Anti – profiteering cases in GST

The anti-profiteering provisions under the GST law make it mandatory for suppliers of goods and services to pass on the benefit of any reduction in the rate of tax, or the benefit of input tax credit, to recipients by way of commensurate reduction in prices.

National Anti-Profiteering Authority was set up in November 2017 to check unfair profiteering activities by registered suppliers which was subsumed with CCI on December 1, 2022.

NAA issued penalty to over 100 companies, including Hindustan Unilever, Patanjali, Jubilant Foodworks, Reckitt Benckiser, Phillips, Gillette India, Procter and Gamble Home Products, and several others, who had moved the High Court against the anti-profiteering provisions. The case is pending at the Supreme Court after the High Court upheld the constitutional validity of the provision.

The law panel was of the view that transition to the GST regime is more or less stabilised. Moreover, the price reduction as means to pass benefits of any changes in GST may also be dependent on other market forces, so it is prudent to re-assess the anti-profiteering provision.

Ideally, pricing of goods and services should be determined by market forces and not controlled by legislation. Anti-profiteering provisions were necessary at the beginning of GST and had a tenure of five years, which has been extended. A sunset clause together with time lines for conclusion of existing disputes would be welcome as it removes uncertainty for businesses. 

Competition Commission of India CCI has disposed of just 27 cases since December 1, 2022. While about 140 cases are pending for adjudication. Besides, 184 matters are pending in various high courts where the order of previous authority were challenged.

Anti-profiteering laws were required, with a time limit of five years set. This was later extended.

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