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.
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