DEDUCTION TOWARDS ANTI-PROFITEERING.

[Sadanand Bulbule]

Dear Sir

Here is one interesting fact and academic question prevailing in some business areas.

A is a registered taxable person under the CGST Act and engaged in the supply of Ready Mix Concrete(RMC) to B, a highly reputed construction company under the support of valid Tax Invoice. B accepts RMC in goods condition, quantity and while making payments to A, B has been deducting 5% of amount in Tax Invoice towards " Anti Profiteering". On insisting, B is not willing to disclose any reasons for such deduction. In some places RMC is buyers' market and buyers dictate monopoly over the vendors. Such amount deducted is very huge.

Here one clear thing emerges. B is not one of the authorities notified under Section 51 or 52 of the CGST Act nor there is any provision under Section 171 of the Act authorising taxable person to deduct any amount towards ' Anti Profiteering'. The concept of Anti Profiteering is all together different issue and nothing to do with A, unless there is verifiable/quality evidence to indicate the non passing of benefit of reduction of rate of tax etc by the vendor. In this case there is no reduction in the rate of GST on RMC, which 18%.

Fact being so, under what unforeseen situation B has been deducting such amount without the authority of law is the moot query, besides keeping the vendor in dark about this.

Kindly demystify the query and suggest the effective solution to stop further deduction and to get back the deducted amount.

Respects.

[Rajagopalan Ranganathan]

Sir,

If, in the contract between the supplier and receiver there is no condition for deduction towards Anti-profiteering then you can move the civil court against the receiver who has deducted Anti-profiteering charges without authority of law. such deduction invites civil consequence. GST Act is not authorising any person other than the competent authority to demand and recover the said sum.

[Sadanand Bulbule]

Thank you very much Sir for your quick response. Regards.

[PAWAN KUMAR]

Rightly explained by Sh. Rajgopalan sir. NAA (National Anti-Profiteering Authority) under section 171 is the final authority who can order if it is evidenced that anti-profiteering has been done, to return back to customer with interest, reduction in prices, impose of penalty and cancelleation of registration. Other authority has not given to any body such as a taxpayer. The amount deducted may be some kind of LD which the buyer is liable to pay GST.

[Sadanand Bulbule]

Ok Pawan Sir. Thank you so much.

AI Summary

Anti-Profiteering deductions unauthorized under GST law; buyers risk civil liability and statutory enforcement avenues apply.
Deduction labelled as Anti-Profiteering by a purchaser from a supplier's tax invoice is not authorised by the GST law where the purchaser lacks statutory power and there is no contractual basis; such unilateral withholdings can attract civil consequences. Statutory anti-profiteering enforcement mechanisms within the GST framework are the appropriate route to address non-passing of tax benefits, and commercial characterisation (for example, liquidated damages) may affect GST treatment, but private deductions without authority are not supported.