The Delhi High
Court on Monday upheld the constitutional validity of anti-profiteering
provisions in the Goods and Services Tax (GST). More than 100 companies,
including Hindustan Unilever, Patanjali, Jubilant Foodworks, and Phillips,
filed petitions against the provisions.
The court held
that the provisions pertain to a commensurate reduction of prices when GST
rates are reduced or due to input tax credit and hence these provisions are in
the public interest. They are in line with legislative powers given under the
Constitution.
The court,
comprising a bench of acting Chief Justice Manmohan and Justice Dinesh Kumar
Sharma, also provided a breather to the companies as it did not rule out the
possibility of them hiking prices due to cost escalation, skewed input tax
credit (ITC) and arbitrary use of power beyond jurisdiction by
anti-profiteering bodies in some cases which would now be determined based on
facts and numbers.
An appropriate
remedy would be to get these matters listed before the division bench for
directions on February 8, said the court.
"Thereafter,
these matters would be listed wherein these aspects of jurisdiction, cost
escalation, ITC skewed situation will now be addressed on a case-by-case
basis," said Abhishek Rastogi, founder of Rastogi Chambers, who argued the
petitions of some companies in the case.
Companies
challenged the constitutional validity of the provisions in the absence of any
formulae for determining profiteering. The court ruled that no fixed or
mathematical formula can be laid down for determining anti-profiteering.
However, it
provided clarity on how profiteered amounts are to be distributed among home
buyers. It said the benefit would be distributed based on per square feet. This
meant that equal benefits would be given for equal space to home buyers.
As such, the buyers would get benefits according to the area of house.
The National
Anti-Profiteering Authority (NAA) was set up in November 2017 to ensure that
companies pass on the benefits of ITC and GST reduction to consumers by way of
reduction in prices. It has been the experience of many countries that when GST
was introduced, there was a marked increase in inflation and the prices of
commodities. NAA was constituted to check this for two years initially but its
tenure was extended later a couple of times. The Competition Commission of
India has been looking into complaints of profiteering against companies since
December 2022.