The Supreme Court has transferred the petitions challenging the validity of the provision on Anti Profiteering Measure under Section Section 171 of the Central Goods and Services Tax (CGST) Act 2017 from different High Courts.
A batch of writ petitions is pending before the High Courts of Delhi, Bombay and Punjab and Haryana in which the constitutional validity of Section 171 of the Central Goods and Services Tax (CGST) Act 2017 read with Rule 126 of the Central Goods and Services Tax (CGST) Rule 2017 and other cognate provisions.
Twenty writ petitions are pending before the High Court of Delhi. Two writ petitions, which are the subject matter of the present Transfer Petitions, are pending before the High Court of Judicature at Bombay.
Section 171 has been inserted in the GST Act which provides that it is mandatory to pass on the benefit due to the reduction in the rate of tax or from the input tax credit (ITC) to the consumer by way of commensurate reduction in prices.
Section 171(1) casts the responsibility to pass on the benefit of GST to the recipient in two aspects. Passing of benefit due to reduction of the tax rate, in case of supplies exclusive of tax or for immediate services is not a big challenge. This is because the reduction in tax rate will directly be evidenced by invoices, and the recipient will get the benefit from the rate reduction. And also, Benefit of Input Tax Credit (ITC), i.e., If it is the service sector, manufacturing, trading, or any specific industry, all are going to get the advantage of the better flow of input tax credit (ITC) except sectors having zero-rated output supply. So overall the expectations of Anti-profiteering Measure provisions are commensurate reduction in prices of supplies.
While allowing the Transfer petition, a two-judge bench comprising of Justice Dr. Dhananjaya Y Chandrachud and Justice Ajay Rastogi observed that “We accordingly allow the Transfer Petitions and direct that the writ petitions shall stand transferred to the High Court of Delhi. The Registries of the respective High Courts are requested to immediately transfer the papers of the proceedings of the writ petitions to the High Court of Delhi. We leave it open to the parties to apply for necessary orders either with regard to the interim relief or for modification of such orders, as the case may be”.
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