In addition to these two cases, the government is also in the process of issuing notices to seven-eight more firms in the next few days, including an FMCG company

finance ministry has sent notices to two companies—a car dealer and a real estate developer—under GST’s anti-profiteering mechanism as these entities did not pass on the benefit of the new indirect tax system given by the government to the final consumer.

"The primary investigations have begun. We have issued notices to a Bareily-based car dealer and a real estate developer based out of Gurgaon," the official told Moneycontrol.

"We have asked them to provide us with their balance sheet and profit and loss account for last one year. In the next three months we will have to establish if it is a case of profiteering," the official said, adding that the final findings of the investigation will then be sent to the National Anti-Profiteering Authority (NAA).

In addition to these two cases, the government is also in the process of issuing notices to seven-eight more firms in the next few days, including an FMCG company, the official said.

NAA is the top decision making body under Goods and Services Tax’s (GST) anti-profiteering mechanism, headed by a chairperson BN Sharma and four technical members.

Under the GST-related laws, the government had introduced an anti-profiteering clause to ensure businesses transfer the benefit of tax credit to consumer by making products cheaper.

The framework of the body comprises a standing committee, screening committees in every state as well as the Directorate General of Safeguards. If consumers feel that the benefit of a rate cut is not being passed on to them, they can approach the state’s screening committee for relief.

Currently, Director General Safeguards, the investigative arm of department of revenue under finance ministry have started investigation in these two cases.

A total of 36 home buyers have filed complaint against Gurgaon-based real estate developer Pyramid Infratech. These home buyers have alleged that the builder has not passed on the benefit of input tax credit to them.

According to the complainants, the builder continued to charge 12 percent GST (since July 1)  despite getting a much higher tax credit (more than the 12 percent tax) from the government on raw materials such as cement and steel.

Similarly, another complainant has claimed that a Bareily-based Honda car dealer has not passed on the benefit of reduced tax rate on car, the official said.

The government has received 36 fresh complaints under GST’s anti-profiteering mechanism, for not passing on to consumers a reduction in price after rate of over 200 items were cut on November 15.

In November that Cabinet approved setting up of National Anti-Profiteering Authority and appointed the Chairman and the four technical members. It was only in last week that the government released the official form for anti-profiteering under GST that can be used by a consumer to register a complaint.

The entity accused of profiteering may also have to shell out an 18 percent interest from the date of collection of higher amount till the date of return of such amount.

 22 Dec 2017, 12:30 PM