Industry body, Associated Chambers of Commerce and Industry of India (ASSOCHAM) has suggested removal of a provision in the revised Model GST Law dealing with anti-profiteering, since it is open to misuse and subjective interpretation. In a detailed representation to the Central Board of Excise and Customs (CEBC) and the Finance Minister Arun Jaitley, the ASSOCHAM also sought clarity on a wide range of issues like location of recipient and supplier of services and the treatment of related party transactions.
ASSOCHAM said that in the revised Model GST Law, the central government has been given powers to constitute an authority to examine whether input tax credits availed of by any registered taxable person, or the benefit of a reduction in the tax rate, has resulted in a commensurate reduction in the price of the goods or services supplied. Also, the authority would have powers to impose penalties where the prices of goods or services supplied are not reduced.
Industry body added that while the intent of such a proposal cannot be questioned, the industry believes that it will be very difficult to implement and the costs of compliance and administration will significantly outweigh the risks that some businesses will seek to ‘profiteer’ from the change in indirect tax systems. With regard to location of recipient and supplier of services for the purpose of ascertaining place of supply, the chamber has said the concept of business establishment be introduced (which should be only one location per legal entity) for sake of simplicity, such as location could be the billing address of the recipient/ supplier.
