Jittery over anti-profiteering clause, firms may move court

Companies, mainly in FMCG and IT segments, complain of ambiguity in rules

Anxious over the government's antiprofiteering drive under the goods and services tax regime, companies in the segments of fast-moving consumer goods (FMCG) and information technology (IT) software are planning to petition the high courts in Delhi and Mumbai, seeking more clarity on the clause.

While the government has not yet prescribed rules or guidelines to compute profiteering, it has sent notices to some companies, including Hardcastle Restaurants, Lifestyle, and Pyramid Infratech.

“There is a lot of ambiguity in the anti-profiteering clause," said a representative of an FMCG company, who did not wish to be identified. He said product prices were not based on taxes alone but on supply and demand conditions, supplier cost, and other factors.

The companies planning to move the HCs have not received an antiprofiteering notice but are filing petitions in anticipation.

Another company in the FMCG sector said a change in profits between the pre- and post- GST regime would also be based on factors like lower logistics cost and seamless movements of goods across the country.

An IT company representative said its clients were questioning it for not passing on GST benefits. “The issue is, how to compute these benefits?” he asked.

It will take 10-15 days to file the writ petition. “If the government comes out with rules before that, we will not file it,” he added.

According to the anti-profiteering rules, “The benefits of input tax credit should have been passed on to the recipient by way of commensurate reduction in prices”.