National Anti-profiteering Authority alert on Covid profiteering
The National Anti-profiteering Authority (NAA) has urged the top brass of the GST administration to ensure that the producers and suppliers of medical devices and drugs lower the prices of Covid-related supplies so that the benefits of the GST rate cuts are passed on to the consumers.
The profiteering watchdog in an office memorandum also asked senior tax officials to ensure that complaints about companies and suppliers not reducing the prices are taken up on a priority basis.
“Suppliers are required to commensurately reduce the prices of each of the supplies of goods and services made by them so that the benefit of the reduction in tax rates and/or input tax credits is passed on to the recipients/consumers,” the NAA said in its instruction.
Tax officials have been told to collect all the evidence needed to take action against “errant suppliers of various goods and services”.
M.S. Mani, senior director, Deloitte India, said: “Businesses dealing with medical supplies that have undergone a GST rate reduction need to ensure they have adequate documentation to demonstrate that the rate cuts have been passed on to the consumers.”
The move comes after the Centre notified tax rate cuts on Covid-related medical supplies with effect from June 14, as cleared by the Goods and Services Tax (GST) Council. The concessional tax rates on 18 classes of items will remain in force till the end of September.
Rajat Bose, partner, Shardul Amarchand Mangaldas & Co, said, “The office order issued by the NAA is a step in the right direction. The government should give wide publicity to Section 171 of the CGST Act and educate the consumers of their rights against companies who are not passing on the benefit of the reduction in GST rates on Covid items.”
If a supplier is found raising the base price to pocket the tax benefit meant for consumers, anti-profiteering authorities could order refund of the allegedly overcharged amount to the consumer or deposit the same in designated consumer welfare funds if identifying individual buyers is not possible.
In addition to returning the overcharged amount with hefty interest, any profiteering behaviour may invite a penalty provision, which has been in force since January 2020.