The National Anti-Profiteering Authority (NAA) has been in the news recently for it fined Hindustan Unilever (HUL) as well as two Nestle and Johnson & Johnson products dealers for not passing on GST rate cuts to customers.

The NAA was formed in November 2017 under the GST Act. This was after the government cut tax on 200 items to check if companies were passing the GST rate cut benefits to consumers or not.

According to the NAA, “Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit should have been passed on to the recipient by way of commensurate reduction in prices. However, it has been the experience of many countries that when GST was introduced there has been a marked increase in inflation and the prices of the commodities. This happened in spite of the availability of the tax credit right from the production stage to the final consumption stage which should have actually reduced the final prices. This was obviously happening because the supplier was not passing on the benefit to the consumer and thereby indulging in illegal profiteering.”

Furthermore, the NAA says its main function is to “ensure that traders are not realizing unfair profit by charging high price from consumers in the name of GST. The responsibility of NAA is to examine and check such profiteering activities and recommend punitive actions including cancellation of Registration.”