GSTAT Closes Anti-Profiteering Case Against Shree Suktam Enterprises After DGAP Fails to Trace Supplier

The anti-profiteering proceedings began from an interim order passed on 10 May 2022 in a recent case, whereby the DGAP was instructed to investigate the full supply chain under Rule 133(5) of the CGST Rules. The DGAP examined two upstream suppliers to determine whether the benefit of GST rate reduction on “Eclat Serum 30gm” from 15 November 2017 was passed on to recipients as mandated by Section 171 of the CGST Act.

DGAP’s Decision: When the DGAP attempted to serve notice on the respondent on 09 August 2023, the notice returned unserved with the remark “LEFT”. Later attempts through State GST and CGST authorities also failed, as officers found that another business was operating at the registered address. Although repeated notices and actions were taken, the respondent could not be located. Without any books, data, or confirmation of supplies, the DGAP concluded that profiteering, if any, could not be determined and submitted a “nil profiteering” report.

Issue Before GSTAT: Whether anti-profiteering proceedings under Section 171 of the CGST Act can continue when the registered supplier is untraceable, no records are available, and the DGAP is unable to determine if any benefit of GST rate reduction was denied to recipients.

Tribunal’s Order: The Tribunal observed that the DGAP had exhausted all avenues to trace the respondent, including sending multiple communications to State GST, CGST, and DGGI authorities in Ahmedabad. Spot inspections confirmed that Shree Suktam Enterprises was no longer operating at its registered address. As no documents, invoices, ledgers, or supply records were available, the DGAP was unable to investigate whether any profiteering occurred and, therefore, reported nil profiteering.

The Tribunal held that no meaningful proceedings could be sustained in the absence of the taxpayer and the necessary evidence. The Tribunal therefore dropped the anti-profiteering proceedings. However, it made an important observation that the jurisdictional commissionerate must still verify whether the entity had engaged in bogus billing in its business dealings with M/s S.R. Lifesciences or any other registered company, and take action if required under the CGST Act.

To Read Full Order, Download PDF Given Below