With less than two days to go for the formal integration of the National Anti-Profiteering Authority (NAA) with CCI, the Centre has now taken steps to facilitate transfer of pending cases to the competition watchdog.

The Central Goods and Service Tax Rules, 2017, have been amended to facilitate the transfer of cases, sources close to the development said. 

The NAA has around 400 cases pending with it. Also, the High Courts have a number of writ petitions pending that challenge the constitutional validity of Section 171 of the CGST Act, which provides for anti-profiteering provisions by mandating that for any reduction in rate of tax on supply of goods or services, the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices. 

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The latest amendments include abolition of the post of Secretary, besides doing away with provisions in CGST Rules relating to the appointment, salary, allowances and other terms and conditions of service of the Chairman and Members of NAA.

Interestingly, the amendments substitute the word ‘duties’ by ‘functions’ while transferring the mandate of NAA to CCI. The amendments also omit provisions relating to the quorum of NAA and the casting vote provided to its Chairman. 

Mandate of NAA transfer to CCI

The Centre had on November 23 issued a notification empowering CCI to examine whether input tax credit availed by any registered person or the reduction in the tax rate has actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him. The notification would come into force from December 1.

Anti-Profiteering Authority 

The National Anti-Profiteering Authority (NAA) was set up under Section 171 of the CGST Act 2017 w.e.f. December 1, 2017 for a period of two years. Its tenure has been extended twice — and now comes to an end on November 30.

It was established to ensure that the benefits of reduction in GST rates and input tax credits are passed on to consumers. 

In the last five years, it has determined profiteered amount of ₹2,240 crore, of which around ₹700 crore has been deposited in Consumer Welfare Funds or returned to consumers or deposited with the High Courts/ Director General of Anti-Profiteering (DGAP). 

Several leading FMCG manufacturers viz. L’Oreal, HUL and Patanjali and real estate sector builders, including DLF and Lodha, were found to have profiteered and were compelled to refund the profiteered amount. 

Many other big real estate builders and FMCGs brands are under investigation or are facing proceedings before the NAA and the orders passed in their cases may have wider ramifications on the consumer centric provisions of anti-profiteering.

GST Council recommendation

The issue of the extension of the tenure of NAA was discussed in the 45th GST Council meeting held on September 17, 2021 and a number of states had expressed their views on the subject. The minutes of the GST Council revealed that anti-profiteering measures need to continue and while extending the tenure of NAA till November 30, 2022, it was agreed to take up the matter with the CCI.