National Anti-Profiteering Authority
Introduction:
Any
reduction in rate of tax on any supply of goods or services or the benefit of
input tax credit should have been passed on to the recipient by way of commensurate
reduction in prices. However it has been the experience of many countries that
when GST was introduced there has been a marked increase in inflation and the
prices of the commodities. This happened in spite of the availability of the
tax credit right from the production stage to the final consumption stage which
should have actually reduced the final prices. This was obviously happening
because the supplier was not passing on the benefit to the consumer and thereby
indulging in illegal profiteering. National Anti-profiteering Authority is
therefore being constituted by the central Government to examine whether input
tax credits availed by any registered person or the reduction in the tax rate
have actually resulted in a commensurate reduction in the price of the goods or
services or both supplied by him, this is to ensure that the consumer is
protected from arbitrary price increase in the name of GST.
Constitution of the
Authority:
The
National Anti-Profiteering Authority shall be a five-member committee
consisting of a Chairman who holds or has held a post equivalent in rank to a
Secretary to the Government of India; and four Technical Members who are or
have been Commissioners of State tax or central tax or have held an equivalent
post under existing laws.
The
Additional Director General of Safeguards under the CBEC (Board) shall be the
Secretary to the Authority.
The
Authority shall cease to exist after the expiry of two years from the date on
which the Chairman enters upon his office unless the Council recommends
otherwise.
Power to determine the
methodology and procedure:
The
Authority can determine the methodology and procedure for determination as to
whether the reduction in the rate of tax on the supply of goods or services or
the benefit of input tax credit has been passed on by the registered person to
the recipient by way of commensurate reduction in prices.
Duties of the Authority:
The Authority would have the following
duties:
(i)
to
determine whether any reduction in the rate of tax on any supply of goods or
services or the benefit of input tax credit has been passed on to the recipient
by way of commensurate reduction in prices;
(ii) to identify the registered person who has not
passed on the benefit of reduction in
the rate of tax on supply of
goods
or services or the benefit of input tax credit to the recipient by way of
commensurate reduction in prices;
(iii)
to order,
(a)
reduction
in prices;
(b) return to the recipient, an amount
equivalent to the amount not passed on by way of commensurate reduction in
prices along with interest at the rate of eighteen per cent. from the date of
collection of the higher amount till the date of the return of such amount or
recovery of the amount not returned, as the case may be, in case the eligible
person does not claim return of the amount or is not identifiable, and
depositing the same in the Consumer Welfare Fund;
(c) imposition of penalty; and
(d)
cancellation
of registration.
Application to the
Authority:
All
applications from interested parties on issues of local nature shall first be
examined by the State level
Screening Committee
constituted in each State by the State Governments consisting of an officer of the
State
Government,
to be nominated by the Commissioner, and an officer of the Central Government,
to be nominated by the
Chief
Commissioner.
The Screening
Committee on being satisfied that the supplier has not passed on the reduction
in rate of tax on any supply of goods or services or the benefit of input tax
credit on to the recipient by way of commensurate reduction in prices, will
forward the application with its recommendations to the Standing Committee on
Anti-profiteering, which shall consist of such officers of the State Government
and Central Government as may be nominated by the GST council, for further
action.
If the Standing
Committee is satisfied that there is a prima facie evidence to show that the supplier has not
passed on the benefit of reduction in the rate of tax on the supply of goods
or services or the benefit of input tax
credit to the recipient by way of
commensurate reduction in prices, it shall refer the matter to the Director General of Safeguards for a
detailed investigation.
Investigation:
The
Director General of Safeguards shall shall conduct investigation and collect
evidence necessary to determine undue profiteering and before initiation of the
investigation, issue a notice to the interested parties (and to such other
persons as deemed fit for a fair enquiry into the matter) containing, inter
alia, information on the following, namely: -
(a) the description of the goods or services in
respect of which the proceedings have been initiated;
(b) summary of the statement of facts on which the
allegations are based; and
(c) the time limit allowed to the interested
parties and other persons who may have
information related to the proceedings for
furnishing their reply.
The
evidence or information presented to the Director General of Safeguards by one
interested party can be made available to the other interested parties,
participating in the proceedings. The evidence provided will be kept
confidential and the provisions of section 11 of the Right to Information Act,
2005 (22 of 2005), shall apply mutatis mutandis to the disclosure of any
information which is provided on a confidential basis.
The Director General of Safeguards can seek
opinion of any other agency or statutory authorities in the discharge of his
duties.
The Director General of Safeguards, or an
officer authorised by him will have the power to summon any person necessary
either to give evidence or to produce a document or any other thing. He will
also have same powers as that of a civil court and every such inquiry will be
deemed to be a judicial proceeding.
The Director General of Safeguards will
complete the investigation within a period of three months or within such
extended period not exceeding a further period of three months for reasons to
be recorded in writing as allowed by the Standing Committee and, upon
completion of the investigation, furnish to the Authority, a report of its
findings along with the relevant records.
Order of the Authority:
The Authority shall (after granting an
opportunity of hearing to the interested parties if so requested) within a
period of three months from the date of the receipt of the report from the
Director General of Safeguards determine whether a registered person has passed
on the benefit of the reduction in the rate of tax on the supply of goods or
services or the benefit of input tax credit to the recipient by way of
commensurate reduction in prices.
If the Members of the Authority differ in
opinion on any point, the point shall be decided according to the opinion of
the majority.
Where the Authority determines that a
registered person has not passed on the benefit of the reduction in the rate of
tax on the supply of goods or services or the benefit of input tax credit to the
recipient by way of commensurate reduction in prices, the Authority may order-
(a)
reduction
in prices;
(b) return
to the recipient, an amount equivalent to the amount not passed on by way of
commensurate reduction in prices along with interest;
(c) imposition of penalty
as specified under the Act; and
(d) cancellation of
registration under the Act.
Any order passed by the Authority shall be
immediately complied with by the registered person failing which action shall
be initiated to recover the amount in accordance with the provisions of the
Integrated Goods and Services Tax Act or the Central Goods and Services Tax Act
or the Union territory Goods and Services Tax Act or the State Goods and
Services Tax Act of the respective States, as the case may be.
The Authority can direct any authority of
central tax, State tax or Union territory tax to monitor the implementation of
the order passed by it.
Conclusion:
National Anti-Profiteering Authority is a
mechanism devised to ensure that prices remain under check and to ensure that
businesses do not pocket all the gains from GST because profit is fine, but
undue profiteering at the expense of the common man is not.
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