The National Anti-profiteering Authority ( NAA ) has imposed a penalty of Rs. 233 crore on the Hindustan Unilever Ltd (HUL) for not passing GST rate cut benefit to the consumers after the large-scale cut last November.
In the 98-page order, the NAA observed that Rs 383.35 crore worth “benefit has been denied” by HUL to its customers.
The authority also directed HUL to reduce the prices of its products by way of commensurate reduction keeping in view the reduced rates of tax and the benefit of ITC.
As per GST rules, 50 percent of the amount profiteered or Rs 191.68 crore is required to be deposited by the company in the central consumer welfare fund (CWF), while the balance amount is to be deposited in the CWF of concerned states where the company sold its products.
It was observed that, after allowing for certain deductions, the confirmed amount of tax benefit that the company has not passed on to consumers was assessed at Rs. 383 crores. NAA asked HUL to deposit Rs. 223 crore in central and state consumer welfare funds as the company had proactively deposited Rs. 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.
“Since the respondent (HUL) has already deposited an amount of Rs 160.23 crore in the Central CWF, he is hereby directed to deposit an amount of Rs 31.45 crore in the central CWF and the balance amount of Rs 191.68 crore in CWFs of the states,” the NAA said.
“He (HUL) has acted in conscious disregard of the obligation which was cast upon him to pass on the benefit of GST rate reductions. Instead, he had deliberately increased the base prices by enhancing them equivalent to the amount of GST rate reductions in order to keep the old MRPs in place or not reduced them proportionately to the benefit of tax reductions…,” the NAA said in the order.
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