The IAS aspirants should study all the topics of socio-economic importance recently been in the national news. Such topics can be asked IAS Mains Exam 2018. Here, we have provided an analysis of newly established National Anti-Profiteering Authority which will assist in the implementation of the new tax regime, GST in the country.
After the implementation of Goods and Services Tax (GST), any reduction in the tax rate on the supply of goods or services or, the benefit of input tax credit to be passed on to the consumers by way of commensurate reduction in prices. In order to keep a check on the benefits of tax reduction after GST and that should be passed to the ultimate beneficiaries, the Government has decided to set up a National Anti-profiteering Authority (NAA) under the new indirect tax regime. Setting up of NAA reveals the Government’s pledge to taking all possible steps to ensure transfer of all the benefits of implementation of GST to the common man.
Probable Questions to be asked in IAS Mains Exam
Q1. Examine the authorization of GST’s National Anti-profiteering Authority and the concerns expressed against its mandate and powers. (150 Words) 10 Marks
Q2. “National Anti-Profiteering Authority is a mechanism devised to ensure that prices remain under check and to ensure that businesses do not pocket all the gains from GST”. Discuss (250 Words) 20 Marks
Constitution of the National Anti-profiteering Authority (NAA)
- The NAA will have five members- Chairman (a post equivalent in rank to a Secretary to the Government of India) and 4 Technical Members (it may be Commissioners of State tax or central tax or served at an equivalent post under existing rules).
- The Additional Director General of Safeguards under the CBEC (Board) shall be the Secretary to the Authority.
- The Authority shall cease to exist after the expiry of two years from the date on which the Chairman enters upon his office unless the Council recommends otherwise.
- Power to determine the methodology and procedure
- The NAA will have authority to determine the methodology and modus operandi for a determination as to whether the cut in the rate of tax on the supply of goods or services or the benefit of input tax credit has been passed on by the registered person to the actual recipient by way of commensurate reduction in prices.
Duties of the Authority
1. To identify the registered individuals who have not passed on the benefits after 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;
2. To determine whether any reduction done 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 actual recipient by way of commensurate reduction in prices.
3. To order:
- reduction in prices of goods and services
- return to the actual recipient, an amount equivalent to the amount not passed on by way of commensurate reduction or cut in the prices of goods and services along with interest at the rate of 18% 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 a penalty if found any irregularities; and
- cancellation of registration in case of violation of guidelines
Application to the Authority
1. The Screening Committee formed in each State by the State Governments shall consist of:
- an officer of the State Government,
- to be nominated by the Commissioner, and
- an officer of the Central Government, to be nominated by the Chief Commissioner.
2. The Screening Committee constituted in each State shall first examine all applications from interested parties on issues of local nature.
3. The Screening Committee shall forward the application with its recommendation after examining the application if the supplier has not passed on the reduction in rate of tax on any supply of goods or services or the benefit of input tax credit on to the recipient by way of commensurate reduction in prices to the Standing Committee on Anti-profiteering for further action.
4. The Standing Committee on NAA shall consist of such officers of the State Government and Central Government as may be nominated by the GST Council.
5. If the Standing Committee is satisfied with the recommendations given by the Screening Committee and the prima-facie evidence is enough to show that the supplier has not passed on the benefit of reduction in the rate of tax under GST on the supply of goods or services or the benefit of input tax credit to the actual recipient by way of commensurate reduction in prices of goods and services then it shall refer the matter to the Director General of Safeguards for a detailed investigation.
1. Further, the Director General of Safeguards under the Authority shall conduct an investigation on the cases and shall go through the evidence found to determine undue profiteering and before initiation of the investigation, issue a notice to the interested parties.
2. The NAA shall conduct a hearing if the aggrieved party requested so within a period of three months from the date of the receipt of the report from the Director General of Safeguards.
3. If the members of NAA differ in opinion on any point, the point shall be decided according to the opinion of the majority.
Order of the Authority
If the Authority finds enough evidence against the registered person that he/she has not passed on the benefit of the reduction in the rate of tax on the supply of goods or services or the benefit of input tax credit to the recipient by way of commensurate reduction in prices, the Authority may 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; imposition of a penalty as specified under the Act; and
- cancellation of registration under the Act.
National Anti-Profiteering Authority (NAA) is a mechanism created to ensure that prices remain under check and to ensure that businesses do not take all the benefits from tax cut under GST because profit is fine, but undue profiteering at the expense of the consumers is not.
But, still, there is a huge confusion and complexity among the consumers about the functioning and bureaucracy of the Authority. At the same time, it is very difficult to trace or find out the malpractices involved in tax rate charged by the merchants. So, more clarity is required on how the Government will determine the difference between undue profit and fair play — or the discretionary space available to the Authority could enable rent-seeking. One of the most important aspects of this Authority should make a fine balance of its ruling and to protect the interests of the consumers. It must not become a tool for harassment of registered firms under GST. So, there should be a priority for the Government to establish transparency in authority’s powers while using in genuine cases.