07.03.2023: Lack of quorum affecting CCI to take up GST anti-profiteering matters

Even after three months of taking over to deal with anti-profiteering under the Goods and Services Tax (GST) mechanism, the Competition Commission of India (CCI) is yet to dispose of a single matter.

“Absence of quorum affecting work at CCI, which also includes anti-profiteering matter,” an official source told businessline. Section 8 of the Competition Commission Act says the Commission shall consist of a chairperson and not less than two and not more than six other members to be appointed by the central government. Section 22 of the act necessitates a quorum of three members for such meetings of the commission.

Not possible

According to the CCI website, as of date, CCI has just two members, with one member acting as chairperson, which means no quorum is possible, making it difficult for CCI to take up anti-profiteering matters. Even in the previous regime to deal with anti-profiteering, CGST rule prescribed a minimum of three members of the Authority (erstwhile NAA or National Anti-Profiteering Authority) to constitute quorum at its meetings.

NAA ceased to exist on December 1, and it was decided that all profiteering-related matters would be examined by CCI. In a notification dated November 23, 2022, the Finance Ministry said: “The Central Government, on the recommendations of the Goods and Services Tax Council, empowers the Competition Commission of India, established under sub-section (1) of section 7 of the Competition Act, 2002, to examine whether input tax credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him.”

NAA was set up after the introduction of GST, initially for two years, which was extended twice subsequently. In the Lucknow meeting (2021) of the GST Council last September, it was agreed that the tenure was to be extended till November 30, after which it would wind up with the CCI stepping in to take over its functions.

Lack of clarity

Section 171 of the CGST Act deals with anti-profiteering measures and prescribes that any reduction in the rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of a commensurate reduction in prices. In this regard, complaints can be filed with the NAA. Now the task is with CCI. There is no clarity as to how many cases of anti-profiteering cases were pending as of December 1, 2022, or how many complaints have been registered between December 1, 2008, and till date.

Even at the time of handing over, various experts said that the transfer of all pending cases from the NAA to the CCI and forming a special bench for adjudication might take some time before things ease out. Post this transfer, jurisdictional high courts will also consider remanding all the writ petitions filed in profiteering cases to CCI. Similarly, the fundamental issue of what would constitute “commensurate reduction in price” and various methods employed by company like increasing grammage, practice of zeroing etc. would continue to remain disputed before various High Courts.

Source: The Hindu Business Line

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