A clutch of companies on Monday told the Delhi High Court that the National Anti-profiteering Authority (NAA) was not following due process of law and was launching investigations against them even when there was no cut in the GST rates or any increase in the input tax credit.
Arguments were also put forward challenging the constitutional validity of setting up NAA without any methodology prescribed for profiteering.
The court has posted the matter to March 4.
Earlier, the court had clubbed the petitions of over 50 companies including HUL, Abbott, Johnson & Johnson, Philips, Acme developers, Samsonite, Jubilant Foods, Nestle, Whirlpool, Samsung, Subway, Samsonite, Reckitt Benckiser and Patanjali, against NAA.
On behalf of companies, Abhishek Rastogi, partner at Khaitan & Co, argued, "There have been various instances where the process has not been followed -- there is no recording of prima facie evidence or any conclusive report by the standing committee or the screening committee."
He also cited instances of parties being dragged into the investigation process even when they weren't making supplies.
The counsel added that some real estate projects that commenced after the GST cut-off date have been investigated for profiteering as well.
"The first test of anti-profiteering is that there should be a decrease in the tax rate or increase in input tax credit. The instances wheree there is an absence of these two factors, we have taken them to the court at the DGAP (Directorate General of Anti Profiteering) stage itself," he argued.
Clause 171 has been inserted in the GST Act which provides that it is mandatory for companies to pass on the benefit due to the reduction in the rate of tax or from input tax credit to the consumer by way of commensurate reduction in prices. End
"The constitutional validity of anti-profiteering provisions was argued today. The validity of the provisions mentioned in the section 171 needs to be tested in the absence of any methodology prescribed to determine the quantum of profiteering," Rastogi said.
He said at this stage, the court wants to determine whether provisions of anti-profiteering are constitutional. After the court decides the legality of the provisions, it will go into details of individual facts, he informed.
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