Delhi HC stays GST appellate tribunal order for Tata Play to deposit Rs 450 crore

The Delhi High Court has stayed a Goods and Services Tax Appellate Tribunal order asking Tata Play, which is engaged in providing direct-to-home television broadcasting services, to deposit Rs 450 crore with the central and state consumer welfare funds on account of profiteering for maintaining identical subscription prices in the pre and post-GST periods and for failing to pass on the benefit of reduced tax incidence to the consumers.

A consumer complaint by Sweety Agarwal had alleged that Tata Play had charged identical subscription prices in the pre-GST and post-GST periods and failed to pass on the benefit of reduced tax incidence and additional input tax credit to the customers.

After investigations, the Director General of Anti-Profiteering (DGAP) had concluded that taxes in the pre-GST period like service tax, value added tax, entertainment tax etc were subsumed in the post-GST period and as a result additional input tax credit became available and effective tax incidence also reduced. But prices were not reduced commensurately and therefore, the company was liable to deposit Rs 450 crore on account of profiteering, it stated.

Challenging the GST authorities order, senior counsel Arvind P Datar and counsel Anuradha Dutt, appearing for Tata Play, told the court that the entertainment tax liability had never been passed on to consumers in the pre-GST regime, and therefore, there was no question of its recovery from subscribers. In such an eventuality, the company cannot be made to suffer the appellate tribunal’s order, particularly when the other similarly placed players are treated indifferently, they contended.

The counsel referred to the HC’s September last year’s remand order wherein the GST rate on DTH services had increased to 18% from 15% service tax and the GSTAT was directed to re-examine whether any profiteering had actually occurred and whether the DGAP’s quantification of Rs 450 crore was based merely on conjecture or surmise.

Datar also questioned whether GSTAT was justified in travelling beyond the scope of the remand directions issued by the court in its September 23 order. He also apprised the judges of another November 2022 order where an interim stay was granted during the pendency of the earlier round of litigation.

Taking note of the submissions, a bench comprising justices Nitin Wasudo Sambre and Ajay Digpaul while issuing notice to the government said that “we are of the view that on the same terms, impugned order can be maintained in the matter. As such, we direct that no coercive steps shall be taken against the petitioner (Tata Play) until further orders.” It also posted the matter for further hearing on July 28. Ikesh Nagpal, Lead-Indirect Tax, AKM Global, a tax and consulting firm said that “the Delhi High Court orders, read together, reflect a deeper insistence on discipline in anti-profiteering adjudication. In it’s earlier order, the court focused on whether the findings of the National Anti-Profiteering Authority and the DGAP report were based on evidence or mere conjecture, especially given that GST rates had increased in the assessee’s case. It accordingly gave a limited, remand to the Goods and Services Tax Appellate Tribunal.”

He further added that the interim stay “suggests the Court is wary of any deviation from that mandate reinforcing that a remand is a structured re-examination, not an expanded second round to sustain earlier conclusions. The final outcome is going to be significant.”