This document explores Chapter 15 of the Central Goods and Services Tax (CGST) Rules, focusing on anti-profiteering measures. The information provided is derived from the official CGST Rules document (source).

Constitution of the Authority

The anti-profiteering Authority comprises a Chairman, who must hold or have held a position equivalent to a Secretary to the Government of India, and four Technical Members. These members, nominated by the Council, must be current or former Commissioners of State or Central Tax, or have held an equivalent post under previous tax laws.

Constitution of the Standing Committee and Screening Committees

The Council has the discretion to form a Standing Committee for Anti-profiteering, composed of nominated Central and State Government officers. Additionally, each State Government is required to establish a State-level Screening Committee. These committees will include one officer from the State Government, nominated by the Commissioner, and one officer from the Central Government, nominated by the Chief Commissioner.

The Central Government, acting on the recommendations of a Council-appointed Selection Committee, is responsible for appointing the Chairman and other Members of the Authority. The Chairman receives a fixed monthly salary of INR 2,25,000, along with other benefits applicable to Central Government officers of equivalent pay scale. For retired officers appointed as Chairman, the monthly salary is INR 2,25,000 minus their pension amount.

Technical Members receive a fixed monthly salary of INR 2,05,400 and are entitled to allowances similar to Group ‘A’ officers in the Government of India. If a retired officer is appointed as a Technical Member, their monthly salary will be INR 2,05,400, reduced by their pension.

Both the Chairman and Technical Members serve a term of two years from their appointment date or until they reach 65 years of age, whichever occurs first. They are eligible for reappointment, provided they have not already reached 62 years of age at the time of initial selection.

Secretary to the Authority

The Additional Director General of Safeguards, operating under the Board, serves as the Secretary for the Authority.

Power to Determine the Methodology and Procedure

The Authority is empowered to establish the methods and procedures to ascertain if a registered person has effectively transferred the benefit of tax rate reductions on goods or services, or the advantage of input tax credit, to the recipient through proportional price decreases.

Duties of the Authority

The Authority holds several key responsibilities:

• Determining if tax rate reductions on goods or services, or input tax credit benefits, have been adequately passed on to consumers via corresponding price reductions.
• Identifying registered individuals or entities that have failed to transfer these benefits to recipients through proportional price adjustments.
• Issuing orders that may include:
  • Mandating price reductions.
  • Directing the return of the unpassed amount to the recipient, along with 18% interest from the date the higher amount was collected until the amount is returned or recovered. If the eligible recipient cannot claim the amount or is unidentifiable, the sum must be deposited into the Fund mentioned in Section 57.
  • Imposing penalties as defined by the Act.
  • Cancelling the registration under the Act.

Examination of Application by the Standing Committee and Screening Committee

Within two months of receiving a written application from an interested party, a Commissioner, or any other individual, the Standing Committee must assess the provided evidence. This evaluation aims to establish if there is prima facie evidence supporting the claim that a supplier has not passed on the benefits of tax rate reductions or input tax credit to the recipient through appropriate price decreases.

Applications concerning local issues, submitted by interested parties, are initially reviewed by the State-level Screening Committee. If this committee finds that a supplier has violated the provisions of Section 171, it will forward the application, along with its recommendations, to the Standing Committee for further necessary action.

Initiation and Conduct of Proceedings

If the Standing Committee concludes that there is prima facie evidence indicating a supplier has not conveyed the benefits of tax rate reductions or input tax credit to consumers through proportional price cuts, it will escalate the matter to the Director General of Safeguards for a thorough investigation.

The Director General of Safeguards is responsible for conducting investigations and gathering the necessary evidence to ascertain if such benefits have indeed been passed on to the recipient via reduced prices. Before commencing an investigation, the Director General must issue a notice to all interested parties. This notice must include details such as a description of the goods or services under scrutiny, a summary of the factual allegations, and the deadline for interested parties and others with relevant information to submit their responses.

The Director General of Safeguards also has the authority to issue notices to other individuals deemed necessary for a comprehensive inquiry. Evidence submitted by one interested party must be shared with other participating interested parties. The investigation must be concluded within three months of receiving the reference from the Standing Committee. An extension of up to an additional three months may be granted by the Standing Committee, provided reasons are documented. Upon completion, the Director General will submit a report of findings and all pertinent records to the Authority.

Confidentiality of Information

Despite certain provisions in sub-rules (3) and (5) of rule 129 and sub-rule (2) of rule 133, information submitted confidentially will be handled in accordance with Section 11 of the Right to Information Act, 2005, regarding its disclosure.

The Director General of Safeguards can request parties providing confidential information to furnish a non-confidential summary. If the party believes summarization is not feasible, they must provide the Director General with a statement explaining why.

Cooperation With Other Agencies or Statutory Authorities

The Director General of Safeguards has the discretion to consult with other agencies or statutory authorities when performing official duties, if deemed appropriate.

Power to Summon Persons to Give Evidence and Produce Documents

The Director General of Safeguards, or an authorized officer, is considered the appropriate authority to summon individuals for evidence or document production under Section 70. During an inquiry, they possess powers similar to a civil court under the Code of Civil Procedure, 1908.

Any inquiry conducted under sub-rule (1) is classified as a judicial proceeding, as per Sections 193 and 228 of the Indian Penal Code (1860).

Order of the Authority

Within three months of receiving the Director General of Safeguards' report, the Authority must determine if a registered person has transferred the benefits of tax rate reductions or input tax credit to the recipient through proportional price decreases.

Interested parties will be given an opportunity to be heard by the Authority if they submit a written request. Should the Authority conclude that a registered person failed to pass on these benefits, it can issue orders including:

• Enforcing price reductions.
• Mandating the return of the unpassed amount to the recipient, along with 18% interest from the date of higher amount collection until its return or recovery. If the eligible recipient is unknown or does not claim the amount, it must be deposited into the fund specified under Section 57.
• Levying penalties as stipulated by the Act.
• Revoking the registration under the Act.

Decision to be Taken by the Majority

In instances where Authority Members hold differing views on an issue, the resolution will be determined by a majority vote.

Compliance by the Registered Person

Registered persons must promptly adhere to any order issued by the Authority under these regulations. Failure to comply will lead to recovery actions for the outstanding amount, as per the relevant provisions of the Integrated Goods and Services Tax Act, Central Goods and Services Tax Act, Union Territory Goods and Services Tax Act, or State Goods and Services Tax Act.

Monitoring of the Order

The Authority reserves the right to instruct any Central, State, or Union Territory tax authority to oversee the implementation of its issued orders.

Tenure of Authority

The Authority's existence is slated to conclude two years from the Chairman's assumption of office, unless the Council suggests an alternative arrangement.

Explanation of Terms

• Authority: Refers to the National Anti-profiteering Authority, established under Rule 122.
• Committee: Designates the Standing Committee on Anti-profiteering, formed by the Council as per sub-rule (1) of Rule 123.
• Interested Party: Encompasses both the suppliers and recipients of goods or services involved in the ongoing proceedings.
• Screening Committee: Denotes the State-level Screening Committee, constituted in accordance with sub-rule (2) of Rule 123.