Centre plans to provide legal power to CCI ahead of merger with NAA

The Union government is working on enhancing legal powers for the Competition Commission of India (CCI) by amending some key provisions of anti-profiteering regulations on goods and services tax (GST), thus preparing the soil for two regulators to merge.

The move assumes significance as the National Anti-profiteering Authority’s (NAA’s) term ends in November, with no further extension being planned. The Centre had early this year decided to subsume the NAA, the GST anti-profiteering watchdog, into the CCI.

The merger could be delayed if the relevant changes are not made before November-end. At present, the CCI’s structure lacks the legal powers and qualifications to deal with offences related to GST.

“The GST law needs some amendment in order to subsume the NAA into the CCI. We may propose removing at least two provisions while modifying the one with respect to appointing members,” a senior government official told Business Standard.

The proposed amendments will require the GST Council’s approval.

Sources said the finance ministry could move an amendment to provisions related to referring GST-related cases to the NAA and with respect to the “timeframe”. At present, the GST law mentions referring the case to the NAA. “It should be deleted or could be replaced with the CCI,” another official in the know said.

While the provision related to the timeframe deals with the existence of the NAA, and with the CCI being the perpetual body, the section needs to be removed, he said. 

Besides, the ministry is also working on tweaking the eligibility criteria mandating four technical members apart from the chairman who are or have been commissioners of state tax or central tax for at least one year, the official said.

The NAA was set up for two years till November 2019 to ensure any reduction in tax rates on any supplies of goods or services or benefits of the input tax credit (ITC).

MAKING INROADS 

• FinMin may make amendments to anti-profiteering regulations under the GST Act
• Term of National Anti-profiteering Authority ends in November 
• Merger could be delayed if changes are not made before November end
• Govt had decided to subsume the anti-profiteering authority with CCI at a council meet in June
• Changes could be made vis-à-vis cases, timeframe, and appointing members 
• Eligibility criteria of members could be modified

However, the tenure was extended till November 30, 2022.

“While ideally GST price changes and ITC matters should be left to market forces, it is necessary to have a well-defined permanent structure to take care of any matter that may involve profiteering from a GST perspective and a reference to the CCI as a body may help in that aspect,” said M S Mani, partner, Deloitte.

The CCI regulates anti-competitive behaviour and conduct that may stifle competition by way of abuse of dominance.

The NAA has investigated cases related to industries including cement, steel, tyre, shipping and the digital economy, and has evolved the economic analysis tools. Nearly 150 writ petitions filed by suppliers against the NAA’s orders are pending in various courts.

“All pending cases require to be disposed of by November while those which remain may be referred to the CCI,” the official cited above said.