Where to appeal against NAA orders? Petition filed in Delhi High Court

A petition has been filed in the Delhi High Court over ambiguity in the process of appealing against National Anti-Profiteering Authority (NAA) orders. The petitioner has raised the question of lack of specific methodology in anti-profiteering rules.

“The petition, filed by real estate company Pyramid Infratech, has stated that there was no clarity on where to appeal against the NAA's orders,” said Abhishek Rastogi, counsel of the petitioner and partner, Khaitan & co. 

Any order in the judicial system in India can be appealed against through writ petitions or appeals. The company raised the question of appeals through writ petition, as it was not clear about the process of appeals. 

Rastogi also raised the question about the lack of methodology in calculating profiteering. For instance, in the case of Pyramid Infratech, NAA had calculated the amount of profiteering through a ratio of taxable turnover of the company to the input tax credit availed. The case related to construction of flats under affordable housing scheme in Haryana.

The authority found that the ratio was 1:1 in the pre-GST period and 7:2 post-GST. As such, the difference between the two — 6:1 — is the profiteered amount and must be refunded to homebuyers or prices of flats be reduced. Besides, interest at the rate of 18 per cent per annum was also to be returned to homebuyers, the NAA ruled.

Protesting against the quantum, the counsel of the petitioner said that the project was not construction-linked but time-linked. In the construction-linked project, this ratio could be relevant, but not in the time-linked project, he said.

Challenging the methodology, he said that Rule 126 of the Central GST Act and anti-profiteering rules do not specify how the exact quantum of profiteering is to be calculated.

The ratio also did not take into account increased prices of raw materials such as steel and cement, he said.

Set up for two years, the NAA has passed significant orders, including against fast-moving consumer goods companies. One of these orders said that benefits of GST reduction or input tax credit must be given in each packet size.