Introduction:

In the case of M/S Excel Rasayan Private Limited v. Union of India & Ors., the petitioner, Excel Rasayan, has approached the Supreme Court challenging the constitutional validity of anti-profiteering provisions under the Central Goods and Services Tax (CGST) Act, as upheld by the Delhi High Court. The provisions in question, Section 171 and Rule 133, mandate that any reduction in tax rates or input tax credit should be passed on to consumers through price reduction. Excel Rasayan contends that these provisions lack clarity, amount to delegation of legislative functions, and violate constitutional rights.

Arguments of both sides:

Excel Rasayan argues that the anti-profiteering provisions lack methodology and objective parameters for computation of profiteering, violating the doctrine of void for vagueness. They also assert that these provisions represent an unconstitutional delegation of legislative power, as they empower the National Anti-Profiteering Authority without adequate guidelines. Furthermore, Excel Rasayan contends that the provisions intrude upon their right to determine prices, as guaranteed by Article 19(1)(g) of the Constitution.

The Union of India, on the other hand, defends the provisions, stating that they serve the objective of ensuring consumer welfare by preventing undue profiteering. They argue that the provisions are necessary to enforce the underlying principles of the GST regime, which aims to pass on benefits of tax reduction to consumers.

Court’s Judgement:

The Supreme Court, while issuing notice in the case, clarified that it does not restrain the High Court from disposing of the main petition. The final decision on the constitutional validity of the anti-profiteering provisions is yet to be made. However, the arguments presented by both sides raise important questions about the balance between consumer welfare and business rights in tax regulation.