JUNE 21, 2017

By Vasa Seshagiri Rao, IRS & K Srinivasan, IRS

THE GST Council chaired by Union Finance Minister Arun Jaitley and comprising state finance ministers as members, approved the anti-profiteering rules in its 17 th meeting held last Sunday.

Section 171 of the Central GST Act mandates that any reduction in rate of 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.

An Anti-profiteering oversight body is sought to be created for overseeing the compliance of the above objective of the Government.

A GST Anti­-profiteering panel is being put in place to ensure passing on the benefits accruing from GST through commensurate price reduction to consumers, subject to operation of a sunset clause for two years.

Besides a Chairman working presently as a Secretary or in the past, four other members of the authority from the rank of joint secretary level officers who have been Commissioners in Central Excise and Service tax either at the Centre or States, are to be nominated by the Council.

A State level screening committee shall be constituted by each State, represented by one officer each of the State and the Centre to be nominated respectively by the Commissioners/Chief Commissioners which will forward the local complaints to the Standing Committee.

A Central Standing Committee shall be constituted by the Council, represented by officers of the State and Centre in such numbers as specified.

The authority derives its powers from rule 10 of the subject rules to decide upon the methodology and procedure based on which complaints from interested parties including a Commissioner will be verified whether a given situation in GST gave rise to gains that was failed to be passed on by the registered person to the recipient of service.

In addition, the Committee will also be empowered to act on complaints routed through a State level Screening Committee via the Central Standing Committee investigated by the Directorate of Safeguards of CBEC who will give a report, not later than 3 months extendable by another three months.

As per the norms, the authority will have relevance for a limited period of two years as per a sunset clause provided under it and will decide on the price reductions to be given to the consumers by trade.

It would ask the businesses to refund the price reduction on a proportionate basis to consumers.

A search-­cum-­selection committee will be set up for finalising the members of the anti-profiteering authority.

As per officials, it is likely to take about one or two months to finalise the members.

As per the structure, the complaints of profiteering would first come to the State level Screening Committee which in turn will forward it to the Central Standing Committee comprising tax officials from states and the Centre.

It would forward the complaint to the Directorate of Safeguards (DGS) working under CBEC in the rank of Commissioner for investigation, which is likely to take about 3 months to complete the inquiry extendable by another 3 months.

On completion of investigation, the report would be submitted to the anti­-profiteering authority which would decide on the proportion of price reduction required.

Failure to comply with the mandate entails penalty including cancellation of Registration as provided under the CGST Act read with rule 8 of the above rules.

Where the consumer cannot be identified, the amount would be credited to the Consumer Welfare fund referred to in Section 57 of the Act.

The ADG Safeguards shall be the Secretary to the Anti-profiteering Authority.

Under section 70 of the Act, it haspowers in any inquiry in the same manner, as provided in the case of a civil court under the provisions of the Code of Civil Procedure.

Every such inquiry shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code.

Looking at the way it is reportedly designed no great apprehensions need be had about the Anti-profiteering Agency set up under the GST Act.

The above enabling provisions are needed for any authority of this kind to do its job effectively and being constituted by officers of a higher rank and experience, no big blame or harm can come of them.

It is tasked to carry out just about its objective of ensuring the passing on of the benefits of GST due to a rate reduction or benefit of ITC gained post GST, if any, which appears to be fair enough on the face of it.

It would also appear very necessary to gauge rightly the measure of growth and success of the new reform which would otherwise go unnoticed and unsung.

(About the authors: Vasa Seshagiri Rao, IRS is Additional Director General, NACEN, Chennai & K.Srinivasan IRS is Assistant Commissioner, Service Tax,Chennai. The views expressed are strictly personal.)