The Delhi High Court on Friday stayed the penalty proceedings initiated against Patanjali Ayurved for allegedly profiteering Rs 75 crore through sale of its products, subject to the condition that it deposits the amount in question in the consumer welfare fund in six monthly installments.
A bench of Justices Manmohan and Sanjeev Narula issued the direction on Patanjali's plea challenging the March 12, 2020 order of the National Anti-profiteering Authority (NAA) holding that the company denied to its customers the benefits of reduction in Goods and Services Tax (GST) between November 2017 to March 2019.
The high court also issued notice to the centre, NAA and the Director General of Anti Profiteering (DGAP) seeking their stand on the company's plea which has claimed that NAA has "failed to appreciate" that Patanjali has passed on benefits worth over Rs 151 crore to the consumers.
Patanjali, represented by senior advocate Aman Sinha, has also challenged the constitutionality of section 171 of Central GST Act which provides that any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices.
According to Patanjali, it passed on the benefit in tax reduction to consumers by various means, including cashback schemes, discounts through secondary and retailer schemes and not increasing the selling price of certain items even after increase in tax rate.
However, without appreciating these claims, NAA held that it has profiteered an amount of Rs 75,08,64,019 and directed that it be deposited in the consumer welfare fund, Mr Sinha contended.
It had also initiated penalty proceedings against the company.
The centre, represented by Additional Solicitor General Chetan Sharma, and NAA and DGAP, represented by central government standing counsel Ravi Prakash and advocates Farman Ali Magray and Zoheb Hussain, opposed the company's petition.
They also said that given the huge annual turnover of the company it should be directed to deposit the amount in one go and not in installments.
However, the high court passed the same order it did recently on a similar plea by Samsonite South Asia Pvt Ltd which was directed to deposit, in the consumer welfare fund, the principal profiteered amount of over Rs 21 crore in six equal monthly installments.
The high court tagged all similar matters for hearing together on August 24.
Patanjali in its plea has contended that the provisions of the CGST Act and the rules framed under it give "excessive and unfettered powers" to NAA to determine the methodology and procedure to be adopted for determining profiteering at its "discretion".
It said that this resulted in the passing of the "arbitrary" order of March 12.
The petition also challenges the composition of NAA, claiming it to be "unconstitutional".
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)