure has its 0wn blemishes and there are still
s0me challenges in successful implementati0n 0f anti-pr0fiteering measures under GST.

PAGE | 3 [ Tax Law - ii ]

 “Anti- Profiteering Mechanism Under GST - Issues & Challenges”

ANTI-PROFITEERING MECHANISM IN INDIA

In 2017, Anti-profiteering was tried out as a new concept and was introduced along with
the Goods and Service Tax (hereinafter „GST‟). The intention of the legislature was to
make sure that the benefit on account of effective reduction of GST rates and benefit of
increased availability of Input Tax Credit (hereinafter „ITC‟) reaches the recipients and
benefits are not pocketed by manufactures. The changeover from an erstwhile indirect tax
system to a single tax regime is usually not received well by many countries. This can be
primarily due to the significant gaps between the intended objective of the legislation and
the conception of methods to remove practical roadblocks on the way. When the Goods
and Service Tax was introduced, the Indian economy had experienced inflationary
pressure. And to mitigate the inflationary effects post implementation of GST, the anti-
profiteering measure was introduced in India.

The GST Council made Anti-Profiteering Rules („APR‟) to operationalize the anti-
profiteering clause. And a three-stage anti profiteering administrative structure and
mechanism to address consumer complaints about profiteering was brought into effect. The
APR lays down the mechanism related to: (i) structure of the Authorities in the ant
profiteering scheme, (ii) mechanism for initiation of anti-profiteering proceedings, (iii)
Procedure to be followed by the National Anti-Profiteering Authority to pass the orders.1

1
„Legislative Changes to Strengthen the GST Regime First Report on Specific Research Issues‟ (Vidhi
Centre for Legal Policy, March 2019),
<https://vidhilegalpolicy.in/wpcontent/uploads/2019/05/LegislativechangestostrenghtentheGSTregimeFirstrep
ortoni dent ifiedissues.pdf> accessed 03 November 2021.

PAGE | 4 [ Tax Law - ii ]

 “Anti- Profiteering Mechanism Under GST - Issues & Challenges”

HISTORY OF ANTI-PROFITEERING MECHANISM

The n0ti0n 0f anti-pr0fiteering in India dates back t0 the year 1958 when the West Bengal
G0vernment enacted the West Bengal Anti pr0fiteering Act, 1958.2 The purp0se 0f the
enactment was t0 prevent pr0fiteering in certain g00ds and services 0f daily use and f0r the
same reas0n the legislati0n defined the term “pr0fiteering” as “sale by a dealer at a higher
price.” The c0ncept 0f anti-pr0fiteering is als0 well rec0gnized in the internati0nal
c0mmunity. Australia and Malaysia are am0ngst the few c0untries t0 implement the law
relating t0 anti-pr0fiteering in the wake of a shift in the indirect tax regime.3

The w0rd “pr0fiteering” has a negative c0nn0tati0n in the sense that it means an act
inv0lving excepti0nal circumstances t0 reap the undue pr0fits incurred.4 0ne must
understand that the legislature has made the act 0f pr0fiteering illegal, under Secti0n 171 0f
the CGST Act5, by making an extra0rdinary c0ncessi0n fr0m G0vernment‟s tax revenue t0
pr0vide the c0nsumers with the benefit 0f price reducti0n. Having said this, anti-
pr0fiteering clause has a reflecti0n 0f essential c0ntract law principle- the d0ctrine 0f
„unjust enrichment‟.6

It is based 0n the premise that undue enhancement 0f 0ne party (supplier) must n0t happens
at the c0st 0f an0ther party (c0nsumer).7 The c0ncept 0f anti-pr0fiteering can als0 be
related t0 the ide0l0gy 0f “S0cialism” as imbibed under the Preamble 0f the C0nstituti0n
0f India. Thereby, the pr0visi0n pr0m0tes the 0bjective 0f a welfare state and reduces
ec0n0mic inequalities as envisaged by the f0unding fathers 0f 0ur C0nstituti0n.

2
West Bengal Anti Profiteering Act, 1958.
3
Bela Mao & Parul Anand, „Anti-Profiteering and India‟s GST: A Double Edged Sword‟, (2018) 29 INT‟L
TAXREV.16.
4
Islamic Academy of Education v State of Karnataka AIR 2003 SC 3724.
5
Goods and Service Tax Act, 2017, s 171.
6
Pavithra R., „Undue Profit Taken Care of: Anti-Profiteering in GST‟, (2018) 5 GNLU L. REV. 201.
7
Pollock & Mulla, The Indian Contract & Specific Relief Acts (16th ed., 2019) 1052.

PAGE | 5 [ Tax Law - ii ]

 “Anti- Profiteering Mechanism Under GST - Issues & Challenges”

LEGISLATIVE ASPECT OF THE ANTI-PROFITEERING MEASURE

At the time of inception of the GST regime in India, there was a significant increase in the
prices of the products and commodities because the suppliers were not passing the benefits
to the recipients during the time when VAT was implemented in the country, thereby
indulging in illegal profiteering.8 Anti-Profiteering provisions were incorporated under the
GST law to put a check on such illegal profiteering.

Section 171 of the CGST Act provides for Anti-Profiteering measure which states 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 by way of commensurate reduction in prices.” In other
words, the benefit of ITC or reduction in GST tax rate is required to be transferred to the
recipients by reduction in the price of service provided or goods supplied.9 The anti-
profiteering measure is intended to protect the consumers against the excessive price
charged by the suppliers and thus it is rightly called as a “consumer protection measure”10.
In addition, it ensures that price of the goods or services are under control and do not lead
to inflation.

For this purpose, National Anti-Profiteering Authority (NAA) was constituted which
examines that “whether ITC 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 and/or
services supplied by him”. NAA has to determine “whether the reduction in the rate of tax
on any goods or services or the benefit of input tax credit has been passed on to the
recipient by way of commensurate reduction in prices or not.” Further, NAA has to
identify the registered persons who have not transferredthe GST rate reduction benefit and
is empowered to pass an order in the form of; (i) penalty (ii) cancellation of the
registration granted to a person; (iii) reduction in prices of impacted product; (iv) return an
amount to the recipient (v) in the case eligible recipient is not identifiable or does not claim
return of the higher amount, then the money is credited to Consumer Welfare Fund.

8
Comptroller and Auditor General of India, „Implementation of Value Added Tax (VAT) in India-Lessons for
Transition to GST: A Study Report‟ (June 2010), <https://cag.gov.in/sites/default/files/publication_files/SRA-
value-added-tax.pdf> accessed 06 November 2021.
9
The Anti-Profiteering Conundrum, (The Economic Law Practice, July 2018),
<https://elplaw.in/leadership/the- anti-profiteering-conundrum> accessed 06 November 2021.
10
M.A. Maniyar, Anti-Profiteering Measure under the GST Laws, Goods and Services Tax Manual, (Sathpal
Pulianied., 2017) 113.

PAGE | 6 [ Tax Law - ii ]

 “Anti- Profiteering Mechanism Under GST - Issues & Challenges”

ISSUES AND CHALLENGES

The Supreme Court in R.K. Garg v. Union of India,11 has rightly pointed out that: “Every
legislation particularly in economic matters is essentially empiric and it is based on
experimentation or what one may call trial and error method and therefore it cannot
provide for all possible situations or anticipate all possible abuses.”

The anti-profiteering measure has posed some challenges to the businessmen due to its
ambiguous nature pertaining to its implementation in the normal parlance. This part
of theproject discusses some of the challenges raised by the suppliers and for this purpose,
an attempt to critically analyse the orders passed by the National Anti-profiteering
Authority has been made.

I. CONSTITUTIONAL CHALLENGES
 VIOLATION OF ARTICLE 19(1)(G)
The issue regarding the constitutional validity of Section 171 of the CGST Act has been a
matter of debate as the suppliers have contended that it is violation of Article 19(1) (g).
This can be highlighted through catena of case laws, wherein the suppliers have argued
that anti-profiteering measure impairs the right of freedom of trade and business as
enshrined under the Indian Constitution.

The pr0p0nents have argued that anti-pr0fiteering pr0visi0n seems t0 bring back the system
0f “Inspect0r Raj” and theref0re, the NAA c0ntr0ls the price 0f the g00ds and services.12
The suppliers in many case laws have argued that the NAA has been emp0wered with the
p0wer 0f “price fixati0n” 0r “price regulati0n” in their hands which has n0t been envisaged
by any c0nstituti0nal pr0visi0n 0r the CGST Act.13 0ne can als0 substantiate this argument
by l00king int0 the principle 0f ec0n0mics that the prices 0f a pr0duct are fixed 0r
regulated by market f0rces and any attempt t0 regulate the mechanism 0f price fixing is
vi0lative 0f freed0m 0f trade and c0mmerce.14

11
R.K. Garg v Union of India AIR 1981 SC 2138.
12
Adithya Reddy, „The anti-profiteering concept is flawed‟, (Businessline, February 2018),
<https://www.thehindubusinessline.com/opinion/the-anti-profitering-concept-isflawed/article22858653.ece>
accessed 07 November 2021.
13
Neeru Varshney v Lifestyle Int’l Pvt. Ltd. NAA Case No. 8/2018; Ravi Charaya v Hardcastle Restaurants
NAACase No. 14/2018.
14
Indraprastha Gas Ltd. v Petroleum & Natural Gas Corp. (2012) ELR (DELHI) 1013

PAGE | 7 [ Tax Law - ii ]

 “Anti- Profiteering Mechanism Under GST - Issues & Challenges”

H0wever, it cann0t be said that anti-pr0fiteering measure is vi0lative 0f Article 19(1) (g)
since such an argument remains untenable in law. The NAA in vari0us cases15 has
rejected theargument against the c0nstituti0nal validity 0f Secti0n 171. The NAA has time
and again negated the argument that it plays the r0le 0f a “price regulat0r”, by relying 0n
the literal interpretati0n 0f Secti0n 171 0f CGST Act. It has als0 been made clear by the
rati0nale purp0rted by the NAA that it is 0nly c0ncerned with tw0 primary things, first, the
benefits 0f reducti0n in rate 0f tax, and sec0nd, passing 0n the input tax credit t0 the end
c0nsumers, and hence it is n0t inv0lved in the pr0cess 0f price fixati0n.16

One must understand that the anti-pr0fiteering measure is hit by the principle 0f ex pr0pri0
vig0r which means t0 “0perate by its 0wn f0rce”.17 Applying this principle t0 Secti0n 171
0f the CGST Act, 0ne may 0bserve that the secti0n 0nly gets triggered 0n happening 0f
certain c0nditi0n, and in the absence 0f such c0nditi0n, the NAA cann0t interfere in the
w0rking 0f the business. An0ther fav0urable argument f0r the anti-pr0fiteering pr0visi0n is
that it c0mes within the ambit 0f reas0nable restricti0ns imp0sed by the State in the interest
0f the general public.

Thus, it is pertinent t0 understand that the anti-pr0fiteering pr0visi0n has been inserted t0
pr0tect the interest 0f the c0nsumers fr0m the unscrupul0us price levied 0n the g00ds and
services and thus c0mes within the ambit 0f reas0nable restricti0ns as pr0vided under
Article 19(6). The interest 0f the suppliers must be taken int0 c0nsiderati0n, but it stands at
an l0wer pedestal when c0mpared with interest 0f the c0nsumers.18

15
Ravi Charaya v Hardcastle Restaurants NAA Case No. 14/2018; Kiran Chimirala v Jubilant Food
Work Ltd.NAA Case No. 04/19.
16
Neeru Varshney v Lifestyle Int’l Pvt. Ltd. NAA Case No. 8/2018; Director General of Anti-Profiteering v
Johnson & Johnson Pvt. Ltd. NAA Case No. 77/2019.
17
Gautam Khattar & Nikhil Mediratta, „The Enactment of Anti-Profiteering Clauses sees Compliance gone
Ashtray‟, (2017) 64 GST-MAG. 56, 58.
18
Commercial & Ahmedabad Mill v Union of India AIR 1993 Guj 30.

PAGE | 8 [ Tax Law - ii ]

 “Anti- Profiteering Mechanism Under GST - Issues & Challenges”

II. THE AMBIGUITY OVER „COMMENSURATE REDUCTION

Section 171 (1) of the CGST Act provides: “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”. This provision casts a responsibility on the
traders to pass on the benefit of GST to the recipient. However, the question that remains
unanswered is the approach to commute the „commensurate reduction‟.19 The apparent lack
of a clear guideline and method to calculate „commensurate reduction‟ was considered
insubstantial by the NAA on account of it being simply mathematical.20 A possible
explanation that germinates from the argument given by the NAA can be related to the
meaning of „profiteering‟. Since neither profiteering nor commensurate reduction is
defined in the legislation, the meaning has to be interpreted in a manner that facilitates the
mechanism.

Profiteering is defined as “the willful action of not passing on the benefits of any reduction
in the rate of tax or the benefit of input tax credit to the recipients by way of
commensurate reduction in prices.”21 Hence, „commensurate reduction‟ has to be
interpreted in a way that counters profiteering and not the profits per se. And the
manufacturers/ traders are not at the liberty to choose the products they will pass the
benefit on.22 Furthermore, this provision has a one- dimensional approach while
considering the reasons for increase in the prices. It does not take into account the changes
in the prices due to the increase in the costs and appreciation in the commercial factors in
the market.23 The NAA had previously absolved the liability of the traders/ manufacturers
from the anti-profiteering charges levelled against them, due to the increase in the price of
raw materials. These rather contradicting approaches that appear in the NAA orders throw
the trader into confusion.

19
Pawan Sharma v M/s Sharma Trading Company 6/2018 NAA 2018.
20
Ravi Charaya v Hardcastle Restaurants Pvt. Ltd 14/2018 NAA 2018.
21
Goods and Services Tax Council, „FAQ on Anti-Profiteering Provisions‟, (Central Board of Indirect Taxes
and Customs, 2018), <http://www.cbic.gov.in/resources//htdocs-cbec/gst/Anti-prof-FAQs-FINAL-
FAQs.pdf> accessed 08 November 2021.
22
Ankur Jain v Kunj Lub Marketing Pvt. Ltd. [TS-546-NAA-2018-NT].
23
Sukhbir Rohilla v Pyramid Infratech TS-455-NAA-2018-NT.

PAGE | 9 [ Tax Law - ii ]

 “Anti- Profiteering Mechanism Under GST - Issues & Challenges”

III. DETERMINING MODALITIES TO PASS THE TAX RATE REDUCTION

BENEFITS

Rule 126 of the CGST Rules states that “the NAA may determine the methodology and
procedure for determination as to whether the reduction in the rate of tax on the supply of
goods or 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”. However, no
parameters have been prescribed yet. Section 171 of CGST Act mandates a supplier to pass
the benefit of GST tax reduction and ITC to the recipients. The Section does not provide
the supplier of goods and services any means of passing on the benefits of tax rates
reduction or the benefit of ITC other than the absolute reduction in the prices of the goods
or services.24 The section enumerates a “commensurate reduction in prices of goods or
services” as a way to pass on the GST reduction & ITC benefits to recipients. Yet, no
guidance has emerged from the government on the connotation of „commensurate
reduction‟ and its applicability in various scenarios.

Under the Anti-Profiteering provisions, the flexibility of a suo moto decision concerning
other modes of passing the benefits is not available to suppliers. However, several
manufactures sought to adopt the method of grammage increase/ increase the quantity of
product keeping the same price to pass on the GST rate reduction benefits to the ultimate
recipients while others have sought to keep the price constant on certain pack size and
reduce the prices in other pack sizes. Notably, such practices are adopted on account of the
problems in changing the packaging and price of the products. However, there still exists
confusion as to whether these practices meet the Anti-Profiteering norms as the Anti-
Profiteering provisions are silent on the method of grammage increase.

24
Sanjeev Agarwal, „Anti-Profiteering in GST: Assertions from Hindustan Unilever Case‟, (Tax Management
India, April 2019), <https://www.taxmanagementindia.com/visitor/detail_article.asp?ArticleID=8462> accessed
10 November 2021.

PAGE | 10 [ Tax Law - ii ]

 “Anti- Profiteering Mechanism Under GST - Issues & Challenges”

IV.FACTORS INFLUENCING THE PRICE OF A PRODUCT

The price 0f a pr0duct is dependent 0n vari0us fact0rs such as c0st 0f raw material,
demand and supply, fixed c0st, variable c0st, pr0fit margin, etc. In such a situati0n, it has
been argued that anti-pr0fiteering measure d0es n0t take int0 c0nsiderati0n the rise
in price due t0 0ther factors.25

It is pertinent to highlight the case of Ravi Charaya v. Hardcastle Restaurant Pvt. Ltd.,26
wherein the Respondent had argued that the Director General of Anti-Profiteering
(hereinafter “DGAP”) “has failed to consider the increase in the cost of inputs such as
electricity, fuel, variable rent and royalty. The NAA did not accept the contention of the
Respondent on the ground that the duty of the DGAP was limited to determine whether the
benefit mandated under Section 171 has been passed on and the argument that he should
take note of such other costs was held unsustainable.”

The “question that arises in the present context is whether Section 171 of the CGST Act
contemplates the notion of other factors as a decisive factor to test the case of profiteering.
A view may be taken that if there exists a correlation between increase in the price of a
product and the increase in input cost, then the supplier must be given a leeway and
accordingly he must be able fix the price. If such other considerations are not taken into
account, it would be an infringement of Article 19(1) (g), as the supplier in order to meet
the mandate of Section 171 has to reduce his profit margin.

25
Dinesh Kanabar & Niraj Bagri, „Indirect Tax: India’, (2017) 69 Tax Exec. 49, 52.
26
Ravi Charaya v Hardcastle Restaurant NAA Case No. 14/2018

PAGE | 11 [ Tax Law - ii ]

 “Anti- Profiteering Mechanism Under GST - Issues & Challenges”

V. THE ISSUE OF DISCOUNTING

A businessman may c0me up with vari0us ways t0 attract the c0nsumers f0r purchasing his
pr0duct. 0ne such traditi0nal way 0f drawing the attenti0n 0f c0nsumers is 0ffering
„disc0unts‟. This secti0n c0ntemplates a situati0n where in the supplier may inflate the
price 0f the pr0duct and thereby 0ffers a disc0unt which might make the price equivalent t0
the price calculated after tax reducti0n.27 This issue was discussed in the case 0f Direct0r
General 0f Anti Pr0fiteering v. M/s Raj & C0.,28 wherein the supplier was selling the
pr0duct at Rs. 31.25/- (inclusive 0f 28% GST). After the reducti0n in tax rate t0 18%, the
price 0f the pr0duct remained unchanged, that is, Rs. 31.25 (inclusive 0f 18% GST). The
allegati0n 0f pr0fiteering was levelled against the supplier as he was vi0lating Secti0n 171
0f the CGST Act. The supplier in the present case c0ntended that it had passed 0n the
benefit t0 the c0nsumer by way 0f giving 12.5% disc0unt. The NAA did n0t accept this
c0ntenti0n since there was a prime facie case 0f pr0fiteering and even after taking int0
c0nsiderati0n the scheme 0f disc0unt, the base price was increased by Rs. 2.07/-.

Such a practice must be restricted since disc0unt means “a deducti0n fr0m an 0riginal price
0r debt”.29 By n0 stretch 0f imaginati0n, the inflated price can be c0nsidered as an 0riginal
price 0f the pr0duct. Als0, 0ne 0f the 0bjectives 0f intr0ducing anti-pr0fiteering measure
was t0 c0ntr0l the inflati0n caused due t0 the paradigm shift in the indirect tax regime. By
ad0pting such pricing scheme, the purp0se 0f the inserti0n 0f anti-pr0fiteering clause is
diluted as there exists a n0ti0n in the mind 0f the c0nsumers that the definite value 0f the
pr0duct is what has been claimed by the seller (i.e. inflated price) and the disc0unt is
0ffered fr0m the supplier‟s pr0fit margin. This will result int0 a situati0n where the
inflated value 0f the g00ds will be c0nsidered as the actual 0r real value which is n0t
acceptable.

27
Thomas Lambert, „Evaluating Bundled Discounts‟, (2005) 89 MINN. L. REV. 1688, 1753.
28
Director Gen. of Anti-Profiteering v Raj & Co. NAA Case No. 25/2018.
29
Discount, Mitra’s Legal & Commercial Dictionary (6th ed. 2006).

PAGE | 12 [ Tax Law - ii ]

 “Anti- Profiteering Mechanism Under GST - Issues & Challenges”

CONCLUSION & SUGGESTIONS

The “concept of anti-profiteering draws a distinction between profit and excessive profit,
wherein the latter is considered to be illegal. This distinction is essential and the provision
of anti-profiteering was enacted with a just intent. However, the implementation of the law,
lack of detailed provisions and the inability of the Legislature to foresee the consequences
are the factors which take away the icing from the cake. Due regard should be given to the
orders of NAA and their contribution in dealing with the issues of customers/sellers and
thereby providing some clarity to the working of anti-profiteering measure.”

Certain suggested practices can help mitigate potential risk due to the lack of certainty on
the exact methodology for determining “commensurate reduction in prices” for passing the
GST Tax Reduction Benefits to consumers:

 The passing of GST rate reduction benefit to recipients by way of grammage

benefit or increase in weight of impacted product should be allowed as a
methodology and procedure under Rule 126 of CGST Rules, 2017.

 The relevant authorities should be tasked to frame guidelines for what

constituted commensurate reduction, conducting surveys analysing the effects on
prices, and consulting businesses about understanding price changes.

 The benefits of ITC or reduction in rate of tax should be closely computed and
monitored, to ensure “commensurate reduction in prices”.

 The CGST Act does not provide any time frame within which such
“commensurate reduction in prices” is to take place and in the absence of any
such time frame, a “reasonable time period” should be given to a supplier to
bring about the necessary reduction in prices in view of the GST rates reduction.

Any GST rate reduction by the Government should always be seen as a sacrifice made by
the Government from its own kitty of revenue, in the interest of the consumers in particular
and society at large. The emphasis should be laid on non-retention of benefit of reduction
of tax rates by the suppliers and its due passage to the recipient in compliance with the
Section 171 of CGST Act, 2017.

PAGE | 13 [ Tax Law - ii ]

 “Anti- Profiteering Mechanism Under GST - Issues & Challenges”

BIBLIOGRAPHY

JOURNALS/ARTICLES

 Mao Bela & Anand Parul, „Anti-Profiteering and India‟s GST: A Double Edged
Sword‟,(2018) 29 INT‟L TAX REV. 16

 Kanabar Dinesh & Bagri Niraj, „Indirect Tax: India‟, (2017) 69 Tax Exec. 49, 52
 Khattar Gautam & Mediratta Nikhil, „The Enactment of Anti-Profiteering
Clauses seesCompliance gone Ashtray‟, (2017) 64 GST-MAG. 56, 58

 Bansal Nitin, „Anti Profiteering under GST – Challenges and Issues‟, [2018]
100Taxmann.com 368 (Article).

 R. Pavithra, „Undue Profit Taken Care of: Anti-Profiteering in GST‟, (2018) 5

GNLU L.REV. 201

 Verma Pulkit & Sachdeva Mehak, „Desisting the unjust-Anti profiteering‟,

[2019] 106Taxmann.com 338 (Article)

 Aravindh S. Ganesh & Krishnan Shobhana, „Anti-profiteering under GST: An

interminable inquest?‟, 90 TAXMANN 257 (2018).

 Nair Sthanu, „Price Monitoring and Control under GST‟, (2017) 52 Economic &
PoliticalWeekly 1, 4- 5

 Lambert Thomas, „Evaluating Bundled Discounts‟, (2005) 89 MINN. L.

REV. 1688,1753.

ONLINE DATABASES

 Manupatra
 Taxmann
 SCCOnline
 JSTOR
 HeinOnline

PAGE | 14 [ Tax Law - ii ]