DG Anti Profiteering Vs A J Enterprises (GSTAT)
The proceedings arose from an investigation report dated 14.10.2022 issued by the Director General of Anti-Profiteering (DGAP) against the Respondent under Section 171 of the CGST Act read with Rule 129(6) of the CGST Rules. The allegation concerned failure to pass on the benefit of reduction in GST rate on restaurant services from 18% to 5% (without input tax credit) effective 15.11.2017. The Respondent operated a “Subway” franchise outlet in Pune under a franchise agreement with Subway India.
An application alleging profiteering was examined by the Maharashtra State Level Screening Committee and referred to the Standing Committee on Anti-Profiteering, which in turn directed the DGAP to investigate. In the initial report dated 20.08.2020, profiteering was computed at ₹15,66,821. The National Anti-Profiteering Authority (NAPA), through an interim order dated 13.04.2022, remanded the matter to the DGAP for reconsideration of discrepancies, including product-wise pricing and the investigation period. Upon reinvestigation, the DGAP recomputed the profiteered amount at ₹2,13,32,322 for the period 15.11.2017 to 30.09.2019, concluding that the Respondent increased base prices and failed to pass on the benefit of tax reduction as per Notification No. 46/2017-Central Tax (Rate).
The GST Appellate Tribunal (GSTAT), empowered to examine anti-profiteering cases w.e.f. 01.10.2024, considered the Respondent’s written submissions. The Respondent contended that the proceedings were barred by limitation, arguing that the six-month period under Rule 133 was mandatory and that even otherwise, five years had elapsed. The Tribunal, relying on judicial precedents including decisions of the Supreme Court and Delhi High Court, held that the timeline under Rule 133 is directory and not mandatory, as no consequence for delay is prescribed. It concluded that anti-profiteering provisions are beneficial legislation aimed at consumer welfare, and the proceedings were not barred by limitation.
