JUNE 20, 2017

By Shankar Rochlani, CA

THE GST Council in its 17th meeting held last Sunday, 18 June 2017, reaffirmed the GST implementation date as 01.07.2017 and also finalised the Anti-profiteering Rules.

The salient features of these rules are -

Constitution of Authority

The Council will constitute an Authority called National Anti-Profiteering Authority. The Authority shall comprise of five Members, one of which will be the Chairman the other four will be Technical members. The Chairman will be a person who holds or has held a post equivalent in rank to a Secretary to the Government of India and the four Technical members will be the Commissioner/s or who have been Commissioners of State Tax or Central Tax or have held an equivalent position under existing law. The Additional Director General of Safeguards under the Board shall be the Secretary to the Authority.

Constitution of Standing Committee and Screening Committee

The Council shall constitute a Standing Committee on Anti-Profiteering which shall consist of officers of State and Central Government as may be nominated in this regard. State level screening committee shall be constituted at each State by the State Government/s which will consist of one officer of State and Central Government each and who are to be nominated by the Commissioner and Chief Commissioner of State and Centre respectively.

Powers and duties of National Anti-Profiteering Authority

The Authority may govern the methodology and procedure to determine whether benefit of reduced rate of tax or increased input tax credit has been passed on by way of reduction in price/s of supply/ies.

The duties of the National Anti-Profiteering Authority are as under:

1. To identify the registered person who has not passed on the benefit of reduction in 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;

2. 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 percent from the date of collection of higher amount till the date of return of such amount or  recovery of the amount not returned in case the eligible person does not claim return of the amount or is not identifiable, and depositing the same in the Fund referred to in section 57  

(c) imposition of penalty as prescribed under the Act; and

(d) cancellation of registration under the Act.

It is pertinent to note that the interest rate mentioned above is not qualified/ accompanied by the word/s ‘per annum'.

Whether the same is a typographical miss or an intended omission, the coming days would reveal.

Application to Standing Committee

Application to Standing Committee may be filed by any interested party or the Commissioner or any other person in writing in the prescribed form. The Committee shall within two months, from the date of receipt of application examine the accuracy and adequacy of evidence provided in the application, determine whether there is prima-facie evidence to support the claim of applicant. All the issues of local nature will be first examined by the State Screening Committee and the Screening Committee shall after being satisfied about the application forward the application alongwith its recommendations to Standing Committee.

Initiation of proceedings

The Standing Committee may after being prima-facie satisfied that there has been contravention of section 171 refer the matter to Director General of Safeguards (DGS) for detailed investigation. DGS shall conduct investigation and collect the evidence necessary to determine whether there has been contravention of section 171. The DGS is empowered to summon any person to give evidence and produce documents as it may deem fit.

Passing of Order

The Authority shall within three months from the date of receipt of report from the DGS determine whether the registered person has contravened the provisions of section 171 or not. An opportunity of being heard should be granted to both the interested parties and may pass the order for:

(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 percent from the date of collection of higher amount till the date of return of such amount or  recovery of the amount including interest not returned in case the eligible person does not claim return of the amount or is not identifiable, and depositing the same in the Fund referred to in section 57; 

(c) imposition of penalty as prescribed under the Act; and

(d) cancellation of registration under the Act.

Further, the order should be immediately complied with by the registered person. Failing to comply with provisions may result in initiation of action of recovery as amount IGST, CGST and SGST or UTGST as the case may be. Also, the Authority may require any of the Authority of Central of State or Union Territory tax to monitor the implementation of the order passed by it.

Decision of the Authority

In case of difference of opinion among the members the decision of the Authority shall be taken by the majority of the members.

Tenure of Authority

The Authority shall cease to exist after the expiry of two years from the date on which the Chairman enters the office unless the Council recommends otherwise.

Before concluding

The Revenue Secretary Dr. Hasmukh Adhia in the press conference said that “We want to keep it as a deterrent and hope we are not compelled to use the APA” . The Government is not very much eager to use the provisions of rules subject to compelling circumstances.

It is pertinent to note that the rules are silent on the following aspects -

1. Appeal against the order passed by the National Anti-Profiteering Authority

2. Enquiries/ proceedings pending at the end of tenure of National Anti-Profiteering Authority

Having said that it will be important to see how the GST Council comes up with a solution on the aforesaid two aspects and on the interest liability computation.

(The views expressed are strictly personal.)