In a development that may be seen as a setback for over 50 leading companies in India, the Delhi HC on Monday upheld the constitutional validity of several provisions within the Goods and Services Tax (GST) framework related to anti-profiteering.
More than 50 major companies are challenging the Anti-profiteering mechanism introduced by the government under GST. This mechanism is designed to ensure that companies pass on the benefits of lower tax rates to consumers. Hindustan Unilever, Abbott, Johnson & Johnson, Philips, Patanjali, Samsonite, Jubilant Foods, and Nestle are among the companies that have taken the indirect-tax department to court over the anti-profiteering provisions under GST.
The HC said that it is a consumer welfare measure in the public interest and does not violate any constitutional provisions, emphasizing that the levy of interest is within the rule-making power of the central government.
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“We have upheld the constitutional validity of section 171 (of CGST Act) as well as rules 122, 124, 126, 127, 129, 133 and 134 of the (CGST) rules of 2017,” the court said.
The court said that in accordance with section 171, any tax foregone must be transferred as a proportional reduction in price, emphasizing that this provision serves as a consumer welfare measure introduced in the public interest.
The rules in question address the establishment and functioning of the Anti-Profiteering Authority.
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