From Dec. 1, all complaints related to GST (Goods and Services Tax) profiteering will be handled by the Indian antitrust watchdog Competition Commission of India (CCI), instead of the National Anti Winstitutional Authority (NAA), according to a government notice.
Currently, all consumer complaints from companies not passing on GST rate cuts are being investigated by the Directorate General for Anti-Profit (DGAP), which then submits its report to the NAA.
The NAA then makes a final judgment on such complaints. As NAA’s term of office expires this month, its functions will be taken over by the CCI as of December 1.
All DGAP reports will henceforth be submitted to CCI for assessment.
“The Central Government hereby, on the advice of the Goods and Services Tax Board, authorizes the CCI to investigate whether input tax credits taken up by a registered person or 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.
EY Tax Partner Saurabh Agarwal said that given that 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 seen how CCI approaches the method of calculation that was 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 for things to become easier. Following this transfer, competent high courts will also consider referring all subpoenas filed in profiteering cases back to CCI,” Mohan said.
According to MS Mani, partner of Deloitte India, the industry should expect some guidance to help determine its profiteering or otherwise.
“Ideally, market forces should dictate prices and CCI should only be called upon in very exceptional cases,” added Mani.
NAA was established in November 2017 under section 171A Goods and Services Tax (GST) to monitor unfair profit making 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 Board at its 45th meeting in September last year gave another 1-year extension to November 30, 2022 to NAA and also decided to move work to CCI after that.
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.
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