CCI staring at lack of quorum logjam again

CCI staring at lack of quorum logjam again

Subject :Polity

Section: National Body

In News: Absence of quorum affecting work at CCI, especially with regards anti-profiteering under GST

Key Points:

• Absence of quorum affecting work at CCI, which also includes major matters including mergers & acquisition (M&A) anti-profiteering matter (GST).
• Section 8 of the Competition Commission Act says the Commission shall consist of a chairperson and not less than two and not more than six other members to be appointed by the central government.
  • As of date, CCI has just two members, with one member acting as chairperson, which means no quorum is possible, making it difficult for CCI to take up anti-profiteering matters.
  • Even in the previous regime to deal with anti-profiteering, CGST rule prescribed a minimum of three members of the Authority (erstwhile NAA or National Anti-Profiteering Authority) to constitute quorum at its meetings.
  • Section 22 of the act necessitates a quorum of three members for such meetings of the commission.
• M&As on hold
  • As CCI does not have the requisite quorum to transact business. This has put several M&As on hold and also impacted the time-bound resolution process of several companies under the Insolvency and Bankruptcy Code as many such cases are referred to the CCI by the National Company Law Tribunal (NCLT).
  • One of the key mandates of CCI is to review combinations (M&As) and if this is not done within 210 days then the transaction is deemed approved.
• National Anti-Profiteering Authority (Now CCI)
  • NAA ceased to exist on December 1 2022, and it was decided that all profiteering-related matters would be examined by CCI.
  • NAA was set up after the introduction of GST, initially for two years, which was extended twice subsequently.
  • Section 171 of the CGST Act deals with anti-profiteering measures and prescribes that any reduction in the 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 a commensurate reduction in prices. In this regard, complaints can be filed with the NAA. Now the task is with CCI.
• The Central Government, on the recommendations of the Goods and Services Tax Council, empowers the Competition Commission of India, established under sub-section (1) of section 7 of the Competition Act, 2002, 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
• Even after three months of taking over to deal with anti-profiteering under the Goods and Services Tax (GST) mechanism, the Competition Commission of India (CCI) is yet to dispose of a single matter.
• The fundamental issue of what would constitute “commensurate reduction in price” and various methods employed by companies like increasing grammage, practice of zeroing etc. would continue to remain disputed before various High Courts.