Profiteering probe on over 100 firms for holding GST relief

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More than 100 companies are being investigated for allegedly inflating their bottom lines and not passing on the goods and services tax (GST) relief to consumers, the intended beneficiaries of several rounds of tax cuts since 2017.

The majority of cases being investigated by the Directorate General of Anti-Profiteering (DGAP) are against real estate developers, fast food joints and movie theatres. The investigation reports are expected to be ready in 6-9 months and will be submitted to the National Antiprofiteering Authority (NAA) for adjudication, a person aware of the matter said.

In 150 cases, wherein the final orders have been passed by the NAA, the findings of the profiteering inquiries have been endorsed by the NAA and, in some cases, the authority has expanded the scope of the investigation to certain other projects of the accused company, or into the pricing behaviour of a different period, the person said on condition of anonymity.

“This has led to many companies under investigation to voluntarily compute the amount profiteered in response to the investigation.” He said for cases related to the real estate sector, many entities under investigation are reducing prices.

NAA’s earlier orders show that companies had raised the base price of a product after the government reduced the GST rate, depriving consumers of the benefit of the tax rate cut and, in some cases, led to rise in the tax outgo of the customer because of the increase in base price. But companies reasoned that an increase in input costs led to the rise in base price. This argument has not been accepted by the authorities as “input costs cannot rise at midnight when tax rate cut comes into effect”.

However, many companies have challenged the law. The legislative framework of anti-profiteering Section 171 of CGST Act, which mandates businesses to pass on the benefits of tax rate cuts or input tax credit to consumers is currently under dispute. The Delhi High Court will hear a bunch of 50-odd petitions on 7 December.

Source from: https://www.livemint.com/news/india/more-than-100-companies-under-profiteering-probe-11606292773169.html

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