GSTAT Delhi Confirms ₹19.3 Lakh Profiteering Liability on Park Avenue After-Shave Distributor

The Delhi Bench of the Goods and Services Tax Appellate Tribunal (GSTAT) on 27 January directed sellers of Park Avenue After-Shave Lotion to deposit Rs. 19,32,446 into the Consumer Welfare Fund, confirming the revised profiteering allegations against them. The ruling comes after a major correction in the profiteering calculations, following the identification of duplication of invoices, which had caused the original financial demand to be overstated.

A Bench comprising Dr. Sanjaya Kumar Mishra, President, GSTAT, heard the appeal following a remand from the Delhi High Court, which directed a re-examination of profiteering calculations after the distributor allegedly failed to reduce its sale prices for consumers when GST on the after-shave lotion was reduced from 28% to 18%.

It noted:

“The profiteering provisions under the CGST Act are intended to ensure that consumers benefit from any reduction in tax. Any failure to pass on such benefits is required to be rectified by depositing the profiteered amount into the Consumer Welfare Fund,” the Tribunal observed.

The respondents, Sai Kripa and JK Helene Curtis—a group company of Raymond engaged in the manufacture and sale of personal care FMCG products—were initially found by the Directorate General of Anti-Profiteering (DGAP) and the erstwhile National Anti-Profiteering Authority (NAA) to have profiteered significantly. The NAA had earlier fixed Sai Kripa's liability at Rs. 38.64 lakh and Helene Curtis' at Rs. 18.48 crore. The Delhi High Court had quashed the NAA order, citing the need for re-investigation.

During the GSTAT proceedings, the respondents challenged the methodology used by DGAP, questioned the constitutionality of Section 171 of the CGST Act, 2017, and cited commercial reasons for maintaining sale prices post-GST reduction. Sai Kripa also contended that some transactions were counted twice while computing the profiteering amount.

After reviewing the remand report, GSTAT noted the duplication of invoices and other factual errors in the earlier calculations and reduced the profiteered amount from Rs. 38.64 lakh to Rs. 19.32 lakh. However, the Tribunal endorsed the DGAP methodology of comparing the weighted average base price with the actual sale price. It observed:

“After remand DGAP has taken into account duplication of invoices calculating the profiteering amount by the principal and retailer. In that view of the matter, DGAP reduced the profiteered amount from 38,64,891 to 19,32,446. Thus, it cannot be said that the methodology adopted by DGAP is wrong in any way.”

The GSTAT clarified that the present order was limited to profiteering by the distributor Sai Kripa and that alleged profiteering by Helene Curtis was “immaterial” for this proceeding.

The Tribunal further rejected arguments that a pending lis before the Supreme Court on the constitutional validity of Section 171 should stay proceedings, citing the Delhi High Court's decision in Reckitt Benckiser India, which upheld anti-profiteering provisions.

On limitation, GSTAT noted that “there is no time limit fixed for the calculation of the profiteered amount” and emphasized that anti-profiteering provisions are beneficial legislation and must receive liberal construction.

Accordingly, the GSTAT directed Shree Sai Kripa Marketing to deposit the confirmed profiteered amount of Rs.19,32,446 between the Central Consumer Welfare Fund and the State Consumer Welfare Funds of Delhi, Haryana, and Uttar Pradesh and submit a compliance report to the Tribunal within four months. The Tribunal specified that the amount must be deposited in a 50:50 ratio. 

For Respondents: Advocates Vineet Bhatia, Aamnaya Jagannath Mishra, Himanshu Gupta, Mr. Tushar Gupta