SECTION 171 OF THE CGST ACT: DUTY WITHOUT A FORUM AND ARTICLE 14

Author

Prajval Bargotra, Rishika Jain, Sharad Khemka

Abstract

 With effect from 1 April 2025, the authority charged with anti-profiteering under the Central Goods and Services Tax Act 2017 stopped accepting fresh requests for examination. Section 171(1), which obliges suppliers to pass on any reduction in tax rate or benefit of input tax credit through a commensurate reduction in price, was left untouched. Five months later the GST Council carried out the largest downward rate revision in the history of the levy. This paper examines the resulting position, in which an unamended statutory duty continues to be enforced with interest and penalty against suppliers complained of before the cut-off, while identical conduct complained of afterwards has no forum at all. It argues that the arrangement is first a failure of legality in Lon Fuller’s sense, a breach of congruence between declared rule and official action, and that this failure supplies the content of a challenge under Article 14 of the Constitution of India on grounds of unreasonable classification and manifest arbitrariness. The paper then confronts the remedy problem: a court cannot compel the constitution of an authority, and levelling down would reward profiteers and penalise purchasers who have already won refunds. It concludes that the most productive response lies in recognising that the duty survives the loss of its forum, which opens restitutionary and consumer-law routes, and that the legislature must choose between a time-bound revival of the authority and outright repeal.

Keywords

anti-profiteering; section 171; GST; sunset clause; Article 14; cut-off dates; manifest arbitrariness; congruence; consumer protection; unjust enrichment

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References

The anti-profiteering sunset is commonly described as the end of anti-profiteering in India. This paper has argued that the description is mistaken. The duty in section 171(1) survives, unamended, and continues to be enforced with interest and penalty against suppliers complained of before 1 April 2025. Identical conduct complained of afterwards, including conduct following the largest rate revision in the history of the levy, has no statutory forum.

Read through Fuller, the arrangement is a failure of congruence: the State declares one rule and administers two. Read through Article 14, the same incongruence produces a classification that separates identically placed suppliers by reference to a stranger’s filing date, a differentia that bears no rational relation to the object of section 171 and is harder to defend than the line struck down in Nakara. The fiscal latitude of R K Garg is unavailable for a provision that raises no revenue and which the State’s own tribunal has called consumer welfare legislation. The argument that no one has a vested right in a forum fails where the forum is the only means of recovering a benefit the statute treats as belonging to the consumer.

The equality argument runs into a remedial wall. Courts cannot compel the constitution of an Authority, levelling down would reward the profiteers, and the negative equality bar limits the relief available to the respondents most likely to raise the point. That dead end is instructive. It shows that the problem cannot be solved by constitutional litigation alone and that the more durable answer lies elsewhere.

Two courses are open in the meantime. The first is legislative. The Council may recommend the constitution of an Authority for a limited period tied to the 2025 rate revision, as was reportedly under consideration before the rate cuts were announced, or Parliament may repeal section 171(1) and accept the consequences of doing so. A time-bound revival is the better course, because it addresses the transition in which non-passage was most likely and then allows the duty to lapse by an honest legislative act. The second course is available now. Purchasers and the CCPA may treat section 171(1) as a subsisting statutory standard, to be vindicated through restitution and the law of unfair trade practices, until the legislature chooses. The present arrangement takes neither course. Its cost falls on the consumers who cannot complain, and also on the respondents now paying interest at eighteen per cent for conduct that a competitor, more fortunately timed, remains free to repeat.

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