GST: CAN OF WORMS

Business Today - - CONTENTS - - Di­pak Mon­dal

The much-awaited Na­tional An­tiprof­i­teer­ing Au­thor­ity un­der the Goods and Ser­vices Tax (GST) has be­gun tak­ing shape with the Cabi­net giv­ing ap­proval to its for­ma­tion. The five-mem­ber au­thor­ity is sup­posed to look at com­plaints of busi­nesses not pass­ing GST ben­e­fits to con­sumers by low­er­ing prices. Though the pro­vi­sion of an an­tiprof­i­teer­ing au­thor­ity was made in the GST law for the tran­si­tion pe­riod of two years, busi­nesses were ex­pect­ing the govern­ment would drop the clause given se­ri­ous ques­tions on its im­ple­men­ta­tion. While it is seen as a move to safe­guard con­sumers’ in­ter­est, im­ple­ment­ing the pro­vi­sions, in its cur­rent form, is like open­ing a can of worms.

For starters, the law does not lay down a method to cal­cu­late fair profit mar­gins for goods and ser­vices. The au­thor­ity would have to de­vise a method­ol­ogy first. If a case is filed against a pro­ducer, the in­ves­ti­ga­tion arm of the au­thor­ity would have to go through the doc­u­ments of play­ers in the whole chain – man­u­fac­turer and sup­plier – to as­cer­tain au­then­tic­ity of prof­i­teer­ing or non-prof­i­teer­ing claims The au­thor­ity has got eight months’ to screen ap­pli­ca­tions, in­ves­ti­gate a gen­uine claim, then hear all the par­ties in­volved and pass a ver­dict. With just a two-year ten­ure, the au­thor­ity, would be flooded with cases.

What hap­pens if the au­thor­ity ceases to ex­ist af­ter two years, as planned? Which agency would mon­i­tor prof­i­teer­ing or would prices be de­cided by mar­ket forces? There are too many ifs and buts, and the stakes are too high on a law that is loosely drafted and has many prac­ti­cal prob­lems.

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