GST Current Affairs

Badri Narain Sharma appointed as Chairman of National Anti-Profiteering Authority

The Appointments Committee of the Cabinet (ACC) has appointed senior bureaucrat Badri Narain Sharma as Chairman of National Anti-Profiteering Authority (NAA) under Goods and Services Tax (GST) regime.

Sharma is 1985 batch IAS officer of Rajasthan cadre. Prior to this appointment, he was additional secretary in Department of Revenue, Finance Ministry.

Background

The Union Cabinet in November 2017 had approved setting up of five-member NAA, mandated to ensure that the benefits of GST rate reduction is passed on to consumers. The anti-profiteering framework under new indirect tax regime consists of NAA at top level, standing committee, screening committees in every state and Directorate General of Safeguards (DGS) in Central Board of Excise & Customs (CBEC).

How anti-profiteering mechanism works?

As per structure of anti-profiteering mechanism in GST regime, complaints of local nature will be first sent to state-level screening committee, while those of national level will be marked for standing committee. If complaints have merit, respective committees will refer cases for further investigation to Directorate General of Safeguards. The DG Safeguards will generally take about three months to complete investigation and send the report to NAA.

If NAA finds that company has not passed on GST benefits, it will either direct entity to pass on benefits to consumers or if beneficiary cannot be identified, it will ask company to transfer amount to ‘consumer welfare fund’ within specified timeline.

NAA has power to cancel registration of any entity or business if it fails to pass on to consumers benefit of lower taxes under GST regime, but it will probably be last step against any violator. NAA will suggest return of undue profit earned from not passing on reduction in incidence of tax to consumers along with an 18% interest, and also impose penalty.

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Union Cabinet approves setting up National Anti-profiteering Authority

The Union Cabinet approved setting up of National Anti-Profiteering Authority (NAA), an apex body with an overarching mandate under Goods and Services Tax (GST) regime so as to ensure the benefit of tax reaches consumers.

It also approved creation of posts of Chairman and Technical Members of National Anti-profiteering Authority (NAA) under GST regime.

National Anti-Profiteering Authority (NAA)

The NAA is tasked with ensuring full benefits of reduction in tax on supply of goods or services flow to consumers. It is responsible for applying anti-profiteering measures in event of reduction GST rate on supply of goods or services or if benefit of input tax credit is not passed on to recipients by way of commensurate reduction in prices.

Composition

NAA will be headed by senior officer of level of a Secretary to Union Government and shall have four technical members from Centre and/or States. The chairman and four members will be less than 62 years of age.

Powers and functions

If NAA finds that company has not passed on benefits of tax reduction, it can direct entity to pass on benefits to consumers along with interest from the date of collection of the higher amount till date of return of such amount.

If the beneficiary cannot be identified, NAA can ask company to transfer amount to the ‘Consumer Welfare Fund’, as provided under Section 57 of CGST Act.

In extreme cases NAA can impose a penalty on defaulting business entity and even order cancellation of its registration under GST.

NAA also has power to cancel registration of any entity or business if it fails to pass on benefit of lower taxes under GST regime to consumers, and empowers consumers to approach it in case of any complaint.

Background

The anti-profiteering framework under new indirect tax regime consists of NAA at top level, standing committee, screening committees in every state and Directorate General of Safeguards (DGS) in Central Board of Excise & Customs (CBEC). The GST Council earlier had approved setting up of five-member NAA to enable consumers to file complaints in case benefits are not transferred to them

Section 171 of Central GST Act pertaining to anti-profiteering, provides that any reduction in rate of tax on supply of goods or services or benefit of input tax credit must be passed on to recipient (consumer) by way of commensurate reduction in prices.

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