Delhi HC stays fine on HUL for GST profiteering
On the plea by Hindustan Unilever Ltd (HUL) against the order given by the National Anti-profiteering Authority (NAA), the Delhi High Court has stayed the fine imposed on HUL.
Why the HUL has sought a review?
The HUL has sought the review of the order of NAA before the Delhi High Court based on the following reasons:
- NAA has made a narrow interpretation of the law and did not take into account the well-established industry practice backed by law.
- NAA order is arbitrary since no methodology has been determined by the NAA as required under law to determine if the benefit has been passed or not.
- Absence of any prescribed method in the GST law to calculate the undue profit earned.
HUL case is one among the others
The various decisions of the NAA are now questioned in the various High Courts. Even the real estate firm Pyramid Infratech has moved the high court against the order of NAA.
Why the issue has become complicated?
Section 171 of the CGST act deals with profiteering. It aims to ensure that reductions in the rate of tax on any supply of goods or services or the benefit of the input tax credit are passed on to consumers and empowers the central government to constitute authority for that purpose. The National Anti-profiteering Authority (NAA) was established by the central government under this provision.
But the absence of a clearly defined method to calculate the undue profit earned has become the bone of contention. The absence of rules has created a vacuum and resulting in ambiguity in dealing with anti-profiteering measures.