Subway Systems India Private Ltd, the licensee of the Subway brand in the country, on Monday questioned the National Anti-profiteering Authority in Delhi High Court for making it a respondent in a case against its franchisee Dough Makers India Private Limited.
Subway Systems, which conducts its franchisee business by sub-licensing the Subway brand, also raised the issue of constitutional validity of setting up the authority without prescribing methodology to calculate profiteered amount, said Abhishek Rastogi, counsel of the company and partner at Khaitan & Co.
Other companies also raised the issue of constitutional validity of the authority.
This particular case relates to alleged profiteering by Dough Makers after GST was reduced on November 15, 2017.
The Authority had calculated the profiteered amount at Rs 78,41,754.
The company said the Authority and its investigation wing computed the alleged profiteered amount arbitrarily on the pretext that Subway Systems had not provided invoices and item-wise data of its franchisee.
Subway Systems told the court that its inclusion as the respondent in the case is a gross violation of natural justice. The Authority had stated that Subway Systems did not submit records and information that was supposed to be maintained by its franchisee.
Subway Systems cited franchisee agreement entered with Dough Maker to establish that pricing of products have contractually been left upon the latter as its own prerogative.
Rastogi said the moot point remains the test of constitutionality of anti-profiteering provisions in the absence of prescribed methodology to determine the quantum of profiteering.
“Once this aspect of constitutionality is decided, the other related points including the quantum of profiteering for different sectors would come into play,” he said.
About 51 companies have filed petitions against anti-profiteering provisions under GST. Besides Subway Systems, HUL, Abbott, Johnson & Johnson, Philips, Acme developers, Samsonite, Jubilant Foods, Nestle, Whirlpool, Samsung, Subway, Samsonite, Reckitt Benckiser and Patanjali are the petitioners.
The court, which had clubbed the petitions, had posted the matter for next hearing on September one.
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