LCI Learning

Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More

Key Takeaways

  • Section 171 of the Central Goods and Services Tax Act, 2017 established The National Anti-Profiteering Authority.
  • The objective of the authority is to guarantee that all stakeholders benefit equally from GST and to boost consumer trust.
  • The NAA has a three-tier organization, with a standing anti-profiteering committee, a state-level screening committee, and the NAA as the top body.


The National Anti-Profiteering Authority (NAA) is a government entity established under Section 171 of the Central Goods and Services Tax Act, 2017. The primary goal of NAA is to ensure that the user receives the benefits of the input tax credit. It is responsible for monitoring any irregular or unfair profiteering activity by registered suppliers. 

According to the anti-profiteering clause in the Goods and Services Tax (GST) Act, any decrease in the rate of tax on any products or services, or the benefit of an input tax credit, must be passed onto consumers in the form of a commensurate reduction in the rates of the respective goods or services. To that aim, the central government established a committee to verify that the anti-profiteering clause is followed in both words and action. As a result, a National Anti-profiteering Authority (NAA) was established in accordance with the 'anti-profiteering rules.' The goal is to guarantee that all stakeholders benefit equally from GST and to boost consumer trust.

The establishment of the NAA comes in the wake of the GST Council lowering the rates on a significant number of commodities during its 22nd meeting in Guwahati. The Council decreased prices on over 200 items at the meeting. This has had a significant price reduction effect, and consumers could profit only if registered providers under GST law instantly reduced the prices of related products.

Composition of the Authority

The NAA has a three-tier organization, with a standing anti-profiteering committee, a state-level screening committee, and the NAA as the top body. The standing committee has the authority to send situations that warrant a comprehensive investigation to the Directorate General of Safeguards, who makes recommendations to the NAA following the inquiry. The authority is required to provide a decision within three months after receiving a report from the Directorate General of Safeguards. Only matters of mass importance are taken up by the authority. The NAA's orders can only be challenged in the high court.The chairman of the NAA, along with four technical members, will coordinate anti-profiteering efforts with the assistance of the Standing Committee and Screening Committees in each state, and the Directorate General of Anti-Profiteering in the Central Board of Indirect Taxes and Customs (CBIC). Their tenure is of two years, although it can be extended by the GST council. The current chairman of the NAA is Badri Narain Sharma, while the secretary and Additional Director General of Safeguards under the Central Board of Indirect Taxes and Customs isA.K. Goel.

Functions and Powers

The Authority's principal duty is to guarantee that traders are not making an undue profit by charging excessive prices to customers in the name of GST and to investigate and prosecute such profiteering acts, including the termination of registration. The Authority has the power to

  • Summon in the representatives of the company that has been charged with profiteering. It can also launch an inquiry through government agencies such as the Directorate General of GST, the Directorate of Data Analytics, and the Directorate General of Safeguards (CBEC)
  • Order the company to lower its pricing so that the gains go to customers as well.
  • Return the undue advantage received, plus 18% from the day the larger value was acquired.
  • When it is difficult to identify and repay such advantages to consumers, order the firm to deposit the benefits in the Consumer Welfare Fund.
  • Penalize the profiteer or terminate its registration.
  • Apart from operating on the recommendations of the standing committee, the NAA also has the authority to initiate Suo Motu action. 
  • The NAA would suggest that a firm refund any excessive profit it made by not passing on tax reductions and benefits to customers, coupled with an 18% interest rate. If it deems it necessary, it may also impose a penalty.

Constitutional Validity

Some real estate developers have sued the government over the constitutionality of the National Anti-profiteering Authority (NAA), claiming that the organization lacks the authority to seek interest on fines imposed by it. This came up after the NAA issued notifications to 50 real estate developers throughout India for taking advantage of the Goods and Services Tax (GST). The writ petition claimed that the absence of a judicial member makes the constitution of the NAA unconstitutional and untenable. There was also the question of the validity of the anti-profiteering provisions as there exists no definition of profiteering, or methodology of calculating profiteered amount under the GST regime.It was argued that Section 171 of the stated statute provides for the 'Anti- Profiteering Measure,' however, its execution in India contradicts the fundamental rights granted in Article 14 of the Constitution, because it amounts to the executive authority exercising unguided discretion and the state acting arbitrarily.

The legislative intent of the NAA,however, is clear in that there cannot be a vacuum in the operation of the statutory body, and it cannot be declared non-existent even temporarily as customers would suffer at the hands of suppliers who, in the absence of a watchdog, may engage in anti-profiteering actions. Furthermore, Rules 122 to 137 of the CGST Rules clearly outline the rules and due procedure that the NAA must follow. The guidelines also outline the steps that must be taken in order for a complaint to be lodged with the authority. As a result, there is no ambiguity in its constitution, guaranteeing that the authority does not exercise unrestrained discretion.


The shifting face of the economy in recent years has resulted in significant changes in the industry. It is critical to remember that simple policing is not a solution to the economy's issues; rather, execution is the most important aspect. Anti-profiteering is an essential and effective practice in and of itself, but the ambiguity in its terms and procedures of authority has cast doubt on its actual execution. Mere policymaking is insufficient, and necessary preparations and steps should be taken to ensure that any future disputes are settled effectively. The authority's powers in such areas should be evaluated, and guidance on how to execute such provisions in various instances should be provided.

"Loved reading this piece by Shvena Neendoor?
Join LAWyersClubIndia's network for daily News Updates, Judgment Summaries, Articles, Forum Threads, Online Law Courses, and MUCH MORE!!"

Tags :

Category Others, Other Articles by - Shvena Neendoor