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.

AI Summary

Construction Firm's Unauthorized RMC Deductions Labeled 'Anti Profiteering' Lacks Legal Basis Under CGST Act A registered supplier of Ready Mix Concrete (RMC) is facing unauthorized deductions by a construction company under the guise of 'Anti Profiteering' without legal basis. The construction company is not authorized under the CGST Act to make such deductions, as there is no reduction in GST rates on RMC. Respondents suggest that the supplier should seek legal recourse through civil court, as only the National Anti-Profiteering Authority can mandate such deductions. The deductions might be misinterpreted as liquidated damages, which would require GST payment. The supplier is advised to take action to recover the deducted amounts.