2020 (1) TMI 1517 - HC - Indian Laws

Anti-profiteering - requirement for authority to standardise and lay down methodology and procedure to determine instances of profiteering - Section 171 of the Central Goods and Service Tax Act, 2017 - HELD THAT - No such Rules have been formulated thus far. The determination of the authority thus varies from case to case with relevant factors not being taken into account to effectively and scientifically determine profiteering or otherwise. Interim stay - List on 24.02.2020. Counter by then with an advance copy served on the petitioner.

Summary

Issues:
1. Interpretation of Section 171 of the CGST Act and Rules made under it regarding anti-profiteering.
2. Standardization and procedure for determining instances of profiteering under Rule 126 of the CGST Rules.
3. Proceeding with profiteering proceedings despite withdrawal of the private complaint.

Analysis:
1. The judgment deals with the interpretation of Section 171 of the Central Goods and Service Tax (CGST) Act, 2017, which addresses measures against anti-profiteering. The petitioners sought to quash orders passed by the authorities under Section 171, alleging them to be contrary to the Act and Rules made under it. The court noted that Rule 126 of the CGST Rules empowers the Authority to determine the methodology and procedure for ascertaining if the benefits of tax reduction or input tax credit have been passed on to consumers through price reductions. The absence of standardized rules for this determination was highlighted by the petitioners, leading to inconsistencies in decision-making.

2. Under Rule 126, the petitioners argued that the Authority must establish a uniform methodology and procedure to assess instances of profiteering. They contended that without such standardized rules, the decisions made by the Authority lack consistency and fail to consider all relevant factors necessary for a fair and scientific determination of profiteering. This lack of uniformity in approach was emphasized as a key concern in the petition.

3. In one of the cases, despite the withdrawal of the private complaint that initiated the profiteering proceedings, the Authority continued with the matter. The petitioners raised this issue, questioning the validity of proceeding with the case when the basis for the complaint had been retracted. This situation raised doubts about the procedural fairness and adherence to legal requirements in the anti-profiteering proceedings.

The judgment highlighted the need for a standardized methodology and procedure for determining profiteering under the CGST Act and Rules. It underscored the importance of consistency and fairness in decision-making processes to ensure effective implementation of anti-profiteering measures. Additionally, the court noted the significance of procedural integrity and adherence to legal requirements in conducting such proceedings, emphasizing the need for transparency and accountability in anti-profiteering actions.