Anti-profiteering investigation: Mock purchases, premise visits planned to check B2B invoices

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Taxmen could carry out ‘mock purchases’, visit premises and check invoices issued by top 20 goods and services suppliers as part of anti-profiteering investigations in their respective areas under the new tightened framework under Goods and Services Tax. GST officers conducting antievasion verification, audits, inspections or search operations may also include checks from anti-profiteering perspective, according to the new stringent monitoring mechanism for taxmen to keep a check on companies for profiteering from reduction in tax rates or availability of seamless input tax credit endorsed by the Council. “GST Council has approved the standard operating procedures for anti-profiteering,” a government official told ET. The Council had at its meeting on Friday extended the tenure of National Anti-profiteering Authority or NAA, ending in November this year, by two years. As per the latest procedure approved by the Council, taxmen can undertake preliminary examination concerning profiteering post cut any in GST rate or on additional input tax credit taken by any company from its records.

They will have to identify top 20 suppliers, including manufacturers, distributors or service providers in their jurisdiction by checking their B2B invoices in their value chains for any prima facie violations of anti-profiteering provisions. Commissioners have been authorised to conduct mock purchases to gather invoices as evidence, check fixation of stickers with revised MRP and visit any premise in case of probable profiteering after approval from competent authority. Authorities will keep a close tab on sudden swelling up of input tax credit for quarters immediately succeeding any GST rate reduction or changes in structure of inputs or abrupt increase in net profits, any enhancement of base price or any product to deny reduction in tax rate to consumers. Input tax credit ledgers of companies may also be looked into to check for profiteering from tax rate reduction or input tax credit changes. 

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