Procter & Gamble Not Liable to Pay 18% Interest on Profiteered Amount as it Happened in 2018: GSTAT [Read Order]
GSTAT held that Procter & Gamble is not liable to pay 18 percent interest on the profiteered amount from 2018
GSTAT, Procter & Gamble Not Liable
GSTAT, Procter & Gamble Not Liable
In a recent ruling, the Delhi Bench of the Goods and Services Tax Appellate Tribunal held that Procter & Gamble is not liable to pay 18% interest on the profiteered amount since the profiteering occurred in 2018, before the amendment introducing such liability came into effect.
The case arose under Section 171 of theCentral Goods and Services Tax Act, 2017, which deals with anti-profiteering. The GST rate on sanitary napkins was reduced from 12 percent to nil with effect from 27 July 2018.
The Directorate General of Anti-Profiteering investigated and reported profiteering of Rs. 6,88,770 by Procter & Gamble for the period from 27 July 2018 to 31 October 2018.
The respondent’s counsel argued that while the company was ready to deposit the profiteered sum in the Consumer Welfare Funds, it could not be directed to pay interest on it. They argued that the interest provision of 18 percent was inserted in Rule 133(3)(c) only by a notification dated 28 June 2019, and later made effective from 1 April 2020, so it could not apply to a period before its commencement.
Justice (Retd.) Dr. Sanjaya Kumar Mishra, (President) observed that the only issue left to be decided was whether interest was payable. The tribunal examined the wording of Rule 133(3) before and after the amendment and referred to the Supreme Court’s Constitution Bench decision in CIT v. Vatika Township Pvt. Ltd. (2015).
The tribunal explained that laws imposing a new liability are presumed to be prospective unless the statute clearly provides otherwise. The tribunal pointed out that the profiteering in this case took place prior to 28 June 2019.
The provision for 18 percent interest was not applicable. It accepted the DGAP’s finding of profiteering to the extent of Rs. 6,88,770 but ruled that no interest or penalty would apply.
The tribunal directed Procter & Gamble to deposit the profiteered amount in the Consumer Welfare Funds of the Centre and States equally. For States and Union Territories where such funds are not yet created, the corresponding share is to be deposited in the Central Consumer Welfare Fund. A compliance report is to be filed within four months. The writ petition was accordingly allowed.
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