The Union Cabinet on Thursday approved the setting up of the anti-profiteering authority under the Goods and Services Tax (GST) regime in a bid to ensure that the benefit of lower rates is passed on to consumers.

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The Authority will be be composed of a chairman and four technical members.

"This paves the way for the immediate establishment of the National Anti-profiteering Authority (NAA) which is mandated to ensure that the benefits of the reduction in GST rates are passed on to the ultimate consumers by way of a reduction in prices," a Finance Ministry release said here.

The NAA is to be headed by a union government Secretary-level officer with four technical members "from the Centre and/or the states".

The anti-profiteering measures are designed to ensure that the full benefits of input tax credits and reduced GST rates on supply of goods or services flow to the consumers.

"This institutional framework comprises the NAA, a Standing Committee, Screening Committees in every state and the Directorate General of Safeguards in the Central Board of Excise and Customs (CBEC)," the statement said.

Affected consumers can apply for relief to the Screening Committee in the particular State.

However, in case the incident of profiteering relates to an item of mass consumption with "All India ramification", the application may be directly made to the Standing Committee.

"After forming a prima facie view that there is an element of profiteering, the Standing Committee shall refer the matter for detailed investigation to the Director General of Safeguards, CBEC, which shall report its findings to the NAA," it said.

"In the event the NAA confirms there is a necessity to apply anti-profiteering measures, it has the authority to order the supplier/business concerned to reduce its prices or return the undue benefit availed by it along with interest to the recipient of the goods or services," it added.

If the undue benefit cannot be refunded, the government can order it be deposited in the Consumer Welfare Fund.

"In extreme cases, the NAA can impose a penalty on the defaulting business entity and even order the cancellation of its registration under GST," the ministry said.

"The constitution of the NAA shall bolster confidence of consumers as they reap the benefits of the recent reduction in GST rates," it added.

In the biggest revamp of the GST tax structure, the GST Council last week removed 178 items from the highest 28 per cent category while cutting the tax on all restaurants outside starred-hotels to 5 per cent but withdrawing input credit facility for them. The facility of input tax credit for restaurants was being withdrawn as they had not passed on this benefit to consumers, the government said.

Only 50 products, including luxury and sin items, white goods, cement and paints, automobiles, aeroplane and yacht parts have been retained in the top 28 per cent slab.