Hardcastle Restaurants (P.) Ltd. v. Union of India – [2019] 110 taxmann.com 410 (Bombay)

The assessee served various types of food and beverage items from its restaurants. Services rendered by the assessee were taxed at rate of 18% GST till November 14, 2017. After issue of notification on November 14, 2017, GST rate was reduced to 5% on the services rendered by the assessee w.e.f. November 15, 2017. The complaints were received against the assessee that it had increased base prices after GST rate reduction resulting in profiteering.

As per the National Anti-Profiteering Authority (NAPA), the assessee derived profit of Rs.7.49 crores for all products through price increase. NAPA passed the order where one technical member who had joined after hearing, also signed the order along with three others who had heard the parties. The assessee filed a writ petition before the High Court of Bombay against NAPA’s order contending it to be breach of principles of natural justice on the grounds that case was heard by only three members and the order was passed by four members.

The Honorable Court observed that NAPA is guided by the principles of natural justice where a hearing is not contemplated merely by looking at records but through the scheme of Rules and the Procedures. Therefore, the presence of a member of the Authority during the hearing is not a formality. Multi-member panels are constituted so that a decision through discussion and exchange of opinion takes place. The assessee was entitled to be heard by all members who were the ultimate decision-makers so that it could try to convince each member of the Authority. The provisions of Anti-Profiteering provide for hearing by all members and if the same was not given by all members, it would result in prejudice.

The Honorable Court set aside the order passed by NAPA and held that order resulted in the violation of the principles of natural justice when the fourth member joined only for signing the order and did not participate in the hearing

Interesting ruling

In favour of dealer