GST: Tata Play Found Guilty Of Profiteering

Tata Play Ltd., formerly known as Tata Sky Ltd., failed to pass on the benefit of input tax credit under the goods and services tax to its customers, the National Anti-Profiteering Authority said in a recent order.

The direct-to-home service provider has been directed to deposit Rs 450 crore, along with an 18% interest, for failing to pass on the ITC benefits to its customers between July 2017 and January 2019.

The NAA relied on the report of the director-general of Anti-profiteering, which had initiated the investigation basis a complaint by a subscriber of Tata Play. The complainant had alleged that Tata Play has been profiteering by not passing on the benefits it gained on levy of the GST, paid by subscribers, on DTH services.

Tata Play argued against the complaint on grounds of lack of evidence on profiteering, absence of locus standi of the complainant, and frivolity of the application. It also said the basis of computation adopted by DGAP is ad hoc. Tata Play also contended that Section 171 of the Central GST Act is open-ended and arbitrary, in restraint of freedom to trade and conduct business, and thus in violation of Articles 14 & 19(1)(g) of the Constitution.

Section 171 provides for anti-profiteering measures, and says that reduction in tax rates or benefits of input tax credit must be passed on to the consumers.

The very purpose of introducing the credit mechanism is to avoid the cascading effect of taxes and reduce burden on the consumers, the DGAP report said.

The authority agreed with the DGAP that Tata Play had gained a benefit of additional 4.19% that should have been passed on to its subscribers. It dismissed the company's arguments saying there is no restraint on conducting trade or fixing prices and subscription charges.

Tata Play has been directed to deposit the penalty amount in the Consumer Welfare Fund, to be equally distributed between the Central CWF and State CWFs.