The Finance Ministry has extended deadline for profiteering investigators under Goods & Services Tax (GST) to complete the process by March 31.
The deadline earlier was November 30. Experts say the extension will help companies alleged to have profiteered to present their case. MS Mani, Senior Director with Deloitte India, said that businesses would have appreciated a standard methodology for the data required for anti-profiteering investigations.
“The absence of the same has made it very difficult for businesses. Hence, they need to be given extended timelines for providing any information,” he said.
Section 171 of CGST Act says that 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 by way of commensurate reduction in prices.
The wilful action of not passing on the above benefits to the recipients in the manner prescribed is known as ‘profiteering’. The National Anti-profiteering Authority (NAA) was set up in order 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.
Based on the investigation of DGAP and then hearing all parties, the NAA concludes whether any registered person has profiteered or not.
The profiteered amount is supposed to be distributed among affected consumers, but in case it is difficult to find the consumers, the amount will be deposited in Consumer Welfare Funds.
Once an allegation is proved, then company/person involved will be liable to pay penalty equivalent to ten per cent of the amount so profiteered. However, no penalty will be leviedable if the profiteered amount is deposited within thirty days of the date of passing of the order by the Authority.
Extension to complete the investigation has come at a time when around 50 orders of NAA has been challenged in the Delhi High Court. These pleas are from Hindustan Unilever, Patanjali, Jubilant Foodworks, Reckitt Benckiser, Johnson & Johnson, Phillips India beside others.
NAA has held that these companies did not pass the benefit of reduction in GST rate or change in input tax credit (ITC) norms. Accordingly, the profiteered amount was to have been deposited in the Consumer Welfare Fund. Aggrieved by rulings, these companies had moved cCourt. The matter has been posted for January.