Companies

NAA gets more time for profiteering probe against Patanjali

Shishir Sinha New Delhi | Updated on September 17, 2018 Published on September 17, 2018

FMCG player had allegedly refused to pass on benefits of a GST rate cut on 178 items

A national body probing a case of profiteering against Patanjali Ayurved has given the investigative authority another three months to ascertain if the consumer goods company was guilty of not pruning prices after the GST rates were slashed last November.

It was only last week that the National Anti Profiteering Authority (NAA) extended the probe deadline to the Director General-Anti Profiteering (DG-AP), a senior tax official told BusinessLine. It is expected that the report will be submitted by the end of this year.

Patanjali Ayurved is accused of not passing on to customers the benefits of a GST rate cut effected on November 15, 2017. The Goods and Service Tax (GST) on 178 items were then lowered from 28 per cent to 18 per cent.

Patanjali had submitted its response last week.

These items included detergents, washing and cleaning preparations, liquid or cream for washing the skin, shampoos, shaving cream, and beauty or make-up preparations, besides other products.

When contacted, Patanjali spokesperson SK Tijarawala said Patanjali received on July 31 a notice issued by the DG-AP on June 21. “In response to the above notice we submitted a final reply on September 13, 2018 along with requisite details and documents,” he said. When asked about the details of the response, he said that since the matter is sub-judice, they could not be made public. “We always believe and act within the law,” he added.

Once the DG-AP submits its report to the NAA, there will be a detailed hearing followed by the ruling. If the authority confirms 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 the cancellation of its registration under GST.

Patanjali is second FMCG major after Hindustan Unilever to face similar charges of profiteering. NAA has already completed hearing in the HUL matter its ruling is likely early next month.

Patanjali has a strong market share in many of the FMCG products such as tooth-paste, shampoo, hair oil and others. It surprised all when its turnover for 2016-17 crossed ₹10,000 crore from nearly ₹500 crore only six years ago. It is believed that its turnover for the last fiscal 2017-18 had fallen flat. Still, it has set a turnover target of ₹20,000-₹25,000 crore in the next 3-5 years.

Published on September 17, 2018
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