M/S Krishna Enterprises (Amba 70Mm) vs. Union Of INDIA And 4 Others

Held

The High Court disposed of the writ petition, directing the petitioner to submit an explanation to the notice dated March 6, 2020, to the National Anti-Profiteering Authority (4th respondent) within four weeks from the date of the order. The Court clarified that the petitioner could raise all available legal defenses in their explanation. The 4th respondent was directed to consider the explanation and pass a reasoned order in accordance with the law, communicating it to the petitioner. The Court also stated that if the petitioner requested a virtual or physical hearing, such a request should be considered. The Court explicitly mentioned that it had not made any observations on the contentions of either party. The interim stay was vacated as a consequence of the disposal. The Court made it clear that personal appearance of the petitioner was not necessary, referencing sub-rule (2) of Rule 133.

Facts

The petitioner, M/s Krishna Enterprises (Amba 70MM), a movie theater proprietor, challenged a notice/summon dated March 6, 2020, issued by the National Anti-Profiteering Authority (NAA) and a prior notice dated October 22, 2019, issued by the Directorate General of Anti-Profiteering (DGAP). The DGAP suspected that the petitioner was not passing on the benefit of GST rate reductions (from 18% to 12% on tickets up to Rs. 100, and from 28% to 18% on tickets above Rs. 100, effective January 1, 2019) to customers, potentially amounting to profiteering of Rs. 7,19,187. The NAA notice directed the petitioner to appear for a hearing on March 24, 2020, to show cause why the DGAP's report should not be accepted. Due to the COVID-19 pandemic and subsequent lockdown, the petitioner could not appear and filed the writ petition in October 2020, seeking to declare the notices illegal and void. An interim stay was granted on further proceedings.

Key Issues

1. Whether the notice/summon dated March 6, 2020, issued by the National Anti-Profiteering Authority (NAA) and the prior notice dated October 22, 2019, issued by the Directorate General of Anti-Profiteering (DGAP) are illegal, null, void, and arbitrary, particularly in light of the COVID-19 pandemic and lockdown restrictions, and whether the petitioner's right to natural justice has been violated. Petitioner's contentions: The petitioner argued that the notices were illegal and arbitrary, and that the COVID-19 pandemic and lockdown made it impossible to comply with the summons, thus violating their right to a fair hearing. They sought to quash the notices and stay further proceedings. Respondents' contentions: The respondents, through their counsel, pointed to Rule 133 of the GST Rules, which contemplates providing an opportunity of hearing to interested parties upon request. They argued that there was no threat of coercive measures like arrest, and that only certain consequences, as mentioned in Rule 133, could follow if an adverse inference was drawn. They also noted that the lockdown had been lifted, and inter-state travel was now possible.