Starting next month, the Competition Commission of India (ICC) will look into anti-gouging measures under the Goods and Services Tax (GST), replacing the National Anti-Gouging Authority (NAA). Experts say that the ICC will have to face the challenge of finding the right methodology to measure the speculation and the amount of the penalty for which NAA is involved in litigation in court.
A notification to this effect was issued by the Central Board of Indirect Taxes and Customs (CBIC) on Wednesday.
In addition to omitting and adding rules, the notice reads: “The central government, on the recommendation of the Goods and Services Tax Board, hereby empowers the Competition Commission of India… to examine whether the registrant or the reduction of the tax rate has actually resulted in a proportionate reduction in the price of the goods or services, or both, supplied by it.
The decision comes at a time when more than 50 cases against the constitutional validity of the NAA have been pummeled and are being heard in the Delhi High Court. The biggest problem is the lack of methodology to calculate speculation.
Abhishek Rastogi, founder of Rastogi Chambers, said that while this is an expected move based on the recommendation of various states, it will be interesting to see if CCI provides a methodology for various sectors before moving towards quantum speculation.
He said the extension of anti-gouging provisions beyond five years will have to test the waters of constitutionality at some point, as the intent was to provide anti-gouging relief only for the transition phase.
Saurabh Agarwal, a tax partner at EY, said it remains to be seen how the ICC addresses the calculation methodology that was absent from the NAA proceedings.
The NAA was established for two years until November 2019 to guarantee any reduction in tax rates on any supply of goods or services or benefits from the input tax credit.
Later, it was extended until November 2021. The GST Council, at its 45th meeting in September last year, granted another one-year extension until November 30, 2022 to NAA and also decided to change the job to CCI after it’s.