NAA held Samsonite responsible for profiteering, asked to deposit ₹25.73 cr

Profiteering watchdog, National Anti-profiteering Authority (NAA) has held luggage and luggage accessories maker Samsonite India responsible for profiteering in respect of the supply of American Tourister Trolley. Accordingly, the company has been asked to deposit a profiteering amount of ₹25.73 crore with Central and States’ Consumer Welfare Funds (CWFs).

In this matter, the applicant alleged that the company had not reduced the selling price of the product when the GST rate was reduced to 18 per cent from 28 per cent with effect from November 15, 2017 and denied the benefit of rate reduction on sales through various channels. The company its response argued that it did pass the benefit and produced some of the invoices. It said that complaint was based on the screenshot of the product sold by a third party and had not bought by the applicant. It also questioned the methodology of calculating profit and final arrived figure.

NAA is tasked 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 event, the 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.

After hearing all the arguments, NAA held the methodology adopted by the DGAP (Director General-Anti Profiteering) for computation of profiteered amount by comparing the average base prices of the products in respect of which the rate of GST was reduced to 18 per cent 28 per cent with the actual post rate reduction base prices of these products appears to be correct, reasonable, justifiable and in consonance with provisions of law.

Talking about the complainant, the authority said that there was accurate and adequate prima facie evidence before the Standing Committee on Anti-Profiteering to order an investigation by the DGAP as per rule. The complaint was lodged based on the MRP (Maximum Retail Price), which only the Respondent could fix as a manufacturer, on which he had supplied the above product retail outlet. It is further apparent that the application was filed on the basis of the POs (Purchase Order) and not based on screenshots of the website of an online retailer as has been claimed by the Respondent.

NAA took note of rule book which provides that any other person can make a complaint under the anti-profiteering provisions and it was not necessary that such a person should have purchased the product himself. Therefore, the Applicant is legally competent to maintain the present complaint against the Respondent, it held.

The authority made it clear that the Respondent was legally not required to collect the excess GST and therefore, he has not only violated the provisions of the law but has also acted in contravention of the provisions the law as he has denied the benefit of tax reduction to his customers by charging excess GST.

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