Compliance Rating, Anti-Profiteering, GST Practitioners and Authorised Representative: formula sheet

Key formulas

Who may be rated (Section 149(1))

Every registered person may be assigned a score by the Government, based on his record of compliance with the Act

Applies to registered persons only. The word is 'may', so rating is enabling, not mandatory.

Basis of score (Section 149(2))

Score may be determined on such parameters as may be prescribed

Parameters are prescribed, not listed in the section. Do not state parameters as part of the Act.

Updating and publication (Section 149(3))

Score may be updated at periodic intervals, intimated to the registered person and placed in the public domain in the prescribed manner

Three actions: update, intimate, publish. All follow the prescribed manner.

Core obligation

Benefit of rate reduction or ITC → passed to recipient through commensurate reduction in price

Section 171(1). It covers both a reduction in the tax rate and the benefit of input tax credit.

Profiteered amount

Profiteered amount = Amount of benefit that should have been passed on − Amount actually passed on

This is a working method, not a formula printed in the Act. The Act defines profiteered as the amount determined on account of not passing on the benefit. Add GST on the base if the question asks for it.

Benefit from rate cut (illustration)

Price cut due = Base price × (Old rate − New rate)

Use when the base price is unchanged and the question treats the full tax saving as the benefit. Read the question for what price is given.

Penalty

Penalty = 10% × Profiteered amount

Section 171(3A). Not leviable if the profiteered amount is deposited within 30 days of the date of the Authority's order.

Authority

Authority includes the Appellate Tribunal

Explanation 2 to Section 171.

Duty to pass on benefit

Rate-cut or ITC benefit → commensurate reduction in price (s.171(1))

Covers both a reduction in tax rate and the benefit of input tax credit, on goods or services or both.

Profiteered amount

Profiteered amount = Price actually charged − Price that reflects the commensurate reduction

Explanation 1 to s.171 (after s.171(3A)): the amount determined on account of not passing on the benefit to the recipient.

Penalty

Penalty = 10% × profiteered amount (s.171(3A))

Levied only after the Authority's examination concludes the person has profiteered.

Penalty waiver

No penalty if profiteered amount is deposited within 30 days of the date of the Authority's order

The 30 days run from the date of passing of the order, not from receipt.

Powers of Authority

Powers and functions as may be prescribed (s.171(3))

The powers of the anti-profiteering Authority come from s.171(3) and the rules made under it. Section 105 (civil court powers) names the Authority, Appellate Authority and National Appellate Authority in the advance-ruling provisions, so do not cite it as the source of the anti-profiteering Authority's powers.

Appellate Tribunal procedure

Not bound by the Code of Civil Procedure, 1908; guided by natural justice; can regulate its own procedure (s.111(1))

It has civil court powers for matters listed in s.111(2) and can enforce orders as a decree (s.111(3)). Explanation 2 to s.171 includes the Appellate Tribunal in 'Authority'.

Rule-making power

Section 48(1): approval manner, eligibility, duties, obligations, removal and other conditions = as prescribed

The Act delegates these details to the rules. Say so before describing them.

Authorised functions

Section 48(2): outward supplies under section 37; return under section 39, 44 or 45; other prescribed functions

Authority must come from the registered person and the practitioner must be approved.

Responsibility rule

Section 48(3): correctness of particulars = registered person's responsibility

Applies notwithstanding sub-section (2). The practitioner's filing does not remove the taxpayer's liability.

Inward supplies

Section 38 reference omitted w.e.f. 1-10-2022

Do not state that a practitioner furnishes inward supply details under section 38 as an Act function.

Appearance link

Section 116(2)(e): authorised GST practitioner of the registered person is an authorised representative

Appearance is on behalf of the concerned registered person, who must authorise it.

Right to appear

Person entitled or required to appear → may appear by authorised representative (Section 116(1))

Exception: where the Act requires personal appearance for examination on oath or affirmation.

Forums covered

Officer appointed under the Act | Appellate Authority | Appellate Tribunal

Covers proceedings under the Act before these three.

Who qualifies (Section 116(2))

(a) relative or regular employee; (b) advocate; (c) CA/CMA/CS with certificate of practice, not debarred; (d) retired officer; (e) GST practitioner authorised by the registered person

Advocate must be entitled to practise in any court in India and not debarred.

Retired officer condition

Post not below Group-B Gazetted officer, for at least 2 years; cannot appear for 1 year from retirement or resignation

Officer of the Commercial Tax Department of a State or UT, or of the Board.

Permanent disqualification

Dismissed or removed from Government service | convicted of connected offence | found guilty of misconduct by prescribed authority → disqualified for all times

Section 116(3)(i).

Insolvent

Adjudged insolvent → disqualified only while insolvency continues

Section 116(3)(ii).

State or UT disqualification

Disqualified under SGST or UTGST Act → deemed disqualified under CGST Act

Section 116(4).

Quick revision

• Section 149: the Government may assign a compliance rating score to a registered person based on compliance record.
• The score may be determined on prescribed parameters and updated at periodic intervals.
• The score is intimated to the registered person and placed in the public domain as prescribed.
• Section 171(1): a rate cut or the benefit of input tax credit must be passed on by a commensurate reduction in prices.
• The Central Government, on the Council's recommendation, may constitute or empower an Authority to examine this.
• Penalty for profiteering is ten per cent of the profiteered amount.
• No penalty if the profiteered amount is deposited within thirty days of the Authority's order.
• For Section 171, 'Authority' includes the Appellate Tribunal.
• Section 48(3): responsibility for correctness of returns filed by a practitioner stays with the registered person.
• Section 116: representation is by a relative or regular employee, an advocate, a CA, CMA or CS with a certificate of practice, a qualifying retired officer, or a GST practitioner.
• A retired officer cannot appear for one year from retirement or resignation.
• A person who is required to appear personally for examination on oath or affirmation cannot send a representative.

Common mistakes

• Listing specific parameters such as return filing and tax payment as if they are written in Section 149. Fix: Write that parameters are 'as may be prescribed'. You may say the score is based on compliance record.
• Saying the Government must rate every registered person. Fix: Use the exact enabling words: may be assigned, may be determined, may be updated.
• Thinking Section 171 applies only to rate cuts. Fix: Remember that the section covers two things: a reduction in tax rate and the benefit of input tax credit.
• Applying the 10% penalty to the sale price or to the tax. Fix: Under Section 171(3A) the penalty is 10% of the amount profiteered only.
• Applying the 30-day relief from the date the order is received or from the date of complaint. Fix: The proviso to s.171(3A) counts thirty days from the date of passing of the order by the Authority.
• Calculating penalty at 10% of the price or of the tax rather than of the profiteered amount. Fix: First compute the profiteered amount, then take 10% of that figure only.
• Saying the practitioner alone is liable for errors in the return. Fix: Quote section 48(3): responsibility for correctness continues to rest with the registered person.
• Listing inward supplies under section 38 as a practitioner function. Fix: The reference was omitted w.e.f. 1 October 2022. Mention only section 37 outward supplies and returns under sections 39, 44 and 45.
• Saying a representative can appear even where the taxpayer is examined on oath. Fix: Always check whether personal appearance for examination on oath or affirmation is required.
• Allowing a CS, CA or CMA without a certificate of practice. Fix: Remember the condition: holds a certificate of practice and has not been debarred.

Exam tips

• Quote the sub-section wording closely. Examiners reward the exact words: may be assigned, prescribed parameters, periodic intervals, public domain.
• Never list parameters or scoring bands as law. Say they are prescribed.
• In case questions, check first that the person is registered, then apply Section 149, then conclude.
• Use a one-line contrast with Section 158 or Section 159 to show depth in longer answers.
• For short notes, a three-part structure of assignment, basis and publication fills the marks.
• Quote the exact words of Section 171(1): commensurate reduction in prices. Examiners look for this phrase.
• Always cover both limbs: rate reduction and input tax credit benefit.
• In numerical questions, show benefit due, benefit given and the shortfall as three separate lines.