Director General of Anti-Profiteering v. A J Enterprises

01 · Facts of the case and issues

A J Enterprises operated a Subway franchise restaurant at Amanora Mall, Pune. A complaint alleged failure to pass the GST reduction from 18% to 5% without input tax credit, effective 15 November 2017. DGAP’s first report dated 20 August 2020 proposed Rs. 15,66,821. The former NAA’s 13 April 2022 interim remand required reconsideration of product prices and the investigation period. DGAP’s revised report dated 14 October 2022 proposed Rs. 13,32,322 for 15 November 2017–30 September 2019. These are investigation and remand history, distinct from the selected 2026 final.

The respondent disputed limitation, methodology and the length of the investigation. It relied on lost ITC, royalties, advertising, lease rent and online-platform commissions, and said the outlet had since closed. Its claimed 12.69% cost increase and 4.38% maximum-profiteering theory were submissions, not approved ceilings or findings of actual cost escalation. DGAP defended its 8.21% ITC-loss allowance and product/channel-specific pre-period averages compared with post-period transaction values.

The source reproduces the respondent’s menu table: Aloo Patty base price rose from Rs. 135 to Rs. 152.40 and Hara Bhara Kabab from Rs. 120 to Rs. 133.30 on 15 November 2017. The final judgment resolves whether evidence justified those increases on the very date of the tax reduction. No complete product-level revised computation, invoice dataset, franchise agreement or cost ledger is appended.

Source: Complaint and report history: paragraphs 1–14, physical pp. 2–5. Respondent’s commercial terms, menu table and objections: paragraphs 18–28, pp. 5–9. DGAP’s response: paragraphs 29–32, pp. 9–10.

02 · Discussion and reasoning of the Hon’ble Court

The Tribunal begins its own consideration at paragraphs 33–35. It rejects the limitation objection in paragraphs 35–41, treating the six-month Rule 133 adjudication timetable as directory. It relies on P. T. Rajan, the expressly prima facie Nestle observation and Reckitt paragraph 158. The latter paragraph speaks of DGAP report timing; extending that rationale to this adjudication timetable is GSTAT’s holding. The note does not turn a preliminary High Court observation into a final binding determination of every limitation question, or declare that every anti-profiteering proceeding may remain open indefinitely.

On the merits, paragraphs 43–49 compare the actual menu prices with the rate-cut date and find no cogent evidence substantiating either the alleged operating-cost increases or their timing. The Tribunal applies the rebuttable presumption through Urban Essence and Reckitt: genuine commercial factors can justify an offset if proved, but unsupported assertions do not discharge that burden. Its inference of deliberate price maintenance is an attributed judicial finding, not an independent allegation by AKHB. The result does not mean royalties, rent or aggregator commissions can never be relevant in another evidential record.

Paragraph 50 rejects reopening the investigation-period dispute because the earlier limited remand had already directed the 15 November 2017–30 September 2019 period. Paragraph 51 finds contravention. Although the report and quantum objections were contested, the published judgment does not reproduce complete workings or separately calculate a numerical answer to the respondent’s 4.38% theory. Acceptance of the Rs. 13,32,322 report is not independent verification by this note of every transaction.

For interest, paragraphs 52–55 follow the prospective Fund-interest approach in Proctor & Gamble, relying on the 28 June 2019 amendment. Paragraph 55 says interest runs from that date until deposit. Operative paragraph 58 and the administrative summary instead end it on 30 September 2019. Both formulations must be retained; this note does not select the shorter period or compute a replacement sum. Paragraph 56 excludes Section 171(3A) penalty because the investigated conduct predates 1 January 2020.

Other source defects remain: paragraph 2 ends the period on 30 September 2017, before its stated November start; paragraph 50 first refers to September 2020 before restating September 2019; paragraph 56 begins the period on 1 July 2017 rather than 15 November. The cost table is actually in paragraph 25 and the menu table in paragraph 19, despite later cross-references to paragraphs 20 and 18. Displayed tax/base rounding and the advertising-cost row have minor tensions, so neither the illustrative menu nor the respondent’s percentage table is certified as complete arithmetic. The Rule 133(3)(c) quotation is incomplete and does not cure the judgment’s interest conflict.

Source: Limitation: paragraphs 35–41, physical pp. 12–15. Own price/evidence findings: paragraphs 42–51, pp. 15–20. Interest and penalty: paragraphs 52–56, pp. 20–22. Period/cross-reference and table issues: paragraphs 2, 19, 25, 44, 46, 50 and 56, pp. 2, 6, 8, 16–17, 20 and 22.

03 · Judicial decision and operative relief

GSTAT accepted DGAP’s report dated 14 October 2022. Read with paragraphs 2, 12 and 32, the adopted principal is Rs. 13,32,322; the operative paragraph does not repeat the rupee figure. Fifty per cent of the profiteered amount with interest must be deposited in the Central Consumer Welfare Fund and the remaining fifty per cent with interest in the Maharashtra Fund. The note does not add another GST layer, award individual refunds or net off the earlier proposal.

The operative interest rate is 18%, from 28 June 2019 to 30 September 2019. Paragraph 55 instead extends it until deposit; that unresolved difference is material to execution. No rupee interest sum is fixed here. Section 171(3A) penalty is expressly excluded for the pre-2020 period, so the reproduced thirty-day penalty proviso does not create a new payment deadline.

There is no express numerical deposit or compliance-report deadline and no alternative Central-Fund contingency. Copies are to go to the jurisdictional CGST/SGST Commissioner for information and necessary action. The judgment was pronounced in open court; typed and visible digital-signature dates are 20 February 2026. Later deposit or judicial clarification remains unverified.

Source: Adopted amount: paragraphs 2, 12 and 32, physical pp. 2, 4 and 10. Conflicting interest, penalty exclusion and Fund split: paragraphs 55–58, p. 22 and administrative p. 2. Circulation, pronouncement, date and signature: paragraphs 59–60, p. 23.

04 · In favour of

Final substantive mixed-result judgment with developed findings on timing, evidence and liability, followed by qualified interest and penalty relief. Outlet closure and the administrative Confirmed label do not replace that analysis. Finality here does not certify no appeal or stay.

Source: Paragraphs 35–58, physical pp. 12–22.