ENSURE GST CUTS REACH USERS: NAPA

THE CONTEXT: The National Anti-Profiteering Authority (NAA) has directed GST officials across the country to ensure that the tax rate cuts notified on some COVID-19-related essentials are passed on to consumers.

Analysis:

• Complaints from end users about lack of price reductions commensurate with the tax cuts, are to be treated on a priority basis
• The complaints must be forwarded to the State level Screening Committees and Standing Committees on Anti-Profiteering.
• At its last meeting on June 12, the GST Council had waived the indirect tax levied on two critical drugs, Tocilizumab and Amphotericin B, and reset the tax rate to 5% on 14 COVID-19 essentials.
• On June 14, the Finance Ministry had notified the revised rates, which are applicable till September 30.
• “The suppliers are required to commensurately reduce the prices of each of the supplies of Goods and Services made by them so that the benefit of the reduction in tax rates and/or of input tax credits is passed on to the recipients/consumers,” the NAA emphasised.
• Producers of items ranging from ambulances to pulse oximeters and oxygen concentrators would need to ensure retail price reductions were effected soon in order to avoid action under the anti-profiteering framework

ABOUT NAA

• The National Anti-profiteering Authority (NAA) was established under section 171 of the Central Goods and Services Tax Act, 2017.
• The NAA was set up to monitor and to oversee whether the reduction or benefit of input tax credit is reaching the recipient by way of appropriate reduction in prices.
• The NAA consists of a Chairman along with four senior government officials, mostly of the rank of joint secretary appointed as technical members in the authority.
• NAA has the authority to deregister an entity or business if it fails to pass on the benefit of lower taxes under GST to the customer.
• Deregistering a business will be the last course of action and extreme step against any violator
• NAA will recommend the return of undue profit which a business earned from not passing on reduction and benefit of tax to consumers along with an 18 per cent interest.
• It can also impose a penalty if it sees it necessary

• Anti-Profiteering Mechanism Under GST Regime:

  • Complaints are based on jurisdiction, complaints that are local in nature will be first sent to a state-level committee for screening
  • Complaints at a national level will be marked directly to the standing committee
  • In case the incident of profiteering relates to an item of mass consumption with an “all India ramification”, the application may be directly made to the Standing Committee
  • If complaints have merit, respective committees will refer cases for further investigation to the Directorate General of Safeguards
  • The DG Safeguards will generally take about 3 months to complete investigation and send the report to NAA
  • If the NAA finds that the company has not passed on GST benefits, it will either direct entity to pass on benefits to consumers, or if the beneficiary cannot be identified, it will ask the company to transfer the amount to ‘consumer welfare fund’ within a specified timeline.