Anti-Profiteering Proceedings Dropped Against Untraceable Serum Supplier due to Lack of Evidence

Issue

Whether anti-profiteering proceedings under Section 171 of the CGST Act can be sustained against a supplier when the entity is untraceable, relevant business records are unavailable, and the investigation authority (DGAP) is unable to gather the necessary evidence to compute the profiteered amount.

Facts

Origin: The investigation originated from an earlier order in the case of a buyer, M/s S.R. Lifesciences. The National Anti-profiteering Authority (NAA) had directed the DGAP to investigate the supplier chain to ensure the benefit of GST rate reduction was passed on.
The Product: The investigation focused on the supply of “ECLAT SERUM 30gm,” for which the GST rate was reduced from 28% to 18% w.e.f. 15.11.2017.
Investigation Hurdles:
- The DGAP issued a notice to the respondent (M/s Shree Suktam Enterprise) covering the period 15.11.2017 to 31.07.2023.
- The notice was returned undelivered with the remark ‘LEFT’.
- The DGAP sought assistance from State Tax, CGST, and DGGI authorities. A spot verification revealed that a different firm was operating at the declared address, and the current occupants had no knowledge of the respondent.
Data Gap: While some GSTR-3B data was obtained, it was insufficient to determine product-wise supplies or verify if the benefit of the rate cut was passed on. No invoices or detailed sales data could be retrieved.

Decision

The GST Appellate Tribunal (GSTAT) accepted the DGAP’s report and dropped the anti-profiteering proceedings against the respondent.
Lack of Evidence: The Tribunal held that since the DGAP had made “all possible efforts” but failed to retrieve the requisite records or locate the supplier, it was impossible to scientifically compute the profiteered amount or even ascertain if the specific product was supplied during the relevant period.
Proceedings Unsustainable: Without the necessary documentary evidence (invoices, price lists), the allegation of profiteering could not be substantiated or sustained in law.
Direction for Bogus Billing: Crucially, the Tribunal observed that the circumstances (untraceable firm, missing records) raised suspicions of bogus billing. It directed the jurisdictional tax department to verify if the respondent was involved in issuing fake invoices to M/s S.R. Lifesciences or others and to take appropriate action under the anti-evasion provisions of the GST law.

Key Takeaways

Evidence is the Lifeblood of Profiteering Cases: Anti-profiteering adjudication relies heavily on granular data (SKU-level prices, invoices). If this data cannot be retrieved because the supplier has vanished, the proceedings essentially hit a dead end and cannot be pursued on estimates alone.
Shift from Profiteering to Evasion: When a supplier goes “missing” during an investigation, the focus of the tax authorities shifts from anti-profiteering (Section 171) to anti-evasion (checking for fake invoices/ITC fraud). The Tribunal’s direction ensures the entity does not escape liability entirely if fraud is involved.
Limits of DGAP’s Power: The case highlights the practical limitations of the DGAP. While they can investigate, they cannot create data where none exists. Once all avenues (including physical verification and inter-departmental assistance) are exhausted, the case must logically be closed.

GOODS AND SERVICE TAX APPELLATE AUTHORITY, NEW DELHI

DGAP

Shree Suktam Enterprise^*

A. Venu Prasad, Technical Member

NAPA/157/PB/2025

NOVEMBER 12, 2025

Rahul Rao Gautam, Additional Assistant Director and Ms. Geetanjali, Inspector for the Appellant.

ORDER

1. The proceedings in the present case were initiated vide Interim Order No. 07/2022 dated 10.05.2022 passed in the case of M/s S.R. Lifesciences. Vide said order, the Authority directed the DGAP to investigate the entire chain of the supplier of M/s S. R. Lifesciences, under Rule 133(5) of the CGST Rules, 2017. On the basis of the order dated 07/2022 dated 10.05.2022, the DGAP had investigated the matter and submitted an Investigation Report dated 31.08.2022 under Rule 133(5) of the CGST Rules, 2017 to the National Anti-Profiteering Authority (hereinafter referred as ‘NAA’).

2. Erstwhile NAA (then CCI) went through the aforesaid Investigation Report dated 31.08.2022 submitted by the DGAP and passed an Interim Order No. 03/2023 dated 31.07.2023. Erstwhile NAA (then CCI) after carefully perusing the above report vide Order No. 03/2023 dated 31.07.2023 directed the DGAP to further investigate the two suppliers of M/s S. R. Lifesciences namely M/s Shree Suktam Enterprise, Ahmedabad and M/s Baxium Health Science, Ahmedabad and submit his Report in terms of the Section 171 of the Act read with Rule 133(5) of the CGST Rules, 2017.

3. Accordingly, it was decided by the DGAP to expand the scope of investigation and collect evidence necessary to determine whether the benefit of input tax credit has been passed on in terms of Section 171 of the Central Goods and Services Tax Act, 2017 to the recipients in respect of supply of “ECLAT SERUM 30gm” by the Respondent.

4. The DGAP issued a Notice under Rule 129 of the Central Goods and Services Tax Rules, 2017 on 09.08.2023 calling upon the Respondent to submit his reply as to whether he admitted that the benefit of reduction in the GST rate w.e.f. 15.11.2017, had not been passed on to his recipients by way of commensurate reduction in price and if so, to suo moto determine the quantum thereof and indicate the same in their reply to the Notice as well as furnish all the supporting documents. As per the Notice for Initiation of Investigation dated 09.08.2023 issued to the Respondent by the DGAP, the period covered by the current investigation is from 15.11.2017 to 31.07.2023.

5. The Notice dated 09.08.2023 issued to the Respondent by the DGAP was returned with the remark “LEFT”.

6. Since no documents/reply were received, letter dated 30.08.2023 was written to the Special Commissioner, Department of Gujarat State Tax, Ahmedabad and a letter dated 30.08.2023 was written to the Commissioner of Central Goods & Services Tax, Ahmedabad requesting them to depute an officer to serve the Notice to the Respondent and acknowledge fact of serving the Notice with the DGAP by sending a receipt of the same.

7. The Additional Commissioner of State Tax (Enforcement) Ahmedabad, Gujarat State replied vide letter dated 15.09.2023 informing that the “Inspector of this office has conducted spot visit of the place of business of M/s. Suktam Enterprise, 27 New Vrundavan Comples, Gurukul Road, Memnagar, Ahmedabad-380052 on 06.09.2023. During spot visit it has come to notice that firm name M/s C.K. Enterprises is doing business of an angadia at the above mentioned place. Hence, statement of owner of M/s C.K. Enterprises has been recorded. According to the statement, he has been running an angadia firm at this address since last six months. He doesn’t know anything about the firm of M/s Suktam Enterprises. Hence, it can be considered that M/s Suktam Enterprise does not exist at the above mentioned place at the time of spot visit.”

8. The Jurisdictional Office have also enclosed the copy of spot inspection report in the case of M/s Shree Suktam Enterprise wherein it is mentioned that: –

“According to the above subject and reference, it is to be noted that by the referred letter, may Mr. Suktam Enterprises, Ahmedabad Address-27, New Vrindavan Complex, Gurukul Road, Mem Nagar, Ahmedabad-3800 was told to check the place of business in the case. According to which, in the sadar case, the spot was inspected on 06.09.2023. They reached the sadar place along with the Panchos at 11:00 am. On checking the site, the site is currently running in the name of CK Enteprises, an Angadia firm. Talking to Gopal Bhai, the owner of Angadia firm, he said that he has been running Angadia firm for the past six months. When they rented the shop, the shop was closed. On further inquiry it is stated that they do not know anything about Mr. Suktam Enterprises or its owner. They do not apologize for the activity that was going on in this place before them.

Thus, the investigation work is completed in the presence of the commissioners. It was completed without hurting the social or religious sentiments of Gopal Bhai, the owner of the present Angadia firm, or causing any financial loss.”

9. The Jurisdictional Office of CGST had also enclosed GSTR-3B returns for the period July, 2017 to September, 2019 along with the spot-visit letter. However, the said data was not useful for determining the profiteering.

10. Another letter dated 26.09.2023 was written to The Additional Director General, DGGI, Ahmedabad Zonal Unit, Ahmedabad. However, the details of Tax Payer as mentioned in E-way Bill Portal which was not enough for the investigation. Further, letters dated 29.02.2024, 22.03.2024, 22.04.2024 were written to the Principal Chief Commissioner of the Central Goods and Services Tax, Ahmedabad Zone but basic details of jurisdiction, statutory returns and the same address, contact number, e-mail id which were already available with the DGAP were not enough for the investigation.

11. Based upon the above the DGAP concluded that in absence of any documentary evidence, it could not be ascertained whether the Respondent had made any supply of the product in question i.e. “Eclat Serum 30gm” to M/s S R lifescience or any other recipients and if so, whether the supplier passed on the benefit of rate reduction to M/s S R Lifescience or other recipients. These could only be ascertained after getting the complete information/ data from the Respondent.

12. Therefore, in absence of any documentary evidence substantiating the benefit of rate reduction was not passed on by the Respondent due to his unavailability and the relevant records, the DGAP could not investigate the matter.

13. Erstwhile NAA (then CCI) vide its Office Memorandum noted that the DGAP had not concluded the investigation due to lack of documents. The CCI decided to send back the case to the DGAP under Rule 133(4) of the CGST Rules, 2017 directing the DGAP to make all possible efforts to trace the Respondent and calculate profiteering within legal framework.

14. The DGAP vide its supplementary report dated 12.11.2024 in the matter and vide its letter dated 18.06.2024 again requested the Special Commissioner, Department of Gujarat State Tax, Ahmedabad to depute an officer to visit the premises of the Respondent and to fetch some contact details of the Respondent. However, no reply was received from the jurisdictional Authority.

15. Subsequently, letter dated 16.07.2024 was issued to the Special Commissioner, Department of Gujarat State Tax, Ahmedabad. However, same reply was received which was not useful for determining the profiteering. Further, the jurisdictional office vide reply dated 01.08.2024 enclosed GSTR-3B returns for the period July, 2017 to September, 2019 along with the spot- visit letter. However, this data was of no help.

16. Therefore, the DGAP again concluded that in absence of any documentary evidence, due to the unavailability of the Respondent and the relevant records, the DGAP could not investigate the matter.

17. Further, w.e.f. 01.10.2024, the Central Government, on the recommendations of the GST Council has empowered the Principal Bench of the GST Appellate Tribunal (GSTAT), constituted under subsection (3) of section 109 of CGST Act, 2017, to examine antiprofiteering cases in terms of Notification No. 18/2024-Central Tax dated 30.09.2024.

18. The Tribunal has considered the DGAP’s Report dated 30.04.2025 and supplementary report dated 12.11.2024 in its hearing on 30.10.2025. During the hearing, Sh. Rahul Rao Gautam, Additional Assistant Director-Authorised Representative of the DGAP, assisted by Ms. Geetanjali, Inspector, appeared on behalf of the DGAP. None appeared on behalf of the Respondent. During the hearing, the Departmental Representatives of the DGAP informed the Tribunal that the DGAP was unable to locate the address and whereabouts of the firm during the investigation. Hence, a report had been submitted in which nil profiteering was determined against the Respondent and further requested that the matter may be closed.

19. The Tribunal finds that the DGAP has made all the efforts by sending various letters to Additional Commissioner of State Tax, Ahmedabad, Additional Director General, DGGI, Ahmedabad Zonal Unit, Principal Chief Commissioner of CGST, Ahmedabad Zone and Special Commissioner, of State Tax, Ahmedabad, however, the details/information provided was not sufficient for completing the investigation. It was also noted by the Tribunal that Inspector deputed by Additional Commissioner of State Tax, Ahmedabad for the spot visit has submitted that some other firm M/s C.K. Enterprises was running business on the address provided for the Respondent i.e. M/s Shree Suktam Enterprises.

20. However, it is pertinent to mention here that the department should ascertain whether M/s Shree Suktam Enterprises, has indulged into any bogus billing or not towards M/s S.R. Lifesciences or any other registered firm. If so, the Jurisdictional Commissionerate may initiate necessary action against the concerned firm as per the provisions of CGST Act, 2017.

21. In view of the foregoing, the Tribunal concludes that no further proceedings can be sustained against the Respondent. Accordingly, the proceedings in the present case are hereby dropped.

22. A copy of this order be supplied to the Respondent and to the concerned Commissioners CGST/SGST for necessary action.

23. Final order signed, dated and pronounced in the open court today.