The national anti-profiteering authority
- June 28, 2022
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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The national anti-profiteering authority
Why in the news?
The national anti-profiteering authority has held cosmetics and personal care giant L’oreal guilty of not passing on the GST rate reduction (28% to 18% in November 2017) benefits to consumers and directed it to deposit the sum along with 18% interest in the consumer welfare fund.
Details:
- Half of the profiteered sum with interest would be deposited in the Central Consumer Welfare Fund, and the other half in the State where the supply was made.
- The authority has also directed the Directorate General Anti-Profiteering (DGAP) to conduct further investigations.
- The NAA noted that the company was only required to maintain the base price of the items and change the GST rates from 28% to 18% in its billing software. But it increased the base price while maintaining the same selling price.
- The NAA also held that increase in grammage is not in any way equivalent or akin to commensurate reduction in prices.
- It also rejected the company’s contention of passing on higher benefits on some items to make up for the others, saying that it is not allowed under the law.
Concept:
The National Anti-profiteering Authority (NAA)
- It is a statutory body under Section 171 of the Central Goods and Services Tax Act 2017
- The National Anti-profiteering Authority shall be headed by a senior officer of the level of a Secretary to the Government of India and shall have four technical members from the Centre and/or the States.
- Other than the Chairperson, it comprises four Technical members, a Standing Committee, Screening Committees in every State and the Directorate General of Safeguards in the Central Board of Excise & Customs (CBEC).
- Powers and functions of the authority:
- The Authority’s core function is to ensure that the commensurate benefits of the reduction in GST rates on goods and services done by the GST Council and of the Input tax credit are passed on to the recipients by way of commensurate reduction in the prices by the suppliers.
- The Authority’s main function is to ensure that the registered suppliers under GST law are not profiteering by charging higher prices from recipients in the name of GST.
- The legal mandate of NAA is to examine and check such profiteering activities and recommend punitive actions including cancellation of Registration.
- In the event the National Anti-profiteering Authority confirms the necessity of applying anti-profiteering measures, it has the power to order the business concerned to reduce its prices or return the undue benefit availed along with interest to the recipient of the goods or services.
- If the undue benefit cannot be passed on to the recipient, it can be ordered to be deposited in the Consumer Welfare Fund.
- In extreme cases the National Anti-profiteering Authority can impose a penalty on the defaulting business entity and even order the cancellation of its registration under GST.
- The anti-profiteering mechanism is a three-stage process. There is a state-level screening committee for local complaints and a standing committee for national-level complaints. Then, there is an investigation by the directorate general of anti-profiteering and a probe by the decision-making body, the NAA.
- Suo moto action:
- The NAA can take note of any instance of anti-profiteering even without a complaint from a citizen.
- This can be done because the chairman of the NAA is also a civilian and s/he can also take cognizance of such acts.
- Even mock purchases can be made by NAA officers to check a trader’s invoice for any profiteering activity.
- The orders of the NAA can be appealed against only in the high court.