GST anti-profiteering: Supreme Court issues notice to Centre

The Supreme Court (SC) on Monday issued a notice to the Union government, including the Finance Ministry, and the National Anti Profiteering Authority on a case relating to the Constitutional validity of anti-profiteering provisions relating to the goods and services tax (GST).

The case pertains to a special leave petition filed before the SC by Excel Rasayan, which is a manufacturer of dishwasher products, against a ruling by the Delhi High Court that upheld the Constitutionality of anti-profiteering provisions. The matter is before a Supreme Court bench - comprising Chief Justice DY Chandrachud, Justice JB Pardiwala, and Justice Manoj Misra.

The company has contended that in the absence of methodology, the anti-profiteering provisions are manifestly arbitrary and vague, and hence constitutional validity has to be tested before the Supreme Court.

Appearing for the petitioner, Abhishek A Rastogi, founder of Rastogi Chambers, argued before the Supreme Court that the time limit concerning anti-profiteering provisions cannot be endless and this will pose significant difficulties for the business.

The anti-profiteering provisions are manifestly arbitrary as there is no methodology to determine the quantum of profiteering, and with this lack of methodology, there are significant challenges for the companies to determine the quantum of profiteering. Further, it was argued on behalf of the petitioner that the provisions are vague in the absence of any definition for ‘commensurate reduction of prices’ and this poses a significant problem.

 

The case is likely to have a significant impact across the industry. More firms are likely to file petitions in the apex court on the issue.

Earlier, over 100 companies including Hindustan Unilever and Jubilant Foodworks had filed petitions against the anti-profiteering provisions in the Delhi High Court. However, the HC in its recent ruling on January 29 had upheld the constitutional validity of the anti-profiteering provisions under the Central GST Act under which companies must reduce prices in line with any GST that they save. If the benefit is not passed to the consumer under this provision, it is seen as profiteering and the company may be penalised.

The Delhi High Court had held that Section 171 of the CGST Act, which says that suppliers of goods and services should pass any reduction in the tax rate to the customer or recipient, should not be seen as a price control measure.

Source::: BUSINESS TODAY,  dated 12/02/2024.