In order to ensure that the benefits of revised lower Goods and Services Tax (GST) rates reach to the consumers, the Union Cabinet on Thursday approved setting up of the anti-profiteering authority, comprising Chairman and four technical members, under the new indirect tax regime. The move comes a day after the Government notified substantial reduction in GST rates on over 200 items following a decision of GST Council at its 23rd meeting at Guwahati.
“This paves the way for the immediate establishment of the National Anti-profiteering Authority (NAA), which is mandated to ensure that the benefits of the reduction in GST rates are passed on to the ultimate consumers by way of a reduction in prices,” a Finance Ministry statement said here.
Union Minister Ravi Shankar Prasad said currently there are only 50 items which attract the highest tax of 28 per cent under the GST regime and rates on many items have been cut to 5 per cent.
“The National Anti-Profiteering Authority is an assurance to consumers of India. If any consumer feels that the benefit of tax rate cut is not being passed on, s/he can complain to the authority,” Prasad told reporters after the Cabinet meeting.
The GST had earlier approved setting up of a five- member National Anti-Profiteering Authority to enable consumers to file complaint in case price reduction is not passed on. A five-member committee, headed by Cabinet Secretary PK Sinha, comprising Revenue Secretary Hasmukh Adhia, CBEC Chairman Vanaja Sarna and chief secretaries from two States, has been entrusted to finalise the chairman and members of the authority.
The anti-profiteering measures are designed to ensure that the full benefits of input tax credits and reduced GST rates on supply of goods or services flow to the consumers.
Consumers, who feel the benefits of notified reduction in prices is not being passed on any goods or services they have purchase, may apply for relief to the Screening Committee in the particular State. However, in case the incident of profiteering relates to an item of mass impact with “All-India” ramification, the application may be directly made to the Standing Committee.
On last Friday, the GST Council had cut rates on 178 items to 18 per cent from 28 per cent, slashed taxes on tax rates on AC and non-AC restaurants to 5 per cent, in one of biggest changes in rules and rates since the new system kicked in from July 1. Only 50 items now attract tax rate of 28 per cent.
As per the Finance Ministry statement, after forming a prima facie view that there is an element of profiteering, the Standing Committee shall refer the matter for detailed investigation to the Director General of Safeguards, CBEC, which shall report its findings to the NAA.
“In the event the NAA confirms there is a necessity to apply anti-profiteering measures, it has the authority to order the supplier/business concerned to reduce its prices or return the undue benefit availed by it along with interest to the recipient of the goods or services,” it added.
According to the anti-profiteering rules, the authority will suggest return of the undue profit earned from not passing on the reduction in incidence of tax to consumers along with an 18 per cent interest, as also impose penalty or cancel registration of any entity or business if it fails to pass on the benefit of lower taxes to consumers under the GST regime.
If the authority finds that a company has not passed on GST benefits, it will either direct the entity to pass on the benefits to consumers or if the beneficiary cannot be identified will ask the company to transfer the amount to the ‘consumer welfare fund’ within a specified timeline.