Arguments were also put forward challenging the constitutional validity of setting up the NAA without any methodology prescribed for profiteering. The court has posted the matter to March 4.
Earlier, the court had clubbed petitions of over 50 companies including HUL, Abbott, Johnson & Johnson, Philips, Acme Developers, Samsonite, Jubilant Foods, Nestlé, Whirlpool, Samsung, Subway, Reckitt Benckiser and Patanjali, against NAA, Abhishek Rastogi, counsel for several petitioners said.
On behalf of the companies, Rastogi, partner at Khaitan & Co, argued, “There have been various instances where the process has not been followed — there is no recording of the prima facie evidence or any conclusive report by the standing committee or the screening committee.”
He also cited instances of parties being investigated even when they were not making supply.
The counsel also said that there were cases where real estate projects commencing after the GST cut-off date had been investigated for alleged profiteering.
“The first test of anti-profiteering is that there should be a decrease in the tax rate or increase in input tax credit. The instances where there is an absence of these two factors, we have taken them to the court at the DGAP (Directorate General of Anti-profiteering) stage itself,” he argued.
Clause 171 has been inserted in the GST Act which provides it mandatory for companies to pass on the benefit due to the reduction in the rate of tax or from input tax credit to the consumer by way of commensurate reduction in prices.
“The constitutional validity of anti-profiteering provisions was argued today. The validity of the provisions mentioned in Section 171 needs to be tested in the absence of any methodology prescribed to determine the quantum of profiteering,” Rastogi said.
He said at this stage, the court wanted to determine whether provisions of anti-profiteering were constitutional. After the court decides the legality of the provisions, it would go into details of individual facts, he informed.