Profiteering Under GST : Lessons from India, Australia and Malaysia

This article concentrates on the atypical anti-profiteering system under the Indian GST and its comparison with similar mechanisms adopted earlier in two other countries—Australia and Malaysia. The Indian anti-profiteering provision was introduced to ensure that tax benefits resulting from the GST reform are passed on to the intended beneficiary, that is, the end consumer. Under this provision, a supplier of goods or services is required to pass on to the consumer—by way of a commensurate reduction in prices—any benefit resulting from a reduction in the tax rate or from the provision of input tax credit. Over the last five years, several high-profile companies found to have engaged in profiteering have been directed to return the profiteered amount along with interest. Amidst rising concerns across the world that VAT rate reductions and exemptions do not actually result in price cuts, but given the proclivity of policymakers to announce such reductions and exemptions regardless, anti-profiteering mechanisms (permanent, not transitory) present a possible solution as far as the way forward is concerned. Historically profiteering (excessive or unfair pricing) has been tackled around the world by way of antitrust and consumer protection laws or general market regulation. The foray of anti-profiteering provisions under tax law is novel, and the application of these provisions in the case of India also presents an interesting opportunity for future interdisciplinary scholarship