The National Anti-Profiteering Authority is a statutory authority established through GST (Goods and Services Tax). The purpose of the authority is to ensure that any reduction in GST rates should flow from the supplier to the consumer. In multiple countries where GST has been implemented, a reduction in tax rates or the input of tax credit has not reached the ultimate recipient. We know this act by suppliers as anti-profiteering, which if not monitored then the inflation rate in the country steeps to dangerous territory. The National Anti-Profiteering Authority seeks to prevent such circumstances unfolding in our country.
It is the duty of the statutory authority to prevent the exploitation of consumers who are cheated by businesses who charge a higher tax rate than what is legally enforced. The authority was established to further the goals set out by Section 171 of the Goods and Service Act, 2017, which aims to prevent profiteering.
Section 171 reads,
“(1) Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices.
(2) The Central Government may, on recommendations of the Council, by notification, constitute an Authority, or empower an existing Authority constituted under any law for the time being in force, to examine whether input tax credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him.
(3) The Authority referred to in sub-section (2) shall exercise such powers and discharge such functions as may be prescribed.”
Composition of the Authority
The National Anti-Profiteering Authority comprises:
- A chairman who holds or has held a post equivalent in rank to a Secretary to the Government of India.
- Four Technical Members who are or have been Commissioners of State tax or central tax or have held an equivalent post under existing laws.
- Additional Director General of Safeguards under the CBIC (Central Board of Indirect Taxes and Customs) shall be the Secretary to the Authority.
Duties of the Authority
As per the official notification by the Central Board of Indirect Taxes and Customs, the National Anti-Profiteering Authority would have the following duties:
- to determine whether any reduction in the rate of tax on any supply of goods or services or the benefit of the input tax credit has been passed on to the recipient through a commensurate reduction in prices;
- to identify the registered person who has not passed on the benefit of a reduction in the rate of tax on supply of goods or services or the benefit of input tax credit to the recipient through a commensurate reduction in prices;
- to order,
(a) reduction in prices;
(b) return to the recipient, an amount equivalent to the amount not passed on by way of commensurate reduction in prices along with interest at the rate of eighteen percent. 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 a return of the amount or is not identifiable, and depositing the same in the Consumer Welfare Fund;
(c) the imposition of penalty; and
(d) cancellation of registration
Application to the Authority
To make an application before the National Anti-Profiteering Authority, all local matters are first examined by the State Government’s screening committee. If the State Screening Committee believe that the supplier has been charging a higher tax rate than what they are required to pay, the Committee will forward the application with its recommendations to the Standing Committee on Anti-profiteering.
In furtherance of the application, the Standing Committee on Anti-Profiteering will refer the matter to the Director-General of Safeguards for a detailed investigation, if they are satisfied with the prima facie evidence provided by the Screening Committee of the respective state.
The investigation by the Authority
Once the application is passed on to the Director-General of Safeguards for a detailed investigation, both parties (supplier and consumer) will be given the chance to present their hearings. After this, the Director-General of Safeguards is to determine whether the supplier has not passed on the tax credit/ reduction in the tax rate to the consumer.
The Authority can 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;
- Imposing a penalty as specified under the Act; and
- cancellation of registration under the Act.
The most recent and relevant case, where a supplier was caught overcharging a tax rate, was the case of Samsonite India. Samsonite is one of the largest luggage manufacturers in the world, and recently an applicant noticed that when the GST rate for their goods was slashed from 28% to 18%, they continued to impose the 28% tax slab. We know this as “profiteering”, so when the application reached the investigation process, the Director-General imposed a fine on Samsonite.
After looking through all the relevant evidence submitted by both parties, the National Anti-Profiteering Authority held that Samsonite had to deposit a profiteering amount of ₹25.73 crores with Central and States’ Consumer Welfare Funds (CWFs).
Further, when an issue came up about the applicant, the Authority held that it doesn’t matter if the applicant is a purchaser of the product, as they make the applications for the benefit of the entire consumer society.