Subway questions constitutional validity of anti-profiteering provisions

Questions the authority over including it as respondent in a case against its franchisee

Subway Systems India Private Ltd, the licensee of the Subway brand in the country, on Monday questioned the National Anti-profiteering Authority in the Delhi High Court for making it a respondent in a case against its franchisee. 

Subway Systems also raised the issue of constitutional validity of setting up the authority without prescribing a methodology to calculate the profiteered amount, said Abhishek Rastogi, counsel of the company and partner at Khaitan & Co.

Other companies also raised the issue of constitutional validity of the authority. 

This particular case relates to the alleged profiteering by the franchisee after goods and services tax (GST) was reduced. 

The company said the authority and its investigation wing computed the alleged profiteered amount arbitrarily on the pretext that Subway Systems did not provide invoice and item-wise data of its franchisee.

Subway Systems told the court that its inclusion as the respondent in the case is a gross violation of natural justice. The authority had stated that Subway Systems did not submit records and information that was supposed to be maintained by its franchisee.

Rastogi said the moot point remains the test of constitutionality of anti-profiteering provisions in the absence of prescribed methodology to determine the quantum of profiteering.

“Once this aspect of constitutionality is decided, other related points, including the quantum of profiteering for different sectors, would come into play,” he said.

About 51 companies have filed petitions against anti-profiteering provisions under GST. Besides Subway Systems, Hindustan Unilever, Abbott, Johnson & Johnson, Philips, Acme Developers, Samsonite, Jubilant Foods, Nestle, Whirlpool, Samsung, Subway, Reckitt Benckiser and Patanjali are the petitioners. 

The court, which had clubbed the petitions, had posted the matter for next hearing on September 1.