The Anti-Profiteering Conundrum

The historic indirect tax reform publicized as “One nation, one tax”, that was finally implemented on 1st July 2017, after a decade of intense debate has a provision called „Anti-profiteering clause‟ which is not only a deterrent to abnormal profit earning by a business entity but can also be a potential armament for consumerism. Section 171 of the CGST Act, 2017 says “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”. To monitor the situation arising out of the newly implemented law a National Anti-Profiteering Authority (NAA) under the Goods & Services Tax has been formed by the Central Government to inquire into any alleged contravention of the provisions of section 171 of the Central Goods & Services Tax Act, 2017 on its own motion or on receipt of information from any interested party as defined in the Rule 137 (c), person, body, association or on a reference having been made to it by the Central Government or the State Government. The idea of anti-profiteering provision has perhaps been borrowed from Australia although an Anti-Profiteering Act was passed by the West Bengal Government in 1958. But global experience suggests that anti-profiteering provisions can be effective only if there is a significant effort towards educating consumers and businesses as to their respective rights and obligations. The paper is based on various articles, research papers, government reports, newspapers, magazines, and various websites.