The authority has also directed field units to ensure that prices of Covid related materials whose rates have been lowered following amendments to law, are reduced commensurately and benefits passed on to consumers. Similarly suppliers be allowed to avail input tax credit where permitted.
In an office memorandum sent out to field units across states, the director general of anti-profiteering (DGAP) and standing committee on anti-profiteering, the NAA has directed authorities to take, “all possible steps envisaged under the GST Laws to ensure that the legislative intent of Section 171 of the CGST Act is complied with.”
The NAA has further said that officers be issued ‘appropriate directions’ to take action and wherever required, “to utilise the powers conferred for collection of evidence which may be required to take action against errant suppliers of various goods and services,” NAA secretary AK Goel said in the memorandum.
Section 171 of the CGST Act 2017 envisages that benefit of tax-rate reduction and or input tax credit should be mandatorily passed on by suppliers to recipients or consumers of the goods and or services.
“I have also been directed to request you to take up the complaints filed by common consumers on priority and to forward the same to the Anti-Profiteering apparatus as provide in Rule 123 of the CGST Rules, 2017, i.e. the State-level Screening Committees and the Standing Committee on Anti-Profiteering,” Goel stated further.
The NAA’s directions follow Central Board of Indirect Taxes and Customs (CBIC) notifying 5% GST on 18 Covid related relief materials including oxygen concentrators and remdesivir injections, and reducing the tax on ambulances from 28% to 12%, till September 30.
The Board reduced rates of pulse oximeters, ventilators, hand sanitizers, Bipap machines, Covid testing kits and oxygen concentrators among others to 5% from 12% or 18% for the period. Also included in this list are drugs recommended by the health ministry, while Tocilizumab and Amphotericin B have been completely exempted from GST. The GST Council had decided to slash the rates amid the surging second Covid wave.
Experts lauded the NAA’s directions but noted that suppliers would have to keep documentation of passing on the benefits to be on the right side of law.
“The order is a step in the right direction. The government should give wide publicity to Section 171 of the CGST Act and educate the consumers of their rights against companies who are not passing on the benefit of reduction in GST rates on Covid items,” said Rajat Bose, partner at law firm Shardul Amarchand Mangaldas & Co.
MS Mani, senior director at Deloitte India added, “Businesses dealing with medical supplies that have undergone a GST rate reduction need to ensure that they have adequate documentation to demonstrate that the rate cuts have been passed on to the consumers.”