COMPETITION COMMISSION OF INDIA TO DEAL ANTI PROFITEERING MEASURES UNDER GST LAWS

[Mr. M. GOVINDARAJAN]

Anti Profiteering

Section 171(1) of the Goods and Services Tax Act, 2017 (‘Act’ for short)  provides 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.

Section 171(2) of the gives powers to the Central Government to constitute an Authority, or empower an existing Authority constituted under any law for the time being in force, to examine whether input tax credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him. 

Section 171(3) of the Act provides that the Authority referred to in sub-section (2) shall exercise such powers and discharge such functions as may be prescribed.

Section 171(3A) of the Act provides that where the Authority referred to in sub-section (2) after holding examination as required under the said sub-section comes to the conclusion that any registered person has profiteered under sub-section (1), such person shall be liable to pay penalty equivalent to ten per cent. of the amount so profiteered.   No penalty shall be leviable if the profiteered amount is deposited within thirty days of the date of passing of the order by the Authority.

National Anti Profiteering Authority

National Anti profiteering Authority has been constituted by the central Government to examine whether input tax credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him, this is to ensure that the consumer is protected from arbitrary price increase in the name of GST.

The Authority would have the following duties:

• to determine whether any reduction in the rate of tax on any supply of goods or services or the benefit of input tax credit has been passed on to the recipient by way of commensurate reduction in prices;
• to identify the registered person who has not passed on the benefit of reduction in the 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;
• to order,-

• reduction in prices;
• 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 per cent. from the date of collection of the higher amount till the date of the return of such amount or recovery of the amount not returned, as the case may be, in case the eligible person does not claim return of the amount or is not identifiable, and depositing the same in the Consumer Welfare Fund;
• imposition of penalty; and
• cancellation of registration.

The Authority shall cease to exist after the expiry of 2 years from the date on which the Chairman enters upon his office.  The said tenure has been extended to four years and then to five years.  The tenure comes to an end on 30.11.2022.

Competition Commission

The Central Government issued Notification No. 23/2022-Central Tax, dated 23.11.2022, vide S.O. No.5450 (E).  Vide this Notification the Central Government gives powers to the Competition Commission of India to examine whether input tax credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him with effect from 01.12.2022.

Notification No. 24/2022-Central Tax, dated 23.11.2022

Vide the above notification the Central Government amended the Goods and Services Tax Rules, 2017.  These amendments will come into effect from 01.12.2022.

This amendment omitted Rules 122, 124, 125, 134 and 137.

Rule 122 provides for the constitution of the National Anti-Profiteering Authority, which consists of a Chairman who holds or has held a post equivalent in rank to a Secretary to the Government of India and four Technical Members who are or have been Commissioners of State tax or central tax for at least one year or have held an equivalent post under the existing law.

Rule 124 provides for the appointment, salary, allowances and other terms and conditions of the Chairman and Members of the National Anti-Profiteering Authority.

Rule 125 provides for the appointment of Secretary to the Authority who shall be an officer not below the rank of Additional Commissioner (working in the Directorate General of Anti-profiteering) shall be the Secretary to the Authority.

Rule 134 provides the procedure for the decisions to be taken by the majority.   A minimum of three members of the Authority shall constitute quorum at its meetings.  If the Members of the Authority differ in their opinion on any point, the point shall be decided according to the opinion of the majority of the members present and voting, and in the event of equality of votes, the Chairman shall have the second or casting vote.

Rule 137 provides the tenure of the National Anti-Profiteering Authority.

The Competition Commission will be the permanent Authority for Anti-profiteering with effect from 01.12.2022.