THE GST ANTI-PROFITEERING CLAUSE: CURRENT SCENARIO AND WAY FORWARD
India has witnessed significant changes in its taxation regime- the major transformation being the implementation of the Central Goods and Services Tax Act (CGST), 2017. To reap the benefits arising out of the reduced taxes, an anti-profiteering clause was introduced under Section 171 of the CGST Act, 2017. By virtue of this clause, a system of checks and balances has been imposed on the producers. This ensures that the benefits reach the consumers and the surplus does not lead to extra profits for the suppliers. Further, this aspect leads to an interplay between the GST regime and the Anti-trust law that aims at reducing the prices for consumers. This is because GST is expected to eventually bring down prices, but this would not be possible unless there is a check on the activities of the firms. Most businesses would enjoy unjust enrichment in terms of profit arising out of implementation of GST in India and not pass the benefit to the consumers. Though the anti-profiteering measure has been incorporated with the sacred intention of benefiting a customer and monitoring the inflationary impact of GST, it is likely that this may end into an “inspector raj” and unwarranted inspection of business policies.
The National Anti-Profiteering Authority has not done anything significant to set up any kind of deterrence. Conversely, it is argued that its very presence is inimical to ease of doing business and a potential source of arbitrariness and harassment of companies. In such a scenario, it is best to rely on the mechanisms of the already established Competition Commission.