In relation to the newly introduced Goods and Services Tax in India consider the following statement...........

Economic Affairs Tax System

In relation to the newly introduced Goods and Services Tax in India, consider the following statements about the National Anti-Profiteering Authority (NAA) and identify the incorrect one/s.

1. The NAA will be a Constitutional body tasked to ensure that benefits of input tax credit and tax reductions are passed on to the end consumer.

2. The NAA is the sole authority mandated to look into the cases of profiteering in the country.

3. In cases of profiteering the NAA can impose fines and can also cancel the GST registration of the defaulting firm.

Select the correct answer using codes given below

1 and 2 only

2 only

3 only

1 and 3 only

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Explanation:

..First and second statements are incorrect.
First statement is incorrect because National Anti-Profiteering Authority (NAA) will not be a Constitutional body.
The NAA is a five member body viz. one chairman and four technical members. The chairman, who heads NAA, is a senior officer of the level of secretary to the Government of India. There are four Technical Members from the Centre and/or the States. The authority will operate for two years.
The GST Act itself contains provision for anti-profiteering measures. The Act recommend for the setting up of an institutional mechanism to ensure that the full benefits of price reluctant factors (i) the input tax credits and (ii) reduced GST rates on supply of goods or services, made from time to time will be passed on to the consumers.
Besides the NAA, the GST law also proposes for other institutional arrangements: a Standing Committee, Screening Committees in every State and the Directorate General of Safeguards in the Central Board of Excise & Customs (CBEC). All these bodies will work together on the anti-profiteering front.
When the NAA certify that there is anti-profiteering in a specific case, it can order the supplier/business concerned to reduce its prices or return the undue benefit availed by it along with interest to the recipient of the goods or services. If the undue benefit cannot be passed on to the consumer, it can be ordered to be deposited in the Consumer Welfare Fund. In extreme cases, the NAA can impose a penalty on the defaulting business entity and even order the cancellation of its registration under GST.