Section 171 of the Central Goods and Services Tax Act, 2017 mandates suppliers to pass on tax benefits to consumers through price reductions, ensuring consumer welfare and preventing unjust enrichment.

JUDGMENT

TABLE OF CONTENTS

Para Nos.THE CHALLENGE1-3ARGUMENTS ON BEHALF OF THE PETITIONERS4-34ARGUMENTS ON BEHALF OF THE RESPONDENTS 35-72ARGUMENTS ON BEHALF OF THE LEARNED AMICUS CURIAE73-85 COURT'S REASONING 86-164 Principles for adjudicating the constitutionality of an enactment 86-88 Court's approach while dealing with tax or economic laws 89Act, 2017 marks a paradigm shift in the field of indirect taxes90-94 Section 171 mandates that tax foregone has to be passed on as a commensurate reduction in price 95-102 Section 171 falls within the law-making power of the Parliament under Article 246A103-107 Section 171 lays out a clear legislative policy and does not delegate any essential legislative function108-115 Impugned provisions are not a price fixing mechanism. They do not violate either Article 19(1)(g) or Article 300A of the Constitution116-121 Reference to anti-profiteering provisions of Australia and Malaysia is misconceived122-123 No fixed/uniform method or mathematical formula can be laid down for determining profiteering 124-129It is the prerogrative of the legislature to decide how the benefit is to be passed on to the consumers130-134 Act 2017 rightly does not fix a time period during which price-reduction has to be offered 135Section 64A of the Sale of Goods Act is not applicable to the obligation under Section 171 136-137A statutory provision cannot be struck down on the ground of possibility of abuse 138To not compare taxes levied after the introduction of the Act, 2017 with a basket of distinct indirect taxes applicable before the operation of the Act would go against the intent and objective of Act, 2017 139-140There is no vested right of appeal and an appeal is a creature of the statute 141-145There is no requirement of Judicial Member in NAA146-151Rule 124 is in consonance with Article 50. There is no scope for governmental interference in functions exercised by NAA 152Rule 133 to the extent it provides for levy of interest and penalty is within the rule making power of the Central Government 153-156Goods and Services Tax collected on the additional realization has rightly been included in the profiteered amount157Time Limit for furnishing of report by DGAP is directory and not mandatory 158Expansion of investigation beyond the scope of the complaint is not ultra vires the statute159-161ACKNOWLEDGEMENT162 TO SUM UP163-164

Manmohan, A.C.J.

THE CHALLENGE

1. Present writ petitions have been filed challenging the constitutional validity of Section 171 of the Central Good and Services Tax Act, 2017 (for short `Act, 2017') and Rules 122, 124, 126, 127, 129, 133 and 134 of the Central Good and Services Tax Rules, 2017 (for short `Rules, 2017') as well as legality of the notices proposing imposition or orders imposing penalty issued by the National Anti-Profiteering Authority (`NAA') under Section 122 of the Act, 2017 read with Rule 133(3)(d) of the Rules, 2017 and the final orders passed by NAA, whereby the petitioners, who are companies running diverse businesses ranging from hospitality, Fast-Moving Consumer Goods (`FMCG') to real estate, have been directed in accordance with Section 171 of Act, 2017, to pass on the commensurate benefit of reduction in the rate of tax or the Input Tax Credit to its consumers/recipients along with interest.

2. Learned counsel for the parties prayed that this Court may first decide the plea of constitutional validity of Section 171 of Act, 2017 as well as Rules 122, 124, 126, 127, 129, 133 and 134 of the Rules, 2017. They stated that only in the event this Court were to uphold the constitutional validity of the aforesaid Section and Rules, would the need to examine the matters on merits arise.

3. Accepting the suggestion of the learned counsel for the parties, this Court proceeded to hear the issue of constitutional validity of Section 171 of Act, 2017 as well as Rules 122, 124, 126, 127, 129, 133 and 134 of the Rules, 2017. The said provisions are reproduced hereinbelow:

Section 171

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