Newsmaker: Meet B N Sharma, and know why companies must fear this man

BN Sharma, Chairman, National Anti-Profiteering Authority. Illustration by Ajay Mohanty
The appointment of IAS officer Badri Narain Sharma as the Chairman of the newly constituted National Anti-Profiteering Authority (NAA) in the Goods and Services Tax (GST) regime is interesting. Sharma, an additional secretary in the department of revenue, is a Rajasthan cadre officer of the 1985 batch. His appointment is interesting because, till now, Sharma has hardly played a role in the evolution of India’s most significant tax reform.

 

Other than the GST Council, which includes the finance ministers of all states along with the Union finance minister and the minister of state for finance with charge of revenue, the NAA promises to be the most watched entity in the GST space. It wields the responsibility to ensure that benefits of lower indirect tax rates are passed on to consumers. Since the GST is predicated on the premise that it will cut taxes at each stage of the production chain, Indian citizens would want to see the cumulative effect on their purchase bills.

 

This can only happen if companies diligently pass on the tax cuts via softer retail prices. In normal business practice, price cuts are the product of competition among producers of goods and services. But none of India’s major political parties believe this would happen without the fear of a stick. That stick is the NAA — though it is supposed to be in existence for only two years from the date it is constituted.

 

That’s the reason why business people were eager to know who will chair the NAA. Its mandate is clear: to ensure benefits of input credit and the reduction in GST rates on specified goods or services are passed on to the consumers by way of a commensurate reduction in prices. The NAA has to demonstrate that prices have been lowered.

 

The penalties are stiff. If found guilty, the concerned business would have to reduce its prices. For any sales made at higher prices, the offending company will have to “return the undue benefit availed along with interest at the rate of 18 per cent to the consumers of the goods or services. If the undue benefit cannot be passed on to consumers, it can be ordered to be deposited in the Consumer Welfare Fund”. Sharma has, therefore, walked into one of the most significant organisations created by the Union government in a long time, with powers over a huge segment of India Inc.  The appointments committee of the cabinet order says Sharma will have the rank and pay of a secretary in the government.

 

The order also says the 58-year-old was closely associated with the formulation of GST and its implementation. But this is a matter of debate. He is, of course, a member of the board of directors of the GSTN—the infotech backbone of the nationwide order matching system which is GST. Yet, the GST Council had appointed Arun Goyal, from the cabinet secretariat, to the sensitive post of advising the Council.

 

Before joining the finance ministry Sharma did a stint in the power ministry and at one time served in the commercial taxes department of the Rajasthan government. So, other than a general exposure in the economic departments of the state governments and at the Centre his “close association” with the tax has been mild.

 

But this has also been the norm within the Indian government for appointments to any ministry. Domain expertise has rarely been given importance. Sharma, however, has  an advantage —  he heads a three-tier national body with plenty of buffer. Complaints will be investigated at the state level by a screening committee. Those complaints that are found to be valid would be referred to a standing committee at the Centre that would, in turn, ask the director general of Safeguards of the Central Board of Excise and Customs to carry out a detailed investigation. And then he can take comfort in the knowledge that Finance Secretary Hasmukh Adhia is there for addressing any challenging question.


Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel