GST Council meet on Oct 7, may review progress in anti-profiteering cases

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The Goods and Services Tax (GST) Council is expected to review progress in anti-profiteering matters in its upcoming meeting on Saturday.
The Council will be apprised of the performance report of the Competition Commission of India (CCI) for the April-June quarter (first quarter, or Q1) of the current financial year (2023-24), which revealed that not a single case had been resolved during the period, according to a source privy to the agenda.

This will be the first performance review of anti-profiteering cases since they were taken over by India’s antitrust regulator on December 1, 2022, replacing the National Anti-Profiteering Authority (NAA) in order to check unfair profiteering activities by registered suppliers.

According to the status report likely to be presented before the Council on October 7, the CCI received a total of 27 complaints during Q1, of which it took up 12 cases related to profiteering and provided necessary direction. The remaining complaints pertained to other GST issues, which were referred to the concerned state and central GST authorities for further action.

The data further showed that about 176 cases are pending, the majority of which were transferred from the erstwhile authority, NAA, and are from the previous quarter. Of these, investigations in six cases confirmed profiteering and were submitted to CCI.

Following the investigation report, the authority passes an order after hearing both parties. If CCI finds that a supplier has engaged in profiteering, it must return the profiteered amount along with 18 per cent interest to the consumer.

Experts attribute the delay to a lack of quorum in CCI during the period.

Vaibhav Choukse, partner and head of competition law at JSA, said, “Section 22 of the Competition Act requires a quorum of at least three members to decide a case before CCI. During Q1 and the second quarter of 2023, CCI lacked a quorum as it had only two members after the retirement of the chairperson in October 2022, making it unable to exercise its adjudicatory role in pending cases. This may be one of the reasons for the delay in handling anti-profiteering cases.”

Notably, on September 19, the Centre appointed three new members to the CCI. With the appointment of the new members, the total strength of the CCI has increased to four, including the chairperson of the commission.

With CCI now functioning at full capacity, matters are expected to be fast-tracked, which will be reflected in the remaining quarters of the current financial year, according to another expert.

Since December 1, CCI has been mandated to investigate anti-profiteering issues related to GST and examine whether input tax credits availed of by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of goods or services.

NAA, which previously examined such cases, was wound up on November 30 after its term came to an end.

The GST Council, in its September meeting last year, granted a one-year extension until November 30, 2022, to NAA and also decided to shift the work to CCI after that.

Henceforth, all investigations based on complaints filed by consumers have been handled by the Directorate General of Anti-Profiteering (DGAP), which then submits a report to CCI.

At the DGAP level, of the total 35 cases received, 31 cases have been stayed by various high courts. One has been held up as directed by CCI, and three are pending as of June 30.

The current set-up of CCI’s anti-profiteering unit has a three-tier structure for investigating and adjudicating profiteering complaints, following GST rules.

Complaints are first sent to state-level screening and standing committees, which are then forwarded to DGAP for investigation. As of June, 303 cases are with the screening panel, and 33 are with the standing committee.

GST rules dictate that within six months from receiving the DGAP’s report, it must be determined whether a registered person has passed on the benefit of the reduced tax rate on the supply of goods or services or the benefit of input tax credit to the recipient through a commensurate reduction in prices.

The ongoing debate over anti-profiteering revolves around the challenges suppliers face in allocating the tax benefit that should be passed on to consumers for each item because raw materials purchased in bulk are used across numerous products in many industries.

CCI was established to enforce the Competition Act of 2002. The primary role of the commission has been to eliminate anti-competitive practices, protect the interests of consumers, and ensure free trade.

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Pooja Gupta

CA Pooja Gupta (CA, ISA, having 15 years of experience. Educator and Digital Creator

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CA Pooja Gupta (CA, ISA, having 15 years of experience. Educator and Digital Creator

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