In a recent amendment to the Central Goods and Services Tax (CGST) Rules, 2017, the Central Government has decided to share the amount received as penalty from the amount deposited by erring businesses in the consumer welfare fund set up as part of the GST anti-profiteering rules. As per the new rules, the amount would be shared with the “concerned States.”
Post GST-rollout on 1st July 2018, the Government established a national anti-profiteering authority to punish businesses for failure to pass on tax benefits to consumers. In case the customer cannot be identified, the money has to be deposited in the consumer welfare fund.
The “anti-profiteering” measures enshrined in the GST law provide an institutional mechanism to ensure that the full benefits of input tax credits and reduced GST rates on supply of goods or services flow to the consumers. This institutional framework comprises the NAA, a Standing Committee, Screening Committees in every State and the Directorate General of Safeguards in the Central Board of Indirect Taxes & Customs (CBIC).
Affected consumers may file an application, in the prescribed format, before the Standing Committee on Anti-profiteering if the profiteering has all-India character OR before the State Screening Committees if the profiteering is of local nature.
According to the amended provisions, 50 per cent of the amount is to be deposited in the Centre’s consumer welfare fund and the remaining to the fund set up by the “state concerned”.
The “state concerned” would here mean the state where the anti-profiteering authority has passed its orders against the business.
So far, CGST rules had not clarified how the amount collected from erring businesses and deposited in the fund would be split.
Complaints of a local nature are first sent to the state-level screening committee, while those of the national level are marked for the standing committee. If the complaints have merit, the respective committees refer the cases for further investigation to the directorate-general of anti-profiteering.
