Authority to curb GST profiteering

Move to ensure benefits are passed on

NEW DELHI: A day after reduced goods and services tax (GST) rates on more than 200 items, including chocolates, shampoo and restaurant bills kicked in, the union Cabinet chaired by prime minister Narendra Modi on Thursday approved the establishment of a powerful national body to ensure that benefits of such tariff cuts are passed on to consumers.

Named the National AntiProfiteering Authority (NAA), the body will provide an institutional mechanism to ensure that the full benefits of input tax credits and reduced GST rates on supply of goods or services flow to consumers. This institutional framework comprises the NAA, a Standing Committee, Screening Committees in every state and the Directorate General of Safeguards in the Central Board of Excise & Customs (CBEC).

Although consumer-friendly, some experts have pointed to the fact that this body could mean more government, not less, and that it could result in the harassment of businesses in some cases. Still, the anti-profiteering body is a temporary one, part of the transitory phase as India moves to a unified tax regime. The body will have a life of two

years.

Affected consumers who feel the benefit of commensurate reduction in prices is not being passed on when they purchase any goods or services may apply for relief to the Screening Committee in the particular state. However, in case the incident of profiteering relates to an item of mass impact with ‘All-India’ ramification, the application may be directly made to the Standing Committee.

After forming a prima facie view that there is an element of profiteering, the Standing Committee shall refer the matter for detailed investigation to the Director General of Safeguards, CBEC, which will report its findings to the NAA.

If the NAA confirms there is a necessity to apply anti-profiteering measures, it will step in and ask businesses that have not passed on full benefits of a reduced tax burden to consumers to refund it with interest. If the undue benefit cannot be passed on to the recipient, it can be ordered to be deposited in the Consumer Welfare Fund. In rare cases, a profiteering business could lose its GST registration too. The NAA will be headed by a senior officer of the level of secretary to the central government with four technical members from the centre and states. A panel led by cabinet secretary PK Sinha has already started consultation with states to finalise the members of the panel.