2025 (12) TMI 504 - AT - GST

No Interest or Penalty on Pre-2020 Profiteering; Rule 133(3)(c) Inapplicable, Compliance Report Directed within Four Months

DGAP Versus Dange Enterprises.

GSTAT (AT), New Delhi held that interest at 18% under Rule 133(3)(c) of the CGST Rules was not leviable on the alleged profiteered amount for the ... Profiteering - levy of interest at 18% under clause (c) of sub-rule (3) of Rule 133 of the CGST Rules on the profiteered amount for the investigation period 15.11.2017 to 30.06.2019 - HELD THAT:- The period of investigation doesn’t substantially fall within the period from which interest as per under the Clause (c), sub-rule (3) rule 133 of CGST Rules is applicable. Hence, it is not inclined to pass any order to that effect - It is also not disputed in this case that the petitioner’s case doesn’t fall within the ambit of penalty as provisions for the imposition of penalty was inserted in the year 2020 which is much after the last date of the alleged profiteering. A report in compliance of this order shall be submitted to this Tribunal by the concerned Commissioner within a period of 4 months from the date of receipt of this order - Case disposed off. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether interest at 18% under clause (c) of sub-rule (3) of Rule 133 of the CGST Rules is leviable on the profiteered amount for the investigation period 15.11.2017 to 30.06.2019. 1.2 Whether penalty is imposable in respect of profiteering that occurred prior to insertion of the penalty provision in the CGST framework in 2020. 1.3 Determination of the quantum of profiteering and consequential direction regarding deposit of such amount. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Levy of interest at 18% under Rule 133(3)(c) of the CGST Rules Legal framework 2.1 The Tribunal examined the Central Goods and Services Tax (Fourth Amendment) Rules, 2019, notified by Notification No. 31/2019-Central Tax dated 28.06.2019, issued under Section 164 of the CGST Act. Sub-rule (2) of Rule 1 of the said notification provides that, save as otherwise provided, the rules shall come into force on the date of their publication in the Official Gazette. 2.2 Rule 17 of the said Fourth Amendment Rules amended Rule 133(3)(c) of the CGST Rules by inserting the words 'along with interest at the rate of eighteen percent from the date of collection of higher amount till the date of deposit of such amount'. 2.3 The Tribunal also considered subsequent notification G.S.R. 927(E), which, in exercise of powers under rule 5 of the Fourth Amendment Rules, appointed 01.04.2020 as the date from which the provisions of the said rule would come into force. 2.4 The Tribunal referred to the Constitution Bench judgment in C.I.T. v. Vatika Township Pvt. Ltd., which lays down that, as a general rule, legislation affecting substantive rights or imposing new obligations or liabilities is presumed to be prospective unless the statute clearly provides, or by necessary implication intends, retrospective operation. It further notes that provisions that are onerous or impose new burdens are subject to the presumption against retrospectivity, whereas curative or purely clarificatory amendments may be retrospective. Interpretation and reasoning 2.5 The Tribunal analysed whether the insertion of interest at 18% in Rule 133(3)(c) is clarificatory/curative (and thereby retrospective) or introduces a new, onerous liability (and thereby prospective in the absence of clear contrary intention). 2.6 Relying on the ratio of Vatika Township, the Tribunal held that legislation (including delegated legislation) which modifies accrued rights or imposes new duties or attaches a new disability must be construed prospectively unless the legislature has clearly expressed or necessarily implied a contrary intention, or the amendment is to cure an obvious omission or explain the former law. 2.7 The Tribunal characterised the interest provision in Rule 133(3)(c) as an onerous imposition on the assessee, introducing a new liability and not conferring any benefit. Consequently, the normal rule of presumption against retrospective operation applies. 2.8 The Tribunal examined the wording of Notification No. 31/2019-Central Tax, particularly the expression 'to further amend' the CGST Rules, and held that grammatically and semantically the term 'further' connotes addition or advancement, not application to the past. On this basis, it rejected the contention that the amendment is merely clarificatory or curative with retrospective effect. 2.9 The Tribunal thus concluded that there is no clear statutory indication or necessary implication that the amended clause (c) of sub-rule (3) of Rule 133 is to operate retrospectively from any date prior to its notified commencement (01.04.2020). Conclusions 2.10 The Tribunal held that the investigation period (15.11.2017 to 30.06.2019) does not substantially fall within the period from which interest liability under the amended Rule 133(3)(c) is applicable. 2.11 Accordingly, the respondent is not liable to pay interest at 18% on the profiteered amount for the said investigation period, and no order for interest was passed. Issue 2: Imposition of penalty for profiteering prior to insertion of penalty provision Legal framework 2.12 The Tribunal noted that the statutory provision enabling imposition of penalty in such profiteering matters was inserted only in the year 2020, i.e., subsequent to the last date of the alleged profiteering (30.06.2019). Interpretation and reasoning 2.13 The Tribunal proceeded on the admitted position that the acts of profiteering in the present case were completed before the penalty provision came into force. 2.14 Consistent with the general principle against retrospective imposition of penal consequences, the Tribunal accepted that the respondent's conduct, which predated the insertion of the penalty provision, could not be brought within its ambit. Conclusions 2.15 The Tribunal held that the case does not fall within the scope of the subsequently inserted penalty provision. 2.16 No penalty was imposed on the respondent in respect of the profiteering determined for the period 15.11.2017 to 30.06.2019. Issue 3: Determination and deposit of profiteered amount Interpretation and reasoning 2.17 The Tribunal noted that the Director General of Anti-Profiteering initially determined profiteering at a higher figure, but as per the latest report dated 20.11.2025, the profiteered amount was quantified at Rs. 4,57,683/-. 2.18 It was recorded that the respondent, through written submissions, admitted the profiteered amount as determined in the latest report and confined its dispute to interest and penalty. 2.19 The Tribunal, therefore, accepted the DGAP's report to the extent of quantification of profiteering at Rs. 4,57,683/-, attributable to 'faceless' recipients. Conclusions 2.20 The Tribunal affirmed that the respondent had profiteered an amount of Rs. 4,57,683/- during the investigation period. 2.21 The respondent was directed to deposit the said amount into the Consumer Welfare Fund created by the Centre and the States, in equal proportion. 2.22 The concerned Commissioner was directed to submit a compliance report to the Tribunal within four months from receipt of the order.