Several news reports indicate investigations being undertaken by National Anti-Profiteering Authority (‘NAA’) against various Companies for ‘profiteering’. These investigations seem to stem from disproportionate increase in price of various products after recent imposition of GST thereon (effective July 18, 2022).

NITYA Comments: Section 171 of the CGST Act containing ‘anti-profiteering’ covers only following two situations viz: 

1. Passing on benefit of reduction in rate of taxes; or
2. Passing benefit of ITC by commensurate reduction in prices. 

Notably, Section 171 does not encompass situation of increase in price corresponding to increase or imposition of tax. Taxpayers can increase price of their output goods & services disproportionate to increase in tax incidence. To that extent, investigations conducted by the NAA are beyond statutory provisions.

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