The union government has been served a notice by the Supreme Court on Monday regarding a case concerning the constitutional validity of anti-profiteering provisions under the goods and services tax (GST). The case was being heard by a three-judge bench consisting of Chief Justice D Y Chandrachud, Justice J B Pardiwala, and Justice Manoj Misra.
This special leave petition was filed against the order of the Delhi High Court, which upheld the constitutional validity of these provisions. The petitioner, Excel Rasayan Private Ltd, a detergent manufacturer, argued that the High Court made a mistake in not recognizing that the challenged provisions go against the constitution.
This is the first petition against the High Court’s order in the Supreme Court, and it is expected that many other companies will also file similar petitions. The petitioner’s counsel contended that the time limit for the anti-profiteering provisions cannot be indefinite and will create significant challenges for businesses.
The National Anti-Profiteering Authority (NAA) was established in November 2017 to ensure that companies pass on the benefits of input tax credit (ITC) and GST reduction to consumers through price reductions. Many countries have observed that the introduction of GST often leads to an increase in inflation and commodity prices. Initially, the NAA was formed for a two-year period, but its tenure has been extended multiple times. Since December 2022, the Competition Commission of India has been investigating complaints of profiteering against companies.
The argument put forth by the counsel is that the anti-profiteering provisions lack a clear methodology, making them arbitrary and vague. The Delhi High Court has previously ruled that there cannot be a fixed or mathematical formula for determining anti-profiteering. Over 100 companies, including Hindustan Unilever, Patanjali, Jubilant Foodworks, and Phillips, have filed petitions against the anti-profiteering provisions in the High Court.
The court has determined that these provisions are in the public interest as they ensure a corresponding reduction in prices when GST rates are lowered or due to input tax credit. It has ruled that these provisions align with the legislative powers granted under the constitution.
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