Any business entity that fails to pass on benefits of lower taxes under the goods and services tax (GST) to consumers faces penalties and cancellation of licence under the new antiprofiteering rules.
The rules notified on Tuesday allow for a five-member National Anti-Profiteering Authority that would be empowered to force reduction in prices to the extent of lower taxes, and impose penalty or even cancel registration under the Central GST Act, effectively stopping an entity from doing business.
A secretary level officer in the government will head the authority that will have powers to force a business to return any undue profit earned by not passing the benefit of lower taxes to consumers along with 18% interest.
The authority is seen as transitory body for two years unless the GST Council extends its tenure. Besides, as a safeguard, it will not be able to take any of these steps suo motu or on its own under the Anti-Profiteering Rules 2017.
The authority will itself decide the methodology and procedure for determining if tax benefits have been passed on to consumers by way of reduction in prices.
There will be a national-level standing committee on anti-profiteering constituted to look into all complaints that have to be made in writing.
Separately, each state will constitute a screening committee to examine local issues. A two-month limit is set for preliminary examination of complaint.