Director General of Anti-Profiteering v. Hotel Babylon Inn Pvt. Ltd.

01 · Facts of the case and issues

Hotel Babylon Inn Pvt. Ltd. provided accommodation in Raipur. Following a complaint of 5 February 2020 and the Standing Committee’s reference, DGAP investigated whether the hotel passed on the GST reduction effective 1 October 2019. Its report of 31 March 2021 computed Rs. 31,28,631 for 1 October 2019–30 June 2020. The final identifies the material reductions as combined GST 18% to 12% for the intermediate room-tariff band and 28% to 18% for the higher band; it does not say every tariff category received a reduction. These historical bands are not represented as current hotel rates.

The respondent said room prices fluctuate with supply, demand, season and occupancy; GST was separately charged, and its declared tariff had not changed between September and October 2019. DGAP instead compared actual transaction prices. It separated room types, occupancy and European, Continental, Modified American and American meal plans, using pre-rate-reduction average base prices for 1 July–30 September 2019 against actual post-reduction transactions of the comparable category.

DGAP excluded four specifically incomparable bills: marriage-group bill 3344 dated 12 July 2019, bills 2 and 4 dated 20 April 2020, and bill 164 dated 29 June 2020. The selected computation covered 1,890 invoices exceeding the commensurate price, not necessarily every invoice or every stay. DGAP rejected cross-customer or cross-category netting in its clarification; that remains identified as its rationale rather than a separate new industry-wide holding.

The source’s worked example concerns invoice 9068 dated 19 December 2019 for one night in a Deluxe single-occupancy American Plan room. The pre-period taxable total was Rs. 97,024 over 23 nights, with a displayed rounded base price of Rs. 4,218. The post-period base charge was Rs. 4,500, producing displayed excess Rs. 282 and Rs. 316 including 12% GST. This illustration does not reproduce the complete 1,890-invoice calculation or underlying booking records.

Source: Identity and chronology: physical pp. 1–6, paragraphs 1–3. Plans and categories: paragraph 4, pp. 6–9. Excluded bills and example: paragraphs 5–7, pp. 10–12. DGAP clarification, including transaction value and no netting: paragraph 10, pp. 14–19.

02 · Discussion and reasoning of the Hon’ble Court

The Tribunal’s own analysis is developed in paragraphs 15–18. It considers the proposed seasonal and market explanations, drawing an inference about pandemic conditions from February 2020. That inference belongs to the judgment’s reasoning; the note does not certify that every hotel’s costs or prices necessarily fell, or supply a corrected national shutdown chronology. The decisive evidential finding is that the hotel produced no cogent management decisions, materials or documents linking its price increases to the claimed commercial factors despite opportunities to do so.

Paragraph 16 addresses the criticism that a three-month average cannot be compared with actual later transactions. On the arguments and DGAP calculations presented, GSTAT treats the average as a comparison method for testing pass-through and rejects the hotel’s objection. It applies Reckitt Benckiser’s rebuttable-presumption approach: genuine market reasons must be substantiated rather than merely invoked. This is not an absolute freeze on room prices, a universal approval of every three-month benchmark or an assertion that the full transaction dataset has been independently audited by this note.

Paragraph 17 separately examines the claimed extra equipment, sanitising products and staff costs during COVID. The consultant said the permitted post-hearing submissions included that explanation. GSTAT reads the additional written submissions and finds the plea absent and unsupported, treating the oral explanation as an afterthought. This is an attributed judicial assessment of that record, not an independent allegation of fabricated invoices or a finding that no real cleanliness expenditure could ever exist.

The source’s language about unchanged prices and unreduced base price requires care. The hotel maintained that separate lower GST on an unchanged base had already reduced invoices, while DGAP’s adopted example actually compares a higher transaction base of Rs. 4,500 with the earlier Rs. 4,218 average. This note does not convert the source’s admission language into a general requirement that an unchanged tax-exclusive base must itself be reduced a second time. Paragraph 6 also contains awkward wording about reducing and maintaining the same price; the defined comparison and actual findings govern this summary.

The limited arithmetic of Table C can be checked: Rs. 97,024 divided by 23 is approximately Rs. 4,218.435; the displayed rounded Rs. 4,218 gives excess Rs. 282, and multiplying by 1.12 gives Rs. 315.84, rounded to Rs. 316. The complete report and invoice-level rounding rules are absent, so neither this example nor the total is recast as a fully audited computation. Table C’s pre-GST/post-GST labels refer to the 2019 rate change, not periods before and after GST’s introduction.

Other source dates remain qualified. Paragraph 15 prints 13 June 2020 as the investigation endpoint, while the question, report and tables repeatedly use 30 June 2020. Paragraph 9(iv) prints September 2029 in the three-month pre-period. Paragraph 2 uses a 13 September notification date against 30 September elsewhere. These are not silently used to shorten the award period or invent a corrected procedural history.

Source: Own reasoning and evidential findings: paragraphs 14–18, physical pp. 20–23. Tax-exclusive-price submissions: paragraph 9(i), p. 13, and worked Table C, p. 11. Date/wording defects: paragraphs 2, 6, 9(iv) and 15, pp. 4–5, 10, 14 and 20.

03 · Judicial decision and operative relief

GSTAT finds that Hotel Babylon Inn profiteered Rs. 31,28,631 in violation of Section 171. Paragraph 18 directs payment with interest at 18% per annum from the date of collection of the higher amount, expressed as 1 October 2019, until realisation. The note preserves both the collection wording and that printed date rather than calculating interest as though all 1,890 invoices were necessarily collected on one day. No rupee interest total is supplied.

The amount is to be deposited equally in Consumer Welfare Funds created by the Centre and States. The operative text does not name a particular State Fund, prescribe a State-Fund-unavailability fallback or allocate a separate rupee amount to each Fund. The adopted computation includes the stated GST component; no further GST layer is added. There is no identified-recipient refund award.

The final does not quantify a penalty or expressly exclude one, and the note supplies neither result. No numerical deposit deadline is stated. Paragraph 19 separately requires the concerned Commissioner to submit a compliance report to the Tribunal within four months from receipt of the order; that reporting period is not converted into a taxpayer payment deadline. Copies are directed to the respondent and concerned CGST/SGST Commissioners.

The judgment is pronounced in open court. Administrative and typed order dates are 2 September 2025; the final page’s visible digital-signature annotation is dated 4 September 2025. The official listing also uses 4 September. This note uses the PDF’s decision date and preserves the other dates without certifying cryptographic signature validity. Actual Fund deposit, allocation and reporting are unverified.

Source: Liability, interest and Fund direction: paragraph 18, physical p. 23, read with administrative summary p. 2. Four-month receipt-based report, circulation, pronouncement and signature: paragraphs 19–21, p. 24. Typed decision date: p. 3.

04 · In favour of

Final substantive liability judgment supported by its own assessment of the contested pricing explanations, comparison method and record. It is not a mere disposal or compliance order. Final describes the adjudicative stage, not exhaustion of appeals, present enforceability or completed compliance. An authenticated later High Court writ challenge is described in the treatment note; the retrieved notice and listing orders do not decide its merits or maintainability.

Source: Paragraphs 15–21, physical pp. 20–24.