The provisions of section 171 are operational with effect from July 1, 2017 in absence of any direction on the methodology for determining amount profiteered or determining whether the supplier has complied with the provisions of section 171. It is made clear that no guidance would be available from the authorities in this regard as the issue of profiteering is to be determined on case by case basis.
Absence of methodology has resulted in several adverse orders by the National Anti-profiteering Authority. Further, these NAA orders are also getting challenged in the high courts.
Currently a batch of petitions by more than 50 companies on the constitutional validity and legality of Section 171 CGST Act as well as Rules 126, 127 and 133 of the CGST Rules is under consideration by the Delhi Court. Based on the reported cases[1], arguments made by the tax payers and practical approaches taken by the Authority in various cases, this article contains certain basic recommendations for rationalizing application of section 171. The provisions of section 172 give authority to issue orders for removal of difficulties for a period of five years.
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