On the 18th of June, 2016, the Goods and Services Tax Council announced the implementation of Anti-Profiteering and its rules. Various countries have experienced inflation and an increase in prices after the execution of GST. These rules are derived from the lessons learnt with the effects of GST around the globe. For example, in 1994, a hike in inflation was seen in Singapore as an after-effect of bringing about GST in the country. Therefore, it is essential for Indian administrators to keep an eye on the prices after implementing GST. India follows a pattern that many other countries have opted for as well. This is to initiate anti-profiteering measures at the retail level to protect consumers from the price swindling. This article talks about Anti-Profiteering and its rules.
Clause 171 deals with anti-profiteering rules and have been included in the Goods and Services Tax Act. This clause states that it is mandatory to pass on the benefit due to a reduction in the rate of tax or from the input tax credit to the consumer by way of an appropriate decrease in prices.
Constitution of the Authority
A GST Authority would determine the method and procedure for determining if the reduction in the rate or the advantages of the input tax credit has been passed on to the buyer by the seller by reducing the prices of the products.
The Authority would comprise of the following individuals.
- A Chairman: Holds or has held a post that is equivalent in rank to a Secretary to the Indian Government.
- Four Technical Members: Individuals who are or have been the Commissioners of the State Tax or the Central Tax for one year at least or have held a post that is equivalent to be nominated by the Council under the existing law.
Duties of the Authority
The Authority would function for two years from the date when the Chairman takes up his office unless recommended otherwise by the Council. The following are the duties of the authority concerned with anti-profiteering.
- To determine if the reduction in the tax rate or the benefit of the input tax credit, by reducing prices, has been passed on to the buyer by a seller.
- To identify taxpayers who have not passed on the benefit.
Orders by the Authority
The Authority has the power to issue the following orders.
- A reduction in the prices of products.
- To return to the buyer if the benefit amount is not passed on along with an 18 per cent interest.
- Payment of penalty
- Cancellation of registration
Working of the Authority
The following steps indicate how the Authority works at a glimpse.
- The Authority shall pass an order within three months from the date of receiving the report from the Director General of Safeguards.
- An opportunity would be provided for being heard to the interested parties if a request for the same is submitted in writing.
- The period of interest shall be calculated from the date of the collection of a higher amount till the date of return of this kind of amount.
- If the eligible buyer does not choose to claim the return or the individual could not be identified, then in such a case, the amount must be deposited to the Fund. Interest will be calculated from the date of collection of the higher amount up until the date it is deposited in the Fund.
Standing Committee and Screening Committees
The following are the features of the Standing Committee and Screening Committees.
- A Standing Committee and a state-level Screening Committee on Anti-profiteering would constitute the Council.
- The Standing Committee would comprise of officers of the State and the Central Government as nominated by the Government itself.
- A state-level Screening Committee would be established in every state and comprise of the following. An Officer of the State Government who would be nominated by the Commissioner, and an Officer of the Central Government as appointed by the Chief Commissioner.
Secretary to the Authority
The Secretary to the Authority would be the Additional Director General of Safeguards under the Board.
Appointments, Salaries and Allowances
The following are the aspects of the Appointments, Salaries and Allowances concerning the Authority.
- The Central Government would appoint the Chairman and the Members of the Authority on the recommendations of a committee designed just for selection constituted by the Council.
- The appointed Chairman would be paid a monthly salary of INR 2.25 Lakhs that is fixed along with other allowances and benefits. If the Chairman selected happens to be a retired officer, the individual shall receive the amount after the deduction (INR 2.25 Lakhs – Amount of the pension).
- The Technical Members of the Authority would be paid a monthly salary of INR 2.05 Lakhs that is fixed along with other allowances and benefits. If the Chairman selected happens to be a retired officer, the individual shall receive the amount after the deduction (INR 2.05 Lakhs – Amount of the pension).
- The appointed Chairman and Technical Members of the Authority would hold the office for a term of two years from when they take up the office, or until they reach the age of 65. The members of the Authority would be eligible for reappointment. However, an individual of 62 years or above would not be qualified to be the Chairman of the Authority.
Below is the process that is followed by the concerned authority for Anti-profiteering.
Initial Stage: State Level Screening Committee
The following is the process that is executed by the State Level Screening Committee.
- Screens the applications to ensure that the supplier has not passed the benefits to the consumer.
- Relevant cases would be passed to the Standing Committee.
Secondary Stage: Standing Committee
The following is the process that is executed by the Standing Committee.
- Receives a written application.
- Examines the evidence that proves the benefit has not been passed on.
- Within two months, refers the case to the Director-General.
Final Stage: Director General of Safeguards
The following is the process that is executed by the Director General of Safeguards.
- Investigates the case.
- Collects the appropriate evidence.
- Issues notice to the supplier.
- Completes and closes the case within three months.
Confidentiality of Information
The parties involved in a case would be protected as the information provided by them will be handled on a confidential basis. Hence, they may be required to submit a non-confidential summary of the same. When the data cannot be summarised by the party providing such information, then such a party may file a statement of reasons why the summarisation would not be possible to the Director General of Safeguards.
The cooperation with other agencies or statutory authorities would be required, and the Director General of Safeguards may seek the opinion of the same.
Power to Summon
The Director General of Safeguards would have the ability to summon any individual as required or necessary. This power could belong to an officer who is authorised by the Director himself as well. This will be used if there is a need to give evidence or to produce a document or any other item as required for the case. The Director General of Safeguards would also have the same powers as that of a civil court. Therefore, every such inquiry would be deemed to be a judicial proceeding.