GSTAT’s first profiteering order: Subway outlet ordered to pay ₹5.45 lakh, interest in consumer fund

The newly constituted GST Appellate Tribunal (GSTAT) has held Pune-based Urban Essence, a franchisee of Subway Ltd, guilty of not passing on GST rate cut benefits worth ₹5.47 lakh to consumers.

Upholding the findings of the Directorate General of Anti-Profiteering (DGAP), the GSTAT, in its first order on an anti-profiteering case, said the company failed to reduce prices of food products in line with the GST rate cut on restaurant services from 18% to 5% with effect from November 15, 2017.

The order dated August 5, passed by GSTAT President Justice (Retd) Sanjaya Kumar Mishra, directed Urban Essence to deposit ₹5,45,005 along with 18% interest from November 15, 2017, into the Consumer Welfare Fund in Maharashtra within three months.

The DGAP investigation covered the period from November 15, 2017, to October 31, 2019, following a customer complaint.

The GSTAT also looked into the issue of whether the entity was eligible to claim input tax credit (ITC) on some invoices.

Anti-profiteering cases under GST were earlier decided by the National Anti-Profiteering Authority (NAA). On December 1, 2022, the Competition Commission of India (CCI) was given the responsibility to decide on anti-profiteering cases under GST.

From October 1, 2024, the Principal Bench of GSTAT has been empowered to adjudicate such matters.

AMRG & Associates Senior Partner Rajat Mohan said the DGAP vs Urban Essence decision marks the first final order from the GSTAT's anti-profiteering division, signalling that the division is now fully operational, with the President himself conducting hearings and delivering orders.

"This sets the tone for a more structured and authoritative approach to anti-profiteering enforcement under Section 171. The Tribunal’s stance—upholding DGAP’s findings across all products and rejecting cost-based justifications—reinforces that GST rate cut benefits must be directly passed on to consumers, backed by strong documentation, or face decisive action," Mohan added.