Final Hearings Scheduled: GSTAT Advances Toward Disposing Anti-Profiteering Cases

The Goods and Services Tax Appellate Tribunal ( GSTAT ) has issued a final hearing notice to taxpayers involving violation of the provisions of Section 171 of the Goods and Services Tax ( GST ) Act, 2017.

The Principal Bench of the GSTAT, located in New Delhi, has summoned a taxpayer for a hearing scheduled on 1st July 2025 at 10:30 AM.

The notice, issued from the Principal Bench at the 6th floor, Tower-1, Jeevan Bharti Building, Connaught Place, New Delhi-110001, pertains to an ongoing anti-profiteering dispute. The taxpayer has been alleged to have failed to pass on the benefit of GST rate reduction or input tax credit (ITC) to the recipient by way of commensurate reduction in prices, thereby violating Section 171 of the Act.

The anti-profiteering mechanism under GST has been codified in Section 171 of theCGST Act. It requires that any advantages brought about by lower GST rates or the availability of input tax credits be distributed to customers. Serious consequences, such as registration cancellation and the recovery of profiteered funds plus interest, may result from noncompliance.

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The GSTAT notice warns that the taxpayer must appear either in person or through an authorized representative on the appointed date and time. Failure to do so will result in the Tribunal proceeding to decide the matter ex-parte, based solely on the material available on record. The notice further requests acknowledgment via return mail to confirm receipt.

The notice to the taxpayer states as follows:

“You may appear either in 'person' or through an 'authorized representative' on the prescribed date/time and place, failing which the Principal Bench Goods & Services Tax Appellate Tribunal (GSTAT), shall proceed to decide the matter ex-parte on the basis of material available on record. You are further requested to acknowledge receipt of this notice vide return mail.”

In October 2024, the government notified that the sunset date for the anti-profiteering provisions under the GST Act will be April 1, 2025. Additionally, effective from October 1, 2024, all pending anti-profiteering complaints will be handled by the Principal Bench of the Goods and Services Tax Appellate Tribunal (GSTAT), replacing the Competition Commission of India (CCI) as the adjudicating authority. This shift was announced through a notification issued by the GST Policy Wing.

These changes follow the recommendations made by the GST Council at its 53rd meeting held on June 22, 2024, where it proposed amendments to Section 171 (Anti-Profiteering) and Section 109 (Constitution of GSTAT) of the Central Goods and Services Tax (CGST) Act, 2017. The amendments aim to introduce a sunset clause for anti-profiteering provisions and designate the Principal Bench of GSTAT as the competent authority to dispose of related cases.

The Council further recommended that after April 1, 2025, no new applications under the anti-profiteering rules should be entertained. According to the GST policy wing's declaration, consumers would no longer be allowed to complain about profiteering by businesses that fail to provide end users with benefits equivalent to the GST rate drop starting on April 1, 2025. However, until a definitive decision is made, complaints submitted before April 1, 2025, will be handled by the GSTAT Principal Bench.

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“Section 171: Anti-Profiteering measure

(1) Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices.

(2) The Central Government may, on recommendations of the Council, by notification, constitute an Authority, or empower an existing Authority constituted under any law for the time being in force, to examine whether input tax credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him.

Provided that the Government may by notification, on the recommendations of the Council, specify the date from which the said Authority shall not accept any request for examination as to whether input tax credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him.

Explanation 1 . --For the purposes of this sub-section, “request for examination” shall mean the written application filed by an applicant requesting for examination as to whether input tax credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him.

Explanation 2.––For the purposes of this section, the expression “Authority” shall include the “Appellate Tribunal]

(3) The Authority referred to in sub-section (2) shall exercise such powers and discharge such functions as may be prescribed.

(3A) Where the Authority referred to in sub-section (2), after holding examination as required under the said sub-section comes to the conclusion that any registered person has profiteered under sub-section (1), such person shall be liable to pay penalty equivalent to ten per cent. of the amount so profiteered:

Provided that no penalty shall be leviable if the profiteered amount is deposited within thirty days of the date of passing of the order by the Authority.

Explanation.-For the purposes of this section, the expression "profiteered" shall mean the amount determined on account of not passing the benefit of reduction in rate of tax on supply of goods or services or both or the benefit of input tax credit to the recipient by way of commensurate reduction in the price of the goods or services or both”

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