DGAP Vs Proctor & Gamble Group (GSTAT)
In a significant ruling, the Goods and Services Tax Authority for Advance Ruling (GSTAT) has decided on an anti-profiteering case involving Procter & Gamble Group (P&G). The central issue was whether P&G was liable to pay 18% interest on a profiteered amount of ₹6,88,770, which resulted from a GST rate reduction on sanitary napkins in 2018. The GSTAT ruled in favor of the company, holding that the interest provision was prospective and could not be applied to a past transaction.
The case stemmed from a GST rate cut on sanitary napkins from 12% to ‘nil’ effective July 27, 2018. A complaint was filed alleging that P&G had not passed this benefit to consumers. The Directorate General of Anti-Profiteering (DGAP) investigated the matter and, after an initial report and subsequent re-investigation, concluded that P&G had profiteered an amount of ₹6,88,770 between July and October 2018. While P&G’s counsel did not admit to profiteering, they agreed to deposit the full amount as a gesture of cooperation, but with the condition that they would not be required to pay interest.
The core of the dispute revolved around the timing of the legal provisions for interest. The DGAP argued that the provision for 18% interest on profiteered amounts, which was inserted into Rule 133(3) of the CGST Rules, 2017, was a “clarificatory” amendment with a retrospective effect, applying from the date the GST was introduced. P&G’s counsel contended that the amendment, which explicitly added the interest clause, was a new, “onerous” provision and therefore should be treated as prospective, applying only after its official enactment. The amendment was made on June 28, 2019, but its implementation date for certain parts was later specified as April 1, 2020. Since the alleged profiteering occurred in 2018, P&G argued it should not be subjected to a rule that did not exist at the time.
