Tata’s retail arm faces ₹1.9 crore penalty for GST-related profiteering1 min read . Updated: 06 Nov 2020, 07:31 AM IST
- NAA determined that the profiteered amount was ₹1.41 crore in the case of cameras and ₹49.8 lakh in the case of power banks.
New Delhi: The National Anti-profiteering Authority (NAA) has ordered Infiniti Retail, Tata group’s consumer durables and electronics retail arm under the brand Croma, to deposit ₹1.9 crore for allegedly profiteering from sales of cameras and power banks after GST rate was reduced in 2019.
The company has to deposit the amount with the central and state consumer welfare funds within three months along with 18% interest from the date these amounts were collected from consumers, NAA said in an order posted on its website. The company has also been asked to reduce the prices of the products—power banks and DSLR cameras.
NAA determined that the profiteered amount was ₹1.41 crore in the case of cameras and ₹49.8 lakh in the case of power banks. This was determined by assessing the average base price of the products in the period before the GST rate was reduced and the sale price after the tax rate cut. GST Council had reduced the tax rate on these items from 28% to 18% from 1 January 2019. The investigation covered the six-month period from 1 January 2019.
An email sent to the Tata group seeking a comment remained unanswered at the time of publishing.
GST laws require businesses to pass on the benefit of tax rate cut to consumers immediately after the tax rate comes down. Although products are not under a price control regime, businesses cannot jack up the base price to pocket the benefit the government intends to give to consumers by sacrificing the tax revenue. However, once the benefit of tax rate reduction is passed on to consumers by lowering the price, there is no lock-in period for holding the reduced price and companies are free to follow their own pricing strategy depending on market dynamics.
Many businesses have jacked up the base price of their products after successive rounds of GST rate cuts and businesses such as retail, real estate and restaurants are among the sectors facing large number of complaints.
Starbucks, a joint venture of the group, was also fined by NAA recently.