The Delhi High Court has refused relief to Sharma Trading Company, a distributor of Hindustan Unilever products, in a case alleging profiteering after GST rates were slashed. The bench of Justice Prathiba M. Singh and Justice Shail Jain delivered the order on 23rd September 2025, making it clear that businesses cannot bypass consumer rights by citing packaging changes or promotional schemes.
Background
The controversy dates back to 2017 when GST on Vaseline VTM 400 ML was reduced from 28% to 18% through a government notification. Anti-profiteering provisions under Section 171 of the GST Act required sellers to reduce prices accordingly, so that consumers benefited from the tax cut.
A complaint reached the National Anti-Profiteering Authority (NAPA), alleging that Sharma Trading had not reduced retail prices despite the tax benefit. Instead, the base price was quietly increased, keeping the maximum retail price (MRP) unchanged at ₹213.
NAPA’s detailed investigation concluded that Sharma Trading had profiteered to the tune of over ₹5.5 lakh. The amount was ordered to be deposited in the Consumer Welfare Fund, along with 18% interest.
Court's Observations
During the hearing, the petitioner argued that the quantity of Vaseline bottles had increased, making the price rise justified. Counsel even referred to promotional schemes, like free Dove soap bars with the product.
The bench was unconvinced.,
"The benefit of a tax reduction must reach the consumer directly," the court observed, adding that increasing product quantity without cutting price was "nothing but deception."
The judges drew attention to their earlier ruling in Reckitt Benckiser v. Union of India, stressing that anti-profiteering laws form a complete code. The provision, they said, was meant to ensure "cash in hand" benefits for consumers through commensurate price cuts, not indirect adjustments like freebies or extra volume.
Rejecting the petitioner’s stance, the court remarked:
"The purpose of GST reduction is to make goods cheaper. That purpose cannot be defeated by clever packaging or bundling tricks."
The bench further clarified that selling below the MRP is perfectly permissible, but using MRP as a shield to avoid price reduction is not.
Decision
After weighing the arguments, the Delhi High Court upheld the original NAPA findings. It directed that the profiteered sum of ₹5,55,126, which had been kept in a fixed deposit pursuant to earlier court orders, now be transferred to the Consumer Welfare Fund.
On the issue of penalty, the court noted that subsequent legal developments had rendered penalty proceedings unnecessary in such older cases. Thus, only the principal profiteering amount with interest would go to the welfare fund.
With these directions, the writ petition filed by Sharma Trading was disposed of.
Case Title: Sharma Trading Company v. Union of India & Ors.
Case Number: W.P.(C) 13194/2018