National Anti-profiteering Authority gets teeth to probe beyond the scope of DG’s complaint

National Anti-profiteering Authority gets teeth to probe beyond the scope of DG’s complaint

India has handed out more powers to the anti-profiteering watchdog, allowing it to widen a probe against a company to include goods or services not covered in an investigation report.

The government has notified the rule changes, inserting a provision in the goods and services tax rules to allow the National Anti-profiteering Authority, or NAA, to direct the Director General of Anti-Profiteering to further a probe if there is reason to believe that there has been contravention of norms in respect of goods or services not covered in the latter’s report.

The move comes on the heels of GST Council, the apex decision making body for the levy, extending the tenure of the NAA by two years. The Council had also approved imposition of an additional penalty of up to 10% of the profiteered amount if the companies don’t pay up a fine of ?25,000 in 30 days.

In the past, there have been cases where the DGAP had sought to widen an inquiry to other goods or services beyond the scope of a complaint. Tax experts said companies now need to prepare themselves better.


“This new provision now specifically allows the NAA to extend investigation to other products as well… From the industry standpoint, it means that the ambit of antiprofiteering proceedings might increase and hence there have to be adequate controls and documentation in place with respect to all products that a company is dealing in,” said Pratik Jain, national leader, indirect taxes, PwC.

The June 28 notification also empowers NAA to summon any person in relation to an inquiry. This was earlier limited to the DGAP or its officers only.

Further, the DGAP has been allowed to complete an investigation within six months from the date of receipt of reference from the standing committee instead of three months now. The DGAP will get additional time to complete any new investigation handed out by the NAA. The DGAP can continue to apply for a three-month extension from the NAA.

A standing committee can now apply for a one-month extension from the NAA, in addition to the two months allowed for examining a complaint or application. Similarly, the NAA can now issue its order within six months — instead of three months earlier —from date of receipt of report from the DGAP.

India put in place an anti-profiteering system to ringfence consumers from sudden spikes in prices after GST was rolled out in July 2017. Countries that implemented GST had witnessed an increase in inflation soon after doing so. It had studied mechanisms that Malaysia and Australia adopted as part of their GST framework.

The country went in for a three-tier structure to investigate anti-profiteering complaints from consumers. At the initial level are the state screening committees and a national standing committee to examine complaints. These committees refer complaints to the Director General of Safeguards, mandated to conduct a thorough investigation by seeking information from the companies concerned. The third and final level is the NAA, which examines the investigation report and hears the company and the complainant before pronouncing a final decision.

Source: Economice-Times

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