GST landscape alarmed: Profiteering concerns pose key challenges for India Inc
anti-profiteering mechanism set up under the GST regime was an initial nudge aimed to ensure that companies passed on the 'benefit' — be it a fall in tax rates, or an enhanced input tax credit — arising from the GST roll-out to the end consumer by way of commensurate reduction in prices. The adjudicating authority, National Anti-Profiteering Authority (NAA) set up in 2017, had a two-year tenure. But this was extended twice, till November 2022, with the mantle passed on to CCI subsequently.
This extension contrasts with international precedents, such as Australia's approach, where similar provisions were enforced, following the introduction of GST, although with a sunset clause.
In late January, Delhi High Court, responding to many writ petitions filed by India Inc across sectors from FMCG to real estate, upheld the constitutional validity of the anti-profiteering provisions. It noted that the objective of Section 171 of Central GST Act, which mandates the passing on of GST benefits, is grounded in consumer welfare and equity principles.
That said, the court also clarified that there may be instances where the anti-profiteering mechanism is arbitrarily applied, either by enlarging the scope of proceedings beyond the jurisdiction or by failing to consider legitimate factors, such as cost escalations, which offset the reduction, or skewed input credit situations. In such cases, the remedy lies in setting aside orders on merits.
The immediate consequence is that India Inc, contending with complexities of a multiple
