Experts flag methodology concern for CCI

The commission replaces NAA for anti-profiteering measures under GST from next month

Starting next month, the Competition Commission of India (CCI) will look into antiprofiteering measures under the Goods and Services Tax (GST), replacing the National Anti-profiteering Authority (NAA). Experts say the CCI will have to address the challenge of finding the appropriate methodology to gauge profiteering and quantum of penalty over which NAA is embroiled in litigation.

The Central Board of Indirect Taxes and Customs (CBIC) issued a notification to this effect on Wednesday.

Besides omitting and adding rules, the notification says, “The central government, on the recommendation of the Goods and Services Tax Council, hereby empowers the Competition Commission of India ... to examine whether input tax credit availed by the registered person or the reduction of the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him.”

The decision comes at a time when 50-odd cases against the constitutional validity of NAA have been clubbed and are being heard in Delhi High Court. The biggest issue is the lack of methodology to calculate profiteering.

Abhishek Rastogi, founder of Rastogi Chambers, said while this is an expected move based on the recommendation of various states, it will be interesting to see whether CCI provides for a methodology for diverse sectors before progressing into quantum profiteering.

He said the extension of the anti-profiteering provisions beyond five years will have to test the waters of constitutionality as the intent was to provide the anti-profiteering relief only for the transitional phase.

Saurabh Agarwal, tax partner at EY, said it has to be seen how CCI addresses the methodology for calculation, which was absent in NAA proceedings.

Karan Sachdev, partner, Lakshmikumaran and Sridharan Attorneys, said CCI has a working knowledge of various business dynamics impacting price and it is well equipped to handle such cases.

Even in Australia, anti-profiteering violations were examined by the Australian Competition and Consumer Commission.