In its first order in profiteering case, the Goods and Services Tax Appellate Authority (GSTAT), has upheld a report by the Directorate General of Anti-profiteering (DGAP) that deemed a Subway franchisee guilty of not passing on GST rate cut benefit to its customers.
The Pune-based entity, Urban Essence, a franchisee of Subway Limited, was asked by the appellate authority to deposit a sum of ₹5,45,005 along with an 18 per cent interest that was payable since November, 2017, in the consumer welfare fund in Maharashtra within three months.
The order in this regard, dated August 5, 2025, was passed by the GSTAT President, Justice (Retd) Sanjaya Kumar Mishra.
The case pertained to a customer complaint against Urban Essence for not passing the benefit of reduction of GST rate on restaurant services from 18 per cent to 5 per cent with effect from November 15, 2017.
The DGAP, which investigated the case, had covered the period from November 15, 2017 to October 31, 2019, to check whether the GST rate cut benefits were passed to consumers.
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The GSTAT, meanwhile, also looked into the issue of whether the entity was eligible to claim input tax credit (ITC) on some invoices.
The Competition Commission of India (CCI) was given the responsibility to decide on anti-profiteering cases under GST from December 1, 2022. Such cases were earlier decided by the National Anti-Profiteering Authority (NAA).
Since October 1, 2024, the Principal Bench of GSTAT has been empowered to examine anti-profiteering cases.
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.
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