the essay of 8 December 2021 · the untouched capture
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<p align="left"><font color="#663399" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2">DECEMBER 08, 2021</font></strong></font></p>
<p><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Anti profiteering - resurrected </strong></font>
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<p align="center"><u><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>By Vijay Kumar </strong></font></u></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">AS per Section 171 of the CGST Act, </font></strong></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) The Central Government may, on recommendations of the Council, by notification, constitute an Authority, or empower an existing Authority constituted under any law for the time being in force, to examine whether input tax credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(3) The Authority referred to in sub-section (2) shall exercise such powers and discharge such functions as may be prescribed. </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government incorporated the provisions of Anti Profiteering Authority in Rules 122 to 137 of the CGST <strong><a href="https://taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=29&filename=notification/gst/cgst-rules/cgst_rules_2017.htm" target="_blank">Rules, 2017</a></strong>, as per which: </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a></a><a></a>122. The Authority shall consist of, -</font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> a) Chairman who holds or has held a post equivalent in rank to a Secretary to the Government of India; and </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b) four Technical Members who are or have been Commissioners of State tax or central tax or have held an equivalent post under the existing law.</font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">124 (4) The Chairman shall hold office for a term of </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"sans-serif" style="background-color:#FFD7AE" span="span">two years </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">from the date on which he enters upon his office, or until he attains the age of sixty- five years, whichever is earlier and shall be eligible for reappointment: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">134. Decision to be taken by the majority. - (1) A minimum of three members of the Authority shall constitute quorum at its meetings.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>137. Tenure of Authority. - </strong>The Authority </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"sans-serif" style="background-color:#FFD7AE" span="span">shall cease to exist </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">after the expiry of two years from the date on which the Chairman enters upon his office unless the Council recommends otherwise.</font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When these rules were discussed in the 17th GST Council Meeting held on 18 June 2017:</font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">- The Chief Economic Adviser (Dr. Arvind Subramanian) stated that there were already two meetings on this issue and that a sunset clause of 9 months to one year needed to be provided. He added that this was a transition provision and would lead to harassment and in the long run, it </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"sans-serif" style="background-color:#FFD7AE" span="span">should die.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">- The Chief Economic Adviser stated that the anti-profiteering clause was a mistake and the discretion it provided might lead to its abuse and cause harassment. Therefore, it was necessary to circumscribe it. He added that it would be difficult to implement it because of the difficulty in determining what profit was, what profiteering was, etc. He further added that it was necessary to keep the provision simple and add a sunset clause so it did not carry on forever.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">- The Secretary stated that the intention was not to harass the small trader but a deterrent effect was required without which there were chances of high amount of profiteering taking place. For this, he stated, that a mechanism was needed but also added that he was in agreement with a sunset clause of say two years, after which it could be said that the Authority would become dysfunctional.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">- The Hon'ble Minister from Bihar wondered as to why retired judges needed to be brought as Chairman of the Authority and why retired officers could not be considered. He opined that </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"sans-serif" style="background-color:#FFD7AE" span="span">judges did not understand the tax complications </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">and suggested that the Authority should be headed by officers and not judges.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">- The Hon'ble Minister from Kerala asked what the exact meaning of "profiteering" was and that benchmark information was required.</font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The GST Council after detailed discussion approved the draft Anti-profiteering Rule and further authorized the Law Committee to make amendments as may be necessary for including the suggestion as discussed.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, the Government appointed Chairman and Members of the National Anti-profiteering Authority. A Press Release by PIB on 28 November 2017, stated:</font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In an immediate follow up action of last week's Cabinet approval for creation of the posts of Chairman and Technical Members of the National Anti-profiteering Authority under GST, the Government today issued orders appointing senior IAS officer Shri B.N. Sharma, as the first Chairman of this apex Authority in the rank of Secretary to Government of India.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Shri B.N. Sharma would be assisted by four senior officials of the rank of Joint Secretary and above, who have been appointed as Technical Members in the Authority. These officials are Shri J.C. Chauhan, Chairman Tax Tribunal, Himachal Pradesh; Shri Bijay Kumar, Principal Commissioner GST, Kolkata; Shri C.L. Mahar, Principal Commissioner GST, Meerut; and Ms. R. Bhagyadevi, ADG, Systems, Chennai.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The appointment orders of Shri B.N. Sharma as Chairman and of the other officials as Technical Members of the Authority were issued on the recommendation of a high level Selection Committee headed by Shri P.K. Sinha, Cabinet Secretary, Revenue Secretary, Chairman, CBEC and Chief Secretaries of States of Maharashtra and Tamilnadu were the other members of the Selection Committee.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Authority has been set up for a two-year period, which would begin from the date Shri B.N. Sharma assumes charge as Chairman.</font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mr. BN Sharma assumed office on 1st December 2017 and so as per Rule 137 of the CGST Rules, (The Authority shall cease to exist after the expiry of two years from the date on which the Chairman enters upon his office.) the National Anti-profiteering Authority would have ceased to exist on and from 30.11.2019, but the GST Council at its 35th meeting on 21st June, 2019 approved to extend the tenure of National Antiprofiteering Authority for a further period of two years beyond 30th November 2019 i.e. upto 30th November 2021.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Introducing this agenda item, the Secretary stated that the anti-profiteering provisions were introduced in the GST vide Section 171 of the CGST <strong><a href="https://taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=29&filename=notification/gst/cgst_act/2017/cgst_act_index.htm" target="_blank">Act, 2017</a></strong> and this did not provide for any sunset clause. However, in terms of Rule 137 of CGST Rules, 2017 the tenure of NAA was only for two years, from the date on which the Chairman assumed charge of his office. The Chairman, NAA had joined the Authority on 1st December, 2017 and thus the tenure of NAA would expire on 30th November, 2019.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, by Notification No. <strong><a href="https://taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MjU4OTQ=" target="_blank">33/2019-Central Tax</a></strong>, dated 18.07.2019, the Government amended Rule 137 to extend the life of the National Anti-profiteering Authority from two years to four years from the date of assumption of the office by the Chairman which was from 1st December, 2017.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, now the tenure of the National Anti-profiteering Authority would end on 30th November 2021, which as we all know and perhaps the government did not know was just last week. The government forgot to amend the rules before 30th November and so the National Anti-profiteering Authority ceased to exist from 1st December 2021. But on 1st December 2021, they issued Notification No.<strong><a href="https://taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=Mjg3Nzg=" target="_blank">37/2021 - Central Tax</a></strong>, which amended Rule 137 to make the tenure of 'four years' as 'five years'. When the National Anti-profiteering Authority did not exist on 1.12.2021, how can they amend the rules to extend its life till 30.11.2022? Don't doubt the brilliance of the babu. The amendment is effective from the 30th day of November 2021!</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Can they amend the rule with retrospective effect? They can. As per Section 164 (3) of the CGST Act, </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(3) The power to make rules conferred by this section shall include the power to give <strong>retrospective </strong> effect to the rules or any of them from a date not earlier than the date on which the provisions of this Act come into force.</font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">No doubt, they have the power to make rules with retrospective effect, but can this provision be made applicable to resurrect a dead authority? As per the Rules only, the National Anti-profiteering Authority ceased to exist from 1st December 2021. So, when its tenure was extended to five years by a notification dated 1st December 2021, the National Anti-profiteering Authority did not exist. How can you extend the life of an institution that did not exist? Maybe you should have recreated the organisation with an extended life. Right to make retrospective legislation does not confer the right to resurrect a dead organisation.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And why did they wait till 1st December to amend the rules when they could have legally, morally, and easily amended it before 30th November 2021? Perhaps babudom has its limitations.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In any case, the National Anti-profiteering Authority is a non-functional body. There should be a quorum of at least three members for the National Anti-profiteering Authority to take a decision. As of now the National Anti-profiteering Authority has only one Member who is also the Acting Chairman. So, it cannot take any decisions. Several writ petitions are pending in Delhi High Court questioning the very validity of the National Anti-profiteering Authority.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When the rules were framed, they perhaps hoped to close down the institution at the end of two years as suggested by the Chief Economic Advisor and so wrote the rules in accordance with this idea. But circumstances and need forced them to extend the tenure to four years and now five years. The rule stated that the <em>Authority shall cease to exist after the expiry of two years from the date on which the Chairman enters upon his office</em>. This means that they visualised only one Chairman - the first one. What would have happened, if for some reason, the Chairman's post became vacant and another Chairman was appointed. Would the Authority's tenure have been extended by another two years from the date on which the new Chairman <em>enters upon his office</em>. Even now, there is no Chairman for the Authority. Will its tenure be five years after the new Chairman <em>enters upon his office?</em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The best solution would be to wind up the National Anti-profiteering Authority and perform the last rites as soon as possible. </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Until Next Week</strong></font></p>
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