Delhi HC upholds anti-profiteering provisions of GST
NEW DELHI: The Delhi High Court bench, led by Acting Chief Justice Manmohan and Justice Dinesh Kumar Sharma, on Monday upheld constitutional validity of anti-profiteering provisions in the goods and services tax Act.
This decision came following petitions from over 100 companies, including Hindustan Unilever, Patanjali Ayurved, Jubilant Foodworks, and Phillips India, challenging these provisions.
The court underscored Section 171 of the GST Act, which mandates that any benefits from tax reductions must be passed on to consumers through corresponding price reductions. This provision is viewed as a measure for consumer welfare introduced in the public interest.“Quantum of profiteering for companies will be decided to address the issue of cost escalation, skewed ITC situations and erroneous application of power.
Accordingly, benefit will be available only after addressing the issue on merits and removing the possibility of arbitrary exercise of power”, said Abhishek A Rastogi, founder of Rastogi Chambers, who argued dozens of petitions for real estate, FMCG and F&B sectors.
“Companies have an option of filing an SLP before the Supreme Court against the constitutional validity order in case the quantum of profiteering computation will be detrimental to them”, added Rastogi.
Established in November 2017, the National Anti-Profiteering Authority (NAA) aims to guarantee that companies transfer the benefits of Input Tax Credit (ITC) and GST reduction to consumers through price reductions. It has been observed in several countries that the introduction of GST often led to a notable rise in inflation and commodity prices. The NAA was initially formed for a two-year term to address this issue, which was later extended multiple times.
Additionally, the Competition Commission of India has been investigating complaints of profiteering against companies since December 2022.