ANTI POFITEERING ACIONS UNDER GST-WHO GOT THE PROFIT.

[Jayaprakash Gopinathan]

The words of the Master always explained situations irrespective of timeframe and subject. When asked why seeing was so difficult this is what the Master said:

When Sam returned from Europe,

his partner in MENS UNDERWEAR LTD

asked him eagerly “Were you able to visit Rome, Sam?

“Yes of course!”

“And did you see the pope?”

“See the Pope? I  had a private audience with him”

“You don’t say!” exclaimed his partner in wide-eyed wonder.

“What is he like?”

“Oh, I’d say he’s a size thirteen and a half” said Sam

The above  words of wisdom surfaced on reading the observation of the Hon’ble Justice DY Chandrachud and Justice MR Shah, judges of the Supreme Court that “ the Parliament had intended the GST to be a citizen friendly tax structure. The purpose of the Act is lost by the manner in which tax law is enforced in our country.  The observation of the Apex Court about the way a land mark legislation is treated by those responsible for its implementation does not appear to have attracted the attention of the authorities probably due to the pre occupations in containing the Covid -19 pandemic. 

Political allegiance often reduces the vision of authorities .What they see often crystallises as that of the vision of Sam quoted. Even prior to the introduction of the GST, there were heated debates about bringing in Anti- profiteering provisions in the statute. The then Finance Minister of Kerala, Shri Thomas Issackji, advocated for its insertion in the statute and succeeded in his attempt against those pleaded for practical wisdom. The shrewd and diplomatic Shri ArunJaitleyji, the then Finance Minister, in his eagerness to make it happen the introduction of GST from 1.7.2017 ,in spite of lack of majority in the Upper House of Parliament accepted all the tall claims of the Kerala Finance Minister and got away with the amendment of Constitution for introduction of GST. The Kerala set up special task force after 1.7.2017 to investigate violations of anti profiteering law. A case under Anti profiteering law detected and action initiated by the State GST department from the capital city of Kerala is unique.

A small time whole sale distributor of a small product (excuse for anonymity to save the distributorship) was served with a notice after investigation for alleged profiteering by retaining the reduced tax component on the goods in hand as on 1.7.2017. The whole sale price of the product together with commissions at different distributors and dealers were fixed by the manufacturer of the goods and printed price lists were issued periodically by the manufacturer for the period of the Notice. The pricelist issued by the manufacturer indicated that the sale price was restructured by the manufacturer and the distributor only followed the instructions of the manufacturer. The Notice was replied promptly by pointing out the erroneous computation of the excess amount collected and the Noticee did not retain any amount other than his commission and they only complied with the instructions of the manufacturer as per the pricelist. No corrigendum was issued after verification of the reply regarding amount alleged to have profiteered. Instead the authority fixed a personal hearing at New Delhi office for the small distributor from Thiruvananthapuram, Kerala. During the hearing, the authority accepted the mistake of computation of excess amount alleged to have collected as pointed out in reply. In spite of submitting that the Noticee only complied with instructions of the manufacturer, the authority did not issue Notice to the manufacturer and when the point was reiterated, the hearing was adjourned for issuing notice to the manufacturer also. But the case was decided, in respect of the distributor, without making any mention of issuing a notice to the manufacturer of the product who actually profiteered by the alleged violation of relevant Section(s)  of CGST Act, 2017. The poor distributor was punished.    

   The information will be a guiding factor for future, if  any  Hon’ble Member of Parliament seek information about the total amount collected, distributed to alleged victims and expense involved for the show in respect of the Anti-Profiteering law.

The above episode informs that not seeing alone was difficult as explained by the master, what is learned too often gets a blurred vision.