Section 171 of the CGST Act says that any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit (ITC) shall be passed on to the recipient by way of commensurate reduction in prices.
Further, the Central Government may, on recommendations of the Council, by notification, constitute an Authority to examine whether ITC 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.
As per the ‘Anti-Profiteering Rules’, a National Anti-profiteering Authority will be constituted soon.
Constitution of the Authority
The Authority shall consist of –
1. The Chairman, who holds or has held a post equivalent in rank to a Secretary to the Government of India; &
2. Four – Technical Members who are or have been Commissioners of State tax or central tax or have held an equivalent post, to be nominated by the Council.
Committees
1. The Council may constitute a Standing Committee on Anti-profiteering which consists of such officers of the State Government and Central Government as required.
2. A State level Screening Committee shall be constituted in each State by the State Governments which shall consist of-
a. One officer of the State Government, to be nominated by the Commissioner, &
b. One officer of the Central Government, to be nominated by the Chief Commissioner.
Secretary to the Authority
The Additional Director General of Safeguards under the Board shall be the Secretary to the Authority.
Appointment and other terms & conditions
1. The Chairman & Members shall be appointed by the Central Government on the recommendations of a Selection Committee.
2. The Chairman shall be paid a monthly salary of ` . 2,25,000 (fixed) & other allowances.
3. Where a retired officer is selected as a Chairman, he shall be paid a monthly salary of `. 2,25,000 reduced by the amount of pension.
4. The Technical Member shall be paid a monthly salary of `. 2,05,400 (fixed) and shall be entitled to draw allowances as are admissible.
5. Where a retired officer is selected as a Technical Member, he shall be paid a monthly salary of `. 2,05,400 reduced by the amount of pension.
6. The Chairman shall hold office for a term of 02 years from the date appointment or he attains the age of 65 years, whichever is earlier & eligible for reappointment.
7. A person shall not be selected as the Chairman if he has attained the age of 62 years.
8. The Technical Member shall hold office for a term of 02 years from the date appointment or he attains the age of 65 years, whichever is earlier & eligible for reappointment.
9. A person shall not be selected as a Technical Member if he has attained the age of 62 years.
Methodology and procedure
The Authority may determine the methodology and procedure for determination as to whether the reduction in 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 recipient by way of commensurate reduction in prices.
Duties of the Authority
1. To determine whether any reduction in rate of tax on any supply of goods or services or the benefit of the ITC has been passed on to the recipient;
2. To identify the registered person who has not passed on the benefit of reduction in rate of tax on supply of goods or services
3. To order –
a. Reduction in prices;
b. Return of the amount equivalent to the amount not passed to the recipient with interest @ rate of 18% &
c. Recovery of the amount not returned in case the eligible person & deposit same in the Consumer Welfare Fund
d. Imposition of penalty as prescribed under the Act; &
e. Cancellation of registration
Examination of application – Standing Committee / Screening Committee
1. The Standing Committee shall, within a period of 02 months from the date of receipt of a written application, Such form and manner, from an interested party or from a Commissioner,
– Examine the accuracy and adequacy of the evidence provided in the application
– To determine whether there is prima-facie evidence to support the claim of the applicant
– The benefit of reduction in rate of tax on any supply of goods or services or
– ITC has not been passed on to the recipient by way of commensurate reduction in prices.
2. All applications from interested parties on issues of local nature shall
– First be examined by the State level Screening Committee
– Upon being satisfied that the supplier has contravened the provisions of section 171,
– Forward the application with its recommendations to the Standing Committee for further action.
Initiation and conduct of proceedings
1. If the Standing Committee is satisfied that the supplier has not passed on the benefit of reduction in rate of tax on the supply of goods or services or the benefit of ITC to the recipient, it shall refer the matter to Director General of Safeguards for a detailed investigation.
2. The Director General of Safeguards shall determine whether the benefit of reduction in rate of tax on any supply of goods or services or the benefit of the ITC has been passed.
3. The Director General of Safeguards shall, before initiation of investigation, issue a notice to the interested parties –
– The description of the goods or services;
– Summary of statement of facts &
– The time limit allowed to the interested parties for furnishing their reply.
4. The Director General of Safeguards may also issue notices to such other persons, If necessary.
5. The Director General of Safeguards shall make available the evidence presented to it by one interested party to the other interested parties.
6. The Director General of Safeguards shall complete the investigation within a period of 03 months of receipt of reference or such extended period not exceeding a further period of 03 months.
7. The Director General of Safeguards, furnish to the Authority a report of its findings, along with the relevant records.
Confidentiality of information
Provisions of the Right to Information Act, 2005 shall apply mutatis mutandis to the disclosure of any information which is provided on a confidential basis.
Powers: Summons & Enquiry
The Authority will have powers to summon any person considered necessary to produce document of evidence under Sec. 70 of the CGST Act.
The Authority will have powers to inquiry and same shall be deemed to be judicial proceedings within the meaning of Sec. 193 & Sec. 228 of the IPC.
Order of the Authority
1. The Authority shall, within a period of 03 months from the date of receipt of the report from the Director General of Safeguards determine whether a registered person has passed on the benefit of reduction in rate of tax or the benefit of the ITC to the recipient.
2. An opportunity of hearing shall be granted to the interested parties, if required.
Tenure of Authority / Sunset Clause
The Authority shall cease to exist after the expiry of 02 years from the date of its constitution.
* The Author is a budding tax law professional and may be reached at shreetaxchambers @ bsnl.in
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