All complaints related to GST profiteering will be dealt with by the Competition Commission of India (CCI) from December 1 and the National Anti Profiting Authority will be liquidated, according to an official notice. Currently, the Directorate General of Anti-Profit (DGAP) investigates GST-profit-related cases and then submits the report to the NAA for final ruling.
GST profit motive means that companies do not pass on the benefits of GST rate reductions to consumers. As NAA’s term of office expires this month, GST profiteering cases will be taken over by the CCI from December 1. All DGAP reports will from now on be submitted to CCI for an opinion.
“The Central Government, on the advice of the Goods and Services Tax Board, hereby authorizes the CCI to investigate whether input tax credits taken up by a registered person or the reduction in the rate of tax have actually resulted in a commensurate reduction in the price of the goods or services provided to him or both,” the Central Board of Indirect Taxes and Customs (CBIC) said in a Nov. 23 notice.
MS Mani, partner at Deloitte India, said: “With the CCI being notified as the body adjudicating anti-profit GST issues from 1 December, the industry would expect some guidance to help determine profit or otherwise. Ideally, market forces should determine pricing and the CCI should only be called upon in very exceptional cases.”
EY Tax Partner Saurabh Agarwal said that since CCI has legal expertise in determining cases related to consumer interests and a clear appeals mechanism, there would be more transparency in the process. “It needs to be looked at how CCI addresses the method of calculation that has been absent from NAA procedures,” Agarwal said.
Rajat Mohan, senior partner of AMRG & Associates, said allowing CII to review GST profit cases will improve order quality. “Transferring all pending cases from NAA to CCI and forming a special court for adjudication may take some time before things get easier. Following this transfer, the competent high courts will also consider referring all subpoenas filed in profiteering cases back to CCI,” Mohan said.
Established in November 2017, the NAA fell under section 171A of the Goods and Services Tax (GST) Act to monitor unfair profit-seeking activities by registered suppliers under GST law. The Authority’s core function is to ensure that the commensurate benefits of the reduction in GST rates on goods and services by the GST Council and of the input tax relief are passed on to consumers through a commensurate reduction in prices.
Initially it was set up for 2 years until 2019 but was later extended for 2 years until November 2021. The GST Council at its 45th meeting in September last year gave NAA another 1 year extension until November 30, 2022 and also decided to continue the work then move it to CCI.
Officials said a separate wing is likely to be set up in CCI to deal with complaints related to GST profit-seeking.
Under the GST Act, a three-tiered structure was set up for the investigation and assessment of the profiteering complaints. The complaints must first be sent to state-level screening and standing committees, which are then forwarded to DGAP for investigation. The research report is then submitted to NAA. The authority then issues an order after hearing both parties.
If NAA determines that a supplier has indulged in profiteering, it must return the amount profited, along with 18 percent interest, to the consumer. If not all consumers can be identified, the amount will be transferred to the consumer protection fund. CCI was established to enforce the law under the 2002 Competition Act.
The committee consists of a chairman and six members appointed by the central government. CCI’s mission is to eliminate anti-competitive practices, protect consumer interests and ensure free trade.
(With input from PTI)
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