When the GST Council issued Anti-profiteering Rules 2017 on June 19, it left out some critical provisions. The notification on Anti-profiteering in the current form relate to the way anti-profiteering complaints and cases will be handled, rather than the "how", the "what" and the "why" of such rules in practice. That is a crucial miss.So what does this mean for businesses - who is affected, why, in what way and how? What to do on the basis of the laws as they currently stand?As the GST Council continues to ponder approach, one needs to understand the anti-profiteering law as it now stands.Section 171 of the CGST Act (and the corresponding provisions of the state GST Acts ) create the obligation on businesses to pass on to the recipients any reduction in the rate of tax or the benefit of input tax credit by way of commensurate reduction in prices. It provides enablement to the central government to set up the Authority or authorise an existing Authority to monitor and enforce compliance with the requirements of the provision - hence the Anti-profiteering Rules 2017 issued earlier this week.Clearly one needs to look at the way such rules have worked in the past in relation to Indirect Tax, particularly in relation to VAT. The best and most recent example of such measures can be found in Malaysia though, and it is quite conceivable that the Government will look to those measures for guidance on how to address the issue.Possibly one other source would be to look at the manner in which the issue was dealt with in Australia when introducing the GST there in 2000, or in Singapore in 1994. After all there is currently no clarity on the yardsticks or standards that would be adopted for determining whether or not the requirements have been met in a given case.Ideally these should have been in place well before the GST implementation for industry to be prepared for compliance. It is of utmost importance that clarity is imparted to this issue - ideally some simple do's and don'ts's for taxpayers to adopt should be published at the earliest opportunity.The potential inflationary impact of GST and the likelihood of its benefits not being passed on by businesses, resulting in public disaffection with this radical reform, are areas of highest concern for the government and this is abundantly clear from the public pronouncements of senior politicians as well as civil servants.Consequently, this is also a matter of high concern for industry and the continued uncertainty arising from the complete absence of any details of how this provision will be implemented remains a serious worry for businesses. In the absence of clear guidelines being spelt out, there are fears that this area would prove to be a minefield of litigation.The Rules published this week provide a substantial, potentially time-consuming process for oversight of the GST rollout to ensure that anti-profiteering behaviour is rooted out. They provide for the establishment of a five member Anti-profiteering Authority at the heart of driving anti-profiteering efforts.The Authority will be headed by a current or retired Secretary level officer, plus four technical members that are or were Commissioners of State or Central Tax (or its equivalent). The Authority will be supported by a Standing Committee (made up of Centre and State officers), plus state level Screening Committees in every state (comprised of one officer of the State concerned and one from the Centre).Essentially in three stages. First of all the state level Screening Committees will be eyes and ears on the ground in each state, responsible for reviewing cases of alleged anti-profiteering. The Screening Committees make recommendations to the Standing Committee, which will in turn (or together with a Screening Committee ) "examine accuracy and adequacy of the evidence" to determine whether a case goes further.When the Standing Committee is satisfied of as "prima facie" case to answer, then a referral will be made to the Director General of Safeguards as a second stage. The DGS will initiate and conclude within 3 months (extendable by 3 months) an investigation, and file a report of findings to the Authority.The Authority then finally at stage three has the power to punish or compensate a case proved. It could order a reduction in prices, a return of an amount "not passed on", a penalty and potentially a cancellation of GST registration. In the event where an affected or aggrieved party cannot be identified, the compensation due would go instead to a consumer welfare fund.Locating this function inside the tax administration is a departure from the global best practices wherein the anti-profiteering authority is independent of the tax administration. For instance, in Malaysia, the provisions for anti-profiteering were not a part of the GST Act but were a part of the Price Control and Anti-Profiteering Act.Earlier, Australia followed a similar course and the price monitoring regime was set up under the Trade Practices Act with the task being assigned to the Australian Competition and Consumer Commission (Malaysia did a similar thing with the Ministry of Domestic Trade there taking on the mantle of watchdog). The time scales and limits mentioned in the Rules are of course necessary, but point to a process that may end up tying up officials and taxpayers for months if not years. As with many other aspects of the new GST the devil is in the detail - the proof will be in the doing.Rule 7 says that the Authority "may determine the methodology" for determination of whether pricing amounts to anti-profiteering. Unfortunately no methodology has so far emerged - with GST just around the corner this leaves businesses in a real bind. When the methodology does emerge it will likely retrospectively apply or at least come into force on 1 July 2017. Ignorance of the methodology is unlikely on past precedent to be an excuse for not complying with the methodology.Whatever mechanism the GST Council ultimately decides to set up, it is to be hoped that certain key principles will be kept in mind while designing the methodology in order for it to be purposeful and enjoy public confidence.a. Adoption of an approach similar to the current, revised Malaysian framework for anti-profiteering cases being taken up - have a narrow sector or industry focus, plus primarily react to consumer "whistleblowers"b. Clearly there should be adequate checks and balances to ensure fair and objective decisionsc. Time limits for completion of enquiries and decisions should be strictly adhered to and prolonged proceedings avoidedd. The criteria for making determination should be objective and easy to followe. They should be aligned with generally accepted accounting norms and practices, so that they do not create additional compliance burdenf. The approach should be selective such that it secures the interest of relatively more vulnerable consumers against unreasonable profiteeringg. Market factors should be a part of the calculus of decision making and a balanced approach should be adopted, so that on the one hand industry is not allowed to make profits out of tax to the detriment of consumers and the regulation does not end up punishing pursuit of efficiency gains arising from GST on the other. Wherever necessary, there should be the willingness to take assistance from independent expertise.For businesses the question remains as to what they should do, given that rules are not published yet. They need to recognize that even in the absence of publication of rules etc., the obligation on them would, one would expect, arise on the day the GST Act takes effect.Hence at this point in time, they would be well advised to be prepared to demonstrate their compliance by ensuring that the impacts of tax rate reduction and input tax credit are carefully taken into consideration, calculated and recorded. Keep good record! Further, the cost calculations underlying their pricing decisions should be able to reflect the transmission of these elements further in the supply chain.Communication with your customers and clients is key in this whole area of managing anti-profiteering compliance. The experience of anti-profiteering rules in other countries has demonstrated that those businesses that manage communication and dialogue in their supply chains best have the fewest issues.Most anti-profiteering cases are initiated by disgruntled clients or angry customers, by those in the supply chain who have not been properly kept abreast of what the enterprise is doing in the brave new world of GST. Also reflect that marketing promises and idle boasts of say "passing on all my GST savings" can land a taxpayer in hot water.One important to-do post July 1 will be for businesses to put anti-profiteering rules on their post-GST checklist - as the methodology emerges, make sure you are able to comply.History also shows that for industry, managing anti-profiteering rules well to be a key sign of a successful GST implementation. That is not myth, but reality. Will your experience be the same? We shall see!Yashodhan Parande is Senior Advisor, Robert Tsang is Senior Director & India GST Implementation Leader with Deloitte Haskins and Sells LLP.Disclaimer: All views expressed are personal and the column does not necessarily reflect the opinion of the editorial board of EconomicTimes.com.