Anti-profiteering, GST, Safegauards

1. CA Aarchana Yadav
16.07.2017

2.  GST is expected to simplify indirect tax collection, prevent
revenue leakages and help realize the goal of one India – one
Market.
 A laudable fiscal and revenue reform measure, is slated to go
on stream in July this year.
 However, like all major reforms, businesses require legal
handholding in order to negotiate the initial bottlenecks and
incongruities involved in the implementation of GST.
 GST is expected to simplify indirect tax collection, prevent
revenue leakages and help realize the goal of one India – one
Market.
 A laudable fiscal and revenue reform measure, is slated to go
on stream in July this year.
 However, like all major reforms, businesses require legal
handholding in order to negotiate the initial bottlenecks and
incongruities involved in the implementation of GST.

3.  Profit “pecuniary gain resulting from the employment of capital in any
transaction”
“the monetary surplus left to a producer or employer after deducting
wages, rent, cost of raw materials, etc.”
 Profiteer
“a person who seeks or exacts exorbitant profits, especially through
the sale of scarce or rationed goods”
 Profit “pecuniary gain resulting from the employment of capital in any
transaction”
“the monetary surplus left to a producer or employer after deducting
wages, rent, cost of raw materials, etc.”
 Profiteer
“a person who seeks or exacts exorbitant profits, especially through
the sale of scarce or rationed goods”
Weapon??
Draconian??
Socialistic??
Source of Harassment??

4.  Wherever GST has been implemented, there has been an
initial rise in prices and this has lasted anywhere from six
months to just short of two years.
 Profit is fine, profiteering is not. Don’t let someone
profiteer at your expense.
 Anti-profiteering is a transitional provision and will be a
short-lived concept
 Introduced to protect the interest of consumers and at the
same time not harming the industry interest.
 Wherever GST has been implemented, there has been an
initial rise in prices and this has lasted anywhere from six
months to just short of two years.
 Profit is fine, profiteering is not. Don’t let someone
profiteer at your expense.
 Anti-profiteering is a transitional provision and will be a
short-lived concept
 Introduced to protect the interest of consumers and at the
same time not harming the industry interest.

5.  Set up Honest pricing policy
 Examine whether taxes set off has been appropriately
matched with price reduction
 Observe Inflationary trends during initial stages of GST
& Control its long term impacts
 To deter Oligopolies
Oligopoly is a market structure in which a small number of firms
has the large majority of market share.
An oligopoly is similar to a monopoly, except that rather than
one firm, two or more firms dominate the market.
 Set up Honest pricing policy
 Examine whether taxes set off has been appropriately
matched with price reduction
 Observe Inflationary trends during initial stages of GST
& Control its long term impacts
 To deter Oligopolies
Oligopoly is a market structure in which a small number of firms
has the large majority of market share.
An oligopoly is similar to a monopoly, except that rather than
one firm, two or more firms dominate the market.

7.  NAA (National Anti – profiteering Authority)
 Apex Body - Will cease within 2 years
 Will have powers to impose penalty and even cancel
the registration of companies
 Council to nominate
a Chairman who holds or has held a post equivalent in rank to a
Secretary to the Government of India; and
(b) four Technical Members who are or have been
Commissioners of State tax or central tax or have held an
equivalent post under the existing law
 NAA (National Anti – profiteering Authority)
 Apex Body - Will cease within 2 years
 Will have powers to impose penalty and even cancel
the registration of companies
 Council to nominate
a Chairman who holds or has held a post equivalent in rank to a
Secretary to the Government of India; and
(b) four Technical Members who are or have been
Commissioners of State tax or central tax or have held an
equivalent post under the existing law

8.  Standing Committee
 Council may constitute
consist of such officers of the State Government and Central
Government as may be nominated by it.
 Screening Committee
In each State by the State Governments
one officer of the State Government, to be nominated by the
Commissioner
one officer of the Central Government, to be nominated by the
Chief
Commissioner.
 Standing Committee
 Council may constitute
consist of such officers of the State Government and Central
Government as may be nominated by it.
 Screening Committee
In each State by the State Governments
one officer of the State Government, to be nominated by the
Commissioner
one officer of the Central Government, to be nominated by the
Chief
Commissioner.

10.  To Determine – whether benefit passed on or not
 identify the registered person who has not passed on the benefit
 To order
reduction in prices;
return to the recipient – amount -interest at the rate of eighteen
per cent – from date of collection of higher amount –till the date
of return
in case the eligible person does not claim return of the amount
or is not identifiable - depositing the Consumer Welfare Fund
(Section 57)
imposition of penalty as specified in the Act; and
cancellation of registration under the Act.
 To Determine – whether benefit passed on or not
 identify the registered person who has not passed on the benefit
 To order
reduction in prices;
return to the recipient – amount -interest at the rate of eighteen
per cent – from date of collection of higher amount –till the date
of return
in case the eligible person does not claim return of the amount
or is not identifiable - depositing the Consumer Welfare Fund
(Section 57)
imposition of penalty as specified in the Act; and
cancellation of registration under the Act.

12.  On Written Application
 Examination of application for accuracy and adequacy of
evidence along with application
 Within Two months of receipt of application
 From an interested party or Commissioner or any other
person
 Issues of local nature – first examined by State level
Screening Committee – then forward to Standing Committee
for further action.
 Matter referred to Director General of Safeguards (DGoS)
 On Written Application
 Examination of application for accuracy and adequacy of
evidence along with application
 Within Two months of receipt of application
 From an interested party or Commissioner or any other
person
 Issues of local nature – first examined by State level
Screening Committee – then forward to Standing Committee
for further action.
 Matter referred to Director General of Safeguards (DGoS)

13.  DGoS is an authourity set up under CBEC
 Safeguards Nation’s interest against increased imports any
commodity which causes or threaten to cuase serious
injury to domestic producers
 Spirit of Articles XIX of GATT 1994
 DGoS will issue a notice to interested parties by providing
Description of goods (which inquiry initiated)
Summary of SOF
Time limit to interested parties & persons ,who may have
information related to the proceedings for furnishing the reply
 DGoS is an authourity set up under CBEC
 Safeguards Nation’s interest against increased imports any
commodity which causes or threaten to cuase serious
injury to domestic producers
 Spirit of Articles XIX of GATT 1994
 DGoS will issue a notice to interested parties by providing
Description of goods (which inquiry initiated)
Summary of SOF
Time limit to interested parties & persons ,who may have
information related to the proceedings for furnishing the reply

14.  Any other party as deemed fit for fair enquiry
 Make available the evidence presented to it by one
interested party to the other interested parties,
participating in the proceedings.
 DGoS conduct enquiry – collected evidences
 Complete Investigation within 3 months (extended by 3
more months ) furnish the authority its report.
 DGoS may issue summons
 Enquiry powers under CPC , 1908
 Deemed as judicial proceedings under IPC
 Any other party as deemed fit for fair enquiry
 Make available the evidence presented to it by one
interested party to the other interested parties,
participating in the proceedings.
 DGoS conduct enquiry – collected evidences
 Complete Investigation within 3 months (extended by 3
more months ) furnish the authority its report.
 DGoS may issue summons
 Enquiry powers under CPC , 1908
 Deemed as judicial proceedings under IPC

15. Australia • Speech of Parliament Secretary dated October 20, 1999
“As we are all aware, the Commonwealth Parliament has passed a new tax system that will
affect prices consumers will pay for goods and services.
Under this new system, commencing 1 July, wholesale sales tax will be abolished and replaced
by a goods and services tax of 10 per cent. Although I and most Australians support the
introduction of the goods and services tax and almost all businesses will be upfront and
honest and not use the new tax system as an opportunity to exploit consumers, the State
and Commonwealth Governments appreciate that a minority of businesses might - …. .
We must be careful not to suggest that everybody will do this. However, some people may notthat everybody will do this. However, some people may not
fully understand the system and some people may not be as upfront as they should be.fully understand the system and some people may not be as upfront as they should be.
We must be proactive to protect consumers, especially in the light of the many changes that
will occur from 1 July. In conjunction with the Commonwealth Government's legislation, the
State Government has drafted this legislation to ensure that price exploitation does not occur.
I commend the Federal and the State Governments for this proactive stance.
Australia • Speech of Parliament Secretary dated October 20, 1999
“As we are all aware, the Commonwealth Parliament has passed a new tax system that will
affect prices consumers will pay for goods and services.
Under this new system, commencing 1 July, wholesale sales tax will be abolished and replaced
by a goods and services tax of 10 per cent. Although I and most Australians support the
introduction of the goods and services tax and almost all businesses will be upfront and
honest and not use the new tax system as an opportunity to exploit consumers, the State
and Commonwealth Governments appreciate that a minority of businesses might - …. .
We must be careful not to suggest that everybody will do this. However, some people may notthat everybody will do this. However, some people may not
fully understand the system and some people may not be as upfront as they should be.fully understand the system and some people may not be as upfront as they should be.
We must be proactive to protect consumers, especially in the light of the many changes that
will occur from 1 July. In conjunction with the Commonwealth Government's legislation, the
State Government has drafted this legislation to ensure that price exploitation does not occur.
I commend the Federal and the State Governments for this proactive stance.

16.  Australian Competition & Consumer Commission (ACCC) •
 Robust Anti-profiteering laws from 1999 to 2002
 Initially Conducted 3k formal investigations till December 2000
 Based on allegations of price exploitation and misleading and
deceptive conduct in relation to post
 In December 2001, 6500 matters were additional investigated
 . The reasons identified were:
(i) Over-charging,
(2) Illegal levy,
(3) Businesses could not adequately validate and account for the
differential amount between prices under the erstwhile and new regime
 Australian Competition & Consumer Commission (ACCC) •
 Robust Anti-profiteering laws from 1999 to 2002
 Initially Conducted 3k formal investigations till December 2000
 Based on allegations of price exploitation and misleading and
deceptive conduct in relation to post
 In December 2001, 6500 matters were additional investigated
 . The reasons identified were:
(i) Over-charging,
(2) Illegal levy,
(3) Businesses could not adequately validate and account for the
differential amount between prices under the erstwhile and new regime

17.  The Price Control Anti-Profiteering Act, 2011 was made applicable to GST
regime in Malaysia, on introduction of GST from April 1, 2015
 Any person who, in the course of trade or business, profiteers in selling
or offering to sell or supplying or offering to supply any goods or
services commits an offence
 Initially made applicable for 18 months from January 2, 2015 to June 30,
2016, later extended upto December 31, 2016
 Net profit margin between January 2, 2015 and March 31, 2015 shall not
exceed the Net profit margin as at January 1, 2015;
 Net profit margin between April 1, 2015 and June 30, 2016 (after
excluding the effect of GST and special refunds of sales tax) shall not
exceed the Net profit margin as at January 1, 2015
 The Price Control Anti-Profiteering Act, 2011 was made applicable to GST
regime in Malaysia, on introduction of GST from April 1, 2015
 Any person who, in the course of trade or business, profiteers in selling
or offering to sell or supplying or offering to supply any goods or
services commits an offence
 Initially made applicable for 18 months from January 2, 2015 to June 30,
2016, later extended upto December 31, 2016
 Net profit margin between January 2, 2015 and March 31, 2015 shall not
exceed the Net profit margin as at January 1, 2015;
 Net profit margin between April 1, 2015 and June 30, 2016 (after
excluding the effect of GST and special refunds of sales tax) shall not
exceed the Net profit margin as at January 1, 2015

18.  The West Bengal Anti-profiteering Act, 1958
 To prevent profiteering in certain articles in daily use
(Rice and rice in the husk, Wheat and wheat products,
Pulses, Spices, Edible oil, Sugar, Baby food, Paper, Drugs
and medicine, Skimmed milk powder, Kerosene, Fish)
 Dealer who profiteers – punishable with rigorous
imprisonment or with fine or with both and forfeit
entire stock in respect of which offence committed
Central Bureau of Investigation
 The West Bengal Anti-profiteering Act, 1958
 To prevent profiteering in certain articles in daily use
(Rice and rice in the husk, Wheat and wheat products,
Pulses, Spices, Edible oil, Sugar, Baby food, Paper, Drugs
and medicine, Skimmed milk powder, Kerosene, Fish)
 Dealer who profiteers – punishable with rigorous
imprisonment or with fine or with both and forfeit
entire stock in respect of which offence committed
Central Bureau of Investigation

21.  CBEC Press Release – 15.06.2017
 Complaints received
 Customers who booked flats in pre-GST era, pressurized
by builders to pay entire amount or face higher tax
incidence in GST
 Builders advised to pass on benefits of lower tax
incidence
 Despite clarity , if builder resorts to such practice, same
can be deemed to be profiteering under Section 171 of
CGST Act.
 CBEC Press Release – 15.06.2017
 Complaints received
 Customers who booked flats in pre-GST era, pressurized
by builders to pay entire amount or face higher tax
incidence in GST
 Builders advised to pass on benefits of lower tax
incidence
 Despite clarity , if builder resorts to such practice, same
can be deemed to be profiteering under Section 171 of
CGST Act.

22.  Press Release – 04.07.2017
 It is also clarified that ‘for reducing the Maximum Retail Price
(MRP), a sticker with the revised lower MRP (inclusive of all
taxes) may be affixed and the same shall not cover the MRP
declaration made by the manufacturer or the packer, as the case
may be, on the label of the package’.
 Series of Tweets from “Food and Consumer Affairs Minister Ram
Vilas Paswan” said the government has given three months time
till September to reprint the revised maximum retail price (MRP)
with the implementation Goods and Services Tax Act.
 Else Face Legal Consequences
 Press Release – 04.07.2017
 It is also clarified that ‘for reducing the Maximum Retail Price
(MRP), a sticker with the revised lower MRP (inclusive of all
taxes) may be affixed and the same shall not cover the MRP
declaration made by the manufacturer or the packer, as the case
may be, on the label of the package’.
 Series of Tweets from “Food and Consumer Affairs Minister Ram
Vilas Paswan” said the government has given three months time
till September to reprint the revised maximum retail price (MRP)
with the implementation Goods and Services Tax Act.
 Else Face Legal Consequences