The National Anti-Profiteering Authority (NAA) is all set to be subsumed into the Competition Commission of India (CCI) by the end of this month. Discomfort has grown within the CCI, , especially with regard to implementation issues.

NAA is profiteering watchdog and was set up after the introduction of GST, initially for two years, which was extended two times subsequently. In the Lucknow meeting of GST Council last September, it was agreed that the tenure was to be extended till November 30, after which it would wind up with the CCI stepping in to take over its functions.

However, there is a thinking that merging of NAA mandate with CCI is an uneasy alliance. Insiders point out that the mandate of the NAA is completely antithetical to the role of CCI, and claim that there won’t be any synergy in the merger. As a market regulator, CCI ensures fair discovery of prices through market forces, whereas NAA mandates passing of tax benefits and input credits to consumers. There is lack of synergy in their roles as also lack of expertise in CCI in handling tax matters. 

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At present, CCI functions with two members, and none of them has any experience or background in indirect tax matters. One member is from the foreign services, whereas the other is from economic services. Though the Competition Act, 2002 provides a plethora of disciplines from which members could be drawn, the provision conspicuously omits taxation as a discipline from its ambit.

There are two other issues. First, many orders by NAA have been challenged in various high courts, and they are still pending. Second, there is huge pendency of cases before the NAA, and CCI, with its increasingly expansive role, may find it difficult to discharge the additional burden. In fact, this may compromise on the quality of work of CCI at a time when it is taking on big tech in a big way, say competition watchdog observers. Earlier this year, the CCI had also expressed its reservations to the revenue department about the proposed merger of NAA with the competition watchdog, said sources in Finance Ministry.

Saurabh Agarwal, Tax Partner with EY says the ultimate objective of NAA and CCI is to protect the consumer interest; however, there may be certain practical challenges that could arise if NAA and CCI are merged as the focus area of the CCI is broader when compared to the NAA, which is restricted to only passage of GST benefits to the customer, and the legality of the NAA is challenged by GST registrants on account of Constitutional validity.

Also, “urgent appointments/ assessment within the current bandwidth is required to be undertaken for swift transition of NAA to CCI, funding and infrastructure which may be required after merger could be seen as challenge and CCI is also facing backlog with a single bench having the responsibility for adjudicating all matters. This move of merger is highly expected as the changes in GST tax rates were happening on a frequent basis and at given juncture changes in GST are comparatively less”, he said.

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