GST: CBEC Takes First Steps To Constitute Anti-Profiteering Body

The Central Board of Excise and Customs is working on the framework of an anti-profiteering body under the Goods and Services Tax, a senior finance ministry official told BloombergQuint.

The body, which is likely to include officials from state and central governments, will fall under CBEC’s ambit, the official said requesting anonymity. It is likely to be headed by a chief commissioner and its rules and powers are still being discussed, the official said.

The Central GST Law includes a provision to pass on the benefits of reduction in tax rates to consumers once the new indirect tax regime is implemented, and is generally referred to as an anti-profiteering measure.

CBEC Chairman Vanaja Sarna had told BloombergQuint in an interview earlier that “there is no timeline as to when this (anti-profiteering body) will be set up as the priority is to roll out GST”.

The official quoted above said CBEC officials are still deliberating the framework and organisational structure of such a body, and the proposal will be tabled before the GST Council’s next meeting scheduled on June 3. It is not certain that it will be formalised in this meeting, he said.

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According to another official, such a body would be needed at initial stages of GST to curb profiteering. Its job will be very difficult as reduction in prices could be attributed to a lot of reasons, he said. But if such a body is not set up, chances of profiteering would rise, he said.

The official said that it is very unlikely that an agency like the Competition Commission of India will be given this job, as investigating companies and conducting surveys will need a lot of data and expertise which CCI lacks.

Satya Poddar, senior tax adviser at EY, told BloombergQuint that setting up an anti-profiteering body under CBEC would make sense and it will have a short life limited to the first year of GST implementation to monitor price changes that take place at the inception of the new indirect tax regime.

“Given that its primary role is to monitor prices at initial days of implementation, it will be very difficult for an agency like CCI to evaluate whether dealers and manufacturers have passed on the benefits of tax reduction to consumers or not,” Poddar said. The body under CBEC need not be overly aggressive, and take up only selected cases of extreme price rises, he said.