New Delhi, Jan 29 – The Delhi High Court on Monday upheld the legality of key provisions related to the National Anti-Profiteering Authority (NAA).
Acting Chief Justice Manmohan and Justice Dinesh Kumar Sharma delivered the verdict on a batch of cases, including petitions from entities such as Philips India, Reckitt Benckiser, Gillette India, and Procter and Gamble Home Products.
The court specifically upheld the constitutional validity of Section 171 of the CGST Act, along with rules 122, 124, 126, 127, 129, 133, and 134 of the CGST rules of 2017.
Notably, Section 171 mandates that any tax benefit must translate into a proportional reduction in prices, stressung its role as a consumer welfare measure introduced in the public interest. Addressing concerns, the court acknowledged the possibility of arbitrary exercises of power under the anti-profiteering mechanism.
However, it said that the appropriate remedy for such cases is to set aside the order on its merits rather than striking down the provision itself, which vests such power in the Anti-Profiteering Authority.
The court clarified that Section 171 of the Act should not be viewed as a price control mechanism but as directly connected to the GST regime’s goal of ensuring suppliers pass on tax benefits to consumers.
The court stated: “Section 171 of the Act, 2017 mandates that whatever is saved in tax must be reduced in price,” incorporating the principle of unjust enrichment.
The court said that a robust mechanism, in compliance with constitutional requirements, is in place for addressing breaches of Section 171(1) of the Act, 2017.
This, it argued, ensures judicial oversight over NAA decisions, reinforcing the accountability of the anti-profiteering body.
Noting the NAA’s role, the court described it as a fact-finding body tasked with investigating whether suppliers adhere to Section 171 of the Act by passing on benefits through reduced prices.
The court recognised the NAA’s responsibility to perform functions requiring domain expertise.
The matters are scheduled for further proceedings on February 8, where the court will provide directions on merits.
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