2020 (7) TMI 614 - HC - GST

Court upholds National Anti-Profiteering Authority legality, directs deposit in instalments amid COVID-19. Stay on interest/penalty.

The Court upheld the constitutionality and legality of the National Anti-Profiteering Authority and related provisions challenged by the petitioner. ... National Anti-Profiteering Authority - deposit of principal profiteered amount - instalment payment of adjudicated liability - stay of interest and penalty proceedings - natural justice - Articles 14 and 19(1)(g) of the Constitution - Section 107(6)(b) of the Central Goods and Services Tax ActDeposit of principal profiteered amount - instalment payment of adjudicated liability - Section 107(6)(b) of the Central Goods and Services Tax Act - Direction to deposit the principal profiteered amount and permission to pay the same in six equated monthly instalments commencing 15th August, 2020. - HELD THAT: - The High Court, while issuing notice on the writ petition challenging the National Anti-Profiteering Authority and related statutory provisions, directed immediate deposit of the principal profiteered sum. The court relied on its earlier orders in Phillips India Limited and Samsonite South Asia and observed that no plea of financial hardship was made by the petitioner. In view of the COVID-19 pandemic and despite objections by respondents to instalments, the court exercised its discretion to permit payment of the adjudicated principal amount in six equal monthly instalments beginning 15th August, 2020, rather than requiring a lump-sum deposit. The direction to deposit is interlocutory and premised on the court's supervisory power pending adjudication of the petition and compliance with Section 107(6)(b) as invoked by the petitioner.Petitioner directed to deposit the principal profiteered amount in six equated monthly instalments commencing 15th August, 2020.Stay of interest and penalty proceedings - National Anti-Profiteering Authority - Interim stay of interest and penalty proceedings initiated by the respondents. - HELD THAT: - Alongside directing deposit of the principal amount, the High Court stayed the recovery of interest and the continuation of penalty proceedings until further orders. The stay operates as an interim protective measure in the course of the writ proceedings and preserves the petitioner's position on ancillary monetary consequences while the constitutional and statutory challenges are adjudicated.Interest amount and penalty proceedings stayed until further orders.Final Conclusion: Notice issued; petitioner directed to deposit the principal profiteered sum in six monthly instalments commencing 15th August, 2020; interest and penalty proceedings stayed; matter listed for further hearing on 24th August, 2020. Issues: Challenge to the constitutionality and legality of National Anti-Profiteering Authority, jurisdiction of respondent no. 2, breach of natural justice, violation of Articles 14 and 19(1)(g) of the Constitution, deposit of tax amount, permission for instalment payments, grant of instalments, stay on interest amount and penalty proceedings, submission of written arguments.Constitutionality and Legality of National Anti-Profiteering Authority: The petitioner challenged the constitutionality and legality of the National Anti-Profiteering Authority, along with Section 171 of the Central Goods and Services Tax Act and Rules 122, 126, 127, and 133 of the Central Goods and Services Tax Rules. The petitioner also contested the order passed by respondent no. 2 in Case No. 16/2020, alleging lack of jurisdiction, statutory non-compliance, and a conflict of interest issue where respondent no. 2 acted as both complainant and adjudicating authority.Breach of Natural Justice and Violation of Constitutional Articles: The petitioner argued that the absence of a methodology in proceedings before the National Anti-Profiteering Authority violates natural justice and infringes upon Articles 14 and 19(1)(g) of the Constitution. Citing previous cases where the Court issued notices in similar matters, the petitioner highlighted concerns regarding procedural fairness and fundamental rights.Deposit of Tax Amount and Instalment Payment: The petitioner expressed willingness to deposit ten percent of the remaining tax amount in accordance with Section 107(6)(b) of the Central Goods and Services Tax Act, 2017. Alternatively, the petitioner requested permission to deposit the entire principal profiteered amount in instalments due to the COVID-19 pandemic situation, referencing precedents allowing such payment arrangements.Court Direction on Deposit and Instalments: The Court directed the petitioner to deposit the principal profiteered sum, despite objections from respondent nos. 1 and 3 regarding granting instalments. In consideration of the pandemic, the Court allowed the petitioner to pay the amount of Rs. 75,08,64,019 in six equated monthly instalments starting from 15th August, 2020. Additionally, the Court stayed the interest amount and penalty proceedings initiated by the respondents until further orders.Submission of Written Arguments and Next Hearing: The learned counsel for the parties were instructed to submit short written submissions not exceeding five pages each at least one week before the next hearing scheduled for 24th August 2020. The Court ordered the uploading of the order on the website immediately and directed the distribution of the order to the counsel via email.