The Goods and Services Tax, Prime Minister Narendra Modi said, was a good and simple tax. But for many in India, including former prime minister Manmohan Singh, and others in public life as well as ordinary citizens, it had become what Congress vice president Rahul Gandhi called the “Gabbar Singh Tax”. Gabbar Singh, for the gen now, is the villain in block buster Hindi film Sholay. And his best dialogue in the film is, Yeh haath mere ko de de, Thakur (Give me this hand, Thakur). The grabbing hand, in other words.
Within three days of slashing the GST on many mass consumed items, the cabinet under the chairmanship of the prime minister on Thursday approved the creation of top post of chairman as well as those of technical members of the National Anti-Profiteering Authority (NAA).
It was the response to the reluctance and refusal on the part of businesses to pass on the reduction in GST rates on goods and services, by way of reduced prices to the end consumers.
The NAA has the authority to order the supplier or business concerned to reduce its prices or return the undue benefit availed by it along with interest to the recipient of the goods or services, in case it finds profiteering. If the undue benefit cannot be passed on to the recipient, it can be ordered to be deposited in the Consumer Welfare Fund. In extreme cases, the NAA can impose a penalty on the defaulting business entity and even order the cancellation of its registration under GST
The government apparently figured out that while there was pressure on it to bring down the rates, which it did for many items of mass consumption earlier this week, there was also the problem of the lower taxes were not percolating down to the people.
This gave the GST implementation by the government a bad name. The government also faces a political drubbing on this count at a very crucial time. Gujarat election processes are under way, many assemblies are due to go to polls in 2018, and the big Lok Sabha polls of 2019 is crucial to the BJP which hopes to bag a second term in office.
Incidentally, while things had generally become costlier in the post GST era, inflation is also threatening to raise its head, amid speculation that there will be no rate cut in the next round of monetary policy.
With the approval granted for these two posts, the decks have been cleared for the formation of the NAA which is mandated to ensure that end consumers of goods and services get the benefit of GST reduction.
This institutional framework to ensure that the full benefits of input tax credits and reduced GST rates flow to the consumers comprises, besides the NAA, a Standing Committee, Screening Committees in every state and the Directorate General of Safeguards in the Central Board of Excise & Customs (CBEC).
The NAA will be headed by a senior officer of the level of Secretary to the Government of India. There will be four technical members from the Centre and/or the states. It is another measure aimed at reassuring consumers that government is fully committed to take all possible steps to ensure the benefits of implementation of GST in terms of lower prices of the goods and services reach them. Effective from midnight of November 14, 2017, the GST rate has been slashed from 28 per cent to 18 per cent on goods falling under 178 headings.
According to the government, there are now only 50 items which attract the GST rate of 28 per cent. Likewise, a large number of items have witnessed a reduction in GST rates from 18 per cent to 12 per cent and so on, and some goods have been completely exempted from GST. Affected consumers, who feel the benefit of commensurate reduction in prices is not being passed on when they purchase any goods or services, may now apply for relief to the Screening Committee in the particular State.
If the incident of profiteering relates to an item of mass impact with 'all India' ramification, the application may be directly made to the Standing Committee.
If a prima facie element of profiteering is found, the Standing Committee shall refer the matter for detailed investigation to the Director General of Safeguards, CBEC, which shall report its findings to the NAA, said the government. The government expects the constitution of the NAA to bolster confidence of consumers as they reap the benefits of the recent reduction in GST rates in particular, and of GST in general.
