The Delhi High Court, led by a bench consisting of Acting Chief Justice Manmohan and Justice Dinesh Kumar Sharma, rendered a verdict on Monday affirming the validity of legal provisions associated with the Goods and Services Tax ( GST ) National Anti-Profiteering Authority (NAA).
The verdict was delivered on a batch of cases, encompassing more than 100 petitions filed by various entities, including prominent names such as Philips India, Reckitt Benckiser, Gillette India, and Procter and Gamble Home Products.
The court explicitly stated that it upheld the constitutional validity of specific sections and rules, including section 171 of the Central Goods and Services Tax (CGST) Act and rules 122, 124, 126, 127, 129, 133, and 134 of the CGST rules of 2017. According to the court, section 171 mandates that any tax benefits must be passed on to consumers in the form of a corresponding reduction in prices. This principle is considered a consumer welfare measure introduced in the public interest. In essence, the court’s decision reinforces the importance of ensuring that any tax concessions or benefits are effectively transferred to the end-users, aligning with the objectives of the National Anti-Profiteering Authority.
The specific rules under scrutiny pertain to the establishment and functioning of the Anti-Profiteering Authority. That is when we take one by one:
Rule 122: Constitution of the Anti-Profiteering Authority
Rule 124: Appointment, salary, allowances and other terms and conditions of service of the Chairman and Members of the Authority
Rule 126: Power to determine the methodology and procedure.
Rule 127: Duties of the Authority
Rule 129: Initiation and conduct of proceedings
Rule 133: Order of the authority
Rule 134: Decision to be taken by the authority
The court acknowledged the possibility of instances where there might be arbitrary exercises of power under the anti-profiteering mechanism. However, it emphasised that the remedy for such cases is to set aside the order on its merits rather than striking down the provision itself, which vests such power in the authority.
GST National Anti Profiteering Authority
The National Anti-Profiteering Authority (NAA) serves as the statutory mechanism within the GST law, tasked with scrutinising unfair profiteering activities carried out by registered suppliers under the GST law. The primary responsibility of the Authority is to verify that the benefits arising from the reduction in GST rates on goods and services, as determined by the GST Council, and the utilisation of Input Tax Credit, are passed on to the recipients. This is to be accomplished through a proportional reduction in prices by the suppliers, ensuring that consumers receive the intended advantages of these measures.
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