Issue No. October/2025/01

The Respondent argued that the Hon’ble Telangana High Court orders and consequent Government notifications, have fixed the maximum ticket price while granting discretion to the theatre owners for pricing, absolved them of liability.

The GSTAT ultimately upheld the DGAP’s report, observing that the cinema hall had indeed profiteered by failing to discharge its statutory duty to pass the tax benefit to the consumers. The Tribunal held that a supplier’s pricing discretion is subject to the anti-profiteering provisions of the GST Act and the local orders fixing maximum prices do not grant a license to retain the benefit of a tax cut. Consequently, the Tribunal directed the cinema hall to deposit the entire profiteered amount of Rs. 16,50,166/-. This amount, along with interest at 18% per annum calculated for a limited period (June 28-30, 2019) on a specific amount (rounded off to Rs. 27,350/-), was ordered to be deposited into Consumer Welfare Funds.

DGAP v. PROCTOR & GAMBLE GROUP, (2025) 35 Centax 77 (Tri. – GST – Delhi)

In present facts of the case before the Goods and Services Tax Appellate Tribunal (GSTAT), Principal Bench, New Delhi, involved an anti-profiteering complaint against the Respondents for not passing on the benefit of GST rate reductions to consumers. The Directorate General of Anti-Profiteering (DGAP) investigated the period from July 27, 2018 to October 31, 2018 and determined that the respondent had profiteered an amount of Rs. 6,88,770/- by failing to commensurately reduce prices following a rate reduction. The primary legal issue before the GSTAT was not the fact of profiteering, which was accepted by the Tribunal, but whether interest at 18% per annum should be imposed on the profiteered amount. This question arose due to the insertion of the provision for interest under Rule 133(3)(c) of the CGST Rules, 2017 via Notification No. 31/2019-Central Tax which came into force on June 28, 2019.

The GSTAT ruled that interest could not be imposed on the profiteered amount. The Hon’ble Tribunal observed that the cause of action i.e. the act of profiteering took place from July 2018 to October 2018, which was much prior to the date the provision for levying interest (June 28, 2019) came into effect. Reliance was placed upon the Judgment of Vatika Township (P.) Ltd., 2014 367 ITR 466 (SC), the Tribunal held that a provision for imposition of interest must be applied prospectively. Therefore, since the profiteering occurred before the amendment to Rule 133(3)(c) the respondent should not be directed to pay any interest. The Tribunal accepted the DGAP’s report to the extent of the profiteered amount and directed Proctor & Gamble Group to deposit the entire sum of Rs. 6,88,770/- equally into the Consumer Welfare Funds created by the Centre and the respective States, without the levy of any interest or penalty.

SHREE SHYAM POLYMERS v. ADDITIONAL COMMISSIONER, CGST, DELHI NORTH, (2025) 34 Centax 184 (Del.)

In present facts of the case, the petitioner challenged an order passed by the Additional Commissioner, CGST, Delhi North primarily on the ground that the Show Cause Notice (SCN) and the final order covered multiple financial years in a consolidated manner, which the petitioner argued was contrary to the provisions of the CGST Act. The case involved allegations of fraudulent availment and utilization of Input Tax Credit (ITC). The core facts revolved around the Commissionerate issuing a consolidated notice and order for different years to establish the illegal modalities adopted by the business to avail fraudulent ITC.

The Hon’ble High Court of Delhi ruled in favour of the revenue and against the petitioner’s primary contention. The Court observed that the language of the relevant statutory provisions, particularly Section 74 of the CGST Act, does not prevent the issuance of an SCN or an order for multiple years in a consolidated manner, especially in cases where fraudulent availment of ITC is the central allegation.

 The Court emphatically stated that in cases involving ITC fraud, a consolidated notice and order is not just permissible but may, in fact, be required to clearly establish the overall illegal modality adopted by the business. As the details of the amounts for each year were clearly set out in the content of the impugned order, the Court found the information to be decipherable and the consolidated notice valid. The petition was disposed of, granting the petitioner liberty to file an appeal against the order before the Appellate Authority by a stipulated date.

TRU SOUND PVT. LTD. v STATE OF UTTAR PRADESH (2025) 34 Centax 343 (All.)

The Petitioner challenged the imposition of tax and penalty that resulted from proceedings initiated after a survey was conducted at its business premises, where excess stock was allegedly found. The authorities issued a notice and subsequently passed an order under Section 130 read with Section 122 of the CGST Act, 2017. The petitioner contested this action, arguing that the discovery of excess stock during a survey could only lead to proceedings under Section 73 (determination of tax not paid or short paid without fraud) or Section 74 (determination of tax not paid or short paid with fraud) of the GST Act, and not the more stringent measures of Sections 130/122. The petitioner further submitted that the issue was squarely covered by a previous judgment of the same High Court in Vijay Trading Company v. Additional Commissioner, [S.L.P. (Civil) Diary No. 5881/2025, decided on 04.4.2025] [(2025) 30 Centax 214 (S.C.)]. which had been affirmed by the Hon’ble Supreme Court.

The Hon’ble High Court of Allahabad allowed the writ petition and quashed the impugned orders levying the tax and penalty. The Court observed that the issue was, in fact, covered by the affirmed precedent of Vijay Trading Company. This precedent establishes that a mere finding of excess stock during a survey or search cannot automatically justify the initiation of proceedings for confiscation and heavy penalties under Sections 130/122. Instead, in such scenarios, the appropriate course of action for the revenue department is to initiate the tax demand proceedings under Sections 73 or 74 of the GST Act. Consequently, the Court found that the proceedings initiated under Sections 130/122 were illegal and directed the concerned authority to refund any amount deposited by the petitioner along with statutory interest.

DGAP v. URBAN ESSENCE (SUBWAY FRANCHISEE), (2025) 34 Centax 72 (Tri. – GST – Delhi)

In present facts of the case, the Respondent allegedly failed to pass on the benefit of a significant GST rate reduction on restaurant services. The GST rate was cut from 18% to 5% with effect from November 15, 2017. The Directorate General of Anti-Profiteering (DGAP) found that the franchisee had increased the base price of its products to effectively neutralize the tax reduction, thereby retaining the benefit instead of transferring it to the consumers. The franchisee contested the investigation, arguing that the complaint was for a single product, and the DGAP was not justified in examining the rate-cut benefit for all products sold. The DGAP’s investigation, however, covered the entire supply for the period July 1, 2017 to March 31, 2019 and calculated the total profiteered amount to be Rs. 5,47,005/- across all products.

The GSTAT upheld the DGAP’s findings, ruling that the Respondent was guilty of profiteering. The Tribunal observed that since the franchisee files a single GST return and maintains one Input Tax Credit (ITC) register covering all its supplies, the DGAP was correct in examining the overall benefit of the tax rate reduction across all products, irrespective of the single product named in the original complaint.

The Court held that the franchisee failed to provide sufficient proof to justify the increase in the base price of its products. Consequently, the GSTAT directed the franchisee to deposit the profiteered amount of Rs. 5,47,005/- along with interest at 18% per annum for the period from January 1, 2018 to December 31, 2019 into the Consumer Welfare Fund. However, the Tribunal also clarified that the penalty provision under Section 171(3A) could not be imposed as it came into effect only from January 1, 2020, and could not be applied retrospectively.