Facts of the case:

The DGAP conducted an investigation and initially submitted its first report dated 17.09.2021, alleging that the Respondent had profiteered ₹28,74,577, inclusive of GST on the base profiteered amount, for the period 15.11.2017 to 30.06.2019. The erstwhile NAA, vide order dated 05.08.2022 remanded the matter back to the DGAP under Rule 133(4) directing further investigation within 3 months. The NAA also directed that the Respondent must furnish full information; failing which, the DGAP could invoke provisions under the CGST Act and Rules. The DGAP thereafter submitted a second report, reiterating the same profiteering amount, stating that the Respondent had not provided any additional documents. 

During the hearing, the Respondent submitted written arguments admitting the profiteered amount of ₹4,57,683 but objecting to the levy of interest and penalty. The Respondent relied on the Tribunal’s ruling in DGAP v. Proctor & Gamble Group, wherein it was held that the amendment to Rule 133(3)(c) inserting interest @ 18% was prospective and not retrospective. Based on the submissions, the Tribunal considered the legislative history of Notification No. 31/2019 — CT dated 28.06.2019, which amended Rule 133(3)(c) to include interest @ 18%. It further noted that the amendment was notified to come into force from 01.04.2020. 

Issue:

Whether the Respondent is liable to pay interest @ 18% on the profiteered amount under Rule 133(3)(c) of the CGST Rules, 2017, and whether any penalty can be imposed for an investigation period prior to the enforcement of the amended rule?

Held that:

The Tribunal held that the amendment to Rule 133(3)(c) inserting the liability to pay interest at 18% on the profiteered amount is prospective in nature, coming into force only from 01.04.2020, and therefore cannot apply to the investigation period between 15.11.2017 and 30.06.2019. Applying the principles laid down by the Supreme Court in Vatika Township, the Tribunal observed that the amendment imposes a new, onerous financial liability, and in the absence of clear legislative intent providing retrospective operation, such a provision must apply prospectively. Since the Respondent’s alleged profiteering occurred prior to the amendment coming into effect, no interest can be levied under the amended rule. 

The Tribunal further held that the penalty provision inserted only in 2020, also cannot apply retrospectively, and therefore the Respondent cannot be subjected to penalty for the investigation period. Accordingly, the Tribunal accepted the DGAP’s report only to the extent of confirming the profiteered amount of ₹4,57,683, directed the Respondent to deposit this amount equally into the Central and State Consumer Welfare Funds, and required the jurisdictional Commissioner to furnish a compliance report within four months. The case was thus disposed of.

Case Name: DGAP Versus Dange Enterprises. dated 02.12.2025

To read the complete judgement 2025 Taxo.online 3181