Anti-Profiteering Authority may just be a toothless body, say experts

The much-talked-about Anti-Profiteering Authority may prove to be a toothless organisation with limited ability to prevent undue retention of GST benefits by corporates, leading to inflation, feel experts.

On June 18, the GST Council approved anti-profiteering rules. Two days later, on June 20, the Finance Ministry notified the formation of the Anti-Profiteering Authority with five members at the top.

The authority, which will start working in a couple of months after the July 1 rollout, will determine the “methodology and procedure for determining ” if the input tax benefit is passed on to the final consumer. It will, however, act only against specific complaints.

Experts say without the suo moto power and set methodology based on prior preparations the Anti-Profiteering Authority will end up as a show-piece and will add another layer of administrative cost.

Anita Rastogi, Partner-Indirect tax and GST of PwC, admits there is merit in the criticism. Australia, she says, handed over the task to its competition commission a full-year prior to roll out of GST.

By the time GST was rolled out, the Australian commission was ready to launch suo-moto enquiry armed with baseline studies on price and cost behaviour of goods and services.

As per the Australian experience the government should have appointed an authority one year prior to introduction of GST so that businesses are prepared and aware of the methodology to be followed, Rastogi told BusinessLine .

Another consultant, who didn’t want to be quoted, pointed out that “India started thinking of an Anti-Profiteering Authority only in September (2016)”, when apprehensions were rife that corporates, armed with a battery of chartered accountants, were doctoring accounts to retain benefits of input tax credits in the GST regime.

There were also allegations of anticipatory price rise by an FMCG company. The government approached it too. But without access to any cost and price reference, they had to accept the company’s arguments behind price rise, the consultant added.

According to him, faced with sharp reaction from industry, the government is also looking at ways to tone down the anti-profiteering rules.

The Indian Foundation of Transport Research and Training (IFTRT), a Delhi-based transport research body, criticised the government for rolling out GST without investing in strong anti-profiteering mechanism and thus paving way for industry and commerce to short change consumers.

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