The learned author attempts to make an overview of the anti-Profiteering measure introduced under the GST regime and the scope of powers of the National Anti- Profiteering Authority.
- Anti- Profiteering measure- Meaning
It is fundamental spirit of an indirect tax regime that reduction in rate of tax any supply of goods or services or the benefit by 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.
With the introduction of GST regime in india, National Anti- Profiteering Authority has been constituted 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 o fthr goods or services or both supplied by him,this is to ensure that thecosumer is protected from arbitrary price increase in the name of GST.
2.Statutory provisions
The statutory provision relating to anti- Profiteering measure are enshrined under section 171of the CGT Act.Rules 123 to 133 of the CGST Rules,2017 deal with provision in respect of constitution of the National Anti- Profiteering Authority and scope of its powers.
As per sub–section (1) of section 171 of the CGST /SGST Act, any reduction in rate tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices.
As per sub- section (2) of section 171, the Central Government may, on recommendation of the Council, by notification, constitute an Authority, or empower an existing Authority constituted under any law for the time being force, to examine whether input tax credits availed by any registreted person or the reduction in the tax rate have actually resulted in a commensure reduction in the price of the goods or services or both supplied by him.
It is clear from the above that when input tax credit is availed of by an registered person, the amount of tax is excluded from the purchase price or cost the goods and the input tax credit is used for discharge of output tax on outward supply. The Authority constituted under sub-section (2) of section 171 is required to examine that input tax credits availed by any registered person results in a commensurate reduction in the price of the goods or services or b both supplies by him.
The Authority is also required to ensure that any reduction in the tax rate must result in a commensurate reduction in the price of the goods or services or b both supplies by him.
3. Constitution of 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 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.
4.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 suppy of goods or services or the benefit by way of commensurate reduction in prices.
5.Duties of Authority
As per rule 127 of the CGst Rules, the Authority would have the following duties:
(i) to determine whether any reduction in the rate of t axo any supply of goods o services or the benefits of input tax has been passed o 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. Fromthe date of collection of the higher amount till the date of the return of such amount or recovery of the amount or recovery of the amount not returned, as the case maybe, in case the eligible person does not claim return of the amount or is not identifiable, and deposite the same in the Consumer Welffare Fund;
(c) Imposition of penalty; and
(d) Cancellation of registration.
(vi) to furnish a performance report to the Council by the 10th of the close each quarter.
6. Application to the Authority
According to sub-rule 128, the Standing Committee shall within a period of two months from the date of the receipt of a written application froman interested party or from a Commissioner or any other person, examine the accuracy and adequacy of the evidence provided in the application to determine whether there is prima-facie evidence to support the claim of goods or to the recipient by way of commensurate reduction in prices.
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 Government 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.
7. Initiation and conduct of proceeding
In terms of sub-rule (1) or rule 129, 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 thesupply 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.
In terms of sub-rule (3) of rule 129, if the Director General of Safeguards 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 in the proceedings. The evidence provided will be kept confidential and the provisions of section 11 of the Right to Infomration Act,2005, shall apply mutatis to the disclose 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 Genearal 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 a judicial proceeding.
The Director General of Safeguards will complete the investigation within a 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.
8. Confidentiality of information
For the purpose of ensure confidentiality of information, it has been provided that notwithstanding anything contained in sub-rules (3) and (5) of rule 129 and sub-rule (2) of rule 133, the provisions of section 11 of the Right to Information Act, 2005, shall apply mutatis mutandis to the disclosure of any information which is provided on a confidential basis.
It is also provided under sub-section (2) of section 130 that the Director General of Safeguards may requie the parties providing information on confedential basis to furnish non-confidential summary thereof and if in the opinion of the party providing such information, the said information cannot be summarised, such party may submit to the Director General of Safeguards a statement of reasons as to why summarisation is not possible.
9. Cooperation with other agencies or statutory authorities
As per rule 131 of the CGST Rules, where the Directors General of Safeguards deems fit, he may seek opinion of any other agency or statutory.
Authorities in the discharge of his duties.
10. Power to summon persons to give evidence and produce documents
In terms of sub-rule 132,the Director General of Safeguards, or an officer authorised by him in this behalf,shall be deemed to be the proper officer to exercise the power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any inquiry in the same manner, as provided in the case of a Civil Procedure,1908.
Every such inquiry referred to in sub-rule (1) shall be deemed to be a judicial proceedings within the meaning of sections 193 and 228 of the Indian Penal Code.
11. Order of the Authority
As per sub-rule (1) of the CGST Rules, 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 determaine whether a register 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 credit to the recipient by way of commensurate reduction in prices, 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 interested at the rate of eighteen percent. from the date of collection of the higher amount till the date of the return of such amount or recovery of the of amount including interest 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 Fund refered to in section 57;
(c) Imposition of penalty as specified under the Act ; and
(d) Cancellation of registered 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 service Tax Act or the Central Goods and Services Tax Act or the Union territory 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 impletion of the order passed by it.
12. Decision to be taken by the majority
As per rule 134 CGST Rules, if the Members of the Authority differ in opinion on any point, shall be decided according to the opinion of the majority.
13. Compliance by the registered person
In terms of rule 135 of the CGST Rules, 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 State goods and Services Tax Act of the respective States, as the case may be.
14. Summing up
Anti-profiteering measures are globally Accepted policies which are implemented by various countries for controlling temporary inflationary prices of goods and services during the transition phase of implementation of GST. Anti-profiteering measure are adopted for providing benefit of GST to the consumers in terms of reduced prices and curbing more profit margins to the businessmen sought to be earned due to rise in prices of goods and services resulting inflation in country.
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