The anti-profiteering clause -which was criticised by states such as West Bengal -was built into the GST law to ensure that the price gains accruing due to an end of “tax on tax
NEW DELHI: The government plans to use the anti-profiteering clause under GST to focus largely on businesses that are prone to formation of price cartels -such as cement and steel -in addition to duopolies and monopolies to crack down on companies that do not pass on the benefit of lower prices to consumers.
Sources told TOI that while prices across industries will be under watch, it was not possible for the government to keep tabs on all segments given the large number of goods and services. At the same time, it will take up cases that are flagged by consumers or other agencies but will largely confine itself to certain businesses.
The anti-profiteering clause -which was criticised by states such as West Bengal -was built into the GST law to ensure that the price gains accruing due to an end of “tax on tax“, or cascading effect, are passed on to consumers. There was a spike in prices of several products in Malaysia after it rolled out GST, prompting the govern ment to insert the clause.
Bengal finance minister Amit Mitra was among the critics of the move, saying that it will result in a return to licence raj, although the government reassured industry that the provision will only be used in rare cases and was largely a deterrent against profiteering. Businesses are already conscious of the need to pass on benefits to the consumers.“In the past, we have noticed cartels in sectors such as cement and even the Competition Commission of India (CCI) has issued orders. If we notice such patterns, we are going to obviously crack down,“ said an official.
The law provides for an antiprofiteering agency , but the sources indicated that any of the existing agencies could be tasked with the job, which could include the CCI or even the consumer courts, although a final decision was yet to be taken.
In any case, the government does not expect to monitor prices for long and intends to use the anti-profiteering clause during the transition phase, sources said.