CGST Section 171: Anti Profiteering Measure

Provisions under Section 171 of the CGST Act 2017 relating to “Anti Profiteering Measure”:

Section 171: Anti Profiteering Measure (CHAPTER XXI: MISCELLANEOUS) [*1]

(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. [*3(a)]

Explanation. – 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. [*3(a)]

(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: [*2]

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 1.- [*3(b)] 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.

Explanation 2.- For the purposes of this section, the expression “Authority” shall include the “Appellate Tribunal”. [*3(b)]

Notes (History of Amendments in Bare Text):

1. CGST Section 171 introduced vide GOI Notification dated 12/04/2017, followed with CBEC Notification 9/2017 on commencement date of 01/07/2017.

2. Sub-section (3A) inserted along with Proviso and Explanation vide section 112 of the Finance Act, 2019, followed with Notification 1/2020 on commencement date of 01/01/2020.

3. Amendments vide Section 148 of the Finance Act (No. 2) 2024, followed with Notification 17/2024 on commencement date of 27/09/2024:

(a) Proviso and Explanation inserted in sub-section (2).

(b) Explanation to section 171 of CGST Act 2017 renumbered as Explanation 1 and a new explanation 2 inserted thereafter.