Closure soon in nearly 100 profiteering cases

CCI is expected to rule on more than a dozen cases of profiteering every month. (Mint)
CCI is expected to rule on more than a dozen cases of profiteering every month. (Mint)


  • All cases are likely to be cleared over the next six to seven months

NEW DELHI : The Competition Commission of India (CCI) will issue final orders on nearly 100 cases of profiteering related to Goods and Services Tax (GST) in the coming six months, a person aware of the matter said, bringing closure to several companies facing charges for years.

The Directorate General of Anti-Profiteering (DGAP), part of the tax department, has already completed its investigations, and the CCI is currently adjudicating them, the person cited above said on the condition of anonymity. The commission is expected to rule on more than a dozen cases of profiteering every month. “In some cases, the commission may even suggest covering certain extra aspects in the investigation. All cases are likely to be cleared over the next six to seven months," the person said.

Anti-profiteering provisions in GST law aim to prevent companies from not passing on tax cuts to consumers. The National Anti-profiteering Authority (NAA) was set up to decide on these cases; later, the authority was wound up, and its duties handed over to CCI. The pending cases primarily involve property developers, construction firms, pharmaceutical firms and service providers, including cinemas, the person cited above said.

Many of these cases have remained pending for long since CCI could not rule on them in the absence of quorum. Since a new chairperson took over in May, CCI has decided on nearly 18 GST-related profiteering cases, said a second person, who also spoke on the condition of anonymity. In cases where where property developers have gone into bankruptcy resolution, CCI has asked DGAP to examine the implications of profiteering-related liabilities.

Even though NAA has been wound up, authorities will still accept fresh complaints for investigation. That will continue till GST law retains the anti-profiteering provision, said the first person quoted above. “Anti-profiteering was introduced to stabilize the introduction of GST," the person said, implying that this provision may be phased out. However, given that GST rates have been stable for some time, fresh complaints are expected to peter out.

From about 300 profiteering cases, where orders have been passed so far, more than 500 crore of profiteered amount has been recovered, which has gone to designated consumer welfare funds where individual consumers could not be identified for refunds, the first person said.

In the case of profiteering by real estate companies, individual home buyers can be identified and in these cases, the orders mandate the businesses to make refunds to the consumers. e-Mails sent to a spokesperson for the finance and corporate affairs ministries and CCI seeking comments remained unanswered till press time.

In both direct and indirect taxes, the government has followed a strategy of lowering tax rates and widening the tax base. Greater compliance by a larger number of assessees also boosts the government’s tax revenue receipts.

“When tax rates are lowered, the incentive for tax evasion goes down. Cost of evasion [surpasses] cost of compliance, when the rates are lower and the system is fool proof," the first person quoted above said. The tech heavy GST system, which relies on extensive data collection and matching of information at different levels, is believed to have boosted the government’s direct tax collections, too, as it becomes increasingly difficult to under-report sales.

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