Time Limit for Furnishing of Report by DGAP under CGST Rules is Directory and Not Mandatory: Delhi HC [Read Order]

A division bench of the Delhi High Court held that Central Goods and Services Tax ( CGST ) Rules, 2017 do not provide any consequences in case the time limits provided thereunder lapse. The bench noted that time limit for furnishing of report by Directorate General of Anti-profiteering ( DGAP ) under CGST Rules is directory and not Mandatory

The assessee(s) contended that the report issued by DGAP and the order passed by National Anti-profiteering Authority ( NAA ) in its case were barred by limitation as provided under Rule 133 of the CGST Rules. The assessee contended that  Rule 133 of the CGST Rules uses the word “shall” and thus mandates that NAA must determine and pass an order within a period of three months from date of receipt of the report from DGAP. Revenue further contended that the procedure that has been prescribed under the Rule 129(6) of CGST Rules ought to have been strictly followed by the DGAP while investigating other products.

 Revenue contended that there is no express provision in the CGST Act that anti-profiteering proceedings would abate if time-lines are not strictly adhered. Revenue further contended that  if the time-lines are read to be mandatory, it would result in gross injustice to the consumers who would be left without a remedy on account of no fault of theirs.  Revenue also pointed out that in the absence of anything to the contrary in the amendment or the amended provision, on a plain reading of the provision, the amended/extended time-period for passing of an order would apply to all pending and future proceedings before NAA. Revenue contended that the time-frames provided in the anti profiteering provisions are merely directory in nature and not mandatory.

The division bench comprising Acting Chief Justice Manmohan and Justice Dinesh Kumar Sharma observed that the CGST Rules  do not provide any consequences in case the time limits provided thereunder lapse. The anti-profiteering provisions in the CGST Act and the CGST Rules are in the nature of a beneficial legislation as they promote consumer welfare. The bench noted that the courts have consistently held that beneficial legislation must receive liberal construction that favors the consumer and promotes the intent and objective of the Act. That being the scenario, it cannot be said that the proceedings as a whole abate on lapse of time limit of furnishing of report by DGAP.

The assessee(s) were  represented by P. Chidambaram, R. Jawahar Lal, Anuj Garg, Mohit Sharma and Harshita. 

Revenue was represented by S. Ganesh, Tarun Gulati, Chinmoy Pradip Sharma, Pritesh Kapoor, V. Lakshmikumaran, Monish Panda, Rohan Shah,Abhishek A. Rastogi, Tushar Jarwal, Sparsh Bhargava,  Puneet Aggarwal, Sujit Ghosh,  S. Suresh, Nikhil Gupta, Shashank Shekhar and Priyadarshi Manish.

To Read the full text of the Order CLICK HERE

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