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Merger of GST’s NAA and CCI

Merger of GST: National Anti-Profiteering Authority

  • NAA is a statutory body set up under Section 171 of the Central GST Act, 2017 to check the unfair profiteering activities by the registered suppliers under GST law.
  • Main function: The Authority’s core function is to ensure that the commensurate benefits of the reduction in GST rates on goods and services done by the GST Council and of the Input tax credit are passed on to the recipients by way of commensurate reduction in the prices by the suppliers.
  • Composition:
    • NAA will be headed by senior officer of level of a Secretary to Union Government and shall have four technical members from Centre and/or States.
    • The chairman and four members will be less than 62 years of age.
  • Sunset clause: In terms of Rule 137 of the CGST Rules, 2017, the NAA shall cease to exist after the expiry of two years from the date on which the Chairman of the Authority enters upon his office unless the GST Council recommends otherwise.
  • Powers and Functions:
    • If NAA finds that company has not passed on benefits of tax reduction, it can direct entity to pass on benefits to consumers along with interest from the date of collection of the higher amount till date of return of such amount.
    • If the beneficiary cannot be identified, NAA can ask company to transfer amount to the ‘Consumer Welfare Fund’, as provided under Section 57 of CGST Act.
    • In extreme cases, NAA can impose a penalty on defaulting business entity and even order cancellation of its registration under GST.
    • NAA also has power to cancel registration of any entity or business if it fails to pass on benefit of lower taxes under GST regime to consumers, and empowers consumers to approach it in case of any complaint.
    • The orders of the NAA can be appealed against only in the high court.
  • Suo-motu action:
    • The NAA can take note of any instance of anti-profiteering even without a complaint from a citizen.
    • This can be done because the chairman of the NAA is also a civilian and he/she can also take cognizance of such acts.


Arguments in Favour of the Merger of GST

  • Minimum regulators: The merger is being considered to reduce multiplicity of regulators – a standalone NAA is not required when there exists the CCI, a body having specialised legal and economic expertise.
  • Continuing the legacy: NAA was originally set up for two years in 2017 and extended twice till end of November 2022. With the merger, the government wants to continue the legacy of NAA and make sure to pass on the GST rate cut benefits promptly to all the eligible beneficiaries or consumers.


Arguments Against the Merger of GST

  • Contrasting objectives: The NAA and the CCI have very different objectives under their respective statutes. The former strives to curb unfair GST profiteering practices whereas the latter is the competition regulator in India.
  • Extra burden on CCI: With the emergence of digital markets and e-commerce, the responsibilities of CCI are already on a rise. Therefore the proposed merger would be a burden the CCI with the interpretation of a new statute and related concerns at a time when its focus is required elsewhere.
  • Administrative challenges: Logistical and staffing issues may crop up given that the CCI operates on sub-optimal strength even today and is dependent on deputed officers for much of its strength.
  • Fundamental issues with the NAA: It is also unclear as to how this merger will address the fundamental issues with the NAA and the institutional framework under the Central Goods and Services Tax Act, 2017 (CGST Act).
  • Pendency of cases: The CCI also faces a significant backlog of cases with a single bench having the responsibility for adjudicating all matters. Hence, the merger will be a further dent on the efficiency.


Merger of GST:  Competition Commission of India (CCI)

  • About:
    • It is a statutory body of the Government of India responsible for enforcing the Competition Act, 2002, it was duly constituted in March 2009.
    • The Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act) was repealed and replaced by the Competition Act, 2002, on the recommendations of the Raghavan committee.
  • Objective: To prevent practices having adverse effect on competition, to promote and sustain competition in the markets, to protect the interests of consumers and to ensure freedom of trade.
  • Composition:
    • The Commission consists of one Chairperson and six Members who shall be appointed by the Central Government.
    • The commission is a quasi-judicial body which gives opinions to statutory authorities and also deals with other cases. The Chairperson and other Members shall be whole-time Members.
  • Functions of CCI:
    • To make the markets work for the benefit and welfare of consumers.
    • To ensure fair and healthy competition in economic activities in the country for inclusive growth and development of the economy.
    • To implement competition policies to ensure the most efficient utilization of economic resources.
    • To develop and nurture effective relations and interactions with sectoral regulators to ensure alignment of sectoral regulatory laws with the competition law.


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