TaxTMI 
TaxTMI 
2026 (3) TMI 825
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.... SHRI A. VENU PRASAD, MEMBER, TECHNICAL (STATE) 1. This proceeding under Section 171 of the Central Goods and Services Tax Act, 2017, hereinafter referred as the CGST Act, for brevity, read with Rule 133 of the Central Goods and Services Tax Rules, 2017, hereinafter referred as CGST Rules, for brevity, to re-examine the correctness of the Report of the Directorate General of Anti-Profiteering, hereinafter referred as DGAP, for brevity, which has been upheld by the erstwhile National Anti-Profiteering Authority, hereinafter referred as NAA, for brevity, but the Hon'ble High Court of Delhi in W.P. (C) 14422/2022 & CM APPL. 44020/2022 has set aside the order of the NAA and directed the matter to be listed before Principal Bench, Goods & Services Tax Appellate Tribunal, hereinafter referred as GSTAT, for brevity, for reconsideration of the factual aspects of the case. The DGAP has alleged in its Report that Respondent has indulged a profiteering to the extent of Rs. 450.18 Crогеs. 2. The Respondent is engaged in providing Direct-to-Home (DTH) television broadcasting services. A consumer complaint by Ms. Sweety Agarwal, alleged that the respondent has charged ....
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....d on the benefit of Input Tax Credit which was not available to him in pre-GST and available to him on implementation of GST w.e.f. 01.07.2017, in terms of Section 171 of the CGST Act, 2017. 5. The DGAP conducted a detailed investigation applying the methodology under Rule 126. The methodology involved comparison of effective tax incidence pre-GST and post-GST, verification of additional ITC, and isolation of GST-related benefits. It was found that: d) In Pre-GST period, the Appellant discharged service tax, VAT, Entertainment tax and other taxes without seamless credit. e) In post-GST period, these taxes were subsumed and as a result additional ITC became available. f) Effective tax incidence reduced post-GST. g) But Prices were not reduced commensurately. h) Profiteering was quantified at Rs. 450.18 crore. 6. The methodology adopted finds support from the judgement of the Delhi High Court in Reckitt Benckiser India Pvt. Ltd. V. Union of India (2023), wherein it was held that Rule 126 provides sufficient guidance and that DGAP methodology cannot be interfered with unless shown to be perverse. Similarly, the antiprofiteering framew....
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....Turnover State-wise to Overall Turnover State-wise Profiteered Amount 1 ANDHRA PRADESH 1,24,54,22,017 1.37 6,15,76,155 2 ARUNACHAL PRADESH 29,27,79,030 0.32 1,44,75,581 3 ASSAM 2,66,31,92,951 2.92 13,16,73,586 4 BIHAR 1,05,36,23,972 1.16 5,20,93,276 5 CHANDIGARH 37,80,04,113 0.42 1,86,89,279 6 CHATTISGARH 1,12,41,58,363 1.23 5,55,80,638 7 DADRA & NAGAR HAVELI 1,55,82,255 0.02 7,70,418 8 DAMAN & DIU 97,26,383 0.01 4,80,892 9 DELHI 3,93,90,83,514 4.33 19,47,56,167 10 GOA 55,43,64,229 0.61 2,74,08,876 11 GUJARAT 2,95,15,09,092 3.24 14,59,28,513 12 HARYANA 2,38,32,85,341 2.62 11,78,34,394 13 HIMACHAL PRADESH 46,69,50,017 0.51 2,30,86,943 14 JAMMU & KASHMIR 39,08,55,863 0.43 1,93,24,696 15 JHARKHAND 89,99,06,282 0.99 4,44,93,166 16 KARNATKA 6,17,84,95,484 6.79 30,54,77,174 17 KERALA 79,82,50,277 0.88 3,94,67,090 18 MADHYA PRADESH 1,47,85,93,207 1.62 7,31,04,605 19 MAHARASHTRA 39,57,42,37,026 43.46 1,95,6....
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....onsequential order has already been passed, W.P. (C) No. 8705 of 2022 challenging the impugned SCN is now infructuous and is accordingly disposed of". 12. Hearings in the matter held on 14.10.2025, 11.11.2025, 09.12.2025, 07.01.2026, 30.01.2026 and 18.02.2026 before the Pr. Bench, GSTAT. Sh. Rohan Shah, Learned Senior Advocate, appeared for the Respondent, assisted by Sh. Deepak Thackur, Ms. Aakansha Wadhwani, Mr. Muhammad Anajwalla, Learned Advocates, appeared on the behalf of the Respondent. Shri Pranav Deshpande, Sr. Vice President and Shri Swaminathan Konar, General Manager of the Respondent Company appeared before the Tribunal. Shri Achyut Pyati, Deputy Manager of the holding Company (Tata sons) appeared virtually before the Tribunal. Shri Harkesh Meena, Assistant Commissioner - Departmental Representative assisted by Shri. Praveen Kumar, and Sh. Ajay Tehlan, Additional Assistant Directors appeared on behalf of the DGAP. 13. Further vide Tribunal order dated 14.10.2025, It was also directed to issue notice to the original complainant, Ms. Sweety Agarwal. Accordingly, a Notice dated 17.10.2025 had been issued to the original complainant Ms. Sweety Agarwal. However, Ms. Sw....
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....ies invoked the word "shall" in the relevant Rules and Parliament subsequently amended timelines by way of Notification No. 31/2019 to reflect the legislative intention that the timeframes be observed. The failure to adhere to statutory mandated timelines renders the investigation and the Report liable to be set aside as time-barred. Reliance is placed on Bhavnagar University v. Pali tana Sugar Mill (P) Ltd. (2003) 2 SCC 111 [at pg. 179 of Compilation Vol II]. e. DGAP's singular focus on alleged ITC benefit is all the more untenable because the DTH industry's pricing and tariff architecture is subject to sectoral regulation by TRAI. In earlier DTH matters (e.g., Bharti Tele media Pvt. Ltd.) NAA/DGAP have held that where a) Entertainment Tax was neither available as ITC per-GST nor as ITC post-GST, or b) the complainant failed to supply cogent evidence, no profiteering was established. Those findings are squarely applicable to the present facts. f. DGAP's approach is arbitrary and discriminatory. In comparable fact situations - notably in Fab India (Case No. 13/2018) and KRBL (Case No. 3/2018) - order passed by earlier NAA has considered both the increase ....
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....tion per pack of supply of services was Rs. 72.73. When the impact of the decrease in the Net Realisation per pack is extrapolated to the entire Turnover of the Company (in the period 01.07.2017 to 31.01.2019), the impact at a Company level is set out in the tabular summary hereunder:- Amount in INR Crores Pack price is kept same for all consumers Pre-GST turnover @ 15% (for the period 01.07.2017 to 31.01.2019) Actual turnover @ 18% (for the period 01.07.2017 to 31.01.2019) Decrease in Net Realisation at a Company level MRP 11,064 11,064 Tax 1,443 1,688 Net realization 9621 (Note 2) 9376 (Note 1) -245 Note 1: Turnover as per financial statement, proportionate for 9 months for FY 2017-18 and 10 months for FY 2018-19 (refer: Page no. 424 of Compilation Vol I - Subtotal A. Total turnover (net of taxes) in CA Certificate - Annexure 9) Note 2: Refer page no. 424 of Compilation of Vol I (Subtotal C. Total turnover at Pre-GST tax rates (net of taxes) in CA Certificate) i. The approach adopted by DGAP mirrors the ITC-turnover ratio methodology already held to be inappropriate by Hon'ble Delhi High C....
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....der the pre-GST had not been charged from its consumers/distributors and the burden of Entertainment Tax was absorbed by the Respondent company. 15. The DGAP was directed to file clarifications on Respondent's submissions dated 14.10.2025 & 11.11.2025. The DGAP has filed its clarifications vide letter dated 28.11.2025. The point wise clarifications given by the DGAP on the contentions raised in para above, has been summarised as below:- a. Objection that investigation against the company is arbitrary, discriminatory and unsustainable merely because other DTH operators were not simultaneously investigated is legally untenable and contrary to the statutory scheme of Section 171 of the Act. Section 171 read with Rule 128, 129 and 133 empowers the DGAP and Authority to initiate investigation based on specific evidence. b. The objection raised by the company regarding the alleged lack of locus standi of the complainant is misconceived and contrary to the spirit and objectives of Section 171 of the CGST Act. Both the registered mobile no. linked to the subscription account belong to the complainant and her husband, establishes that complainant was using the connectio....
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.... benefit arising from increased availability of ITC under GST is passed on to the recipients through commensurate reduction in prices. i. The Respondent's reliance on the judgment in Reckitt Benckiser India Pvt. Ltd. Vs. Union of India, 2024 SCC Online Del 588, to challenge DGAP's methodology is misplaced and untenable. The observations of Hon'ble DHC in the case were rendered in context of Real Estate Sector. j. The Respondent's challenge to DGAP's comparison of ITC to turnover ratios for pre-GST (15 months) and post-GST (19 months) is baseless. In fact, the DGAP's methodology is based on actual figures of ITC availed and turnover is furnished by the Respondent itself through GSTR returns and audited financial records. k. The Respondent's reliance on the Delhi High Court's observations regarding relevance of "economic and commercial factors" is price formulation is misleading. While the Court acknowledged that suppliers may consider commercial and economic factors in setting prices, it clearly held that Section 171 exclusively concerns the indirect tax component of price and the Authority's mandate is to ensure benefit of rate reduction or additional ITC....
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....ate computations advanced by the Respondent Company on the basis of Chartered Accountant certificates are not supported by contemporaneous purchase invoices, statutory ITC ledgers or return-based reconciliations. c. The objections relating to locus standi of the complainant and validity of the complaint are also misconceived. d. With regard to the Entertainment Tax, it is submitted that the said levy was a statutory indirect tax, the legal and economic incidence of which is borne by the recipient of the service. 18. The Respondent has also filed its short synopsis dated 18.02.2026, the same has been summarised as below:- Increase in the rate from 15% to 18% has been completely ignored by the DGAP: a. The calculation method adopted by the DGAP in arriving at the profiteered amount is completely flawed and unsustainable. The Company has, in fact, suffered loss on account of net tax cost and there has been no profiteering in the hands of the Company. b. Erroneous Calculations by the DGAP of the amount of additional ITC benefit available to the Company c. DGAP's calculation of additional ITC benefit available to the Company, as p....
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....l Unavailable Credit (01.04.2016 to 30.06.2017) 74,66,96,730 Refer Page No. 424 of Compilation Vol I (Annexure 9 CA Certificate, subtotal E) (submitted by Company vide email dated 24.03.2021 as per request from DGAP vide Notice DIN No. 202102dapHQOOOOE298 dated 15.02.2021 (refer page 60 of Compilation Vol I)) C. Ratio of Unavailable Credit to the available credit in the pre-GST period (01.04.2016 to 30.06.2017) (B/A*100) 9.67% D. Total Credit taken in the post GST period (01.07.2017 to 31.01.2019) 13,70,60,74,243 Refer Page 85 of Compilation Vol I (Sr. No. 4 of Table A of Part of DGAP Report) E. Increased benefit of ITC credit available in the post GST period vis-à-vis the pre-GST period, by applying 9.67% [(C)-above] to the Total credit taken in the post-GST period (01.07.2017 to 31.01.2019) [(D)above] 1,32,49,30,797 d. Alternatively, in the DGAP's calculation, the cost of increase in rate of tax is considered with the actual certified ITC benefit, then too, there is no profiteering. Description Rs. (in crores) Total taxable turnover for the period 01.07.2017 to 31.01.2019 9105.22 Increase in ta....
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....sessee providing the DTH services was liable to pay Service Tax, Central Excise Duty on set-top boxes and equipment, Value Added Tax (VAT) on set-top boxes, accessories and recharge vouchers, Entertainment Tax levied by State Governments on DTH services, Countervailing Duty (CVD) on imported equipment, Special Additional Duty (SAD) on imports and Entry Tax / Octroi in certain States. 22. There is no dispute regarding the fact that all these taxes were levied independently. ITC was not available seamlessly especially between state and central taxes. From 01.07.2017, all major indirect taxes applicable to the DTH industry were subsumed into one single tax regime under Goods and Services Tax (GST), which includes Service Tax, Central Excise Duty, Value Added Tax (VAT), State Entertainment Tax on DTH, Countervailing Duty (CVD), Special Additional Duty (SAD), Entry Tax / Octroi. As a result of the advent of the GST regime, DTH services and related equipment are taxed uniformly under GST regime at 18% with full availability of Input Tax Credit. 23. It was submitted by the Respondent as a petitioner in W.P. (C) 14422/2022 & CM APPL. 44020/2022 before Hon'ble High Court of Delhi that....
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....T @18%: Rs.54 • Total Payable: Rs.354 • Effective Tax Burden: Rs.54 (18%) Net Impact due to GST introduction: From the above illustration, it is clear, under the pre-GST regime, the subscriber paid approximately Rs.390 on a Rs.300 subscription, reflecting a 30% cumulative tax burden. Under GST, the total payable reduces to Rs.354, reflecting an 18% tax burden. This results in a net reduction of Rs.36 per month in this illustration. Additionally, GST allows seamless input tax credit to operators, eliminating cascading effects that existed under the earlier regime. For better clarity, Side-by-Side Comparison - DTH Tax Burden Pre & Post GST is as below: Illustrative comparison based on a monthly DTH subscription value of Rs.300. Scenario Tax Components Total Tax Amount Effective Burden Pre-GST (15% ET State) Service Tax 15% + Entertainment Tax 15% Rs.90 30% Pre-GST (20% ET State) Service Tax 15% + Entertainment Tax 20% Rs.105 35% Post-GST (All India) GST @18% Rs.54 18% The side-by-side view highlights that GST significantly reduced the cumulative tax burden, particularly in States with high Entertainmen....
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....to June 2017) 74.66 B. ITC cost extrapolated for 19 months =A19/15 94.57 The above data given by the respondent was examined in detail along with DGAP response. As per the new scheme of calculations under GST, the above contents of the table of calculations (on average basis) given by the respondent are not valid as per below illustration:- Scenario Tax % (on Rs. 300/- subscription per month) Tax Amount Total Payable Difference: excess tax burden in pre-GST period. 1.Pre-GST (15% Entertainment Tax) 30% (15 percent service tax and 15 entertainment taxes & levies) Rs.90 390 96 2.Pre-GST (20% Entertainment Tax) 35% (15 percent Service Tax + 20 Entertainment taxes & levies) Rs.105 Rs.405 51 Post-GST 18% GST Rs.54 Rs.354 Net result and Impact of taxes in Post GST Period: From the above table, it is clear with the introduction of GST, the effective tax burden on DTH services reduced by eliminating Entertainment Tax and other cascading levies, bringing uniform taxation with seamless Input tax credit - in overall GST benefitted the industry and consumers. Hence, the contention of the respondent that increase ....
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.... that Tata Sky has not collected entertainment tax from the customers is not valid as per law. However surprisingly, as per the respondent, they have deposited the entertainment tax due to all the respective states. Hence, post GST, the respondent is bound to pass on the benefit of subsummation of entertainment taxes to customers whether it has been collected or not. 27. Coming to the question no. III as framed by us in the aforesaid Para 3, we take note of the fact that it apparent from the records:- * The assesses charged Rs.3290 for six-month period as DTH subscription prior to GST inclusive of all levies and taxes. * Multiple indirect taxes including Service Tax and statutorily leviable Entertainment Tax stood subsumed under GST. * Post-GST, despite reduction in effective tax burden to 18%, the assessed continued charging Rs.3290 inclusive of all taxes for six months plus GST. * The assesses contended that no benefit arose as Entertainment Tax was not actually collected earlier. Settled Principle of Law: Entertainment tax is a statutory levy on the act of providing entertainment. The obligation to pay tax arises from the statute itse....
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....he Council, specify the date from which the said Authority shall not accept any request for examination as to whether input tax credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him." The Hon'ble High Court of Delhi in the case of Reckitt Benckiser India Pvt. Ltd., Vs. Union of India, (2024) 14 Centex 374 (Delhi), W.P (C) No. 7743 / 2019 dated 29.01.2024 has held that as far as methodology adopted by the DGAP in calculating of profiteering in respect of the Real Estate Industry is incorrect. However, the Delhi High Court further held that there is 'no one size fits all' formulae or method to be applied for every industry. Every Industry has to be taken in its own peculiarity and accordingly profiteering has to be calculated. Constitutional challenge: The Hon'ble High Court of Delhi, in the case of Reckitt Benckiser India (P.) Ltd. v. UOI (Supra) has considered the constitutional validity of Section 171 of the CGST Act and also considered the scope of this provision. Further, the contention raised by the Respondent no. 1 is that the con....