Cabinet clears setting up of GST anti-profiteering authority

The union cabinet on Thursday approved the setting up of a National Anti-profiteering Authority under the GST, in a bid to ensure that consumers get the benefit of reduced prices under the new indirect tax regime.

The approval by the cabinet paves the way for the immediate establishment of the apex body, which is mandated to ensure that the benefits of GST rate reduction is passed on to consumers.

The announcement comes close on the heels of the GST Council's decision to drastically prune items in the high-tax bracket, and limit those in the highest tax slab of 28 per cent to just 50.

The sharp reduction in the GST rates of a large number of items of mass consumption has paved the way for the immediate establishment of an apex body mandated to ensure that the benefits of the reduction in GST rates on goods or services are passed on to the ultimate consumers by way of a reduction in prices, an official release stated.

The NAA will be headed by a senior official of the level of secretary to the Government of India with four technical members from the centre and/or the states.

The "anti-profiteering" measures enshrined in the GST law provide an institutional mechanism to ensure that the full benefits of input tax credits and reduced GST rates on supply of goods or services flow to the consumers. This institutional framework comprises the NAA, a standing committee, screening committees in every state and the Directorate General of Safeguards in the Central Board of Excise & Customs (CBEC).

Affected consumers who feel the benefit of commensurate reduction in prices is not being passed on when they purchase any goods or services 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. After forming a prima facie view that there is an element of profiteering, the Standing Committee may 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.

If the undue benefit cannot be passed on to the recipient, it can be ordered to be deposited in the Consumer Welfare Fund. In extreme cases, the NAA can impose a penalty on the defaulting business entity and even order the cancellation of its registration under GST.

Union minister Ravi Shankar Prasad said currently there are only 50 items which attract the highest tax of 28 per cent under the Goods and Services Tax (GST) regime and rates on many items have been cut to 5 per cent as well.

"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, then he can complain to the authority," Prasad told reporters after the Cabinet meeting.

This reflects government's full commitment to take all possible steps to ensure benefits of implementation of GST to the common man, the minister said.

The GST Council, chaired by union finance minister and comprising state counterparts, had last week decided to slash tax rates on over 200 items in the GST regime as well as lowered tax rates on AC and non-AC restaurants to 5 per cent.

The council 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 P K 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 authority will have a sunset date of two years from the date on which the chairman assumes charge. The chairman and the four members of the authority have to be less than 62 years.