Government extends timeline for concluding anti-profiteering investigations under GST framework

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MUMBAI: The government asked its investigating officials to take more time to conclude the ongoing anti-profiteering investigations under the Goods and Services Tax (GST) framework.

This comes at a time when some of the top companies have dragged the government to court over anti-profiteering.

The government on Tuesday said that the investigators could take longer to conclude anti-profiteering cases.

“The government has further extended timeline for anti- profiteering authorities to complete their investigations, and as such any investigations required to be closed by the DGAP by 30 November 2020 can now be completed up-to 31 March 2021. This extension much like the previous one seems to be on account of the limitations posed (inability for businesses to provide requisite data) to the revenue authorities on account of the ongoing pandemic, as well as the quantum of pending cases,” said Abhishek Jain, Tax Partner, EY India.

The Delhi High Court last week postponed the hearing in the anti-profiteering matter to January after it found that there was no consensus between the tax department and the companies that had approached the court.

About 51 companies had dragged the Indian indirect tax department to court over anti-profiteering under GST.

In a court proceeding of such nature, the judge wants both sides to arrive at a consensus on which are the pertinent questions to be examined in the case. The tax department had about 15 questions that they wanted to seek information about while all the companies together had about 50 questions.

Companies, including HUL, Abbott, Johnson & Johnson, Philips, Samsonite, Jubilant Foods, Abbott, Nestle, Whirlpool, Samsung, Reckitt Benckiser and Patanjali, had approached the Delhi High Court after they were penalised under the anti-profit mechanism of the indirect tax department.

As per the GST framework, the benefits of the rate reduction have to be passed on to customers.

If a company is unable to do so, it can be levied penalties and interest on top of it for profiteering from the tax regime. The section in the GST Act dealing with anti-profiteering states: “Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient (consumer) by way of commensurate reduction in prices.”

Input tax credit refers to a mechanism under the GST framework wherein the tax a company pays when it buys raw materials or other services can be passed on to the buyer when the goods or services are sold.

The National Anti-profiteering Authority (NAA) has been slapping fines on companies that were found to be benefiting from GST and had not passed on the benefits of the tax or input tax credit to the end consumers.

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