Skip to content

Indirect Tax Laws and Practice · Anti-profiteering

Rule 129 CGST Rules: Initiation and Conduct of Anti-Profiteering Proceedings

Updated 11 October 2026 · Fact-checked

Under Rule 129, the Standing Committee refers a case to the Director General of Anti-profiteering (DGAP) when it finds prima-facie evidence that a supplier did not pass on a tax-rate cut or ITC benefit through lower prices. The DGAP issues notice, investigates, shares evidence among parties, and reports to the Authority within six months, extendable by up to three months.

Understand Initiation and Conduct of Proceedings under Rule 129

Section 171 of the CGST Act requires a supplier to pass on to the recipient the benefit of a tax-rate reduction or of input tax credit, through a commensurate reduction in prices. Rule 129 is the first stage of enforcing this. It tells you how a complaint becomes a formal investigation.

The process starts with an application. Under Rule 128, an interested party, a Commissioner or any other person applies to the Standing Committee. Local issues first go to the State level Screening Committee. The Standing Committee examines whether the evidence is accurate and adequate enough to show prima-facie that the benefit was not passed on.

Rule 129 begins when the Standing Committee is satisfied. It refers the matter to the Director General of Anti-profiteering (DGAP) for detailed investigation. Your question may use the old name, Director General of Safeguards. The rule text was amended with effect from 12.06.2018 to say DGAP.

The DGAP must be fair. Before starting, it issues a notice to the interested parties. It can also notice other persons for a fair enquiry. Evidence given by one party is made available to the other parties. Confidential information is protected under Rule 130.

The DGAP then investigates and reports to the Authority with its findings and relevant records. The Authority decides the case under Rule 133. Rule 129 only covers the stage up to the report.

Key rules to remember

Trigger for referral (Rule 129(1))
Prima-facie evidence of non-pass-on → Standing Committee refers to DGAP
The benefit may be a tax-rate reduction on goods or services, or input tax credit. Pass-on must be by commensurate reduction in prices.
Purpose of investigation (Rule 129(2))
DGAP collects evidence to determine whether the benefit has been passed on
The DGAP investigates; it does not decide the final order.
Contents of notice (Rule 129(3))
Notice = (a) description of goods or services + (b) summary of statement of facts + (c) time limit for reply
Issued to interested parties before the investigation begins.
Other notices and evidence sharing (Rule 129(4) and (5))
Notice to other persons as deemed fit; evidence of one party made available to the other parties
Supports a fair enquiry. Confidential material is covered by Rule 130.
Time limit for investigation (Rule 129(6))
6 months from receipt of reference + extension of up to 3 months, with reasons recorded in writing
The extension is allowed by the Authority. The original period of three months was changed to six months from 28.06.2019.
Related time limits
Rule 128: Standing Committee and Screening Committee, 2 months each, extendable by up to 1 month. Rule 133(1): Authority, 6 months from DGAP report
Useful for questions that run through the whole timeline.

How to solve Initiation and Conduct of Proceedings under Rule 129 questions

Use this order for any question on how a profiteering complaint is initiated and investigated.

  1. 1Identify the allegation: tax-rate cut or ITC benefit not passed on through lower prices (Section 171).
  2. 2Trace the application: who filed it, and whether a local issue first went to the State level Screening Committee (Rule 128).
  3. 3Check the Standing Committee's step: it must find prima-facie evidence before it refers the matter to the DGAP.
  4. 4State the DGAP's duties: issue notice with the three required contents, investigate, and give parties access to each other's evidence.
  5. 5Apply the time limit: six months from receipt of the reference, plus up to three more months on the Authority's permission with written reasons.
  6. 6Conclude with the report: the DGAP gives findings and records to the Authority, which decides under Rule 133.
  7. 7Give a clear answer to the exact question asked, such as a deadline date or whether a notice is valid.

Quickest way: Timeline-and-notice check

When to use it: Use for MCQs and short case questions on dates, extensions and notice contents.

  1. Write the sequence: application → Standing Committee → DGAP → report to Authority.
  2. Attach the period to each stage: 2 months (+1) for the committee, 6 months (+3) for the DGAP.
  3. Remember the notice has three parts: description, summary of facts, reply time.
  4. Check who allows the extension: the Authority, with reasons in writing.
  5. Pick the option that matches exactly, and reject options that use three months as the base DGAP period.

Common mistakes in Initiation and Conduct of Proceedings under Rule 129

  • Stating the DGAP's investigation period as three months.

    Older notes and the original rule used three months.

    Fix: The period is six months from the Standing Committee's reference, with a further extension of up to three months.

  • Saying the Standing Committee can extend the DGAP's time.

    The original rule said the Standing Committee allowed extension.

    Fix: The current rule says the extension is allowed by the Authority, for reasons recorded in writing.

  • Writing that the DGAP decides whether profiteering took place and orders price cuts.

    Students mix up the investigation stage and the decision stage.

    Fix: The DGAP investigates and reports. The Authority determines the matter and passes orders under Rule 133.

  • Leaving out the notice contents or issuing notice after investigation starts.

    The notice is treated as a formality.

    Fix: Notice is issued before the investigation begins and contains the description of goods or services, a summary of facts and the time allowed for reply.

  • Referring to the Director General of Safeguards as the current authority.

    The original rule used that title.

    Fix: Use Director General of Anti-profiteering, and mention the older name only if asked.

  • Skipping the Screening Committee for local issues.

    Students only remember the Standing Committee.

    Fix: Applications on local issues are first examined by the State level Screening Committee, which forwards them with recommendations to the Standing Committee.

Worked examples

Example 1

The Standing Committee refers a case against Sunrise Foods Ltd to the DGAP on 1 March 2027. By what date must the DGAP complete the investigation normally, and what is the latest date if an extension is allowed in full?

Show the solution
  1. The rule allows six months from receipt of the reference. Assume receipt on 1 March 2027.
  2. Six months from 1 March 2027 ends on 31 August 2027, which is the normal deadline.
  3. An extension of up to a further three months is permitted, with reasons recorded in writing, as allowed by the Authority.
  4. Three months beyond 31 August 2027 takes the outer limit to 30 November 2027.

Answer: Normal deadline is 31 August 2027. With the maximum extension, the outer limit is 30 November 2027. The extension needs written reasons and the Authority's permission.

Example 2

Before beginning its investigation into Kaveri Appliances Pvt Ltd, the DGAP asks whether it must issue a notice, what the notice must contain, and whether evidence given by the complainant must be shown to Kaveri Appliances. Advise.

Show the solution
  1. Rule 129(3) requires the DGAP to issue a notice to the interested parties before initiating the investigation.
  2. The notice must contain a description of the goods or services in respect of which the proceedings began.
  3. It must also contain a summary of the statement of facts on which the allegations are based.
  4. It must state the time limit allowed to interested parties and other persons with relevant information to furnish their reply.
  5. Under Rule 129(5), evidence presented by one interested party must be made available to the other interested parties taking part in the proceedings. So the complainant's evidence must be shown to Kaveri Appliances.
  6. Information given on a confidential basis is protected under Rule 130, and a non-confidential summary may be required.

Answer: The DGAP must issue notice before starting. It must state the goods or services, a summary of facts and the reply time limit. The complainant's evidence must be made available to Kaveri Appliances, subject to confidentiality protection under Rule 130.

Exam tips

  • Learn the numbers as pairs: 2 months plus 1 for committees, 6 months plus 3 for the DGAP, 6 months for the Authority.
  • In MCQs, watch for options that use the old three-month DGAP period or the old extension authority.
  • For case questions, name each body and its role in sequence. Marks go for correct sequencing.
  • If a question says Director General of Safeguards, answer with the DGAP and note the name change.
  • Keep Rule 129 (initiation and investigation) separate from Rule 133 (order of the Authority).

Practice questions from Anti-profiteering

Initiation and Conduct of Proceedings under Rule 129 in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Initiation and Conduct of Proceedings under Rule 129: frequently asked questions

Who refers a case to the DGAP under Rule 129?

The Standing Committee does, once it is satisfied there is prima-facie evidence that the benefit of a tax-rate reduction or ITC was not passed on by a commensurate price reduction.

How long does the DGAP have to complete the investigation?

Six months from receiving the reference from the Standing Committee. The Authority may allow an extension of up to three more months, with reasons recorded in writing.

What happens after the DGAP finishes the investigation?

The DGAP gives the Authority a report of its findings with the relevant records. The Authority then determines whether the benefit was passed on, within six months of receiving the report, under Rule 133.

Is the DGAP the same as the Director General of Safeguards?

The rule originally named the Director General of Safeguards. It was replaced by Director General of Anti-profiteering with effect from 12.06.2018. In exams, use the current name.