Representational image. Photo: Mint.
Representational image. Photo: Mint.

NAA orders Jaipur FMCG stockist to pay profiteered amount

The order of NAA said that Sharma Trading Company has profiteered to the extent of 5,50,186 and directed it to deposit the amount with 18% interest to the consumer welfare fund set up under the anti-profiteering law

New Delhi: The National Anti-profiteering Authority (NAA) has found a Jaipur-based stockist of Hindustan Unilever Ltd. guilty of profiteering by not passing on the benefit of Goods and Service Tax (GST) reduction on a skin care product to consumers.

The order of NAA, posted on its website on Monday, said that Sharma Trading Company, the stockist and distributor, has profiteered to the extent of Rs. 5,50,186 and directed it to deposit the amount with 18% interest to the consumer welfare fund set up under the anti-profiteering law. The trading company is found to have not passed on the benefit of tax cut on the product from 28% to 18% last November to consumers.

NAA also asked the stockist to reduce the “sale price of the product immediately commensurate to the reduction in the rate of tax as was notified on 14 November 2017 and pass on the benefit of reduction in the rate of the tax to his customers."

An emailed query sent to HUL on Monday night remained unanswered at the time of publishing. HUL had informed Mint last December when notices were issued to Sharma Trading Company that HUL was committed to ensuring that the benefits because of reduction in GST rates are passed on to the end consumers. “We have communicated to the trade to pass on the benefits of GST rate reduction to the consumers," the company had said then.

NAA also issued a show cause notice to the stockist on why it should not be levied a penalty for the offence. The order also said that businesses are liable to pay a penalty of 10,000 or an amount equivalent to the tax evaded, whichever is higher. “Accordingly, it is proposed to impose penalty on the respondent….However, before the penalty is imposed, the respondent is hereby given notice as to why such penalty should not be imposed on him," said the order.

NAA gave the order based on investigation by the Directorate General of Anti-profiteering (DGAP), the investigation arm of the Authority and the evidence presented before it. DGAP told NAA that the stockist’s contention that it did not profiteer as the buyer had returned the product and a credit note was issued in his favour did not hold good. Central GST Act, 2017 required that the benefit of tax reduction should be passed on at the time of supply of the goods and services and any future event related to that supply would not make the transaction of original supply infructuous, the investigating agency said.