Home / Companies / News /  NAA orders Starbucks Coffee to deposit 1.04 crore profiteered amount

New Delhi: The National Anti-Profiteering Authority (NAA) has ordered Starbucks Coffee Company to deposit to central and state consumer welfare funds 1.04 crore it is found to have profiteered by allegedly not passing on the benefit of GST rate cut to consumers.

NAA estimated the quantum of profiteering by the company based on an investigation by the Director General of Anti-Profiteering for the period from 15 November 2017 to 30 June 2018, an order posted on the website of NAA showed.

The company has to deposit the amount within three months with 18% interest from the day the profiteered amounts were collected from consumers, NAA said in its order.

The company said it will comply with the order. "As a responsible business, Tata Starbucks will comply with the ruling. Tata Starbucks intends to explore our legal options on the basis of our belief that we have followed the law in accordance with the revision of the GST structure," said a spokesperson for Tata Starbucks, the 50:50 joint venture between Tata group and Starbucks Coffee Co.

The investigation was carried out based on a complaint filed by a consumer that the company did not reduce the price commensurately after the GST rate on restaurant services was reduced from 18% to 5% from 15 November 2017. The complainant had filed copies of invoices of coffee purchased prior to and after the GST rate cut.

The NAA order said that the company had informed the investigating agency, the Director General of Anti-Profiteering, that the base price of its ‘short cappuccino’ was raised from 155 to 170 with effect from 15 November 2017. The company argued that despite the base price increase, there was a reduction in the tax inclusive price charged to consumer.

NAA found that no benefit of tax rate reduction was passed on to consumers as the coffee company raised the pre-rate reduction base prices to nullify the GST rate cut. NAA said the company has not only collected excess base prices from consumers, but also compelled them to pay additional GST on these excess base prices which they should not have paid.

“The respondent has thus defeated the objective of both the Central and state governments to provide the benefit of rate reduction to ordinary consumers by sacrificing their tax revenue," NAA said in its order. (ends)

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