Phillips India Limited Vs. Union of India & Ors.

Certainly! The petition before this esteemed Bench, which was expeditiously listed by the Registry and conducted via video conferencing, presents a robust challenge to the order dated 19th May 2020 issued by the National Anti-Profiteering Authority (“Authority”) under the Central Goods and Services Tax Act, 2017 (“CGST Act”). The crux of the petitioner’s grievance revolves around the Authority’s determination that they had contravened Section 171 of the CGST Act, alleging profiteering specifically related to their “food processor” product. The Authority’s directive mandates the petitioner to effect a price reduction on the said product and to deposit a sum of Rs. 4,53,949/- within a stringent timeline of three months, coupled with an imposition of interest at a substantial rate of eighteen percent calculated from the date of collection from recipients until the date of deposit.

In addition to contesting the substantive findings of profiteering, the petitioner fervently challenges the procedural integrity of the Authority’s actions. Central to their plea is a writ of prohibition sought against the Authority’s attempt, as per the impugned order, to expand the scope of investigation beyond the initial findings on the “food processor” to include “other impacted products”. This expansion, the petitioner contends, is not only unwarranted but also procedurally flawed, as evidenced by a subsequent communication dated 11th June 2020 from the Director General of Anti-Profiteering (“DGAP”). This communication, viewed by the petitioner as an extension of the overreach by the Authority, called for additional details and documents related to the investigation of these purportedly impacted products by a specified deadline of 7th July 2020.

The issuance of notice in response to this petition has been duly acknowledged by learned counsels representing respondents No. 1 to 3, led by Mr. Ravi Prakash, and respondents No. 5 to 7, represented by Ms. Vipasha Mishra. Ms. Mansie Jain, representing respondent No. 8, also acknowledged the notice. These respondents have been granted a reasonable period of four weeks to file their comprehensive counter-affidavits, setting the stage for a thorough legal examination of the issues at hand.

The petitioner’s arguments, articulated by learned senior counsel, assert multifaceted grounds for challenging the impugned order and the subsequent actions of the DGAP. They contend that the application of Rule 133(5) retroactively by the Authority is untenable, highlighting purported errors in the consideration of relevant materials and the reliance on irrelevant factors in reaching the adverse conclusions. Moreover, the petitioner vigorously contests the application of sub-rule (3) of Rule 133, emphasizing its erroneous application and asserting that the impugned notice, issued post the final order by respondent No. 2, exceeds the permissible scope of enquiry.

The overarching legal argument advanced by the petitioner hinges on the interpretation of statutory provisions within the CGST Act and associated Rules, particularly Rules 126, 127, and 133, which they deem not only null and void but also violative of fundamental rights enshrined under Articles 14 and 19(1)(g) of the Constitution of India. Rule 129 of the CGST Rules also comes under sharp scrutiny, with the petitioner asserting its nullity for purportedly violating principles of natural justice.

Furthermore, learned senior counsel for the petitioner underscores specific contextual nuances pertaining to the increase in customs duty on certain products during the relevant periods, advocating for their exclusion from the profiteering calculations. They substantiate this argument with detailed illustrations, drawing comparisons between invoiced amounts spanning different periods to demonstrate consistency in pricing despite external economic fluctuations.

Conversely, the counter-arguments presented by the learned counsel for the Authority and the DGAP underscore the expansive powers vested in the Authority under Section 171 of the CGST Act. They vehemently contend that the statutory framework provides the Authority with wide-ranging powers to scrutinize any supply of goods or services to ensure compliance with the provisions governing the passing on of benefits derived from tax rate reductions or input tax credits to consumers through commensurate reductions in prices.

They refute the petitioner’s contention regarding the lack of suo motu powers of the Authority, arguing that Section 171, read in conjunction with relevant rules, empowers the Authority to initiate investigations based on complaints, applications, or its own scrutiny in the public and consumer interest. They stress that the statutory provision’s use of the term “any” demands a broad interpretation, underscoring the Authority’s mandate to examine all supplies without exception.

Moreover, the respondents highlight procedural safeguards within the CGST Act and Rules, asserting that while mechanisms exist for complaints and applications to trigger investigations through prescribed forms and committees, these do not curtail the Authority’s inherent powers under Section 171. They dismiss the petitioner’s characterization of the procedural steps as fetters on the Authority’s powers, reaffirming that such measures are intended to ensure transparency and adherence to due process, thereby safeguarding the rights of all parties involved.

As this matter progresses, it is evident that the issues raised are of significant legal and constitutional importance, warranting a comprehensive examination of statutory interpretation, procedural fairness, and the extent of regulatory powers conferred under the CGST Act. The judicial scrutiny of these issues, through the present writ petition, seeks not only to redress the specific grievances of the petitioner but also to establish precedents that uphold the principles of equity, justice, and constitutional rights in the realm of GST compliance and enforcement.

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