GST: No profiteering plaint from 17 States/UTs, so far

Not one complaint of profiteering has been made in 17 States and Union Territories under the Goods and Services Tax (GST) regime, post the rate cuts.

This, despite a National Anti-profiteering Authority (NAA) being in place, with screening committees in every State.

States can file cases suo motu and also forward them for further action.

Possible reasons

“Gujarat is one of the biggest manufacturing and trading hubs and Tamil Nadu is one of biggest manufacturing hubs. Still not a single complaint against profiteering post-GST has been received from them and 15 other States. It means either the companies there are passing on all the benefits of GST rate cuts to consumers, or the consumers are unaware, or there are some issues with tax officials,” a senior government official told BusinessLine . After the introduction of the new indirect tax regime from July 1 last year, the GST Council has lowered duties on 384 goods and 68 services.

The National Anti-profiteering Authority was set up to determine if the reductions in tax rates and the benefits of the input tax credit are being passed on to consumers by way of commensurate reduction in prices. The NAA is stratified at these levels — the Directorate General of Anti-profiteering in the Central Board of Indirect Taxes and Custom (CBIC), a Standing Committee, and Screening Committees in every State.

Screening panels

All the 29 States and three Union Territories (Delhi, Puducherry and Chandigarh) have Screening Committees.

Rule 128 of the CGST Rules 2017 prescribes that a complaint can be filed by an interested party or a commissioner or any other person. The official said a commissioner is the most competent authority to find whether a rate reduction has been passed on or not.

“On the effective date of rate reduction itself, the commissioner just needs to check whether invoicing has been done properly. If it is, then the benefit will reach the next level and ultimately to the consumer,” he said, adding that at the first level of distribution, any mischief can be reported and action taken.

The issue is whether the NAA can ask field officers (Commissioners) to take pro-active steps. The Rules are not very clear on that. “There is no institutional mechanism of superintendence and administration of various layers, especially the States’ Screening Committees and the Standing Committee,” the official said. The DG is one of 10 in the CBIC, reporting to the Board’s Chairman. This is unlike the Competition Commission of India (CCI) where different layers such as DG are under the administrative control of the Chairman.

“The current arrangement is making it difficult to achieve the legislative intent that the concession of the government reaches the end consumer,” the official said.

‘Consumer must benefit’

Union Minister Arun Jaitley in his blog of July 27 had said that the net revenue loss the government has suffered on account of the reduction of tax on goods and services is about ₹70,000 crore. Now, there is a need to ensure that consumers get the benefit of not only this loss but any possible loss in the future.

Keeping this in mind, the NAA wrote to the CBIC earlier this month urging it to ask field officials to look for profiteering and file complaints suo motu . It is expected that the CBIC will write to its Commissioners. The matter can also be taken up with the GST Council so that State governments can instruct their tax officials accordingly.

The NAA came into existence last November. As per Rule 137 of the CGST Rules, the Authority shall cease to exist after the expiry of two years from the date on which the Chairman took charge.