Center mandates CCI to probe GST-related profiteering

 

The development ends uncertainty about the future of the anti-profiteering regime, which was introduced to prevent businesses passing on tax benefits to consumers.

The central government has ordered India's anti-trust watchdog Competition Commission of India (CCI) to investigate Goods and Services Tax (GST)-related profiteering by businesses from November 1, coinciding with the term of the National Anti-Profiteering Authority (NAA). Have given. Till the end

An official order from the Central Board of Indirect Taxes and Customs (CBIC) said that the decision was taken on the recommendation of the GST Council, the federal indirect tax body. Mint had reported on November 11 that if the GST Council does not meet before the end of the month, a panel of officers empowered to take emergency decisions will recommend to the CCI the benefits of GST rate cuts and availability of input tax credits. Will decide on giving mandate for deliver to consumers.

The CBIC said the government has empowered the CCI to examine "whether input tax credit availed by a registered person or reduction in the rate of tax has actually resulted in reduction in the price of goods or services or both supplied by him". Is."

The development ends uncertainty about the future of the anti-profiteering regime, which was introduced to prevent businesses passing on tax benefits to consumers. Industry watchers have long claimed that in the absence of industry specific guidelines on how to calculate reduction in value due to the tax rate cut, it would be difficult for them to ensure full compliance. Policymakers have also acknowledged that the anti-profiteering provision in the GST law is not ideal, as its implementation in a free market economy, where businesses have freedom to set prices, would be a difficult challenge.

NAA will cease to exist from December 1, though the Directorate General of Anti-Profiteering (DGAP), the investigation arm of the profiteering watchdog, will retain its investigative powers under the GST laws, said Rajat Mohan, partner at accounting firm AMRG Associates.

“Henceforth all reports of the DGAP will be submitted to the CCI for its decision. Transfer of all pending cases from NAA to CCI and constitution of a special bench for adjudication may take some time, which will increase the pendency of cases. The judiciary may also consider remanding all writ petitions filed in profiteering cases back to the CCI," explained Mohan.

After the completion of the term of former CCI President Ashok Kumar Gupta in October, CCI is now waiting for the new President. A new chairman would mean that the CCI would get a quorum to decide on matters. Currently, the regulator has only two members. The government may need to meet the necessary funding and infrastructure requirements for CCIs to meet the new mandate.

The anti-trust watchdog has established itself as a strong regulator over the past decade and uses both adjudication and advocacy to remove anomalies in the market. The government is currently in the process of reforming the Competition Act, which was passed in 2002 to empower the regulator to effectively deal with digital economy firms and improve the ease of doing business.