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GST anti-profiteering body may lack enough muscle

Press Trust of India  |  New Delhi 

The proposed anti-profiteering authority under the goods and services (GST) regime is likely to be a toothless tiger with no powers to levy penalty or even suo motu take up investigation.

The Council earlier this month agreed on broad principles of the anti-profiteering rules, a senior official told PTI here.

According to the rules agreed upon, when a complaint is received about any company or a trader making undue profit by not passing on the benefit of lower incidence because of GST, it would be referred to a standing committee appointed by the Council.

The committee would decide whether an inquiry should be initiated on the complaint. The new anti-profiteering authority will carry out an investigation only when the committee recommends so.

The inquiry report with recommendations would be referred back to the standing committee, the official said, adding that any penalty or action would be taken by either the committee or the Council.

To carry out the investigation, the new authority will be a full-time body with "unfettered" powers to issue summons, including to the top management of companies that are alleged to have profiteered. But the power to levy penalties may rest with the all powerful Council or the Standing Committee of officers.

At present, except Trai, all regulators and the Competition Commission of India (CCI) have powers to levy penalty in case of violation of any rule or law. The anti-profiteering authority will be the only institution which will not have the same.

As per the rules being framed for the authority, not all cases of profiteering can be taken up for scrutiny and a minimum threshold of making undue gains from the new regime could only be brought up for scrutiny, a senior official told PTI here.

"A notification on the anti-profiteering authority will be issued shortly with details of rules and procedures to be followed," he said.

Only those cases of profiteering that are above the threshold would be taken up for investigation and matters below that would be ignored, he said.

"After completion of investigation, the authority would give its report to the Council which would decide on the quantum of penalty," he said.

The official further said that before issuing summons, the authority would do fact-finding and gather substantial evidences.

After the 15th meeting of the Council on June 3, Finance Minister Arun Jaitley had said a committee comprising officials from the Centre and states would be set up to look into the complaints with regard to the anti-profiteering clause that seeks to prevent companies from making undue gains post rollout.

Section 171 of the Central Act provides that any reduction in rate of on any supply of goods or services or the benefit of input credit will be passed on to the recipient by way of commensurate reduction in prices.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, June 13 2017. 14:57 IST