Delhi HC bunches 40-odd pleas against anti-profiteering rulings

Delhi High Court on Monday bunched over 40 pleas against rulings of National Anti-profiteering Authority (NAA). These pleas are from Hindustan Unilever, Patanjali, Jubilant Foodworks, Reckitt Benckiser, Johnson & Johnson, Phillips India beside others.

NAA has held that these companies did not pass the benefit of reduction in GST rate or change in input tax credit (ITC) norms. Accordingly, the profiteered amount was to have been deposited in the Consumer Welfare Fund. Aggrieved by rulings, these companies had moved Court.

After GST’s introduction, the NAA was set up to determine whether the reductions in tax rates and the benefits of the input tax credit were being passed on to consumers by way of reduced prices.

On Monday, various suggestions were given to the Court regarding hearing of these matters. One suggestion was to formulate the questions of law/issues on which the matter will be argued because different counsels will be arguing the matter hence it will avoid the repetition of arguments.

There were various applications by other petitioners in other writ petitions. The Court allowed one such application for the amendment of the writ petition. Now the matter is listed for November 3.

The core of the matter is section 171 of CGST Law and rule 126 of CGST Rules. Section 171 says the suppliers of goods and services should pass on the benefit of any reduction in the rate of tax or the benefit of input tax credit to the recipients by way of commensurate reduction in prices.

The wilful action of not passing on the above benefits to the recipients in the manner prescribed is known as ‘profiteering’.

According to rule 126, the NAA may determine the methodology and procedure for determination as to whether the reduction in the rate of tax on the supply of goods or services or the benefit of input tax credit has been passed on by the registered person to the recipient by way of commensurate reduction in prices.

According to Abhishek A Rastogi, Partner at Khaitan & Co, who is arguing seven petitions on anti-profiteering, while the Court will initially decide the aspect of constitutional validity of section 171 of the CGST act, the determination of the quantum of Profiteering cannot be ignored and hence will have to be argued for each specific petition. These facts in each petition will also play an important role to decide the actual Profiteering, if at all.

“The idea of preparing the exhaustive list of issues on the constitutional aspects and the written submission for each of the petition is a great idea agreed today to address one of the most complicated controversies of GST,” he said.