The specifics of methodology has been inconsistent and ambiguous in the National Anti-profiteering Authority
Starting this month, the Competition Commission of India is looking into anti-profiteering measures under the Goods and Services Tax. CCI has substituted the National Anti-profiteering Authority (NAA) to regulate unfair profiteering practices of the registered suppliers.
NAA had been touted as the watchdog for passage of benefits from GST rate reduction and input tax credits (ITC) to the end-consumers. Its original tenure ended in 2019 according to the Act’s sunset clause. However, the tenure was extended until 2021 and re-extended until it was finally wound up in November 2022.
The Central Board of Indirect Taxes and Customs (CBIC) issued a notification subsuming NAA under the antitrust watchdog of India.
Apart from the inevitability of the merger, it is preferable in certain aspects. This move will minimise multiplicity of regulators for adjudication of unfair practices. Consequently, this addresses any jurisdictional conflicts that might have arisen in the future.
CCI is already well-versed with the business and market dynamics that impact prices and consumer interests and thus equipped to handle such matters. One may also expect reasoned and detailed observations, thereby enhancing the quality of the orders. Further, the commission has had a laudable record of accountability and transparency of proceedings.
However, there needs to be a restraint on the disclosure of details of proceedings and investigation in cases of profiteering claims. A confidential preliminary investigation to ascertain prima facie violation of anti-profiteering norms shall be an apposite recourse. The discretion ensures allegations of unjust enrichment until established beyond reasonable doubt do not impact the goodwill and market of the business.
Another advantageous outcome of the merger is the clear and settled appellate mechanism as opposed to the complex web of options available with the party aggrieved by order of the NAA. This was a crucial cripple in the anti-profiteering regime with no provision of appeal and appellate authority. This was further plagued by the pre-deposit requisite to filing an appeal against the Commissioner’s order before the CESTAT. Nonetheless, it is being reckoned as a hasty move and an uneasy alliance.
One of the issues that is being raised is lack of synergy in the subject matters and functions of both the regulators. This apprehension arises out of ostensible lack of expertise of CCI in handling taxation related matters. Moreover, there seems to be ambiguity on redressal of fundamental issues of institutional framework under the CGST Act.
Another major issue may arise is the heavy burden of cases on the Commission. CCI is entrusted with an expansive role of preventing, regulating and prosecuting unfair trade practices. Besides, the Commission is embroiled in making headway with the BigTech and e-commerce industry which is a tedious task in itself.
In these circumstances, taking over NAA’s roles may disrupt its core functioning in addition to concerns of pendency of matters, and logistical, staffing, infrastructural and administrative challenges. These reservations were also raised by CCI as interpretation of a new statute is itself an enormous task, especially at a time when it needs to give attention to something as mercurial as digital market platforms.
Apart from the aforementioned handicaps, the stakeholders are sceptical of the methodology and determinants of profiteering and computation of quantum of penalty. CCI shall have to deal with the dreary task of devising a methodology which it had no nexus with, until now. The specifics of methodology has been inconsistent and ambiguous in the NAA which is a major red flag for the Commission.
The Commission is starting with a blank slate. Yet, there is a lot to gain from the merger especially given the excellent track record of CCI.
The writer is a lawyer and columnist