GSTAT Holds Section 171 Enforceable Under GST Despite Absence of Fixed Anti-Profiteering Methodology; Anti-Profiteering Action Held Valid
Meetu Kumari | Jan 31, 2026 |
GSTAT Holds Section 171 Enforceable Despite Absence of Fixed Anti-Profiteering Methodology
A complaint was filed alleging that the benefit of the GST rate reduction from 28% to 18% on “Park Avenue Good Morning After-Shave Lotion 50 ml,” effective from 15.11.2017, was not passed on to consumers. The Standing Committee referred the matter to the DGAP, which investigated sales made by Shree Sai Kripa Marketing, a distributor of JK Helene Curtis Ltd. The DGAP found that post-rate reduction, the respondent increased base prices while keeping the final selling price unchanged, resulting in consumers paying a higher amount than warranted.
The Delhi High Court set aside an earlier NAA order determining profiteering due to duplication errors in the calculation and remanded the matter for fresh adjudication. Upon re-verification, the DGAP corrected the computation and quantified the profiteered amount at Rs. 19,32,446. The proceedings were transferred to the GST Appellate Tribunal, and the matter was heard afresh.
Main Issue: Whether the respondent distributor had profiteered by not passing on the benefit of the GST rate reduction to consumers in violation of Section 171 of the CGST Act, 2017.
GSTAT’s Decision: The GST Appellate Tribunal upheld the DGAP’s revised findings and confirmed profiteering of Rs. 19,32,446. The Tribunal held that Section 171 is enforceable, contains adequate machinery provisions, and that the absence of a fixed methodology does not invalidate anti-profiteering action. It rejected the respondent’s arguments on limitation, duplication, pricing discretion, commercial justification, and inclusion of GST in the profiteered amount.
The Tribunal clarified that even if GST collected on the excess amount was deposited with the government, the consumer had still paid a higher price and was entitled to restitution. Since individual buyers were unidentifiable, the respondent was directed to deposit the profiteered amount equally in the Central and State Consumer Welfare Funds. No interest or penalty was imposed, as the sections were introduced after investigation period.
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