Smookey Kitchen Foods Opc PVT. LTD vs. Union Of INDIA & Ors.

Facts

The Petitioner, SMOOKEY KITCHEN FOODS OPC PVT. LTD, filed a writ petition before the Delhi High Court challenging an order dated 30.11.2023 passed by Respondent No. 2. The Petitioner sought to quash the direction to pay interest at 18% per annum on the alleged profiteered amount for the period prior to 28.06.2019. Additionally, the Petitioner requested a direction to deposit the State Government component of the profiteered amount, having already deposited the Central Government component. The Petitioner claimed there was no established mechanism for depositing the State component. The Respondent indicated a decision to allow deposit with the Central Consumer Welfare Fund until a specific fund is created.

Held

The Court addressed the issue of interest payment by referring to the judgment in DGAP Vs. Procter & Gamble Group, (2025) 35 Centax 77 (Tri. GST Delhi), which held that interest is payable w.e.f. 28.06.2019. Since the Petitioner was directed to pay interest up to 30.06.2019, the Court found that the Petitioner was only liable for three days of interest. The Court directed the DGAP (Respondent No. 3) to calculate this three-day interest component within two weeks, and the Petitioner was to deposit the amount within the subsequent two weeks. Regarding the deposit of the State component, the Court noted the Respondent's submission that the Petitioner could deposit the amount with the Central Consumer Welfare Fund until the State fund is created. The writ petition was disposed of in terms of these directions.

Key Issues

1. Whether the Petitioner is liable to pay interest at 18% per annum on the alleged profiteered amount for the period prior to 28.06.2019, as directed by the order dated 30.11.2023 passed by Respondent No. 2? - Petitioner's contention: The Petitioner argued that interest should not be levied for the period prior to 28.06.2019. - Revenue's contention: The judgment does not explicitly record arguments from the Revenue on this specific issue, but the Court's decision implies acceptance of the Petitioner's stance regarding the interest period. 2. What is the appropriate mechanism for the Petitioner to deposit the State Government component of the alleged profiteered amount, given the absence of a specific fund? - Petitioner's contention: The Petitioner sought a direction for the Respondents to communicate the deposit mechanism, as they had already deposited the Central Government component and found no fund for the State component. - Revenue's contention: The Respondent submitted that a decision had been taken to permit deposit with the Central Consumer Welfare Fund until the State fund is created.