GST authority says HUL didn't pass on Rs 3.83-bn rate cut benefit to buyers

The GST anti-profiteering authority has found HUL guilty of not passing on rate cut benefits of Rs 3.83 billion to consumers.

The complaint before the National Anti-Profiteering Authority (NAA) stated that although the Goods and Services Tax (GST) rate on a large number of products was cut from 28 per cent to 18 per cent, HUL had not reduced the maximum retail price (MRP) of its products.

The NAA while passing the order said that Rs 3.8335 billion worth "benefit has been denied" by HUL to his customers.

A statement from the company is awaited.    

As per GST rules, 50 per cent of the amount profiteered or Rs 1.9168 billion is required to be deposited by the company in the central consumer welfare fund (CWF), while the balance amount is to be deposited in the CWF of concerned states where the company sold its products.  

"Since the respondent (HUL) has already deposited an amount of Rs 1.60229 billion in the Central CWF, he is hereby directed to deposit an amount of Rs 314.5 million in the central CWF and the balance amount of Rs 1.9168 billion in CWFs of the states," the NAA said.

The authority also directed HUL to reduce the prices of its products by way of commensurate reduction keeping in view the reduced rates of tax and the benefit of ITC. 

"He (HUL) has acted in conscious disregard of the obligation which was cast upon him to pass on the benefit of GST rate reductions. Instead, he had deliberately increased the base prices by enhancing them equivalent to the amount of GST rate reductions in order to keep the old MRPs in place or not reduced them proportionately to the benefit of tax reductions...," the NAA said in the order.

The present investigation was conducted by the Directorate General of Anti-Profiteering between November 15, 2017, and February 28, 2018.

The NAA directed DGAP to conduct further investigation to ascertain whether the respondent has passed on the benefit of tax reductions in respect of all the products being sold by him and submit a report quantifying the amount of profiteering. 

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel