GST profiteering may lead to cancellation of registration
21/06/2017
NEW DELHI: The government's anti-profiteering rules have raised the prospects of cancellation of registration of an entity that takes undue advantage of Goods and Services Tax (GST) implementation and does not share the gains with consumers.
Cancellation of registration is in addition to the power to levy penalty that was prescribed under the law.
The government has repeatedly threatened to invoke anti-profiteering provisions to ensure that gains of GST by way of lower taxes and input tax credit for taxes paid at all stages are passed on to consumers. At the same time, it also wants to ensure that in cases where the levy is going up, companies do not take unfair advantage.
The GST Council has approved a three-stage process with the complaints being first verified by a standing committee of officers. If the panel finds merit, it will be sent to director general of safeguards, which will investigate the case. Based on the report, Anti-Profiteering Authority will decide on the case. From the time the complaint is lodged, the entire process has to be completed in eights month, the rules finalised by the Council said.
Tax practitioners said that cancellation of registration is too harsh, given that the rules are too open-ended.
A consultant said in their current form, the provisions can be misused by rivals, who can lodge a complaint against a company, which will have to answer queries.
"The current mechanism is too broad-based and difficult to implement. Can you act against an eatery in Mahabalipuram that does not pass on the gains of input tax credit. The focus should be on sectors such as automobiles, cement, steel and real estate where malpractices are more common and some have a history of pocketing the gains," said a tax consultant with a global firm.
The government has opted to play it safe with the anti-profiteering provisions as Malaysia saw a price surge in various segments after it introduced GST. Australia had successfully used the clause to ensure that consumer interest was protected.
Share This Story |
|
Comment On This Story |
|
|
|
|