GST UPDATE ON PROFITEERING CHARGES AGAINST NESTLE

National Anti-Profiteering Authority is a double-check system implemented to ensure prices remain under check and businesses are on operating in a fair and just manner. NAA also makes sure that undue profiteering at the expense of the commo n man, who is invariably the end consumer, does not take place. Recently, Nestle has been slammed by this authority for not passing benefits for the reduction in prices to its customers. Nestle products rates in GST had been reduced from 28% to 18% and from 18% to 12%, vide Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017 with effect from 15.11.2017 and again from 18% to 12%, vide Notification No. 06/2018-Central Tax (Rate) dated 25.01.2018 with effect from 25.01.2018.
In response to the allegations imposed by authority, Nestle claimed that the benefits largely have been passed on by way of reduction of MRP or by way of increase in quantity of products. Further, on SKUs(Stock keeping unit) where it was not practicable to pass on the benefits, say for example NESCAFE single serve packs for INR 2/- or MAGGI Noodles INR 5/- packs, the benefit has been passed on other pack sizes within the same product category. Moreover, in some situations where the benefit could not be passed on instantly by reduction in MRP or increase in grammage, the amount was set aside, to be subsequently passed on and was not reckoned either in our sales or profits.
Accordingly, the benefit of Rs. 192 Crore has been passed by way of above methodologies and the company deposited Rs 16.58 crore in the Consumer Welfare Fund on suo moto.
The authority has asked the company to deposit Rs 73.14 out of Rs 89.73 crore of profiteering as remaining amount has already been deposited. Since the recipients are not identifiable, the amount should be deposited with Consumer Welfare Funds of Centre and States within three months. It has been contended by the authority that the method adopted by Nestle was inappropriate, illogical, arbitrary, and illegal, which has resulted in unfairness and inequality while passing on the benefit of tax reduction. According to the authority, narration of facts established the fact that the company denied thee the benefit of tax reduction to the customers and this is contravention of the law.
Nestle has asked authority to provide them some time to analyse the order issued by them.
In these 3 years after implementation of GST, we have seen many case of anti profiteering being slammed by the authority against various tax payers. Though the big taxpayers for the sake, to maintain their brand and goodwill try their best to comply with the provisions and pass the benefit to the consumers. But such orders of wrong adoption of methodology are creating panic among the big taxpayers like Samsung, Nestle, Johnson and Johnson etc.
Government should act pro actively and issue the manner of passing on the benefits to customers.

Comments

GST UPDATE ON PROFITEERING CHARGES AGAINST NESTLE

Post a Comment

Query