Anti-profiteering body gets 2 members, steps up hearings
3 min read . Updated: 03 May 2022, 12:32 AM IST
PremiumNational Anti-Profiteering Authority expedites number of hearings amid a backlog of over 200 cases
BENGALURU : India’s anti-profiteering watchdog has swung into action after a year, with two new members joining it, and is likely to issue orders in the coming months in cases involving Cloudtail, Loreal India, Logix, Prestige Estates, DLF and the Hiranandani Group, among others.
With over 200 cases piled up, the National Anti-Profiteering Authority (NAA) has expedited the number of hearings even as the Goods and Services Tax (GST) Council mulls over its fate. With its tenure set to end in November, the NAA is expected to pass orders in a slew of cases in the coming months—over 100 hearings are scheduled till mid-May alone.
According to the anti-profiteering rules under GST, “Benefits of input tax credit should have been passed on to the recipient by way of commensurate reduction in prices."
“The NAA’s work was affected last year with the lack of quorum as there were vacant positions. However, with the two new members joining in the last week of February, the authority has started functioning well and is holding 5-6 hearings a day for various cases," said a government official.
To pass a judicial order, a quorum of three is required, which was not there following the vacancies since 29 April 2021.
After a gap of nearly a year, the NAA issued two orders in April—on Lodha and Alton India. Its previous order—in the case of Dough Makers—was way back in March 2021.
The GST Council decided last year that it will explore bringing anti-profiteering cases under the Competition Commission of India. In the meantime, it extended the NAA’s tenure in view of the large caseload. However, the directorate general of anti-profiteering has already submitted its reports in the 206 cases piled up so far. Around 39 cases are being currently probed by the DGAP.
“While there is talk of ending the term of NAA, the fact remains that such a body will be needed till the time the possibility of a further GST rate reduction. Besides items like petroleum, alcohol and a part of real estate are still out of the ambit of GST, which will be introduced at a later stage, requiring the anti-profiteering to stay for a longer term," said another official.
M.S. Mani, partner, Deloitte India said it was essential to complete the cases pending with the NAA soon so that the impacted businesses get time to review the verdict and evaluate remedies.
“Industry would hope that the methodology adopted for each business considers the factors specific to that business," said Mani.
He added that moving anti-profiteering matters to the Competition Commission of India (CCI) should ideally be done after specifying the manner of computation and the factors to be considered for each sector.
Queries mailed to Cloudtail, Prestige Estates, Hiranandani Group, Loreal India and the finance ministry on Saturday remained unanswered.
“We have always maintained a strict compliance to all existing laws and adhere to the highest standards of corporate governance and ethical business practices," DLF’s spokesperson told Mint in response to the queries.
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.
Rajat Mohan, senior partner, AMRG Associates, said NAA is hard-pressed to complete formalities and decide the matters related to anti-profiteering.
“This paucity of time at the hands of authority would be passed on to both the sides demanding justice, derailing the most important leg of profiteering laws…Most of the cases decided by authorities would land up in courts for final justice, failing the entire ecosystem created for the benefit of Indian consumers," added Mohan.
Pratik Jain, partner, Price Waterhouse LLP said: “The issue of anti-profiteering is being picked up in regular audits and investigations as well and is likely to lead to avoidable litigation. In any case, if this mechanism has to continue, it should be restricted to only cases of reduction in GST rates and based on a consumer complaint."
