The learned author attempts to make an overview of anti-Profiteering measure introduced under the GST regime and the scope of powers of National Anti- Profiteering Authority.
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 happended in spite of the availability of the tax credit right from the production stage to the final consumtion 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.
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 passedon 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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Authorised Representative plays a crucial role by appearing as a legal representative of another person in adjudicating proceedings under GST regime. Section 116 provides qualification,disqualification and other procedures relating to authorised representative which are articulated under this article.
Authorised Representative is a authorised by a person to appear on his behalf in any proceedings. ‘Authorised Representative’ has been defined in the Goods and Services Act itself. Section 2(15) of the central Goods and services Act ,2017 (hereinafter reffered to as “ the CGST Act”) defines ‘authorised representative’ as representative reffered to in section 116. Broadly, it includes a relative, a regular employee, an advocate, a charted accountant, a company secretary, or any person with prescribed qualifications. It is also provided that indirect tax gazetted officers can appear as authorised representative after one year from retirement.
The GST law also specifies for some disqualification for an authorised representative such as dismissal from government service, conviction under some specified Acts, insolvency, misconduct, etc. Such orders of disqualification are, however , required to be passed after complying the principles of natural justice.
2 . Appearance by authorised representative
Section 116(1) provides that any person can appear by an authorised representative in any proceedings under the Goods and Services regime.By virtue of this, an authorised representative can appear before the following authorities-
However, a person is not allowed to appear by an authorised representative when he is required under the Act to appear personally for examination on oath or affirmation.
3. Persons who can be authorised representative
Section 116(2) places limitation on the persons who may be authorised to represent before the authorities. The following categories of persons are so permitted to act as an authorised representative on his behalf -
Relative or regular employee of an registered person who has authorised him to act can be appointed as an authorised representative.
An advocate who is entitled to practice in any court in india, and who has not been debarred from practicing before any court in india, can represent the assessee.
Any charted accountant, a cost accountant or a company secretary who holds a certificate of practice and who has not been debarred from practice, are permitted to act as an authorised representative.
4. Government officers
A retired officer of the Commercial tax department of any State Government or Union territory or of the Board who, during his services under the Government had worked in a post not below the rank than that of a Group –b Gazetted officer for a period of not less than two years can be a appointed as an authorised representative.
However, such officer would not be entitledto appear before any proceedings under the GST Act for a period of one year from the date of his retirement or resignation.
5. GST practitioner
A GST practitioner would also be allowed to appear as authorised representative before any officer of department, Appellate Authority or Appellate Tribunal, on behalf of a registered person who has authorised him to be his GST practitioner.
4. Disqualification for acting as an authorised representative
The Disqualifying factors in relation to a person representing the assessee under section 116 are contained in sub-section (3) thereof which are as follows:
Such disqualifications to act as an authorised representative would work for the period as mentioned under-
5. Action for misconduct of an authorised representative
In term of rule 116 of the CGST Act, 2017, where an authorised representative, ( other than those advocate/ CA/ CS/ CWA) is found, upon an enquiry into the matter, guilty of connection with any proceedings under the act, the Commissioner may, after providing him an opportunity of being heard , disqualify him from appearing as an authorised representative.
6. principle of natural justice to be followed
The principle of natural justice has to be observed before any adverse action is going to be observed before any adverse action is going to be taken against the assessee. One of the grant of an opportunity of hearing, oral or in writing,before conclusion is arrived at by the authority exercising their powers.
7. Applicability of SGST Act/ UTGST Act
Any person who has been disqualified under the provisions of the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act will be deemed to be disqualified under the GST Act as stated under section 161(4) of the CGST Act.
8. Applicability of IGST Act
Section 20 of the IGST stipulates that the provisions of the CGST Act would, mutatis mutandis, apply to integrated tax as they apply in relation to central tax as if these are enacted under this Act. Accordingly, there is no separate provisions regarding authorised representative under the IGST Act, thus, the provision available under the CGST Act, is made applicable to IGST Act.
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In the case of Pr.CIT, New Delhi v. Delhi Airport Metro Express Pvt.Ltd. [ITA No. 705/2017, decided on 5-9-2017] the Commissioner opined that assessing officer allowed depreciation in excess of what was assessing officer to make fresh assessment. The Delhi High Court held that for the purpose of exercising jurisdiction under section 263 of the Act, the conclusioin that the order of the assessing officer is erroneous and prejudicial to the interests of the Revenue has to be preceded by some minimal inquiry. That basic exercise of determining as to what extent the depreciation was claimed in excess has not been undertaken by the Pr. CIT. He had exercised the second option available to him under section 263(1) of the Act by sending the entire matter back to the assessing officer for a fresh assessment. That option, in the considered view of the Court,can be exercised only after the Pr. CIT undertakes an inquiry himself. The High Court held that revision was not justified.The learned author discusses the case in detail.
Subject to it’s Explanations, section 263(1) of the Income Tax Act,1961 (‘Act’) states that the principal Commissioner may call for and examine the record of any proceeding under the Act, ad if he considers that any order passed therein by the assessing officer is erroneous on so far as it is prejudicial to the interests of the revenue, he may after giving the assessee an opportunity of being heard and after such order thereon as the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment.
More recently, in Pr. CIT, New Delhi v. Delhi Airport Metro Express pvt.Ltd. [ITA No. 705/2017, decided on 5-9-2017], the short question raised by the Revenue was whether the ITAT was justified in setting aside the order of the Principle Commissioner of Income Tax (‘Pr. CIT’) passed under section 263 of the Act in respect of assessment year 2011-12 setting aside the original assessment order dated 31-12-2013 passed by the Assessing Officer (‘AO’) under section 143(3) of the Act.
2. Facts of the case
The brief facts in the above –mentioned case were that the assessee being a concessionaire of the Airport Metro Express Project of the Delhi Metro Rail Corporation Ltd. (‘DMRC’) under a Build-Operate-Transfer (‘BOT’) Scheme, had accepted the concession for a period of 30 years During the assessment year in question, the assessee claimed depreciation of Rs.112,29,74,447, on fixed assets of Rs.15,60,48,17,189 50% of the eligible depreciation rates since, during the assessment year in question, the assets were used for less than 180 days. The assessing officer framed the assessment under section 143(3) of the Act allowing depreciation as claimed by the assessee.
The case of the revenue was that the assets were developed under the BOT scheme and the assessee was not eligible to claim depreciation as it was not the owner of the assets. The Revenue contended that the land for the project was handed over by the DMRC to the assessee as Concessionaire of the basic structure was also done by the DMRC.
The case of the assessee was that during the assessment year in question it had purchased and installed plant and machinery and such plant and machinery was legally owned by it. It was further contended that since such assets were used for the purpose assessee’s business,it was entitled to claim depreciation under section 32 of the Act.
The Pr. CIT, in exercise of powers under section 263 of the Act issued a show cause notice (SCN) dated 16-3-2015 to the assessee pointing out that if the value of these fixed assets were to be amortized evenly over a period of 30 years, the amount of to be amortized would only be Rs.52,01,60,572 for each year. Therefore, the depreciation allowed to the assessee was in excess by Rs. 60,28,13,875 and, to that extent, the order passed by the assessing officer was prejudicial to the interest of the Revenue. In reply to the SCN, the assessee took the stand that, interest of the Revenue. In reply to the SCN, the assessee took the stand that, during the assessment year in question, it “had purchased the assets from independent vendors, out of its own funds for settings up the project.
Thereafter, order dated 30-3-2016 was passed by the Pr. CIT.
3. Thus held the court
The learned Judges of the Delhi High Court observed that for the purpose of exercising jurisdiction under section 263 of the Act, the conclusion that the order of the assessing officer is erroneous and prejudicial to the interests of the assessing officer is erroneous and prejudicial to the interests of the Revenue has to be preceded by some minimum inquiry. In fact, if the Pr. CIT was of the view that the AO did no undertake any inquiry, it became incumbent on the Pr. CIT to conduct such inquiry. All that Pr. CIT had done in the order was to refer to the Circular of the CBDT and conclude that “in the case of the assessee company, the assessing officer was duty bound to calculate and allow depreciation on the BOT in conformity of the CBDT Circular No. 9/2014 but the assessing officer is erroneous insofar as prejudicial to the interest of revenue”. In the considered view of the Court,this can hardly constitute jurisdiction under section 263 of the Act. In the context of the present case depreciation on assets like land and building, it was incumbent upon the purchased and installed by the assessee out of its own funds during the assessment year in question and, which were those assets that were handed over to it by the DMRC. That basic exercise of the determining as to what extent the depreciation was claimed in excess has not been undertaken by the Pr. CIT. He had exercised the second option available ro him under section 263(1) of the Act by sending the entire matter back to the assessing officer for a fresh assessment. That option, in the considered view of the Court, can be exercised only ofter the Pr. CIT undertakes an inquiry himself in the manner indicated hereinbefore. That was missing in the present case.
Finally, the Delhi High Court held, in respect of the appeal, that the ITAT was not in error in setting aside the order of the Pr. CIT under section 263 of the Act, no substantial question of law arose herein.
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