Facts of the Case: The proceedings arose under Section 171 of the CGST Act, 2017 dealing with anti-profiteering measures. The Respondent was alleged to have profiteered an amount of ₹6,88,770/- during the period 27.07.2018 to 31.10.2018, by not passing on the benefit of tax rate reduction to consumers. The DGAP’s Report concluded that the profiteering amount was correctly computed. However, a dispute arose on whether the Respondent was also liable to pay interest at 18% on the profiteered sum.
This question arose because Rule 133 of the CGST Rules was amended vide the Central Goods and Services Tax (Fourth Amendment) Rules, 2019, notified on 28.06.2019, inserting a clause that directed deposit of profiteered amount “along with interest at the rate of 18% from the date of collection till the date of deposit”.
The Respondent argued that since the profiteering period was prior to 28.06.2019, interest liability could not be fastened.
Issue: Whether the insertion of the clause mandating deposit of profiteered amount along with 18% interest under Rule 133 is Clarificatory in nature and hence retrospective, or enabling in nature and hence prospective, applicable only to cases of profiteering after 28.06.2019.
Held that: The Authority relied on the Constitution Bench judgment of the Supreme Court in CIT v. Vatika Township Pvt. Ltd., which laid down the principle that fiscal statutes creating new liabilities (tax, penalty, surcharge, or interest) are presumed to be prospective, unless a contrary legislative intent is clear.
The CGST Rules, by their own scheme (Rule 1(2)), provide that they come into force on their publication date unless a different effective date is expressly notified.
Accordingly, the provision for interest under Rule 133 applies only from 28.06.2019 onwards.
Since the profiteering in this case took place in 2018 (prior to amendment), the Respondent was directed to deposit only the profiteered sum of ₹6,88,770/- in the Consumer Welfare Funds of Centre and States equally, without interest.
Case Name: DGAP Versus Proctor & Gamble Group. Dated 10.09.2025
To read the complete judgment 2025 Taxo.online 2318
