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Home >Companies >News >Hindustan Unilever fined ₹223 crore for GST profiteering

New Delhi: The GST anti-profiteering watchdog, National Anti-profiteering Authority (NAA), said on Monday consumer goods maker Hindustan Unilever Ltd (HUL) has allegedly profiteered to the extent of 383 crore after the large scale goods and services tax (GST) rate cut last November.

An order from the NAA posted on its website said that, after allowing for certain deductions, the confirmed amount of tax benefit that the company has not passed on to consumers was assessed at 383 crore. NAA asked HUL to deposit 223 crore in central and state consumer welfare funds as the company had proactively deposited 160 crore with the central consumer welfare fund, set up under the anti-profiteering laws.

The NAA order indicates vigilance on the part of the authorities in ensuring that the benefit of tax cuts are passed on to consumers.

In response to an emailed query, a spokesperson for HUL said the company was reviewing the NAA order. “We will explore all possible options," said the statement. The spokesperson said HUL has always held GST as a progressive reform which will benefit consumers and the industry at large. “In the absence of set rules and guidelines on profiteering, we have gone by the spirit of the law, and we passed on the entire benefit received under GST to consumers—either through reduction in prices or through increase in grammage. HUL has since suo moto deposited 160 crore ...into the government’s consumer welfare fund," said the spokesperson. HUL also said it has kept the government informed of the approach and the manner it had adopted in passing on GST benefits to consumers.

Abhishek Jain, a tax partner at EY, said that allowing adjustment where the benefit of GST is passed on through increased grammage is a positive for the industry.

The anti-profiteering law requires businesses to pass on the benefit of tax cuts as well as tax rebates to consumers. It, however, is not a perfect law as businesses always have the right to increase prices in a free market. Besides, there are no guidelines for companies to follow in ensuring that the benefit of tax rebates and rate reductions on raw materials are passed on to consumers at the right measure across all final products. Mint reported on 27 November that NAA has witnessed a surge in complaints relating to overcharging by FMCG companies.

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