The Goods and Services Tax Appellate Tribunal (GSTAT) has directed the Indian Railway Catering and Tourism Corporation (IRCTC) to deposit ₹50.41 crore for failing to pass on tax benefits to consumers following the introduction of the Goods and Services Tax (GST) on its Rail Neer packaged drinking water. The order was pronounced on October 14, 2026, and IRCTC disclosed the development to stock exchanges on October 15.
The tribunal has given IRCTC one month to deposit the amount, along with interest at 18% from June 28, 2019. If the amount and interest are not deposited within 30 days, an additional penalty of 10% may apply. The funds will be distributed between the Central Consumer Welfare Fund and the respective state consumer welfare funds in a 50:50 ratio.
Why the Tribunal Ordered the Deposit
The case relates to the price of Rail Neer after GST was introduced on July 1, 2017. The investigation covered supplies made between July 2017 and May 2020.
The Directorate General of Anti-Profiteering (DGAP) found that IRCTC continued selling Rail Neer at a maximum retail price of ₹15 per bottle despite a reduction in the applicable tax burden. The tribunal accepted the investigation report and rejected IRCTC’s objections to the findings and calculation methodology.
IRCTC argued that the Railway Ministry fixed the maximum retail price, leaving the corporation unable to reduce it directly. The tribunal, however, held that IRCTC had control over the transfer price at which it supplied water to railway departments and units operated by licensees. It ruled that the transfer price should have been reduced to pass on the tax benefit to consumers.
Tribunal Rejects IRCTC’s Arguments
IRCTC also argued that Rail Neer was priced below competing brands and that changes in its base price reflected rising costs. It cited its profit-sharing arrangement with the Railway Ministry as part of its defence.
The tribunal did not accept these arguments as grounds for exemption from anti-profiteering provisions under Section 171 of the Central GST Act. It also ruled that water served on premium trains could not be treated as complimentary because its cost was included in the ticket fare.
State-Wise Distribution of the Amount
Maharashtra accounts for the largest share of the ₹50.41 crore amount at approximately ₹10.46 crore, followed by Uttar Pradesh at ₹7.48 crore and Delhi at ₹5.79 crore. Tamil Nadu accounts for around ₹5.65 crore, while Kerala’s share is approximately ₹3.35 crore.
The amount also includes supplies in several other states and Union Territories, reflecting the nationwide distribution of Rail Neer during the investigation period.
IRCTC Plans to Challenge the Order
In its stock exchange disclosure, IRCTC stated that it is filing an appeal before the competent court against the tribunal’s order. The case highlights the application of anti-profiteering rules to government-owned enterprises and the requirement to pass on eligible tax benefits to consumers.
The final outcome will depend on the proceedings before the competent court.
