The GST Appellate Tribunal (GSTAT) Delhi in DGAP v. Procter & Gamble Group [NAPA/13/PB/2025, order dated September 10, 2025], held that the provision for imposition of 18% interest on the anti-profiteering amount under Rule 133(3)(c) of the CGST Rules applies prospectively only to cases arising after June 28, 2019, and is not applicable retrospectively to profiteering occurring between July and October 2018; thus, while the profiteered amount of Rs. 6,88,770/- was confirmed, no interest or penalty was imposed.
Facts:
Directorate General of Anti-Profiteering (DGAP) (“the Appellant”) filed a complaint alleging that Procter & Gamble Group (“the Respondent”) had profiteered by not passing on the benefit of GST rate reduction on sanitary pads from 12% to nil for the period July 27, 2018 to October 31, 2018.
The Respondent was directed initially to deposit the profiteered amount along with interest under Rule 133 of the CGST Rules.
The Respondent contended readiness to deposit the profiteered amount but argued against the imposition of 18% interest, asserting the interest provision introduced by Notification No. 31/2019 dated June 28, 2019 was prospective and could not apply to the profiteering period in 2018. The Respondent further contended that penalty provisions were not applicable.
The Appellant sought confirmation of the profiteering amount and imposition of interest under the statutory framework via the GST Appellate Tribunal.
Issue:
Whether the Respondent is liable to pay interest at 18% on the profiteered amount prior to the effective date of the relevant amendment to Rule 133 CGST Rules?
Held:
The GSTAT Delhi in NAPA/13/PB/2025 held as under:
- Observed that, Rule 133(3)(c) was amended by Notification No. 31/2019-CT dated June 28, 2019 to impose 18% interest on certain anti-profiteering amounts.
- Noted that, this amendment came into force from June 28, 2019, and was made effective from April 1, 2020, by subsequent notification.
- Noted and upheld that, the Respondent’s contention that this interest provision is prospective and not retrospective.
- Noted that, there is no provision for retrospective imposition of interest for profiteering occurring before the amendment.
- Held that, the Respondent should deposit the identified profiteered amount of Rs. 6,88,770/- but refrained from imposing interest or penalty and directed deposit of profiteered sum into the Consumer Welfare Fund as per Section 57 of the CGST Act.
Our Comments:
The Tribunal examined the prospective versus retrospective nature of the amendment imposing interest on anti-profiteering amounts. It applied statutory interpretation principles and relied on the Supreme Court Constitution Bench ruling in C.I.T. (C-1) New Delhi v. Vatika Township Pvt. Ltd [(2015) SCC 1] regarding the presumption against retrospective operation of onerous statutes, unless clearly expressed. The Tribunal emphasized the express effective dates in the amending notifications, thus affirming the prospective application of the 18% interest provision.
Relevant Provisions:
Rule 133(3) of the CGST Rules, 2017
“133 (3). Where the Authority determines that a registered person has not passed on the benefit of the reduction in the rate of tax on the supply of goods or services or the benefit of input tax credit to the recipient by way of commensurate reduction in prices, the authority may order-
a) reduction in prices;
b) return to the recipient, an amount equivalent to the amount not passed on by way of commensurate reduction in prices along with interest at the rate of eighteen percent. from the date of collection of higher amount till the date of the return of such amount or recovery of the amount including interest not returned, as the case may be;
c) the deposit of an amount equivalent to fifty percent. of the amount determined under the above clause [along with interest at the rate of eighteen percent from the date of collection of the higher amount till the date of deposit of such amount] in the fund constituted under Section 57 and the remaining fifty percent. of the amount in the Fund constituted under Section 57 of the Goods and Services Tax Act, 2017 of the concerned State, where the eligible person does not claim return of the amount or is not identifiable.
d) imposition of penalty as specified under the Act; …”
Notification No. 71/2019- Central Tax dated December 13, 2017
“In exercise of the powers conferred by rule 5 of the Central Goods and Services Tax (Fourth Amendment) Rules, 2019, made vide notification No. 31/2019 – Central Tax, dated the 28th June, 2019, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 457(E), dated the 28th June,2019, the Government, on the recommendations of the Council, hereby appoints the 1st day of April, 2020, as the date from which the provisions of the said rule, shall come into force.”
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