SC notice to Centre on plea against HC verdict upholding anti-profiteering provision of CGST Act

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Supreme Court of India

New Delhi: The Supreme Court on Monday sought responses from the Centre and others on a plea challenging the Delhi High Court judgement which upheld the validity of a provision of the Central Goods and Services Tax (CGST) Act mandating that whatever companies save in tax they must reduce in price.


A bench of Chief Justice D Y Chandrachud and justices JB Pardiwala and Manoj Misra took note of the appeal of M/S Excel Rasayan Private Ltd against the high court verdict and issued notices to the Union Ministry of Finance, National Anti-profiteering Authority, its Director General, Central Board of Indirect Taxes and Customs and the GST Council.

A division bench of the high court, on January 29, upheld the constitutional validity of Section 171 of the CGST Act, 2017 which mandates that whatever the companies save in tax they must reduce in price.

The high court said the anti-profiteering provisions in the 2017 law and the related rules are in the nature of beneficial legislation as they promote consumer welfare.


The high court’s judgement came on a batch of over 100 petitions by several prominent business entities, including multinational corporations. These included Philips India, Reckitt Benckiser, M/S Excel Rasayan Private Ltd, Gillette India and Procter and Gamble Home Products.

"The constitutional validity of Section 171 of (CGST) Act, 2017 as well as Rules 122, 124, 126, 127, 129, 133 and 134 of the (CGST) Rules, 2017 is upheld," said the high court.

The high court said Section 171 mandates that a tax foregone has to be passed on as a commensurate reduction in price and that it is a consumer welfare measure introduced in the public interest.


The rules in question pertain to the establishment and functioning of the National Anti-Profiteering Authority (NAA). The high court had said it was possible that there may be cases of arbitrary exercise of power under the anti-profiteering mechanism but the remedy lay in setting aside such order on merits and not striking down the provision itself which invests such power in the authority.

The petitioners, companies running diverse businesses, had approached the high court after they were directed by the NAA to pass on the commensurate benefit of a reduction in the rate of tax or the Input Tax Credit to its consumers along with interest.

The high court had directed that the matters be listed for appropriate directions next month.