Govt wants industry to pass on GST relief to consumers, open to engagement if needed, says senior official

Moneycontrol has learnt from officials that the government is still open to the idea of reintroducing a formal statutory framework to check cases of "profiteering" under the regime if the benefits are not passed on to consumers in a timely manner.

"Ideally, we don’t envisage a situation where businesses will not be passing on the benefits of (GST) rate cuts to retail prices. But if at all they don’t, we may think of a formal legal framework to ensure that it happens," another official said.

In a post GST Council meeting press-conference on September 3, revenue secretary Arvind Shrivastava said since inception, under the arrangement for anti-profiteering, which is no longer in place now, only 704 cases were registered with the erstwhile National Anti-Profiteering Authority (NAA).

"And 60 percent of the cases were initiated within the first three-four years of implementation. Total profiteering that was alleged was around Rs 4,362 crore in these 704 cases. So, we expect that last time, too, industry has largely passed on the benefits of rate cut," Shrivastava said.

At present, anti-profiteering are being handled by the GST Appellate Tribunal (GSTAT).

In 2017, the government introduced anti-profiteering measures by adding Section 171 in CGST Act. It also established the National Anti-Profiteering Authority (NAA) to ensure anti-profiteering is prevented. In cases of businesses resorting to profiteering, the NAA had the powers to take actions, including imposition of penalty.

Tax experts say that while the NAA was well-intentioned in its structural design, its operational trajectory was marred by procedural delays, limited jurisprudential evolution and a prevailing perception of being more punitive than reformative.

The NAA continued its operations till November 30, 2022. From December 1, 2022, the NAA’s functions were transferred to the Competition Commission of India (CCI). However, in 2024, the GST Council recommended that no new cases of anti-profiteering will be accepted by the CCI starting April 1, 2025, which effectively ended statutory supervision of such cases.

Some tax experts say there is a need for an anti-profiteering framework. "Currently, the GST Appellate Tribunal is handling such cases but a dedicated authority under GST 2.0 could make the process even more effective and efficient," said Sandeep Sehgal, Partner-Tax, AKM Global.

"With recent GST rate rationalizations, having a clear, streamlined mechanism will ensure that consumers fully benefit from tax reductions, while also providing businesses with guidance and clarity on compliance."

Krishan Arora, Partner, Grant Thornton Bharat, said any future construct should prioritise clarity in methodology for assessing profiteering, expedited adjudication to avoid prolonged litigation, and business-friendly norms that preserve pricing autonomy while ensuring accountability.

"In essence, the path forward lies in striking a judicious balance — protecting consumer interests without stifling enterprise agility," he said.

While anti-profiteering as a consumer welfare measure is a laudable concept, the way it was implemented earlier left it open to criticism for its hyper-technical approach which often didn't consider basic commercial rationale, say experts. "Even if the same is brought back into GST, one hopes that business aspects peculiar to various sectors are considered to decide whether or not there has been profiteering," said Sudipta Bhattacharjee, Partner at Khaitan & Co.