Supreme Court directs pending writ petitions challenging NAA orders to Delhi High Court
- Mar 19, 2020 | Viren Shah
The National Anti-profiteering Authority (‘NAA’) was established to ensure that the benefits of reducing or lowering taxes under the GST law are passed onto the end consumers.
Section 171 of the CGST Act, 2017, deals with anti-profiteering measures, and calls for a reduction in tax rates or benefits derived from the same to be passed onto the consumer by way of ‘commensurate reduction in price’.
The primary cause for complications is the lack of clarity regarding the term ‘commensurate reduction in prices’. It is worth noting that both CGST Act and Anti-Profiteering rules do not define what does the term ‘commensurate reduction’ means, nor do they prescribe any computation methodology for the same.
Further, it is to be noted that many taxpayers have challenged the constitutional validity of provisions relating to anti-profiteering before the High Courts of Bombay, Delhi, and Punjab & Haryana.
Currently, 20 writ petitions are pending before the New Delhi High Court, 2 writ petitions before the Bombay High Court and 1 writ petition before the Punjab & Haryana High Court.
Recently, the Supreme Court in the case of Hardcastle Restaurants Pvt. Ltd.i has directed that the cases pending before the Bombay High Court and Punjab & Haryana High Court be transferred to the Delhi High Court to ensure uniform and consistent view on the law.
Accordingly, based on the Supreme Court directions, the following three writ petitions are transferred to the Delhi High Court.
- Hardcastle Restaurant Pvt. Ltd. (Writ Petition No. 3536/2019) (Bom)
- Macrotech Developers Ltd. (Writ Petition No. 12872/2019) (Bom)
- Nani Resorts & Floriculture Pvt. Ltd. (Writ Petition No. 37033/2019) (P&H)
The provisions on anti-profiteering are necessary from the consumer’s standpoint. However, from the taxpayer’s (i.e., business houses) perspective, the CBIC should come out with specific turnover limit or fix particular margin variation so that the taxpayer below that limit/variation does not face any proceedings under the provisions of Section 171 of the CGST Act.
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[i] Transfer Petition (Civil) Nos. 290-292 of 2020