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Why National Anti Profiteering Authority(NAA) to be Subsumed into CCI? | Know Everything for UPSC

Relevance of NAA & CCI for UPSC


Every happening related to GST, NAA & CCI are relevant under GS 3: Fiscal Policy, Statutory Bodies, Government Policies & Interventions  under the UPSC CSE Mains Syllabus.C

In depth understanding of mandate and functions of financial watchdogs like Competition Commission of India (CCI) & National Anti Profiteering Authority(NAA) are also important from the UPSC Prelims Examination 2023.


Why NAA & CCI in News?


  • As per he Central Board of Indirect Taxes and Customs (CBIC) notification, the Competition Commission of India (CCI) will address profiteering issues related to the goods and services tax (GST) from December 1 this year.
  • So, the National Anti-Profiteering Authority (NAA) is all set to be subsumed into the Competition Commission of India (CCI) by the end of this month.


Background of NAA’s merger into CCI


In the Lucknow meeting of GST Council (September 2021), it was agreed that the tenure of NAA was to be extended till November 30, after which it would wind up with the CCI stepping in to take over its functions.

Also Read: GST Council- SC ruling on GST Council


Know about NAA


  • The National Anti-profiteering Authority (NAA) is the statutory mechanism under GST law to check the unfair profiteering activities by the registered suppliers under GST law.
  • 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.
  • The NAAs main function is to ensure that the registered suppliers under GST law are not profiteering by charging higher prices from recipients in the name of GST.
  • The legal mandate of NAA is to examine and check such profiteering activities and recommend punitive actions including cancellation of Registration.
  • Its term ends on November 30.


Know about CCI


  • The CCI is a statutory body established under Section 7 of the Competition Act, 2002 (Competition Act), with the objective of preventing 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.
  • The CCI also has the power to impose hefty penalties (such as the Rs 6,000 crores penalty upon cement companies).
  • The CCI is, however, not a price regulator and, in practice, is rarely concerned with high (exploitative) prices charged by a party.
  • The Competition Act also clearly sets out the appellate mechanism; appeals against the CCI’s orders lie before the National Company Law Appellate Tribunal and, thereafter, before the Supreme Court.


What NAAs merger into CCI Means?


  • The Central Government, on the recommendations of the Goods and Services Tax Council, hereby empowers the Competition Commission of India established under sub-section (1) of section 7 of the Competition Act, 2002 (12 of 2003), 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.
  • The notification for the same will come into force with effect from December 1, 2022.
  • Till now, this was being done by the National Anti-profiteering Authority (NAA), which addresses all consumer complaints relating to profiteering under GST.


Why National Anti Profiteering Authority(NAA) to be Subsumed into CCI?_3.1


What are the issues pertaining  to the NAAs merger into CCI?


There is a thinking that merging of NAA mandate with CCI is an uneasy alliance.

Lack of Synergy

  • Some experts say that the mandate of the NAA is completely antithetical to the role of CCI, and claim that there won’t be any synergy in the merger.
  • As a market regulator, CCI ensures fair discovery of prices through market forces, whereas NAA mandates passing of tax benefits and input credits to consumers.
  • There is lack of synergy in their roles as also lack of expertise in CCI in handling tax matters.

Extra Burden on CCI

  • Many orders by NAA have been challenged in various high courts, and they are still pending. Also, there is huge pendency of cases before the NAA, and CCI, with its increasingly expansive role, may find it difficult to discharge the additional burden.
  • In fact, this may compromise on the quality of work of CCI at a time when it is taking on big tech in a big way. Earlier this year, the CCI had also expressed its reservations to the revenue department about the proposed merger of NAA with the competition watchdog.
  • The Parliamentary Standing Committee on Commerce’s Report on ‘Promotion and Regulation of E-Commerce in India’ recommended entrusting the CCI with major responsibilities of regulating e-commerce in India, by setting up a digital markets division within the CCI and the introduction of ex-ante regulation of digital platforms. The proposed merger would, therefore, burden the CCI with the interpretation of a new statute and related concerns at a time when its focus is required elsewhere.

What should be done to gain maximum from NAA and CCI merger?


  • At present, the CCI focusses on eliminating practices that have an adverse effect on competition and works to promote and sustain competition, protect consumer interests and ensure freedom of trade in the markets.
  • So, there may be certain practical challenges that could arise if NAA and CCI are merged as the focus area of the CCI is broader when compared to the NAA, which is restricted to only passage of GST benefits to the customer, and the legality of the NAA is challenged by GST registrants on account of Constitutional validity. But ultimately objective of NAA and CCI is to protect the consumer interest; so they can manage these things.
  • Also, “urgent appointments/ assessment within the current bandwidth is required to be undertaken for swift transition of NAA to CCI, funding and infrastructure which may be required after merger could be seen as challenge and CCI is also facing backlog with a single bench having the responsibility for adjudicating all matters.
  • There should be a separate wing within the CCI to address GST related issues.
  • This move of merger was highly expected as the changes in GST tax rates were happening on a frequent basis and at given juncture changes in GST are comparatively less.

Also Read: The Editorial Analysis- Extending GST Compensation as a Reform Catalyst




Q. What is an ‘Anti-profiteering’ activity?

Ans. The suppliers of goods and services should pass on the commensurate benefit of any reduction in the rate of tax on such supplies or the benefit of input tax credit to the recipient by way of commensurate reduction in prices. The action of not passing of such above said benefits to the recipient amounts to “profiteering”.

Q. What is the anti-profiteering mechanism under CGST Act, 2017?

Ans. CGST Act, 2017 mandates a 3-tier structure for the investigation and adjudication of the complaints regarding profiteering.

  1. National Anti-profiteering Authority (NAA)
  2. Directorate General of Anti-Profiteering (DGAP)
  3. State-level Screening Committees and Standing Committee.

Q. When will the National Anti-profiteering Authority (NAA) merge into CCI?

Ans. National Anti-Profiteering Authority (NAA) is all set to be subsumed into the Competition Commission of India (CCI) by December 01, 2022.

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Did you know?

National Anti Profiteering Authority(NAA) is profiteering watchdog and was set up after the introduction of GST, initially for two years, which was extended two times subsequently.

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