Delhi High Court: Increasing Product Quantity Without Price Cut After GST Reduction Is Deceptive
The Delhi High Court has ruled that increasing the quantity of a product while keeping the maximum retail price (MRP) the same after a GST rate reduction is considered deceptive. The court stated that selling a product below its MRP is permissible, but selling above it is not, and increasing quantity without reducing price defeats the purpose of GST rate reductions.
The court opined that manufacturers and retailers should be prepared for transitional issues after GST rate reductions and ensure the benefit is passed on to consumers. The petitioner, Sharma Trading Company, argued that increasing the product's quantity justified the price charged after a GST rate cut, but the court disagreed.
The court held that anti-profiteering authorities can order price reductions, return undue benefits with interest, deposit amounts in the Consumer Welfare Fund, levy penalties, and even cancel GST registration in extreme cases. Section 171 of the CGST Act 2017 prescribes measures to curb anti-profiteering, with the GST Appellate Tribunal empowered to handle such cases from April 1, 2025, onwards.
The Delhi High Court's ruling serves as a reminder to businesses to comply with anti-profiteering measures and pass on GST rate reduction benefits to consumers. Failure to do so may result in penalties or even cancellation of GST registration in extreme cases.
