Bangalore The National Anti-Profiteering Authority (NAA) may take a year and a half to decide on pending cases at its current pace, even though the Goods and Services Tax Council (GST) is yet to decide to include the agency in the Competition Commission . of India (CCI). If the authority has to decide on these matters on its own, it may require an extension of one year after its term ends on November 30.
The authority, which was stalled for almost a year due to lack of quorum, swung into action after the government appointed two members to it in April.
The NAA issued 36 orders in the June quarter, including one against cosmetic giant L’Oreal, which was found guilty of profiteering to such an extent. 186 crores.
The NAA consists of four technical members and a chairman. It now has only three technical members, one of whom has the additional charge of chairman.
The two-day GST Council meeting, which began in Chandigarh on Tuesday, is likely to examine the status of 216 profiteering cases before the NAA and decide on its future course. A state government official said on condition of anonymity that the large number of pendencies suggest that the NAA may get an extension.
As per the anti-profiteering rules under GST, “Benefit of input tax credit should be passed on to the recipient by way of reduction in prices.”
The anti-profiteering mechanism has three phases. The first is a state level committee that investigates local complaints. The second is a standing committee for national level grievances, while the third is an inquiry by the Directorate General of NAA.
“NAA expects to issue at least 40 orders in the next quarter. That is, more than one decision every three days. However, even at that pace, it will take a year and a half from now to settle these,” said a central government official on condition of anonymity.
In September, the GST Council decided to explore bringing anti-profiteering cases under the country’s monopoly watchdog, the CCI. However, the final decision on this is awaited. MS Mani, partner, Deloitte India, said the NAA should get more time to clear pending cases, as a new authority may take time to understand the nuances of these cases. “In the absence of a common cost method to determine the existence or otherwise of profitability, it would be more difficult for a new body to deal with these matters,” Mani said.
Abhishek A., partner at Khaitan & Co. “Hopefully, NAA can get an extension, but the contentious issue is that the industry struggles in the absence of any prescribed methodology to quantify profiteering,” Rastogi said.
The merger with the CCI may not resolve the fundamental dispute and aspects relating to constitutionality.
Rastogi said, “As a consequence, any such merger would be futile unless there is a robust framework to quantify profiteering for the various sectors under investigation in the light of economic realities and statutory provisions.” Are.”
Abhishek Jain, partner, Indirect Taxes, KPMG in India, expects some discussion in the GST Council about the inclusion of NAA in the CCI by the end of his term in November.
“Whether all pending cases will be settled by November 2022 or some will be referred to CCI is something that needs to be seen. It is noteworthy that this change in the governing body will not affect the challenge posed in various High Courts regarding the constitutional validity of the anti-profiteering provisions.
140 writ petitions are pending in various courts against NAA. However, now the courts have set aside any NAA order so far.
Prateek Jain, Partner, Price Waterhouse & Co LLP said that with the five years of GST, there should be no anti-profiteering provisions and the market forces should decide the pricing.
“It has been five years since GST was implemented. A lot must have changed since then in terms of input costs for businesses and the overall economic situation. Ideally, we should not have anti-profiteering provisions right now and let the market forces decide the pricing,” Jain said.
At least, there should be only limited applicability in future when the GST rate on a particular product or service is lower and that too for a limited time, “say three months from the change”, he said.