A company is required to give information to the Director-General of Anti-profiteering (DGAP) only about the ‘complained product’ and not about every product it produces, the Delhi High Court has said.
A complained product refers to a product against which complaint of not passing reduction in GST rate or benefit of Input Tax Credit (ITC) is alleged. The complaint can be made by any consumer or even a tax officer can suo motu files a complaint.
“It is directed that, till the next date, it will not be required to furnish information to the DGAP pursuant to the impugned notice other than information pertaining to the Complained Product,” a division Bench of the Delhi High Court ordered in a matter related with profiteering complaint made against Dettol HW Liquid Original 900 ml, produced by Reckitt Benckiser India (petitioner).
The National Anti-profiteering Authority (NAA) ordered an enquiry of profiteering against the said product. However, the company moved to Delhi High Court after the DGAP issued a notice seeking information on all its products (nearly 3,500 in number).
It argued that that as per the provisions under the GST Rules, without a report of the DGAP on the Complained Product followed by an order of NAA, the DGAP cannot suo motu issue a notice requiring the Petitioner to submit information on all its products.
The Bench found force in the submissions of the petitioner. Accordingly it allowed interim relief to the company. The matter has been listed for hearing on August 22.
It is important to note that in the case of Abbott Healthcare Private Ltd it was held that DGAP cannot proceed to investigate into products other than those covered in the notice and stay was granted until further order.
To overcome this, the rule was amended with effect from June 28 providing power to the NAA to direct the DGAP to investigate into goods or services other than those covered in the report submitted by DGAP. Further the investigation of other products shall be deemed to be a fresh proceeding. It is further provided that in order to initiate proceeding for other products, the NAA must have reasons which are to be recorded in writing.
Harpreet Singh, Partner with KPMG, said this ruling would give some belief to the dealers that authorities cannot arbitrarily question the pricing/policies of products “unless they have tangible evidence to substantiate their claim and are working within the framework of GST regulations.
Echoing the same sentiment Anita Rastogi, Partner with PwC, said that investigation of the complained product is right, but “expanding the scope of investigation to other products without following the due process looks unreasonable.”
MS Mani, Partner at Deloitte India, said that the mandate of the anti-profiteering provisions to investigate specific allegations of profiteering should be respected. “Broad level enquiries covering all products/SKUs would entail significant change compliance efforts for businesses and hence should be avoided unless there are compelling grounds for such an enquiry,” he said.