GST anti-profiteering body tells P&G to deposit ₹241.5 cr

The National Anti-profiteering Authority (NAA) has upheld profiteering of over ₹241.5 crore by Procter & Gamble. The company has denied the allegation and said it is exploring legal action.

“Respondents have denied benefit of rate reduction to the buyers of their SKU (Stock Keeping Units) in contravention of the provisions of section 171 (1) of CGST Act, 2017, and they have resorted to profiteering,” NAA said in its ruling. Accordingly, it asked half of the profiteered amount of ₹241.51 to be deposited in the Central Consumer Welfare Fund and the remaining with Consumer Welfare Fund of States and UTs (33 in total). This has been done as millions of ordinary consumers are not identifiable. This amount will be doposited, along with 18 per cent interest payable from the date of profiteered amount realised by company till date of deposit.

A spokesperson of P&G said that as a responsible corporate, the company has entirely passed on the net commensurate benefit under GST to the recipients. In addition, “we communicated the same via advertising in mass media to help increase awareness with the consumers, shoppers and retailers. Also, along with the industry, we have been consistently requesting the authorities for a clear set of rules and regulations to eliminate ambiguity and complexity in this area. We will review the order by NAA, and assess all possible legal options. We are hopeful that our stand will be vindicated,” the spokesperson said.

The complainant in the matter alleged that Procter & Gamble Home Products (PGHP), Procter & Gamble Hygiene & Healthcare (PGHH) and Gillette India (GIL) did not pass on the benefit of reduction in the rate of GST from 28 per cent to 18 per cent with effect from November 15, 2017, by way of commensurate reduction in the prices of products being sold by them. After its investigation, the Directorate General of Anti Profiteering (DGAP) stated that the base prices of 1,383 goods had been increased by respondent companies after the rate of tax was reduced on them and, hence, the law was violated. Initially it estimated profiteering amount of over ₹243.93 crore. After examining all the facts, NAA lowered the amount to ₹241.5 crore in its ruling,

The NAA has asked DGAP to further investigate and compute the profiteered amount on the stock, which was lying with the respondents and their distributors and retailers, including the modern retailers in the date of tax reduction – November 15, 2017. At the same time Consumer Affairs Ministry will see why sticker informing price reduction post duty cut was not affixed on stock lying.

NAA is profiteering watchdog in GST regime, and it is assigned to determine if the reductions in tax rates and the benefits of the input tax credit (ITC) are being passed on to consumers by way of commensurate decline in prices. In the eventthe authority confirms there is a necessity to apply anti-profiteering measures, it has the authority to order the supplier/business concerned to reduce its prices or return the undue benefit availed by it, along with interest to the recipient of the goods or services. If the undue benefit cannot be passed on to the recipient, it can be ordered to be deposited in the Consumer Welfare Fund. In extreme cases, the NAA can impose a penalty on the defaulting business entity and even order cancellation of its registration under GST.

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