GST officers to ensure companies pass on benefits to the consumers

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Weeks after goods and services tax (GST) rate reduction on over 100 items including consumer durables, the anti-profiteering watchdog has asked GST officers to keep a close tab on businesses to ensure benefits are passed on to end consumers. 


However, tax experts cautioned that it could lead to harassment of taxpayers at the ground level if not done in a judicious manner. 

The national anti-profiteering authority has asked the central board of indirect taxes and customs (CBIC), the nodal department for GST, to instruct commissioners to proactively carry out checks on companies and businesses for profiteering.


“The GST law authorises commissioners to file profiteering complaints if they find that rate cuts or availability of input tax have not resulted in commensurate reduction in prices. They must be proactive, especially after the July rate cuts, considering that consumer awareness in the country remains low,” said an NAA official. Of the over 100 profiteering complaints being examined at different levels, only 7-10 have been filed by commissioners of various states. Rates were cut on more than 100 items in July, including refrigerators, washing machines, small-screen television sets, perfumes, cosmetics, vacuum cleaners, and shavers. According to rule 128 of the Central GST Act, the standing committee under the anti-profiteering mechanism will examine complaints and evidence provided by an interested party or a commissioner.


“Even commissioners are authorised by law to file complaints. But only a handful of complaints have been filed by them,” pointed out an official.


Also, if an enquiry is with respect to a particular product, details about other products should ideally not be sought,” he said.


He added that for the industry, it means that necessary documentation and explanations should be kept ready, which demonstrates that GST benefits have been passed on to the consumers. According to the anti-profiteering rules under GST, “Benefits of input tax credit should have been passed on to the recipient by way of commensurate reduction in prices.”


The anti-profiteering mechanism is a three-stage process. There is a state-level screening committee for local complaints and a standing committee for national-level complaints. Then, there is investigation by the directorate general of Anti-Profiteering and finally a probe by NAA, the decision-making body.


“The lower number of complaints filed by Commissioners could be due to their preoccupation with the GST implementation. Since the majority of businesses should have complied with the requirements of Section 171, it is expected that they will be able to provide documentation demonstrating the same” M S Mani, Partner at Deloitte India.