Section 171 of CGST Act

Anti-profiteering measure

 

Enforced with effect from 1-7-2017.

 

Section 171 (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.

 

Section 171 (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.

 

Proviso inserted by the Finance (No. 2) Act, 2024, w.e.f. 27-9-2024.

 

Explanation. —

 

For the purposes of this 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.

 

Section 171 (3)

 

The Authority referred to in sub-section (2) shall exercise such powers and discharge such functions as may be prescribed.

 

Section 171 (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 percent of the amount so profiteered:

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 —

 

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”.

 

See also

Rule 21 of the CGST Rules, 2017;

Rule 123 of the CGST Rules, 2017;

Rule 124 of the CGST Rules, 2017;

Rule 125 of the CGST Rules, 2017;

Rule 126 of the CGST Rules, 2017;

Rule 127 of the CGST Rules, 2017;

Rule 128 of the CGST Rules, 2017;

Rule 129 of the CGST Rules, 2017;

Rule 130 of the CGST Rules, 2017;

Rule 131 of the CGST Rules, 2017;

Rule 132 of the CGST Rules, 2017;

Rule 133 of the CGST Rules, 2017;

Rule 134 of the CGST Rules, 2017;

Rule 135 of the CGST Rules, 2017; and

Rule 136 of the CGST Rules, 2017.

 

For Competition Commission of India empowered to examine whether input tax credits availed by any registered person or reduction in tax rate have actually resulted in a commensurate reduction in price of goods or services or both supplied by him, see Notification No. 23/2022-Central Tax, dated 23-11-2022.

 

 

Section 171 (3A) inserted by the Finance (No. 2) Act, 2019, w.e.f. 1-1-2020.

 

Explanation 1 and 2 inserted by the Finance (No. 2) Act, 2024, w.e.f. 27-9-2024.