GST: Profiteering check now picking up

Kerala’s screening committee collected price information for over 600 items in the pre-GST and post-GST periods and suspected overcharging in 430 items
The anti-profiteering mechanism under the goods and services tax (GST) has picked up, with Kerala proposing action against 335 traders for not passing on to consumers a reduction in price under the new set of levies.

The screening committee of the state has written to the standing committee at the Centre, providing a list of these merchants and evidence, demanding action. 

Uttar Pradesh (UP) and Bihar, among others, say they have started with awareness campaigns, price information collection and investigation.

“We collected information and found some were collecting GST while not being registered. Some others were additionally collecting value added tax (VAT) from consumers. Some were charging GST above the MRP (printed Maximum Retail Price). We have demanded strict action against these entities, to discourage others from these malpractices,” said a Kerala official, on condition of anonymity.

Kerala’s screening committee collected price information for a little over 600 items in the pre-GST and post-GST periods in all districts, and suspected overcharging in 430 items, according to the official.

GST law provides for an anti-profiteering mechanism to ensure the full benefits of a reduction in tax on supply of goods or services go to consumers. The full benefit of input tax credit must be passed, with a commensurate reduction in prices, according to the law. 

UP says it is collecting information on suspected GST evasion and profiteering, including secret surveys and investigation. “We are collecting data for businesses that are under-invoicing transactions. We are also looking at entities that are doing wrong billing by charging GST over MRP. We will soon formulate a strategy against the offenders,” said an official. Most anti-profiteering cases relate to restaurants and non-brands. “Our officers are discreetly carrying out surveys and investigation. We will take action,” he added.

For local complaints, state-level screening committee looks into it, and passes it to the central standing committee. The latter may refer cases to the Director General of Safeguards for detailed enquiry, which will in turn recommend to the National Anti-Profiteering Authority, for action against offenders. The latter body is empowered to order a reduction in prices, returning the profiteered amount with 18 per cent interest, imposition of penalty or cancellation of registration of a supplier. 

A Maharashtra official said awareness campaigns by the government had ensured that merchants do not profiteer. “We have been disseminating information about how to fix prices,” he said. Adding that restaurants were initially found to be not passing on the tax benefit but doing so on being told by the authorities. “No complaint has come yet,” he said.

Officials from Bihar said cases were yet to come and the state government was doing publicity campaigns to make consumers aware. “With these being carried out, we will very shortly see cases coming in,” said the official.

Officials in Assam said detailed instructions would be issued to field formations on anti-profiteering and to report on any malpractice. “We will soon start receiving complaints,” one added. 

The Punjab government says it will go slow on the investigation for the next five or six months until GST stabilises. 

“With the anti-profiteering mechanism picking up the pace, it is important for businesses to ensure compliance, to avoid trouble,” said Rajat Mohan of chartered accountants AMRG & Associates.

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