Delhi HC hears 37 anti-profiteering pleas; J&J, HUL among petitioners

The Delhi High Court (HC) on Monday heard 37 goods and services tax  (GST) anti-profiteering writ petitions, including ones filed by Johnson & Johnson, Reckitt Benckiser, Hindustan Unilever, Patanjali Ayurved, Philips India, Jubilant Foodworks, and IFB via videoconferencing. It also served notice to the Attorney General of India over the constitutional validity of the profiteering provision.

The HC Bench directed the petitioners to jointly finalise questions on the constitutional validity of Section 171 of the Central GST (CGST) Act, which states any reduction in the rate of tax on the supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices. Those will be served to the respondent — the central government.

A list of common questions around the anti-profiteering issue need to be filed by the petitioners.

The Bench orally indicated it would first decide the common question of law on the constitutional issues and on the interpretation of the anti-profiteering provisions by way of judgment. Thereafter, if the need arose, it would decide the factual issues in each case individually.

The matter has been adjourned to November 3.      

These companies have challenged the constitutional validity of the anti-profiteering provision in the CGST Act and the anti-profiteering rules related to the methodology and procedure for determination whether reduction in the GST rate or the benefit of input tax credit has been passed on by the registered person to the recipient by way of commensurate reduction in prices. Companies have argued these are in violation of Articles 14, 19(1)(g) , 265, and 300A of the Constitution of India.

Harpreet Singh, partner, KPMG, said, “This is one of the most keenly observed proceedings. The outcome of this case could determine the way forward for the industry, in terms of adherence to anti-profiteering provisions, and in a way impact their proposed marketing strategy.”

“While the court would initially decide the aspect of the constitutional validity of Section 171 of the CGST Act, the determination of the quantum of profiteering cannot be ignored and hence, would have to be argued for each specific petition. These facts in each petition would also play an important role to decide the actual profiteering, if at all,” said Abhishek A Rastogi, partner at Khaitan & Co, who is arguing the seven petitions on anti-profiteering.