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The National Anti-Profiteering Authority (NAA) has begun processing a slew of complaints against pharmacies, drug retailers and hospitals for failing to pass on goods and services tax (GST) cuts on life saving drugs and equipment to consumers during the covid-19 pandemic.

The move comes a year after some of them were reported to have fleeced consumers in the middle of India’s devastating second wave of the covid-19 pandemic.

In view of the pandemic, the GST Council last June cut GST rates on 18 Covid-19 related items including oxygen concentrators, Remdesivir and ambulance service.

The move holds considerable significance for consumers as this is the first time such complaints are being heard under an institutional mechanism.

“We are receiving many complaints of profiteering by intermediaries on Covid-19 related items like oxygen concentrators and the drugs like Remdesivir as the GST Council last year slashed rates to benefit end users, who were already suffering from high medical cost due to the pandemic. These complaints have been filed on the NAA portal and will be examined," said a government official. 

He added that it will also examine if a probe needs to be launched on these complaints.

The GST Council slashed the tax on key Covid-19 related drugs like Remdesivir and Heparin from 12% to 5%, Tocilizumab and black fungus drug Amphotericin B from 5% to nil, medical grade oxygen and concentrators from 12% to 5%, hand sanitisers from 18% to 5%, and ambulance services from 18% to 5% up to 30 September. 

The NAA last year directed all GST field units to collect evidence against suppliers that do not pass on benefits of lower GST rates on Covid-19 related goods and services to consumers.

The NAA has the powers to identify the guilty person or business; order them to reduce prices and return the profiteered amount along with interest; cancel the registration of the supplier;  and impose penalties. 

In case the recipient is not identified or does not claim returned amount, the NAA may order the supplier to deposit the amount with the Consumer Welfare Fund.

“The entire objective of GST rate reduction of life saving medicines and equipment’s like oxygen concentrator was to ensure that the products are affordable and in the hands of common man. The anti-profiteering authority is bound to take action against Intermediaries, where it is proved to their satisfaction, and where the rate benefit did not reach the end consumer" said Harpreet Singh, Partner, Indírect Taxes at KPMG.

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. The director general of anti-profiteering (DGAP) carries out an investigation and submits the report to the NAA, which carries out hearings and is the final decision-making body. It passes an order based on the DGAP report and after hearing the defendant and the complainant.

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