GST Tribunal Holds Urban Essence Accountable in Landmark Profiteering Case

Urban Essence, an Indian franchisee of Subway Ltd, was found guilty by the GST Appellate Tribunal (GSTAT) of profiteering by not passing GST rate cut benefits of Rs 5.47 lakh to consumers. The tribunal has ordered the company to deposit the amount with interest into a consumer welfare fund.

The newly established GST Appellate Tribunal (GSTAT) has issued its inaugural ruling in a profiteering case, finding Urban Essence, a franchisee of Subway Ltd, guilty of failing to transfer GST rate cut benefits amounting to Rs 5.47 lakh to consumers.

According to GSTAT's order dated August 5, the tribunal supported the Directorate General of Anti-profiteering (DGAP) report stating that Urban Essence profiteered by not appropriately reducing food product prices. The tribunal, led by President Justice (Retd) Sanjaya Kumar Mishra, instructed the Pune-based entity to pay Rs 5,45,005 with 18% interest from November 15, 2017, to the consumer welfare fund in Maharashtra within three months.

This landmark decision marks a structured approach to anti-profiteering enforcement under Section 171, affirming that GST rate cut benefits must reach consumers or face significant consequences.

(With inputs from agencies.)