Two people aware of the matter said that once the watchdog becomes fully functional, more than a hundred orders will be issued against companies profiting by withholding the benefits of Goods and Services Tax (GST) from consumers.
The government is in the process of nominating a new chairperson for the antitrust regulator and three other members, and once at least one new member or chairperson is appointed, orders for profiteering will start pouring in, giving the CCI the required quorum of three members. . The verdict, said one of the two people cited above.
The Directorate General of Anti-Profiteering (DGAP), the agency probing GST-related profiteering, has completed over 100 investigative reports on corporate profiteering, awaiting final orders from the CCI. These include those investigation reports that have been transferred from the now abolished National Anti-Profiteering Authority (NAA) to the CCI and those that have been sent directly to the CCI after the DGAP was empowered to adjudicate on GST-related profiteering with effect from November 1. Was sent to
These cases mostly cover alleged profiteering by real estate developers, producers of fast-moving consumer goods (FMCG) and cement producers, said the first person cited above.
“Of all the complaints investigated by the DGAP, profiteering has been proved in about 80% of the cases, and confirmed by the NAA in almost all the cases,” said the person who spoke on the condition of anonymity.
Real estate developers, in particular, have been under regulatory focus for failing to pass on to customers the benefits of credit for taxes paid on raw materials such as cement and steel, which in the GST regime require developers to pay their final tax. were available to do. liability.
In the pre-GST era, credit was not available for taxes paid on building materials due to multiple tax systems at the central and state levels and the fact that house property was considered an immovable asset rather than a ‘goods’. However, in the GST regime, credit for taxes on inputs such as cement and steel became available for payment of 12% GST liability on sale of under-construction property (8% in case of affordable homes). In case of ready-to-move-in homes, where completion certificate has been issued, there is no GST. The complaints are about not passing on the benefit of tax credit to consumers through lower prices or installments in case of under-construction flats or where completion certificate has not been issued.
Emails sent to spokespersons for the Finance Ministry, CCI and DGAP on Tuesday seeking comment for this story remained unanswered at the time of publication.
The government recently allowed the CCI to approve mergers and acquisitions with its existing strength so that corporate transactions are not affected by the lack of quorum in the regulator, which currently has only two members. However, this exemption does not apply to decisions on matters relating to profiteering or anti-competitive practices.
Unlike in the case of household products or other items, in the case of home construction it is possible for the investigating agency to identify the victim of corporate profiteering and for the adjudicating authority to order refund with interest. In cases where the consumers cannot be identified and are in large numbers, the company is ordered to deposit the amount of profiteering in a designated Consumer Welfare Fund.
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