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What is the role of the National Anti-Profiteering Authority (NAA) under GST law?

What is the role of the National Anti-Profiteering Authority (NAA) under GST law?

29-Oct-2024

Revenue

Answer By law4u team

The National Anti-Profiteering Authority (NAA) plays a crucial role under the Goods and Services Tax (GST) law in India, primarily aimed at ensuring that the benefits of reduced tax rates or input tax credits are passed on to consumers. Here are the key functions and responsibilities of the NAA: Monitoring Compliance: The NAA monitors compliance with the anti-profiteering provisions under Section 171 of the GST Act, which mandates that any reduction in the rate of tax or benefits from input tax credits must be passed on to consumers. Investigating Complaints: The authority is responsible for investigating complaints received from consumers, the GST council, or other stakeholders regarding instances where businesses have failed to pass on the benefits of reduced tax rates or input tax credits. Determining Profiteering: Upon receiving a complaint, the NAA conducts a thorough investigation to determine if there has been profiteering. This involves examining pricing strategies and cost structures of businesses to assess whether the benefits were passed on to consumers. Issuing Orders: If the NAA finds that a business has engaged in profiteering, it has the authority to issue orders directing the business to reduce prices and refund the excess amount to consumers. This may include adjustments to the pricing of goods or services to ensure compliance. Imposing Penalties: The NAA can impose penalties on businesses found guilty of profiteering. These penalties can be significant, aimed at deterring non-compliance and ensuring that businesses adhere to the anti-profiteering provisions. Advisory Role: The NAA can advise the GST Council on matters related to anti-profiteering and make recommendations to improve the regulatory framework surrounding GST compliance. Promoting Transparency: The authority promotes transparency in pricing practices among businesses. By ensuring that the benefits of GST reforms reach consumers, it fosters trust in the GST regime and enhances consumer confidence. Collaboration with State Authorities: The NAA collaborates with state GST authorities to address complaints and ensure a coordinated approach in enforcing anti-profiteering measures. Public Awareness: The NAA plays a role in educating businesses and consumers about their rights and responsibilities under the anti-profiteering provisions, promoting a better understanding of GST compliance. In summary, the National Anti-Profiteering Authority (NAA) under the GST law is tasked with ensuring that the benefits of tax reductions are passed on to consumers, investigating complaints of profiteering, issuing orders, and imposing penalties for non-compliance. Its role is critical in maintaining fairness and transparency in the pricing practices of businesses within the GST framework.

Answer By Lokenender Giri

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Answer By Anik

Dear client, Under the GST law, NAA has an important function to monitor and compel Businesses to pass the benefits from reduced tax rates and input tax credit availed to consumers. Set up under section 171 of the CGST Act, 2017, the NAA must vigil businesses that ought not to be making unfair gains by not adjusting the lowered GST rates on prices or denying input tax credits. The primary idea here is to shield consumers from exorbitant prices as the government promised in the implementation of GST. Despite these tax reliefs, the NAA is authorized to undertake detailed investigations of overcharging complaints from consumers. After any complaint has been lodged it is reviewed by a screening committee at the state level or a standing committee at the central level. If the committees consider the complaint deserves consideration, the matter is forwarded to the Directorate General of Safeguards for further assessment. Besides this the NAA possess the powers to; direct a reduction in the prices, refund the undue benefit along with interest to the consumers, transfer the profits if the beneficiaries cannot be identified to the Consumer Welfare Fund, or even penalize the violators by cancelling their GST registration. Besides handling complaints, the NAA also has a suo moto power, making it act independently if it finds any profiteering activities. It functions within a tier system that provides order scope of control through state, standing, and apex committees. The establishment of the NAA was, therefore, informed by the risk of inflationary tendencies that may emerge from the implementation of GST as businesses make new price adjustments. Its decisions can only be challenged in the High Court hence the high legal review. By these mechanisms, the NAA contributes significantly to the protection of consumer interest under the GST arrangements. In case of further queries please do not hesitate to contact us. Thanks.

Answer By Ayantika Mondal

Dear client, The National Anti-profiteering Authority (NAA) was established under section 171 of the Central Goods and Services Tax Act, 2017. The NAA was set up to monitor and to oversee whether the reduction or benefit of input tax credit is reaching the recipient by way of appropriate reduction in prices. National Anti-profiteering Authority (NAA) is therefore primarily constituted by the central government to analyse whether input tax credits availed by any registered person or the reduction in the tax is passed onto the consumer and he/she is protected from random price increase for self-interests in the name of GST. Institutional Framework- The National Anti-profiteering Authority comprises of a five-member committee, consisting of, a Chairman (equivalent to a rank of secretary in the government), four technical members (present/former commissioners of State tax or central tax departments). The Additional Director General of Safeguards under the Central Board of Indirect Taxes and Customs (CBEC) would be the Secretary to NAA. Tenure- The National Anti-profiteering Authority committee will initially have a two-year tenure that can be extended by the GST Council if they see a requirement for its existence in the future. Aim- The primary aim of the National Anti-profiteering Authority is to ensure the benefits of reduction or lower taxes under the new GST regime are passed onto the end consumers. Which is to determine that if any reduction in the rate of tax on supply of goods or services is passed onto the final recipient by way of proportional reduction in prices. Apart from this, the NAA also has to identify registered people/entities who have not passed on the benefit of a reduction in the rate of tax by means of ITC and bring them to task. Members- The NAA consists of a Chairman along with four senior government officials, mostly of the rank of joint secretary appointed as technical members in the authority. Special Powers of NAA- 1. NAA has the authority to deregister an entity or business if it fails to pass on the benefit of lower taxes under GST to the customer. 2. Deregistering a business will be the last course of action and extreme step against any violator 3. NAA will recommend the return of undue profit which a business earned from not passing on reduction and benefit of tax to consumers along with an 18 per cent interest. It can also impose a penalty if it sees it necessary. Anti-Profiteering Mechanism Under GST Regime- 1. Complaints are based on jurisdiction, complaints that are local in nature will be first sent to a state-level committee for screening 2. Complaints at a national level will be marked directly to the standing committee. 3. In case the incident of profiteering relates to an item of mass consumption with an “all India ramification”, the application may be directly made to the Standing Committee 4. If complaints have merit, respective committees will refer cases for further investigation to the Directorate General of Safeguards 5. The DG Safeguards will generally take about 3 months to complete investigation and send the report to NAA 6. If the NAA finds that the company has not passed on GST benefits, it will either direct entity to pass on benefits to consumers, or if the beneficiary cannot be identified, it will ask the company to transfer the amount to ‘consumer welfare fund’ within a specified timeline. Conclusion- National Anti-Profiteering Authority is a double-check system implemented to ensure prices remain under check and businesses are on operating in a fair and just manner. NAA also makes sure that undue profiteering at the expense of the common man, who is invariably the end consumer does not take place. Should you have any queries, please feel free to contact us!