Anti-Profiteering Probe on ‘Eclat Serum 30gm’ Collapses as Supplier Remains Untraceable: GSTAT Drops Case [Read Order]

In a recent ruling, the Principal Bench of the Goods and Services Tax Appellate Tribunal (GSTAT) at New Delhi held that the anti-profiteering proceedings against the respondent could not continue, as the Directorate General of Anti-Profiteering (DGAP) was unable to trace the supplier or obtain any documents needed to verify whether GST rate reduction benefits were passed on for the product “Eclat Serum 30gm.”

The case arose under Section 171 of the Central Goods and Services Tax Act, 2017, which deals with anti-profiteering. The investigation began after directions were issued in a different matter involving S.R. Lifesciences, in which the DGAP was asked to examine the entire supply chain, including the supplies made by Shree Suktam Enterprise (the respondent).

The DGAP issued a notice to the respondent on 9 August 2023, asking for records to determine whether the benefit of the GST rate reduction effective from 15 November 2017 had been passed on. However, the notice was returned with the remark “LEFT,” indicating that the firm was not available at the registered address.

The DGAP argued that despite writing several letters to the jurisdictional State Tax and Central Tax authorities, and requesting physical verification, no useful information could be obtained. A visit to the respondent’s address revealed that another business, C.K. Enterprises, had been operating there for six months. The owner stated that he had no knowledge of Shree Suktam Enterprise.

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The DGAP also explained that although some old GSTR-3B returns were received from jurisdictional offices, these returns did not contain any information that could help determine whether the respondent had supplied “Eclat Serum 30gm” or passed on GST benefits to any recipient. The respondent could not be contacted, and no records, invoices, or transaction details were available.

At the hearing, Sh. A. Venu Prasad, Technical Member of the GSTAT, observed that the DGAP had made repeated efforts by coordinating with various tax authorities, requesting assistance, and seeking field verification, but the respondent remained untraceable.

The tribunal observed that without any documentary evidence or confirmation that the respondent had made the relevant supplies, the investigation could not be completed.

The tribunal pointed out that in the absence of records, it was not possible to verify whether the benefit of GST rate reduction had been passed on. It also explained that while the matter could not proceed under anti-profiteering, the jurisdictional authorities may separately examine whether the respondent had engaged in bogus billing, if such facts came to light.

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