Subway Franchisee GST Profiteering Case: GSTAT Order

New Delhi, Aug 13 (PTI) In its first order in profiteering case, the newly constituted GST Appellate Tribunal (GSTAT) has held Urban Essence, a franchisee of Subway Ltd, guilty of not passing GST rate cut benefit of Rs 5.47 lakh.

The Goods and Services Tax Appellate Authority (GSTAT) order dated August 5 upheld the Directorate General of Anti-profiteering (DGAP) report that Urban Essence has profiteered to the extent of Rs 5.47 lakh by not passing on a commensurate reduction of the prices of food products to customers.

The order in this regard was passed by GSTAT President Justice (Retd) Sanjaya Kumar Mishra.

The appellate tribunal directed the Pune-based entity to deposit a sum of Rs 5,45,005 along with an 18 per cent interest from November 15, 2017 and deposit tha same in the consumer welfare fund in Maharashtra within 3 months.

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

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.

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

From 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.