2022 (5) TMI 633 - HC - GST

Anti-profiteering - power of suo moto investigation in terms of Rule 133 of the Central Goods and Service Tax Rules, 2017 - widening of the scope of enquiry to include suo moto review from 01.07.2017 with the inception of GST, till date of the complaint - HELD THAT - The provisions of Section 171 of the CGST Act compare well with the spirit and intention of Section 18, though perhaps not the language. The Competition Act addresses anti-competitive agreements and has a laudable purpose behind it. The object is to ensure healthy competition in the market as it is expected to bring about various benefits for the public as well as the economy. This is similar to the Anti-profiteering provision and the spirit and object behind its insertion. The distinction sought to be made by the petitioner is thus rejected. The cases relied upon by the petitioner are distinguishable for this reason. Coming to impugned notice dated 10.07.2020, the Authority has called upon the petitioner, based upon report of the DGAP dated 01.07.2020 to show cause why the aforesaid report not be accepted and the petitioner s liability for profiteering determined. The petitioner is thus at liberty to comply with the directive under the impugned notice, put forth its explanation in writing within a period of three (3) weeks from date of uploading of this order in the official website of this Court, appear before the Authority on a date to be fixed by the authority per mutual convenience of the parties and contest the findings and conclusion in the report of the DGAP dated 01.07.2020 - Barring the aspect of assumption of jurisdiction that has been held adverse to the petitioner, both parties are at liberty to pursue all lines of argument as they believe are available to them and nothing contained in this order shall stand in the way of a de novo hearing on the merits of the matter, with all issues left open, for decision afresh. Petition dismissed.

Issues Involved:
1. Jurisdiction and power of the National Anti-Profiteering Authority (NAA) under Rule 133 of the CGST Rules, 2017.
2. Retrospective application of Rule 133(4) and (5) (a) & (b) of the CGST Rules.
3. Procedural compliance and the methodology of computation of profiteering.
4. Maintainability of the writ petition and availability of alternate remedies.

Issue-wise Detailed Analysis:

1. Jurisdiction and Power of the National Anti-Profiteering Authority (NAA):
The petitioner, a trader in dental equipment, challenged a notice issued by the NAA based on a report by the Director General of Anti-Profiteering (DGAP). The petitioner argued that the suo moto investigation powers under Rule 133 of the CGST Rules were only available to the Authority from 28.06.2019, and hence the notice was without jurisdiction. The court noted that the petitioner had already complied with an earlier order directing the remission of an amount to a complainant. The Authority had directed a fresh investigation to unearth further instances of unjust enrichment, which led to the impugned notice.

2. Retrospective Application of Rule 133(4) and (5) (a) & (b):
The petitioner contended that the amendments to Rule 133, which expanded the Authority's powers, should apply prospectively from 28.06.2019 and not to complaints filed before this date. The court examined the legislative intent and the purpose of the anti-profiteering measures. It concluded that the amendments were procedural and should apply retrospectively to ensure the effective implementation of the GST regime's objectives. The court relied on precedents, including the Supreme Court's judgment in Excel Crop Care Ltd. v. Competition Commission of India, to support the retrospective application of procedural rules.

3. Procedural Compliance and Methodology of Computation of Profiteering:
The petitioner raised concerns about the methodology used to compute profiteering, arguing that it lacked precision. However, the court noted that the petitioner had not challenged the relevant provisions of the Act and Rules. The court found that the DGAP had followed the prescribed procedure, including hearing the petitioner before finalizing its report. The court upheld the procedural compliance and directed the petitioner to respond to the show cause notice issued by the Authority.

4. Maintainability of the Writ Petition and Availability of Alternate Remedies:
The respondents argued that the petitioner had an effective remedy under Rule 133(2) to file an appeal against the DGAP's report. The court acknowledged the availability of alternate remedies but decided to address the legal issue raised by the petitioner. The court held that the assumption of jurisdiction by the respondents was valid and dismissed the writ petition. The court directed the petitioner to comply with the impugned notice, submit explanations, and contest the findings before the Authority.

Conclusion:
The court dismissed the writ petition, upholding the retrospective application of Rule 133(4) and (5) (a) & (b) of the CGST Rules and the jurisdiction of the National Anti-Profiteering Authority. The petitioner was directed to respond to the show cause notice and contest the findings in the DGAP's report before the Authority. The court emphasized the procedural compliance and the purpose of the anti-profiteering measures under the GST regime.

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