Delhi High Court Asks GST Appellate Tribunal To Examine 'Profiteering' Allegations Against Tata Play

The direction was made by a division bench comprising Justices Prathiba M. Singh and Shail Jain while dealing with the company's appeal against the show cause notice and consequential order passed against it by the erstwhile National AntiProfiteering Authority (NAPA).

Section 171(2) of the GST Act provided for the constitution of NAPA but from September, 2024, the Principal Bench of the GST Appellate Tribunal was empowered to discharge its functions.

The allegation against the company was that it had indulged in profiteering by not passing on the benefit of Input Tax Credit to its consumers.

In respect of DTH Services, initially, the GST payable from 1st July, 2017 was 15%. The same was, however, increased to 18% with effect from 15th November, 2017. Parallelly, however, there were several goods and services for which the GST rates were, in fact, reduced from 28% to 18%.

The company claimed that its services attracted higher taxation with effect from 15th November, 2017 i.e. the same increased from 15% to 18%. Thus, there was no occasion to pass on any benefit of input tax credit to the consumers.

However, the case of the Central Board of Indirect Taxes & Customs was that there was a reduction in the GST rates of various inputs and the benefit of the said reductions, which were availed of in the form of input tax credit, ought to have been passed to the consumers.

The High Court observed that the GST Appellate Tribunal, having now been vested with the function of NAPA, and the fact that GST rates had in fact increased in the case of the Petitioner, the question of profiteering deserves to be re-looked at.

It has asked the Tribunal “to examine the factual matrix as to whether there was any actual profiteering at all or whether the Investigation Report dated 6th August, 2021 submitted by the Directorate General of Anti Profiteering was based merely on conjecture or surmise.”

As such, it directed that the the matter be listed before the Principal Bench of GST Appellate Tribunal on 14th October.

Tata Play had also challenged the very validity of Section 171 and the corresponding Rules as being violative of its right to trade.

The High Court however observed that the provision was already upheld by a coordinate bench in Reckitt Benckiser India Pvt. Ltd. v. Union of India (2024), which said that Section 171 has a flavor of consumer welfare regulatory measure, as it seeks to achieve the primary objective behind the Goods and Services Tax regime i.e. to overcome the cascading effect of indirect taxes and to reduce the tax burden on the final consumer.

In this backdrop it held,”At the time when these reductions/modifications took place, Anti-Profiteering measures were introduced into the GST law, to ensure that the benefit of reduction in rates of GST or the benefit of input tax credit would be passed on to the consumer by way of commensurate reduction in the rate/price. The Anti-Profiteering measures were thus meant to be in public interest to avoid unjust enrichment of manufacturers, retailers and other goods and service providers.”

Appearance: Mr. Arvind P. Datar, Sr. Adv with Mr. Rohan Shah, Mr. Tushar Jarwal, Mr. Rahul Sateeja, Mr. Vikrant A. Maheshwari & Ms. Daliya Singh, Advs. for Petitioner; Mr. Zoheb Hossain, Mr. Sanjeev Menon, Mr. Vivek Gumani, Mr. Satyam Prakash and Mr. Samit Siddhahta, Advs. for DGAP and NAPA. Ms. Nidhi Raman with Mr. Arnav Mittal & Mr. Mayank, Advs for UOI.

Case title: Tata Play Ltd v. Union of India & Ors.

Case no.: W.P.(C) 14422/2022

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