Anti profiteering provisions are constitutionally valid- SC

Comment

The petition filed challenging the constitutional validity of Anti profiteering provisions of GST is hereby quashed by the SC. The provisions of anti profiteering are upheld by the supreme court.

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Citation

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Union of India vs. Namit Sharma (2013) 10 SCC 359

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Wing Commander Shyam Naithani vs. Union of India and Ors., W.P.(C) 6483/2021 & connected matters,

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Dr.Ashwani Kumar vs. Union of India, (2020) 13 SCC 585,

Chairman & MD, BPL Ltd. vs. S.P. Gururaja and Ors., (2003) 8 SCC 567

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CIT vs. B.C. Srinivasa Setty (1981) 2 SCC 460 and CCE vs. Larsen & Toubro Ltd. (2016) 1 SCC 170,

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Ahmedabad Urban Development Authority (supra), Indian Carbon Limited\

V.V.S. Sugars (supra) and Shree Bhagwati Steel Rolling Mills v. CCE

f Ahmedabad Urban Development Authority (s

P.K. Chinnasamy v. Govt. of T.N., (1987) 4 SCC 601; Centre for PIL v. Housing & Urban Development Corpn. Ltd., (2017) 3 SCC 605; Dinesh v. State of Rajasthan, (2006) 3 SCC 771; Vimala (K.) v. Veeraswamy (K.), (1991) 2 SCC 375].

Indian Carbon Ltd. Vs. State of Assam, (1997) 6 SCC 479 and Shree Bhagwati Steel Rolling Mills vs. CCE (2016) 3 SCC 643

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Pleading

This petition is filed to challenge the constitutional validity of anti profiteering provisions of GST.

Facts

Present writ petitions have been filed challenging the constitutional validity of Section 171 of the Central Good and Services Tax Act, 2017 (for short ‘Act, 2017’) and Rules 122, 124, 126, 127, 129, 133 and 134 of the Central Good and Services Tax Rules, 2017 (for short ‘Rules, 2017’) as well as legality of the notices proposing imposition or orders imposing penalty issued by the National Anti-Profiteering Authority (‘NAA’) under Section 122 of the Act, 2017 read with Rule 133(3)(d) of the Rules, 2017 and the final orders passed by NAA, whereby the petitioners, who are companies running diverse businesses ranging from hospitality, Fast-Moving Consumer Goods (‘FMCG’) to real estate, have been directed in accordance with Section 171 of Act, 2017, to pass on the commensurate benefit of reduction in the rate of tax or the Input Tax Credit to its consumers / recipients along with interest. 2. Learned counsel for the parties prayed that this Court may first decide the plea of constitutional validity of Section 171 of Act, 2017 as well as Rules 122, 124, 126, 127, 129, 133 and 134 of the Rules, 2017. They stated that only in the event this Court were to uphold the constitutional validity of the aforesaid Section and Rules, would the need to examine the matters on merits arise.

Observation

Keeping in view the aforesaid conclusions, the constitutional validity of Section 171 of Act, 2017 as well as Rules 122, 124, 126, 127, 129, 133 and 134 of the Rules, 2017 is upheld. This Court clarifies that it is possible that there may be cases of arbitrary exercise of power under the anti-profiteering mechanism by enlarging the scope of the proceedings beyond the jurisdiction or on account of not considering the genuine basis of variations in other factors such as cost escalations on account of which the reduction stands offset, skewed input credit situations etc. However, the remedy for the same is to set aside such orders on merits. What will be struck down in such cases will not be the provision itself which invests such power on the concerned authority but the erroneous application of the power.